1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ______________ BARGO ENERGY COMPANY (Exact name of small business issuer as specified in its charter) Texas 0-8609 87-0239185 (State or other jurisdiction of (Commission file number) (I.R.S. Employer incorporation or organization) Identification No.) 700 Louisiana, Suite 3700 Houston, Texas 77002 (Address of principal executive offices, including zip code) (713)236-9792 (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: The Company had approximately 87,933,000 shares of common stock, par value $0.01 per share, issued and outstanding as of November 14, 2000. Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X] 2 PART I FINANCIAL INFORMATION - -------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented have been made. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Form 10-KSB filing for the year ended December 31, 1999. 3 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASSETS (Unaudited) September 30, 2000 December 31, 1999 ------------------ ----------------- CURRENT ASSETS Cash and cash equivalents $ 2,175,000 $ 2,375,000 Trade accounts receivable, no allowance for doubtful accounts considered necessary: Joint interest billings 528,000 210,000 Accrued oil and gas sales 22,851,000 7,629,000 Due from affiliates 6,000 19,000 ------------- ------------- TOTAL CURRENT ASSETS 25,560,000 10,233,000 ------------- ------------- PROPERTY AND EQUIPMENT Oil and gas properties, full cost method 193,679,000 76,107,000 Other 832,000 696,000 ------------- ------------- TOTAL PROPERTY AND EQUIPMENT 194,511,000 76,803,000 Less accumulated depletion, depreciation and amortization (18,515,000) (6,220,000) ------------- ------------- NET PROPERTY AND EQUIPMENT 175,996,000 70,583,000 ------------- ------------- OTHER ASSETS Goodwill, net of accumulated amortization of $358,000 and $208,000 respectively 1,642,000 1,792,000 Loan costs, net of accumulated amortization of $3,357,000 and $436,000 respectively 8,871,000 1,890,000 Other 791,000 41,000 ------------- ------------- TOTAL OTHER ASSETS 11,304,000 3,723,000 ------------- ------------- TOTAL ASSETS $ 212,860,000 $ 84,539,000 ============= ============= The accompanying notes are an integral part of these financial statements. 4 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) September 30, 2000 December 31, 1999 ------------------ ----------------- CURRENT LIABILITIES Current portion of long-term debt $ -0- $ 6,000 Trade accounts payable 9,399,000 2,623,000 Accrued oil and gas proceeds payable 2,803,000 1,805,000 Accrued interest payable 737,000 84,000 Accrued income taxes payable 7,582,000 -0- Due to affiliates 598,000 199,000 ------------- ------------- TOTAL CURRENT LIABILITIES 21,119,000 4,717,000 ------------- ------------- LONG TERM DEBT, less current portion 118,750,000 20,780,000 ------------- ------------- DEFERRED TAX LIABILITY 3,317,000 3,085,000 ------------- ------------- REDEEMABLE PREFERRED STOCK, 10% cumulative; $.01 par value; 10,000,000 and 5,000,000 shares authorized as of September 30, 2000 and December 31, 1999, respectively; 5,000,000 shares outstanding as of September 30, 2000 and December 31, 1999, net of unamortized issuance costs 56,021,000 51,664,000 ------------- ------------- STOCKHOLDERS' EQUITY Common stock, $.01 par value; 200,000,000 and 120,000,000 shares authorized as of September 30, 2000 and December 31, 1999, respectively, and 87,932,726 shares issued and outstanding as of September 30, 2000 and December 31, 1999, respectively 921,000 921,000 Additional paid-in capital 6,878,000 6,878,000 Treasury stock (2,040,000) (2,040,000) Retained earnings (deficit) 7,894,000 (1,466,000) ------------- ------------- TOTAL STOCKHOLDERS' EQUITY 13,653,000 4,293,000 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 212,860,000 $ 84,539,000 ============= ============= The accompanying notes are an integral part of these financial statements. 