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 SEPTEMBER 30, 1997
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 November 1, 1997
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
(in thousands)
September 30,
December 31, 1997
1996 (Unaudited)
-------------------------------
Current Assets:
Cash and cash equivalents $ 7,994 $ 8,708
Accounts receivable - revenue 14,432 10,881
Accounts receivable - joint interest and other 1,673 1,605
Other current assets 1,046 1,117
-------- --------
25,145 22,311
-------- --------
Oil and gas properties (full cost accounting method):
Proved oil and gas properties 249,693 271,731
Unproved oil and gas properties 1,000 1,000
Less accumulated depletion, depreciation and amortization (20,757) (38,095)
-------- --------
229,936 234,636
-------- --------
Gas plants and gathering systems 34,258 36,539
Less accumulated depreciation (2,305) (4,357)
-------- --------
31,953 32,182
-------- --------
Other properties and assets, net 8,536 8,471
-------- --------
$295,570 $297,600
======== ========
See Notes to Consolidated Financial Statements
1
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
(dollars in thousands)
September 30,
December 31, 1997
1996 (Unaudited)
------------------------------
Current liabilities:
Current maturities of long-term debt
and notes payable $ 120 $ ---
Accounts payable - trade 8,934 7,187
Accounts payable - revenue and other 5,210 3,872
Accrued interest 3,366 5,917
Income taxes payable 579 473
-------- --------
18,209 17,449
-------- --------
Long-term debt - less current maturities 64,966 67,100
-------- --------
10 1/2% Senior Subordinated Notes 110,000 110,000
-------- --------
Deferred income taxes 37,061 37,396
-------- --------
Commitments and contingent liabilities
15% Cumulative redeemable preferred
stock, 40,000 shares of $.01 par
value authorized; 20,000 shares
issued and outstanding; liquidation
preference of $25,393 at September 30,
1997, including dividends in arrears 20,000 20,000
-------- --------
Common stockholders' equity of
management, subject to put and
call rights, 13,611 shares of
$.01 par value common stock
issued and outstanding 4,560 4,560
Less related notes receivable (937) (937)
-------- --------
3,623 3,623
-------- --------
Other common stockholders' equity:
Common stock, 1 million shares,
$.01 par value, authorized,
900,000 shares issued and
outstanding 9 9
Additional paid-in capital 89,991 89,991
Retained deficit (48,289) (47,968)
-------- --------
41,711 42,032
-------- --------
$295,570 $297,600
======== ========
See Notes to Consolidated Financial Statements
2
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands)
Predecessor Successor
------------ --------------------------------------------------------------------------
Pro Forma
47 Days 227 Days Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended Ended Ended
February 16, September 30, September 30, September 30, September 30, September 30,
1996 1996 1996 1996 1997 1997
------------ --------- --------- ----------- ---------- ----------
Revenues:
Oil and gas sales $ 8,079 $ 47,632 $19,229 $55,711 $ 17,275 $54,580
Gas gathering and processing 5,322 26,294 10,956 31,616 10,755 32,712
Other income 168 1,386 718 1,554 232 846
------- --------- ------- ------- -------- -------
13,569 75,312 30,903 88,881 28,262 88,138
------- --------- ------- ------- -------- -------
Costs and expenses:
Oil and gas production 3,607 20,181 8,080 23,788 8,724 25,734
Gas gathering and processing 4,567 21,836 9,208 26,403 8,998 27,956
Depletion, depreciation and
amortization
2,583 17,439 6,929 20,838 6,762
General and administrative 320 1,313 437 1,633 742 1,172
Interest 1,102 10,595 4,195 12,808 4,051 12,128
Stock option compensation 3,199 --- --- --- --- ---
Writedown of oil and gas
properties --- 83,305 --- --- --- ---
------- --------- ------- ------- -------- -------
15,378 154,669 28,849 85,470 29,277 87,192
------- --------- ------- ------- -------- -------
Income (loss) before income taxes (1,809) (79,357) 2,054 3,411 (1,015) 946
Income tax expense (benefit) (511) (28,369) 853 1,543 (278) 625
------- --------- ------- ------- -------- -------
Net income (loss) (1,298) (50,988) 1,201 1,868 (737) 321
Preferred stock dividend
requirements --- 1,898 792 2,306 917 2,655
------- --------- ------- ------- -------- -------
Net income (loss) available for
common stockholders $ (1,298) $ (52,886) $ 409 $ (438) $ (1,654) $(2,334)
======= ========= ======= ======= ======== =======
See Notes to Consolidated Financial Statements
3
CODA ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Predecessor Successor
------------ ----------------------------
47 Days 227 Days Nine Months
Ended Ended Ended
February 16, September 30, September 30,
1996 1996 1997
------------ ---------- ----------------
Cash flows from operating activities:
Net income (loss) $ (1,298) $ (50,988) $ 321
Adjustments to reconcile net income (loss)
to net cash provided by
operating activities:
Depletion, depreciation and amortization 2,583 17,439 20,202
Writedown of oil and gas properties --- 83,305 ---
Deferred income tax expense (benefit) (511) (28,745) 335
Stock option compensation 3,199 --- ---
Other 6 (284) (20)
Effect of changes in:
Accounts receivable 3,386 (3,902) 3,619
Other current assets (63) (171) (77)
Accounts payable and other current liabilities (4,166) 10,793 (640)
-------- --------- --------
Net cash provided by operating activities 3,136 27,447 23,740
-------- --------- --------
Cash flows from investing activities:
Additions to oil and gas properties (1,717) (7,697) (25,510)
Proceeds from sale of assets 110 1,381 3,541
Purchase of Coda by JEDI, net of $5,740 cash acquired --- (174,373) ---
Gas plant and gathering systems and other property additions (114) (323) (2,422)
Loan to stockholder --- (738) (450)
Payments received on amounts due from stockholders 130 124 ---
Other --- (40) ---
-------- --------- --------
Net cash used by investing activities (1,591) (181,666) (24,841)
-------- --------- --------
Cash flows from financing activities:
Proceeds from bank borrowings --- 2,000 18,500
Proceeds from issuance of subordinated debt --- 210,000 ---
Proceeds from issuance of common and preferred stock --- 110,026 ---
Repayment of bank borrowings and subordinated debt (19) (152,890) (16,486)
Financing costs (390) (783) (199)
-------- --------- --------
Net cash provided (used) by financing activities (409) 168,353 1,815
-------- --------- --------
Increase in cash 1,136 14,134 714
Cash at beginning of period 4,604 --- 7,994
-------- --------- --------
Cash at end of period $ 5,740 $ 14,134 $ 8,708
======== ========= ========
Supplemental cash flow information:
Interest paid $ 1,544 $ 5,719 $ 9,579
======== ========= ========
Income taxes paid $ --- $ 120 $ 424
======== ========= ========
See Notes to Consolidated Financial Statements
4
CODA ENERGY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. THE JEDI MERGER
On February 16, 1996, pursuant to an Agreement and Plan of Merger, Coda
Energy, Inc. ("Coda"), was acquired by Joint Energy Development Investments
Limited Partnership ("JEDI"), which is an affiliate of Enron Capital & Trade
Resources Corp. ("ECT") (the "JEDI Merger"). Coda, together with its
subsidiaries, prior to and including February 16, 1996 is referred to herein as
the Predecessor and after such date as the Successor and collectively, for both
periods, the Company. In conjunction with the JEDI Merger, JEDI 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
JEDI Merger. Following consummation of the JEDI Merger, the Management Group
owns approximately 5% of Coda's common stock on a fully-diluted basis. JEDI
owns the remaining 95%.