5 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended September 30, ----------------------------------- 2000 1999 ------------- ------------- REVENUES Oil and gas sales $ 36,358,000 $ 4,304,000 ------------- ------------- TOTAL REVENUES 36,358,000 4,304,000 ------------- ------------- COSTS AND EXPENSES Lease operations and production taxes 13,359,000 1,869,000 General and administrative 3,155,000 709,000 Depletion, depreciation and amortization 5,238,000 386,000 ------------- ------------- TOTAL EXPENSES 21,752,000 2,964,000 ------------- ------------- OTHER INCOME (EXPENSE) Interest income 70,000 1,000 Interest expense (4,952,000) (221,000) ------------- ------------- TOTAL OTHER INCOME AND (EXPENSE) (4,882,000) (220,000) ------------- ------------- INCOME BEFORE INCOME TAXES 9,724,000 1,120,000 ------------- ------------- INCOME TAX BENEFIT (EXPENSE) Current (4,341,000) 0 Deferred 231,000 (380,000) ------------- ------------- TOTAL INCOME TAX BENEFIT (EXPENSE) (4,110,000) (380,000) ------------- ------------- NET INCOME 5,614,000 740,000 REDEEMABLE PREFERRED STOCK DIVIDENDS, INCLUDING ACCRETION (1,496,000) (1,277,000) ------------- ------------- NET INCOME(LOSS)ALLOCABLE TO COMMON SHAREHOLDERS $ 4,118,000 $ (537,000) ============= ============= EARNINGS (LOSS) PER COMMON SHARE - BASIC Net income (loss) per common share $ .05 $ (.01) ============= ============= EARNINGS (LOSS) PER COMMON SHARE - DILUTED Net income(loss) per common share $ .04 $ (.01) ============= ============= WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING Basic 87,933,000 91,831,000 Diluted 103,280,000 91,831,000 The accompanying notes are an integral part of these financial statements. 6 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Nine Months Ended September 30, ----------------------------------- 2000 1999 ------------- ------------- REVENUES Oil and gas sales $ 83,213,000 $ 9,520,000 ------------- ------------- TOTAL REVENUES 83,213,000 9,520,000 ------------- ------------- COSTS AND EXPENSES Lease operations and production taxes 28,370,000 4,187,000 General and administrative 6,415,000 2,377,000 Depletion, depreciation and amortization 12,817,000 2,559,000 ------------- ------------- TOTAL EXPENSES 47,602,000 9,123,000 ------------- ------------- OTHER INCOME (EXPENSE) Interest income 151,000 6,000 Interest expense (11,275,000) (1,630,000) ------------- ------------- TOTAL OTHER INCOME AND (EXPENSE) (11,124,000) (1,624,000) ------------- ------------- INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 24,487,000 (1,227,000) ------------- ------------- INCOME TAX BENEFIT (EXPENSE) Current (9,488,000) -0- Deferred (232,000) 417,000 ------------- ------------- TOTAL INCOME TAX BENEFIT (EXPENSE) (9,720,000) 417,000 ------------- ------------- NET INCOME(LOSS)BEFORE EXTRAORDINARY ITEM 14,767,000 (810,000) ------------- ------------- EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT (NET OF TAX OF $645,000) (1,051,000) -0- ------------- ------------- NET INCOME (LOSS) 13,716,000 (810,000) REDEEMABLE PREFERRED STOCK DIVIDENDS, INCLUDING ACCRETION (4,358,000) (1,934,000) ------------- ------------- NET INCOME(LOSS)ALLOCABLE TO COMMON SHAREHOLDERS $ 9,358,000 $ (2,744,000) ============= ============= EARNINGS (LOSS) PER COMMON SHARE - BASIC Net income (loss) per common share before extraordinary item $ .12 $ (.04) Net income (loss) per common share from extraordinary item (.01) .00 ------------- ------------- Net income (loss) per common share $ .11 $ (.04) ============= ============= EARNINGS (LOSS) PER COMMON SHARE - DILUTED Net income (loss) per common share before extraordinary item $ .10 $ (.04) Net income (loss) per common share from extraordinary item (.01) .00 ------------- ------------- Net income (loss) per common share $ .09 $ (.04) ============= ============= WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING Basic 87,933,000 70,622,000 Diluted 103,280,000 70,622,000 The accompanying notes are an integral part of these financial statements. 7 BARGO ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, ----------------------------------- 2000 1999 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 13,716,000 $ (810,000) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion, depreciation, and amortization 12,817,000 2,558,000 Amortization of debt issue costs 3,551,000 154,000 Extraordinary loss on extinguishments of debt 1,696,000 -0- Deferred income taxes 232,000 (417,000) ------------- ------------- 32,012,000 1,485,000 Change in working capital items: Increase in accounts receivable (15,540,000) (1,749,000) Decrease(increase) in due from affiliates 13,000 (12,000) Increase in accounts payable and accrued liabilities 16,009,000 930,000 Increase (decrease) in due to affiliates 399,000 (564,000) Other (749,000) (8,000) ------------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 32,144,000 82,000 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of oil and gas properties (158,937,000) (27,484,000) Proceeds from the sale of oil and gas properties 40,993,000 -0- Additions to property and equipment (136,000) (65,000) ------------- ------------- NET CASH (USED IN)INVESTING ACTIVITIES (118,080,000) (27,549,000) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of debt 200,550,000 17,760,000 Purchase of treasury stock -0- (90,000) Repayment of long-term debt (102,586,000) (38,005,000) Proceeds from issuance of stock -0- 50,000,000 Stock issuance costs -0- (2,199,000) Loan costs (12,228,000) (103,000) Proceeds from exercise of stock options -0- 10,000 ------------- ------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 85,736,000 27,373,000 ------------- ------------- NET (DECREASE) IN CASH (200,000) (94,000) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,375,000 1,241,000 ------------- ------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,175,000 $ 1,147,000 ============= ============= NONCASH ITEMS: Dividends on redeemable preferred stock $ 4,358,000 $ 1,934,000 ============= ============= The accompanying notes are an integral part of these financial statements. 8 BARGO ENERGY COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1: THE COMPANY AND ACCOUNTING PRINCIPLES Bargo Energy Company (the "Company" or "Bargo") is engaged primarily in the acquisition, development and production of oil and gas reserves and operation of oil and gas wells. The accompanying financial statements include the accounts of the Company and its wholly owned subsidiaries, Bargo Petroleum Corporation (BPC) and Future Cal-Tex Corporation (FCT). Intercompany accounts and transactions are eliminated in consolidation. All material adjustments, consisting only of normal recurring adjustments that, in the opinion of management are necessary for a fair statement of the results for the interim periods, have been reflected. These interim financial statements should be read in conjunction with the annual consolidated financial statements of the Company. The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Significant assumptions are required in the valuation of proved oil and gas reserves which, as described above, may affect the amounts at which oil and gas properties are recorded. Actual results could differ from these estimates. In June 1998 the Financial Accounting Standards Board issued SFAS 133 "Accounting for Derivative Instruments and Hedging Activities." (as amended by SFAS 137 and SFAS 138) This standard is effective for fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company). SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company has not yet completed its evaluation of the impact of the adoption of this new standard. NOTE 2: PROPERTY ACQUISITIONS AND DIVESTITURES On March 31, 2000, the Company acquired interests in oil and gas properties from Texaco Exploration and Production, Inc., Four Star Oil and Gas Company and McFarland Energy, Inc. ("Texaco Acquisition") for a gross purchase price of $161.1 million, before closing adjustments. Such amount has been included as an addition to oil and gas properties. The final determination of the purchase price and its allocation is subject to adjustment over the current fiscal year. The effective date of the purchase is January 1, 2000. The properties are located in the Permian Basin, East Texas, Oklahoma and Kansas. The Company utilized a new credit facility to acquire the properties (see Note 3.) 9 The following Bargo Energy Company pro forma information gives effect to the Texaco Acquisition referred to above and the East Texas properties (as reported on Form 8-K filed on November 19, 1999) as if they had been acquired January 1, 1999: Nine months ended September 30, 2000 1999 ----------- ----------- (amounts in thousands except per share amount) Revenues $ 107,163 $ 73,290 Net income before extraordinary item $ 19,815 $ 5,183 Net income $ 18,764 $ 5,183 Earnings per share: Basic - Net income per common share before extraordinary item $ .18 $ .05 Net income per common share $ .16 $ .05 Diluted - Net income per common share $ .15 $ .05 before extraordinary item Net income per common share $ .14 $ .05 On May 31, 2000 the Company sold its Ardmore Basin producing oil and gas properties in southern Oklahoma to Le Norman Partners, LLC for $31.9 million. Bargo also completed the sale of its interest in the Russell Clearfork Unit to Cross Timbers Oil Company for $2.9 million. Proceeds from both sales were used to paydown outstanding indebtedness under the Company's term and revolving credit facility. (See Note 3.) No gain or loss was recognized on these sales and the full cost pool was adjusted for the sales price. NOTE 3: CREDIT AGREEMENT Effective March 31, 2000, the Company entered into a new syndicated credit agreement ("Credit Agreement") with Chase Bank of Texas ("Chase") and several other energy lending banks (all banks shall be referred