The JEDI 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 JEDI 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
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 JEDI Merger, the purchase price allocated to oil and gas
properties was in excess of the cost center ceiling by approximately $83.3
million ($53.3 million net of related deferred taxes). The resulting writedown
was a non-cash charge and was included in the results of operations for the 227-
day period ended September 30, 1996.
2. ACCOUNTING AND REPORTING POLICIES
The consolidated financial statements include the accounts of Coda and its
majority-owned subsidiaries. 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 319-day
period ended December 31, 1996,
5
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 September 30, 1997, and the results of operations and cash flows
for the 47-day period ended February 16, 1996, the 227-day period ended
September 30, 1996 and the nine months ended September 30, 1997. The results for
the period ended September 30, 1997, are not necessarily indicative of results
for a full year.
Fees from overhead charges billed to working interest owners, including the
Company, of $848,000, $4.3 million and $4.9 million for the 47-day period ended
February 16, 1996, the 227-day period ended September 30, 1996 and the nine
months ended September 30, 1997, 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 JEDI
Merger and the sale of the 10 1/2% Senior Subordinated Notes (the "Notes") 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 adjusting the 1996 periods: (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 JEDI Merger, (vi) to adjust
the provision for income taxes for the change in financial taxable income
resulting from the above adjustments, and (vii) to record the cumulative
dividend requirements of the redeemable preferred stock issued to JEDI.
4. ACQUISITIONS
In February 1997, the Company purchased 123 producing oil and gas properties
from J. M. Huber Corporation for an aggregate purchase price of approximately
$13.5 million, of which $6.5 million was financed under the Company's credit
agreement. The properties are predominately located in Texas, Oklahoma and
Arkansas. The Company estimates the properties have proved reserves of
approximately 1.6 million barrels of oil and 15.1 Bcf of gas as of the effective
date, January 1, 1997.
5. LONG-TERM DEBT
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 (as amended, the "Credit Agreement") which
provides for a revolving credit facility in an amount up to $250.0 million.
Pursuant to the terms of the Credit Agreement, the semiannual borrowing base
6
redetermination as of April 1, 1997, resulted in an increase of the Company's
borrowing base from $115 million to $120 million. The next redetermination is
scheduled for January 1, 1998. At September 30, 1997, $67.0 million was
outstanding under the Credit Agreement and $53.0 million was available for
borrowing thereunder. On March 31, 1997, the Company repaid in full (principal
balance of $466,000) it's note payable to NationsBank that was due January 2,
1998.
6. 10 1/2% SENIOR SUBORDINATED NOTES
On March 18, 1996, the Company completed the sale of the Notes which 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 (the "Indenture")) 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 September
30, 1997, was $67.1 million.
The Notes were issued pursuant to the 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.
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.
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:
7
December 31, September 30,
1996 1997
-------------- --------------
(Unaudited)
Current assets $ 7,745 $ 5,820
Oil and gas properties, net 50,176 51,095
Gas plants and gathering systems, net 31,617 31,846
Other properties and assets, net 1,113 781
------- --------
Total assets $90,651 $ 89,542
======= ========
Current liabilities $ 8,321 $ 6,315
Intercompany payables 33,551 29,585
Deferred income taxes 16,191 17,956
Stockholder's equity 32,588 35,686
------- --------
Total liabilities and stockholder's equity $90,651 $ 89,542
======= ========
Predecessor Successor
----------- -----------------------------
47 Days 227 Days Nine Months
Ended Ended Ended
February 16, September 30, September 30,
1996 1996 1997
----------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Oil and gas sales $ 2,529 $ 17,443 $17,463
Gas gathering and processing 5,322 26,294 32,712
Other income (loss) 2 156 (51)
------- -------- -------
7,853 43,893 50,124
Costs and expenses:
Oil and gas production 843 4,758 5,672
Gas gathering and processing 4,567 21,836 27,956
Depletion, depreciation and amortization 1,039 6,924 7,460
General and administrative 435 2,229 2,429
Interest 460 1,881 1,454
Writedown of oil and gas properties --- 19,159 ---
------- -------- -------
7,344 56,787 44,971
------- -------- -------
Income (loss) before income taxes 509 (12,894) 5,153
Income tax expense (benefit) 277 (4,488) 2,055
------- -------- -------
Net income (loss) $ 232 $ (8,406) $ 3,098
======= ======== =======
8
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 "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. There are currently 20,000 shares of Preferred Stock issued and
outstanding. Shares of Preferred Stock in excess of such 20,000 shares are
issuable only for the purpose of paying dividends on the Preferred Stock. As of
September 30, 1997, the Preferred Stock had accumulated approximately $5.4
million in preferred dividends which had not been declared by the Board of
Directors.