to collectively as the "Banks"), with Chase serving as administrative agent. Proceeds from the new Credit Agreement were used to fully refinance the Company's previous bank indebtedness and make the Texaco Acquisition. Borrowings under the Credit Agreement are secured by mortgages covering substantially all of the Company's producing oil and gas properties. As required by the Credit Agreement, the Company has hedged 75% of estimated oil production generated from the Texaco Acquisition through 2001 (see Note 4). In accordance with the Credit Agreement the Banks were paid various underwriting, administrative and advisory fees totaling $4.38 million. The Credit Agreement provides for a total commitment amount of $245 million, comprised of a revolving and a term facility. 10 The total commitment amount under the term facility was $45 million. The term facility matures December 31, 2000. Borrowings under the term facility as of September 30, 2000 were $20.1 million. The Company received commitments from several of its current stockholders to purchase preferred stock and also received a commitment from one of its lenders to convert a portion of the loan into preferred stock, in an amount sufficient in the aggregate to repay the term facility in full at maturity (see Note 5). As the Company has both the ability and intent to refinance its term facility, the amounts have been classified as long term in the balance sheet at September 30, 2000. The total commitment amount under the revolving facility is $200 million with a current borrowing base of $150 million ("Borrowing Base"). The revolving facility matures March 31, 2003. Borrowings under the revolving facility as of September 30, 2000 were $98.7 million. Under the revolving facility, the Company has a choice of two different interest rates; the Base Rate or the LIBO Rate. While the term facility is outstanding, the debt under the revolving credit facility bears interest under the Base Rate (which is the higher of the lender's "Prime Rate" or the Federal Funds Rate plus .5%) plus an applicable margin of 1.0% or interest under the LIBO Rate at the LIBO rate (reserve adjusted) plus 2.5%. The Company may convert any portion of the outstanding debt from one interest rate type to another in increments of $1 million. In connection with the new Credit Agreement, the Company wrote off $1,696,000 of loan costs related to the previously existing revolving credit agreement. Such amounts are shown separately, net of tax, as an extraordinary item. Effective October 4, 2000, the borrowing base under the revolving facility was increased to $170 million. On October 10, 2000, utilizing availability under the revolving facility, the Company paid off the term facility in the amount of $20,100,000 thereby eliminating the term facility commitment. Since the term facility is terminated, the applicable margin for borrowings under the revolving credit facility will be computed based on Borrowing Base utilization ranging from 0%-.75% for Base Rate loans and 1.5%-2.25% for LIBO Rate loans. The current balance outstanding under the revolving facility is $104,000,000 as of November 14, 2000. NOTE 4: HEDGING AND DERIVATIVE ACTIVITIES The Company engages in certain hedging activities related to the purchase and delivery of oil and gas in the future. Such activities are accounted for in accordance with Statement of Financial Accounting Standard No. 80, "Accounting for Futures Contracts" (SFAS 80). The losses on hedging contracts are included as a reduction of net revenues. In addition to the hedges in place at December 31, 1999, the Company entered into additional derivative contracts in the first quarter of 2000 in relation to the Texaco Acquisition. The instruments cover approximately 75% (or approximately 190,000 BBLS per month) of estimated oil production related to the Texaco Acquisition through calendar year 2001. The contracts related to the Texaco Acquisition production consist of a floor of $22 per BBL for April through December 2000 and a floor of $21 per BBL for January through December 2001. The Company was required to hedge a portion of its production under the terms of their new Credit Agreement (see Note 3). Accordingly, the cost of the instrument ($6.22 million, paid in full during the first quarter of 2000), has been capitalized as loan costs and will be amortized over the life of the loans. NOTE 5: EQUITY BACKSTOP The Company received commitments from several of its current stockholders to purchase preferred stock, and also received a commitment from one of its lenders 11 ("Converting Lender") to convert a portion of the term facility into preferred stock, in an amount sufficient in the aggregate to repay the term facility (see Note 3) in full at maturity (the purchase of additional preferred stock and conversion of a portion of the term facility into preferred stock in order to retire the term facility at maturity shall be known as the "Equity Backstop"). In order to secure the Equity Backstop the Company paid an Equity Backstop fee of $1.35 million to the preferred stockholders and the Converting Lender. Additionally, the Company initiated a Consent Action to increase the Company's outstanding capital stock, in preparation for the potential issuance of additional shares as a result of the Equity Backstop. This Consent Action was approved by a majority of the Company's stockholders on March 13, 2000 and became effective April 10, 2000. The Company's articles of incorporation have been amended to increase the authorized common shares to 200 million and authorized preferred shares to 10 million. The Company repaid the term facility on October 10, 2000 thereby canceling the Equity Backstop commitments. NOTE 6: EARNINGS PER SHARE Net income or loss per common share is based on the weighted average number of common shares outstanding. In accordance with SFAS 128, "Earnings Per Share", income available to common stockholders is reduced by the amount of dividends on cumulative preferred stock and accretion of related stock issuance costs. The Company's common stock equivalents consisted of stock options and warrants. The calculation of weighted average number of common shares outstanding for the three and nine months ended September 30, 2000 is as follows: Weighted average basic common shares outstanding 87,933,000 Options and warrants outstanding (Treasury Stock Method) 15,347,000 ----------- Weighted average fully diluted common and common equivalent shares outstanding 103,280,000 =========== 12 - -------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- This report includes "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements other than statements of historical fact included in the Report (and the exhibits hereto), including without limitation, statements regarding the Company's financial position and estimated quantities and net present values of reserves, are forward looking statements. The Company can give no assurances that the assumptions upon which such statements are based will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed in the section "Risk Factors" included in the Company's Forms 10-KSB and other periodic reports filed under the Exchange Act, which are herein incorporated by reference. All subsequent written and oral forward looking statements attributable to the Company or persons acting on its behalf are expressly qualified by the Cautionary Statements. THE COMPANY Bargo Energy Company (the "Company" or "Bargo") is engaged in the acquisition and exploitation of oil and natural gas properties located onshore primarily in the Gulf Coast Region (Texas and Louisiana), Permian Basin, MidContinent, and California. The Company's principal business strategies include (i) maximizing the value of its existing high-quality, long-life reserves through efficient operating and marketing practices, (ii) conducting detailed field studies using the latest technology to identify additional reserves and exploration potential, and (iii) seeking acquisitions of producing properties, with exploration and development potential in areas where the Company has operating experience and expertise. STRATEGIC DEVELOPMENTS On March 31, 2000 the Company closed the acquisition of oil and gas properties from subsidiaries of Texaco, Inc. for $161.1 million (the "Texaco acquisition"). The Company borrowed from commercial banks sufficient amounts to finance the entire acquisition and refinance existing bank indebtedness. The loans consisted of a revolving credit facility and a term loan. The term loan was scheduled to mature on December 31, 2000. The Company received commitments from several of its current stockholders to purchase preferred stock, and also received a commitment from one of its lenders to convert a portion of the loan into preferred stock, in an amount sufficient in the aggregate to repay the term loan in full. These commitments to purchase preferred stock at maturity of the term loan also provide for the issuance of common stock. The company repaid the term loan with availability under the revolving credit facility on October 10, 2000. On August 29, 2000 the Company announced that it had retained Lehman Brothers Inc. and Chase Securities, Inc. for the purpose of evaluating various strategic alternatives for the future. The Company is currently considering various alternatives to maximize shareholder value over the near term including the possibility of an outright sale, merger, or recapitalization with public or private equity. 