8. BELCO MERGER
The Company entered into an Agreement and Plan of Merger (the "Belco Merger
Agreement") dated as of October 31, 1997 among the Company, Belco Oil & Gas
Corp., a Nevada corporation ("Belco"), and Belco Acquisition Sub, Inc., a
Delaware corporation ("Sub"), providing for the merger (the "Belco Merger") of
Sub with and into the Company, with the Company surviving the Belco Merger.
Pursuant to the terms and conditions of the Belco Merger Agreement, (i) the
common stockholders of the Company will receive an aggregate of $134 million in
cash, as increased by the cash proceeds, if any, received by the Company from
the sale of Taurus Energy Corp. ("Taurus"), a wholly owned subsidiary of the
Company, prior to the consummation of the Belco Merger, and as decreased by the
aggregate amount of payments due to Douglas H. Miller pursuant to the Amendment
to Executive Employment Agreement (discussed below), and (ii) the preferred
stockholder of the Company will receive (A) cash equal to the redemption value
of the Company's preferred stock less $10 million, (B) warrants to purchase
1,666,667 shares of common stock of Belco at an exercise price of $27.50 per
share (subject to adjustment), pursuant to the terms and conditions of a
Warrant Agreement to be executed and delivered to the Company's preferred
stockholder at the closing of the Belco Merger and (C) the right to receive
(only under certain circumstances) the aggregate amount received by the Company
from the sale of Taurus after the consummation of the Belco Merger.
Prior to the closing of the Belco Merger, the Company has agreed, among other
things, to (i) operate its business in the ordinary course, consistent with past
practice, (ii) provide Belco full access to all of its properties and personnel
so as to enable Belco to conduct its due diligence, (iii) not initiate, solicit,
negotiate or encourage any proposal or offer to acquire all or substantially all
of the business of the Company, and (iv) use its reasonable efforts to
consummate a transaction disposing of Taurus.
The Belco Merger Agreement provides for the closing of the Belco Merger on
November 26, 1997, which date can be extended to December 3, 1997 upon either
party's election. However, the closing of the Belco Merger is conditioned on a
number of things, including but not limited to, (i) Belco determining that, had
the Company's representations and warranties made in the Belco
9
Merger Agreement been made without any knowledge or materiality
qualifiers, Belco would not suffer or experience losses aggregating greater than
$10 million and (ii) the execution and delivery of several ancillary agreements.
The Belco Merger Agreement may be terminated (i) by mutual written consent of
Belco and the Company, (ii) by either Belco or the Company if the closing of the
Belco Merger has not occurred by November 26, 1997 (or December 3, 1997 if
either party has requested such extension in accordance with the Belco Merger
Agreement); provided that the Company cannot terminate the Belco Merger
Agreement pursuant to this clause (ii) for a period of 45 days after December 3,
1997 to allow Belco to obtain all regulatory approvals necessary to consummate
the transactions contemplated by the Belco Merger Agreement if the disposition
of Taurus does not occur before such date, or (iii) by either Belco or the
Company upon written notice to the other in the event of a final permanent order
either enjoining or otherwise prohibiting the consummation of the transactions
contemplated by the Belco Merger Agreement or having a material adverse effect
on the business, operations or financial condition of Belco or the Company.
Simultaneously with the execution of the Belco Merger Agreement, the Company
entered into a number of ancillary agreements. The Company entered into
Shareholder Agreements, effective as of October 31, 1997 (the "Shareholder
Agreements"), with Belco and each of the Company's minority shareholders
providing, among other things, that (i) the shareholder would vote in favor of
the Belco Merger at any meeting of stockholders and granting Belco an
irrevocable proxy, coupled with an interest, to vote in favor of the Belco
Merger, (ii) the shareholder waives any appraisal rights, and (iii) the
shareholder releases the Company from any claims that the shareholder might have
against the Company or any affiliate. The Company also entered into a
Stockholders Allocation Agreement dated as of October 31, 1997 (the "Allocation
Agreement") with all of the stockholders of the Company wherein the
stockholders, among other things, agreed to the allocation of the proceeds from
the Belco Merger among themselves and approved and adopted the Belco Merger
Agreement. The Company also entered into an Amendment to Executive Employment
Agreement dated as of October 31, 1997 with Douglas H. Miller providing, among
other things, for the cancellation of the remaining term under Mr. Miller's
original Executive Employment Agreement, effective upon the consummation of the
Belco Merger, and the payment to Mr. Miller at the closing of the Belco Merger
of the sum of all payments that would have come due to Mr. Miller under his
original employment agreement if Mr. Miller's employment had continued without
interruption.
In connection with the JEDI Merger, JEDI and the Management Group entered into
a Stockholders Agreement dated October 31, 1995, as amended by Amendment No. 1
to Stockholders Agreement dated as of January 10, 1996 (as amended, the "JEDI
Stockholders Agreement") that, among other things, 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,
10
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 Belco Merger would be a Trigger Event as
described in the JEDI Stockholders Agreement. If the Belco Merger is
consummated, the Company will record compensation expense equal to the value of
the Special Management Rights, currently estimated to range from $17.1 million
to $19.3 million. Since the Special Management Rights are an obligation of JEDI,
the offsetting credit would be to additional paid-in capital.
11
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 of the properties to be
acquired.
On February 16, 1996, pursuant to an Agreement and Plan of Merger, Coda was
acquired by Joint Energy Development Investments Limited Partnership ("JEDI"),
which is an affiliate of Enron Capital & Trade Resources Corp. ("ECT") (the
"JEDI Merger"). Coda, together with its subsidiaries, prior to and including
February 16, 1996 is referred to herein as the Predecessor and after such date
as the Successor and collectively, for both periods, the Company. The JEDI
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 JEDI Merger reflect
a new basis of accounting and are not comparable to prior periods.
FORWARD-LOOKING STATEMENTS
All statements in this document concerning the Company other than purely
historical information (collectively "Forward-Looking Statements") reflect the
current expectation of management and are based on the Company's historical
operating trends, estimates of proved reserves and other information currently
available to management. These statements assume, among other things, (i) that
no significant changes will occur in the operating environment for the Company's
oil and gas properties, gas plants and gathering systems, (ii) that there will
be no material acquisitions or divestitures and (iii) the continuation of
current ownership and management. None of the forward-
12
looking statements give any effect to any changes resulting from the proposed
merger with Belco Oil & Gas Corp. described in Item 5. The Company cautions that
the Forward-Looking Statements are subject to all the risks and uncertainties
incident to the acquisition, development and marketing of, and exploration for,
oil and gas reserves. These risks include, but are not limited to, commodity
price risk, environmental risk, drilling risk, reserve, operations and
production risks, regulatory risks and counterparty risk. Many of these risks
are described elsewhere herein. The Company may make material acquisitions or
dispositions, enter into new or terminate existing oil and gas sales or hedging
contracts, or enter into financing transactions. None of these can be predicted
with any certainty and, accordingly, are not taken into consideration in the
Forward-Looking Statements made herein. For all of the foregoing reasons, actual
results may vary materially from the Forward-Looking Statements and there is no
assurance that the assumptions used are necessarily the most likely.
13
RESULTS OF OPERATIONS
The following table sets forth certain unaudited 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.
Predecessor Successor
----------- -------------------------------------------------------------------------
Pro Forma
47 Days 227 Days Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended Ended Ended
February 16, September 30, September 30, September 30, September 30, September 30
1996 1996 1996 1996 1997 1997
----------- ------------ ----------- ----------- ---------- -----------
OIL AND GAS OPERATING DATA:
Net production:
Oil (Mbbls) 408 2,147 840 2,555 803 2,435
Gas (Mmcf) 500 2,390 1,012 2,890 1,213 3,475
Average sales price:
Oil (per Bbl) $ 17.57 $ 19.90 $ 20.46 $ 19.53 $ 18.35 $ 19.20
Gas (per Mcf) $ 1.82 $ 2.05 $ 2.01 $ 2.01 $ 2.09 $ 2.25
Average production cost per BOE $ 7.33 $ 7.93 $ 8.01 $ 7.83 $ 8.68 $ 8.54
GAS GATHERING AND PROCESSING
OPERATING DATA:
Sales:
Gas sales (MMBTU) 1,555 7,633 3,154 9,188 2,975 9,283
Gas sales average price $ 2.24 $ 2.20 $ 2.21 $ 2.21 $ 2.42 $ 2.45
Natural gas liquids sales
(M gallons) 5,868 27,844 10,982 33,712 10,809
Natural gas liquids average price $0.3173 $0.3403 $0.3641 $0.3363 $0.3302 $0.3337
Costs and expenses (in thousands):
Gas purchases $ 3,760 $19,615 $ 8,231 $23,675 $ 8,020 $24,813
Plant operating expenses $ 506 $ 2,552 $ 1,088 $ 3,058 $ 978 $ 3,143
Comparison of the nine months ended September 30, 1996 (pro forma) and 1997
(historical)
The unaudited pro forma information was prepared as if the JEDI Merger and
the issuance of $110.0 million of 10 1/2% Senior Subordinated Notes (the
"Notes") had occurred on January 1, 1996. The unaudited pro forma information
was prepared by combining the two 1996 periods and giving
14
effect to adjustments affecting (i) depletion, depreciation and amortization,
(ii) interest expense, (iii) income taxes and (iv) certain other costs resulting
from the JEDI Merger as more fully outlined in the Notes to Consolidated
Financial Statements. The comparisons below compare the unaudited pro forma
information for the nine months ended September 30, 1996 to unaudited historical
information for the nine months ended September 30, 1997. Unless otherwise
indicated, the variation and trend analysis set forth below in comparing the
nine months ended September 30, 1996 and 1997 is comparable to the analysis that
would result from comparing the quarters ended September 30, 1996 and 1997.
Oil and gas sales for the nine months ended September 30, 1997, decreased 2%
to approximately $54.6 million from approximately $55.7 million in the
comparable period in 1996 primarily due to a 5% decrease in oil production and a
decrease of $.33 per barrel in the average sales price of oil partially offset
by a 20% increase in gas volumes resulting from the acquisition of oil and gas
properties in February 1997 and favorable drilling results in 1996 and 1997 and
an increase of $.24 per Mcf in the average sales price of gas. The decrease
in oil production is primarily a result of natural declines in production
partially offset by production from acquisitions in December 1996 and February
1997. During the nine months ended September 30, 1997, 86% of oil and gas sales
revenues were attributable to oil production.
Oil and gas sales for the quarter ended September 30, 1997 decreased 10% to
approximately $17.3 million from approximately $19.2 million in the comparable
period in 1996 primarily due to a decrease of $2.11 per barrel in the average
sales price of oil and by a 4% decrease in oil production. The decrease in oil
production results primarily from natural production declines which were
partially offset by production from acquisitions in December 1996 and February
1997. The Company also experienced a 20% increase in gas volumes as a result of
the acquisition of oil and gas properties in February 1997 and favorable
drilling results in 1996 and 1997. Oil and gas prices remain unpredictable.
See "- Changes in Prices and Hedging Activities" below.
Gas gathering and processing revenues for the nine months ended September 30,
1997 increased 4% to approximately $32.7 million from approximately $31.6
million in the comparable period in 1996 primarily due to an 11% increase in the
average sales price for natural gas. This increase was partially offset by a
11% decrease in natural gas liquids volumes due primarily to natural production
declines.
Gas gathering and processing revenues for the quarter ended September 30,
1997 decreased 2% to approximately $10.8 million from approximately $11.0
million in the comparable period in 1996 primarily due to a 9% decrease in the
average sales price for natural gas liquids and a 6% decrease in natural gas
sales volumes due primarily to natural production declines. These decreases
were partially offset by a 10% increase in the average sales price of natural
gas.
Other income for the nine months ended September 30, 1997 decreased 46% to
approximately $846,000 from approximately $1.6 million in the comparable period
in 1996 due to a reduction in interest income of approximately $295,000 as a
result of interest earned in 1996 on cash balances
15
associated with the JEDI Merger and a reduction in gains on sales of marketable
securities of approximately $240,000.
Oil and gas production expenses (including production taxes) for the nine
months ended September 30, 1997 increased 8% to approximately $25.7 million from
approximately $23.8 million for the same period in 1996, reflecting the effects
of the properties acquired in 1996 and 1997 and from new wells drilled. Oil and
gas production expenses for the nine months ended September 30, 1997 were $8.54
per BOE and are expected to remain near this level for the remainder of the
year.
Gas gathering and processing expenses for the nine months ended September 30,
1997 increased 6% to approximately $28.0 million from approximately $26.4
million in the comparable period in 1996 due primarily to an increase in the
purchase price paid to producers. Gas gathering and processing expenses usually
fluctuate in ratio with gas gathering and processing revenues.
Gas gathering and processing expenses for the quarter ended September 30,
1997 decreased 2% to approximately $9.0 million from approximately $9.2 million
in the comparable period in 1996 due to a slight decrease in the purchase prices
paid to producers and a slight decrease in plant operating expenses.
Depletion, depreciation and amortization expense for the nine months ended
September 30, 1997, decreased 3% to approximately $20.2 million from
approximately $20.8 million for the period in 1996 reflecting the effect on
depletion, depreciation and amortization rates of upward reserve revisions at
December 31, 1996 and acquisitions in December 1996 and February 1997. Oil and
gas depletion, depreciation and amortization expense decreased from $5.94 per
BOE for the nine months ended September 30, 1996, to $5.75 per BOE for the nine
months ended September 30, 1997. The Company anticipates that the depletion,
depreciation and amortization rate per BOE will be approximately $5.75 for 1997,
absent significant additional acquisitions or reserve revisions.
General and administrative expenses for the nine months ended September 30,
1997 decreased 28% to approximately $1.2 million from approximately $1.6 million
for the same period in 1996. This decrease is primarily due to an accrual for
bonuses of $567,000 in 1996 but not in 1997. The Company expects that general
and administrative expenses for the year ended December 31, 1997 will be near
1996 levels, absent significant additional acquisitions.
General and administrative expenses for the quarter ended September 30, 1997
increased 70% to approximately $742,000 from approximately $437,000 in the
comparable period in 1996 due primarily to a July 1997 reduction in overhead
fees charged on wells operated by the Company in order to correct prior
overcharges of administrative burdens.
Interest expense for the nine months ended September 30, 1997 decreased 5% to
approximately $12.1 million from approximately $12.8 million for the comparable
period in 1996, primarily due to decreases in outstanding debt levels as a
result of utilizing available cash flow to reduce amounts outstanding under the
Company's credit facility.
16
Net income for the nine months ended September 30, 1997, was approximately
$346,000 compared to approximately $1.9 million for the comparable period in
1996. This decrease resulted primarily from decreases in oil and gas prices,
lower oil volumes, relatively higher lease operating expenses and a decrease in
other income. Net loss for the quarter ended September 30, 1997 was $712,000
compared to net income for the quarter ended September 30, 1996 of $1.2 million.
This decrease resulted primarily from decreases in oil and gas prices, lower oil
volumes, relatively higher lease operating expenses and a decrease in other
income.
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 barrel
during 1996 and at December 31, 1996, was $20.22 and $24.88, respectively. For
the nine months ended September 30, 1997, the Company received an average of
$1.63 per barrel less (including an oil hedging price decrease of $.58 per
barrel) and $.08 per Mcf less for its oil and natural gas sales, respectively,
than the average NYMEX prices for the same period. On October 31, 1997, the
NYMEX closing price for the near month for oil and natural gas was $21.08 per
barrel and $3.55 per Mcf, respectively.
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 on a portion of the Company's production
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. Under the standard form swap and option agreements in use by the
Company, the Company's revenues will be limited when the NYMEX price exceeds the
strike price. The total potential reduction in revenues is equal to the
difference between the strike prices and the NYMEX price for the production
month hedged multiplied by the number of barrels swapped. To the extent this
amount exceeds the credit limit established by the counterparty, the Company may
be required to utilize cash to fund a margin account. The Company has not
historically been required to provide any significant amount of collateral in
connection with its hedging activities.
The Company has sold swaps to hedge 150,000 barrels of oil and 60,000 barrels
of oil at a weighted average NYMEX price of $19.27 and $19.41 per barrel for the
three months ending December 31, 1997 and year ending December 31, 1998,
respectively, under various transactions entered into as of September 30, 1997.
In connection with a swap beginning January 1, 1997 covering 15,000 barrels per
month at a strike price of $19.00, which expires December 31, 1997, the Company
granted the counterparty a one day option at the expiration of the swap to
extend the swap under the same terms for an additional twelve months.
17
During the 47-day period ended February 16, 1996, the 227-day period ended
September 30, 1996 and the nine months ended September 30, 1997 the Company's
oil revenues were decreased by $14,000, $2.0 million and $1.4 million,
respectively, as a result of hedging transactions.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had cash and cash equivalents of
approximately $8.7 million and working capital of approximately $4.9 million.
Cash provided by operating activities for the nine months ended September 30,
1997 decreased to approximately $23.7 million compared to $30.6 million for the
comparable period in 1996. Changes in working capital items account for
approximately $3.0 million of the decrease in cash provided by operating
activities. As a result of issuing the Notes in March 1996, accrued interest
increased approximately $3.1 million in 1996. Cash provided by operating
activities before changes in working capital items for the nine months ended
September 30, 1997 decreased $3.8 million to approximately $20.9 million from
approximately $24.7 million from the comparable period in 1996 due to a decrease
in margins on oil and gas operations and a decrease in other income. Excluding
the impact of the JEDI Merger, cash flows used in investing activities increased
to $24.8 million for the nine months ended September 30, 1997 from $8.9 million
for the comparable period in 1996, primarily as a result of the acquisition in
February 1997 of oil and gas properties for $13.5 million. Cash flows provided
by financing activities decreased from $168.4 million for the nine months ended
September 30, 1996 to $1.8 million for the comparable period in 1997, primarily
due to financing transactions related to the JEDI Merger.
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
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 of the properties to be acquired.
The Company from time to time entertains 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.
The Company has development drilling programs designed for all its major
operating areas. The Company has budgeted capital spending of between $15
million and $20 million in 1997, excluding property acquisitions, but is not
contractually committed to expend these funds. During the first nine months of
1997, the Company incurred approximately $9.5 million of these costs. In
addition, the Company is continuing to evaluate oil and natural gas properties
for future 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
18
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 governing the Notes (the "Indenture") .
The JEDI Merger
The Company incurred substantial indebtedness in connection with the JEDI
Merger and is highly leveraged. As of September 30, 1997, the Company had total
indebtedness of approximately $177.1 million and common stockholders' equity of
approximately $45.7 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 Company's credit
facility, 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. The Company may 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 (as amended, the "Credit Agreement"). Pursuant
to the terms of the Credit Agreement, the semiannual borrowing base
redetermination as of April 1, 1997 resulted in an increase of the Company's
borrowing base from $115 million to $120 million. The next redetermination is
scheduled for January 1, 1998. At September 30, 1997, $67.0 million was
outstanding under the Credit Agreement and $53.0 million was available for
borrowing thereunder. On March 31, 1997, the Company repaid in full (principal
balance of $466,000) its note payable to NationsBank that was due January 2,
1998.
15% Cumulative Preferred Stock
The Company's Restated Certificate of Incorporation authorizes the issuance
of up to 40,000 shares of preferred stock, par value $0.01 per share, designated
as "15% Cumulative Preferred Stock" (the "Preferred Stock"). In conjunction with
the JEDI 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
are 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 September
30, 1997, the Preferred Stock had accumulated approximately $5.4 million in
preferred dividends which had not been declared by the Board of Directors.
19
Effect of the Belco Merger on Liquidity and Capital Resources
The Company has entered into an Agreement and Plan of Merger dated as of
October 31, 1997 among the Company, Belco Oil & Gas Corp. ("Belco") and Belco
Acquisition Sub, Inc. ("Sub"), providing for the merger of Sub with and into the
Company, with the Company surviving the Merger (the "Belco Merger"). The
consummation of the Belco Merger would cause a default under the terms of the
Credit Agreement due to (i) the change in ownership of the Company or (ii) the
disposition by Grant W. Henderson, President and Chief Financial Officer of the
Company, of his common equity ownership in the Company. In order to avoid such
default, it will be necessary for the Company to obtain from its lenders a
waiver or consent to the Belco Merger, make arrangements to repay in full the
amounts outstanding under the Credit Agreement ($67.0 million at September
30,1997), or otherwise amend the Credit Agreement on terms mutually acceptable
to the parties.
Under the terms of the Indenture governing the Notes, the change in ownership
of the Company, as a result of the consummation of the Belco Merger, would allow
each holder of the Notes to require the Company to repurchase such Notes at 101%
of the principal amount thereof plus accrued and unpaid interest.
20
PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION
-----------------
The Company entered into an Agreement and Plan of Merger (the "Belco Merger
Agreement") dated as of October 31, 1997 among the Company, Belco Oil & Gas
Corp., a Nevada corporation ("Belco"), and Belco Acquisition Sub, Inc., a
Delaware corporation ("Sub"), providing for the merger (the "Belco Merger") of
Sub with and into the Company, with the Company surviving the Belco Merger.
Pursuant to the terms and conditions of the Belco Merger Agreement, (i) the
common stockholders of the Company will receive an aggregate of $134 million in
cash, as increased by the cash proceeds, if any, received by the Company from
the sale of Taurus Energy Corp. ("Taurus"), a wholly owned subsidiary of the
Company, prior to the consummation of the Belco Merger, and as decreased by the
aggregate amount of payments due to Douglas H. Miller pursuant to the Amendment
to Executive Employment Agreement (discussed below), and (ii) the preferred
stockholder of the Company will receive (A) cash equal to the redemption value
of the Company's preferred stock less $10 million, (B) warrants to purchase
1,666,667 shares of common stock of Belco at an exercise price of $27.50 per
share (subject to adjustment), pursuant to the terms and conditions of a
Warrant Agreement to be executed and delivered to the Company's preferred
stockholder at the closing of the Belco Merger and (C) the right to receive
(only under certain circumstances) the aggregate amount received by the Company
from the sale of Taurus after the consummation of the Belco Merger.
Prior to the closing of the Belco Merger, the Company has agreed, among other
things, to (i) operate its business in the ordinary course, consistent with past
practice, (ii) provide Belco full access to all of its properties and personnel
so as to enable Belco to conduct its due diligence, (iii) not initiate, solicit,
negotiate or encourage any proposal or offer to acquire all or substantially all
of the business of the Company, and (iv) use its reasonable efforts to
consummate a transaction disposing of Taurus.
The Belco Merger Agreement provides for the closing of the Belco Merger on
November 26, 1997, which date can be extended to December 3, 1997 upon either
party's election. However, the closing of the Belco Merger is conditioned on a
number of things, including but not limited to, (i) Belco determining that, had
the Company's representations and warranties made in the Belco Merger Agreement
been made without any knowledge or materiality qualifiers, Belco would not
suffer or experience losses aggregating greater than $10 million and (ii) the
execution and delivery of several ancillary agreements.
The Belco Merger Agreement may be terminated (i) by mutual written consent of
Belco and the Company, (ii) by either Belco or the Company if the closing of the
Belco Merger has not occurred by November 26, 1997 (or December 3, 1997 if
either party has requested such extension in accordance with the Belco Merger
Agreement); provided that the Company cannot terminate the Belco Merger
Agreement pursuant to this clause (ii) for a period of 45 days after December 3,
1997 to allow Belco to obtain all regulatory approvals necessary to consummate
the transactions contemplated by the Belco Merger Agreement if the disposition
of Taurus does not occur before
21
such date, or (iii) by either Belco or the Company upon written notice to the
other in the event of a final permanent order either enjoining or otherwise
prohibiting the consummation of the transactions contemplated by the Belco
Merger Agreement or having a material adverse effect on the business, operations
or financial condition of Belco or the Company.
Simultaneously with the execution of the Belco Merger Agreement, the Company
entered into a number of ancillary agreements. The Company entered into
Shareholder Agreements effective as of October 31, 1997 (the "Shareholder
Agreements"), with Belco and each of the Company's minority shareholders
providing, among other things, that (i) the shareholder would vote in favor of
the Belco Merger at any meeting of stockholders and granting Belco an
irrevocable proxy, coupled with an interest, to vote in favor of the Belco
Merger, (ii) the shareholder waives any appraisal rights, and (iii) the
shareholder releases the Company from any claims that the shareholder might have
against the Company or any affiliate. The Company also entered into a
Stockholders Allocation Agreement dated as of October 31, 1997 (the "Allocation
Agreement") with all of the stockholders of the Company wherein the
stockholders, among other things, agreed to the allocation of the proceeds from
the Belco Merger among themselves and approved and adopted the Belco Merger
Agreement. The Company also entered into an Amendment to Executive Employment
Agreement dated as of October 31, 1997 with Douglas H. Miller providing, among
other things, for the cancellation of the remaining term under Mr. Miller's
original Executive Employment Agreement, effective upon the consummation of the
Belco Merger, and the payment to Mr. Miller at the closing of the Belco Merger
of the sum of all payments that would have come due to Mr. Miller under his
original employment agreement if Mr. Miller's employment had continued without
interruption.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) Exhibits
2.1/(1)/ Agreement and Plan of Merger ("Agreement and Plan of Merger") by
and among Coda, Belco Oil & Gas Corp. ("Belco") and Belco
Acquisition Sub, Inc. dated as of October 31, 1997.
2.2/(1)/ Agreement of Coda to provide schedules to Agreement and Plan of
Merger (Exhibit 2.1).
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.
22
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, Coda's
guarantor subsidiaries, Diamond Energy Operating Company, Taurus
Energy Corp. and Electra Resources, Inc. (collectively, 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 Goldman, Sachs, & Co., Chemical
Securities, Inc., ECT Securities Corp. and NationsBanc Capital
Markets, Inc. (collectively, 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.
4.4 Credit Agreement, dated February 14, 1996, among the Company,
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.
4.5 Promissory Note dated February 14, 1996, in the original
principal amount of $87,500,000.00, executed by Coda, payable to
NationsBank filed as Exhibit 4.6 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 $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.
23
4.7 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.
4.8 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.
4.9 Specimen Certificate of Series B 10 1/2% Senior Subordinated
Notes due 2006 (included in Exhibit 4.1 hereto), filed as
Exhibit 4.11 to the 1996 Form S-4 and incorporated by reference
herein.
4.10 First Supplement to Indenture dated as of April 25, 1996 filed
as Exhibit 4.12 the Company's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1996 and incorporated by
reference herein amending the Indenture filed as Exhibit 4.1
above.
4.11 First Amendment to Credit Agreement, dated August 1, 1996, among
the Company, NationsBank and additional lenders named therein,
filed as Exhibit 4.13 to the Company's quarterly report on Form
10-Q for the quarterly period ended September 30, 1996 (the
"September 1996 10-Q") and incorporated by reference herein
amending the Credit Agreement filed as Exhibit 4.4 above.
4.12/(1)/ Form of Shareholders Agreement ("Shareholders Agreement") by and
among Coda, Belco and each of the minority shareholder of Coda
effective as of October 31, 1997.
4.13/(1)/ List of Coda Shareholders Executing the Shareholders Agreement
(Exhibit 4.12).
4.14/(1)/ Stockholders Allocation Agreement among Coda and each of the
Coda stockholders dated as of October 31, 1997.
4.15/(1)/ Agreement of Coda to provide schedules to Shareholders Agreement
(Exhibit 4.12) and Stockholders Allocation Agreement (Exhibit
4.14).
10.1/(2)/ Form of Indemnification Agreement entered into between Coda and
certain of its directors and officers filed as Exhibit 10.1 to
Coda's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated by reference herein.
10.2/(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, (the "September 1995 10-Q") and
incorporated by reference herein.
24
10.3 Agreement and Plan of Merger, by and among Coda, Joint Energy
Development Investments Limited Partnership ("JEDI") 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
(the "October 1995 8-K"), and incorporated by reference herein.
10.4 Agreement of Coda to provide schedules to the Agreement and Plan
of Merger (Exhibit 10.3) omitted pursuant to Item 6.01 (b)(2) of
Regulation S-K filed as Exhibit 2.2 to the September 1995 10-Q,
and incorporated by reference herein.
10.5 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.
10.6 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 ("January 1996 8-K"), and
incorporated by reference herein.
10.7 Agreement of Coda to provide schedules and exhibits to Second
Amendment to Agreement and Plan of Merger (Exhibit 10.6) and to
provide schedules to Amendment No. 1 to Subscription Agreement
(Exhibit 10.18) and Amendment No. 1 to Stockholders Agreement
(Exhibit 10.19) filed as Exhibit 99.4 to the January 1996 8-K,
and incorporated by reference herein.
10.8/(2)/ Stockholders Agreement dated October 30, 1995 filed as Exhibit
99.2 to the October 1995 8-K, and incorporated by reference
herein.
10.9/(2)/ Subscription Agreement among Coda Acquisition, Inc. and The
Management Investors (as defined therein) dated October 30, 1995
filed as Exhibit 99.3 to the October 1995 8-K, and incorporated
by reference herein.
10.10 Agreement of Coda to provide schedules to Stockholders Agreement
(Exhibit 10.8) and to Subscription Agreement (Exhibit 10.9)
filed as Exhibit 99.11 to the October 1995 8-K, and incorporated
by reference herein.
10.11/(2)/ Business Opportunity Agreement dated as of October 30, 1995
filed as Exhibit 99.4 to the October 1995 8-K, and incorporated
by reference herein.
10.12/(2)/ Executive Employment Agreement between Coda Acquisition, Inc.
and Randell A. Bodenhamer filed as Exhibit 99.5 to the October
1995 8-K, and incorporated by reference herein.
10.13/(2)/ Executive Employment Agreement between Coda Acquisition, Inc.
and J. William Freeman filed as Exhibit 99.6 to the October 1995
8-K, and incorporated by reference herein.
25
10.14/(2)/ Executive Employment Agreement between Coda Acquisition, Inc.
and Grant W. Henderson filed as Exhibit 99.7 to the October 1995
8-K, and incorporated by reference herein.
10.15/(2)/ Executive Employment Agreement between Coda Acquisition, Inc.
and Jarl P. Johnson filed as Exhibit 99.8 to the October 1995 8-
K, and incorporated by reference herein.
10.16/(2)/ Executive Employment Agreement between Coda Acquisition, Inc.
and Douglas H. Miller filed as Exhibit 99.9 to the October 1995
8-K, and incorporated by reference herein.
10.17/(2)/ Executive Employment Agreement between Coda Acquisition, Inc.
and J.W. Spencer, III filed as Exhibit 99.10 to the October 1995
8-K, and incorporated by reference herein.
10.18/(2)/ Amendment No. 1 to Subscription Agreement dated as of January
10, 1996 filed as Exhibit 99.2 to the January 1996 8-K, and
incorporated by reference herein.
10.19/(2)/ Amendment No. 1 to Stockholders Agreement dated as of January
10, 1996 filed as Exhibit 99.3 to the January 1996 8-K, and
incorporated by reference herein.
10.20 Credit Agreement, dated February 14, 1996, among the Company,
NationsBank, individually and as agent, and additional lenders
named therein filed as Exhibit 4.4 above.
10.21 Promissory Note dated February 14, 1996, in the original
principal amount of $87,500,000.00, executed by Coda, payable to
NationsBank, filed as Exhibit 4.5 above.
10.22 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 4.6 above.
10.23 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 4.7
above.
10.24 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 4.8 above.
10.25/(2)/ Form of Nonstatutory Stock Option Agreement attached and filed
as Exhibit A to Exhibit 99.3 to the October 1995 8-K, and
incorporated by reference herein.
26
10.26/(2)/ Form of Limited Recourse Promissory Note attached and filed as
Exhibit B to Exhibit 99.3 to the October 1995 8-K, and
incorporated by reference herein.
10.27/(2)/ Form of Security Agreement attached and filed as Exhibit C to
Exhibit 99.3 to the October 1995 8-K, and incorporated by
reference herein.
10.28/(2)/ List of Management Investors who are parties to Nonstatutory
Stock Option Agreement (Exhibit 10.25), Limited Recourse
Promissory Note (Exhibit 10.26) or Security Agreement (Exhibit
10.27) filed as Exhibit 10.27 to the 1996 Form S-4, and
incorporated by reference herein.
10.29 First Amendment to Credit Agreement, dated August 1, 1996, among
the Company, NationsBank and additional lenders named therein
filed as Exhibit 4.11 above.
10.30/(2)/ Limited Recourse Promissory Note dated July 31, 1996, in the
original principal amount of $1,187,500.00 executed by Douglas
H. Miller, payable to the Company, filed as Exhibit 10.30 to the
September 1996 10-Q, and incorporated by reference herein.
10.31/(2)/ Amendment to Nonstatutory Stock Option Agreement dated July 31,
1996 between the Company and Douglas H. Miller filed as Exhibit
10.31 to the September 1996 10-Q, and incorporated by reference
herein amending the Nonstatutory Stock Option Agreement filed as
Exhibit 10.25 above.
10.32 Agreement and Plan of Merger, by and among Coda, Belco and Belco
Acquisition Sub, Inc. dated as of October 31, 1997 and filed as
Exhibit 2.1 above.
10.33 Agreement of Coda to provide schedules to Agreement and Plan of
Merger (Exhibit 2.1) filed as Exhibit 2.2 above.
10.34 Form of Shareholders Agreement ("Shareholders Agreement") by and
among Coda, Belco and each of the minority shareholder of Coda
effective as of October 31, 1997 filed as Exhibit 4.12 above.
10.35 List of Coda Shareholders Executing the Shareholders Agreement
(Exhibit 4.12) filed as Exhibit 4.13 above.
10.36 Stockholders Allocation Agreement among Coda and each of the
Coda stockholders dated as of October 31, 1997 filed as Exhibit
4.14 above.
10.37 Agreement of Coda to provide schedules to Shareholders Agreement
(Exhibit 4.12) and Stockholders Allocation Agreement (Exhibit
4.14) filed as Exhibit 4.15 above.
27
10.38/(1)(2)/ Amendment to Executive Employment Agreement between Douglas
H. Miller ("Miller") and Coda dated as of October 31, 1997
amending that certain executive Employment Agreement
effective as of February 16, 1996 between Miller and Coda
(Exhibit 10.16).
27/(1)/ Financial data schedule
- -------------------------------------------------------
/(1)/ Filed herewith.
/(2)/ Identifies management contract or compensation plan.
28
(B) Reports on Form 8-K - None
- --------------------------------------------------------------------------------
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: November 13, 1997
29
EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
2.1* Agreement and Plan of Merger ("Agreement
and Plan of Merger") by and among Coda,
Belco Oil & Gas Corp. ("Belco") and Belco
Acquisition Sub, Inc. dated as of October
31, 1997.
2.2* Agreement of Coda to provide schedules to
Agreement and Plan of Merger (Exhibit
2.1).
4.12* Form of Shareholders Agreement
("Shareholders Agreement") by and among
Coda, Belco and each of the minority
shareholders of Coda effective as of October
31, 1997.
4.13* List of Coda shareholders executing the
Shareholders Agreement (Exhibit 4.12).
4.14* Stockholders Allocation Agreement among
Coda and each of the Coda stockholders
dated as of October 31, 1997.
4.15* Agreement of Coda to provide schedules to
Shareholders Agreement (Exhibit 4.12) and
Stockholders Allocation Agreement (Exhibit
4.14).
10.38* Amendment to Executive Employment
Agreement between Douglas H. Miller
("Miller") and Coda dated as of October 31,
1997 amending that certain Executive
Employment Agreement effective as of
February 16, 1996 between Miller and Coda
(Exhibit 10.16).
27.* Financial Data Schedule
_________
* Filed herewith