13 GENERAL The Company's revenues, profitability and future growth and the carrying value of its oil and gas properties are substantially dependent on prevailing prices of oil and gas and its ability to find, develop and acquire additional oil and gas reserves that are economically recoverable. The Company's ability to maintain or increase its borrowing capacity and to obtain additional capital on attractive terms is also influenced by oil and gas prices. Prices for oil and gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and gas, market uncertainty and a variety of additional factors beyond the control of the Company. These factors include weather conditions in the United States, the condition of the United States economy, the actions of the Organization of Petroleum Exporting Countries, governmental regulation, political stability in the Middle East and elsewhere, the foreign supply of crude oil and natural gas, the price of foreign imports and the availability of alternate fuel sources. Any substantial and extended decline in the price of crude oil or natural gas would have an adverse effect on the Company's carrying value of its proved reserves, borrowing capacity, revenues, profitability and cash flows from operations. The Company uses the full cost method of accounting for the Company's investment in oil and gas properties. Under the full cost method of accounting, all costs of acquisition, exploration and development of oil and gas reserves are capitalized into a "full cost pool." Oil and gas properties in the pool, plus estimated future expenditures to develop proved reserves and future abandonment, site remediation and dismantlement costs, are depleted and charged to operations using the unit of production method based on the portion of current production to total estimated proved recoverable oil and gas reserves. To the extent that such capitalized costs (net of depreciation, depletion and amortization) exceed the discounted future net cash flows on an after-tax basis of estimated proved oil and gas reserves, such excess costs are charged to operations. Once incurred, the write down of oil and gas properties is not reversible at a later date even if oil or natural gas prices increase. The Company does not have a specific acquisition budget because of the unpredictability of the timing and size of forthcoming acquisition activities. There is no assurance that the Company will be able to identify suitable acquisition candidates in the future, or that the Company will be successful in the acquisition of producing properties. In order to finance any possible future acquisitions, the Company will either use borrowings available under its credit facility or the Company may seek to obtain additional debt or equity financing in the public or private capital markets. Further, there can be no assurances that any future acquisitions made by the Company will be integrated successfully into the Company's operations or will achieve desired profitability objectives. In June 1998 the Financial Accounting Standards Board issued SFAS 133 "Accounting for Derivative Instruments and Hedging Activities." (as amended by SFAS 137 and SFAS 138) This standard is effective for fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company). SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company has not yet completed its evaluation of the impact of the adoption of this new standard. The Company implements oil and gas hedges as it deems appropriate to ensure minimum levels of cash flow or as market conditions are believed to create an opportunity to increase cash flows. At December 31, 1999 collars were in place for portions of the Company's oil production for October 1 through September 2000 at floors of $18.00 and ceilings of $20.75 and $23.08. Contracted volumes total 50,200 barrels per month declining each month to 42,000 barrels representing approximately 14% of the Company's projected oil production. Beginning October 2000 through September 2001 the Company has two 14 swaps in place at $17.55 and $18.05. Contracted volumes total 41,350 barrels per month declining to 34,300 barrels per month representing approximately 13% of the Company's projected oil production for that period. Floors are in place for April 2000 through December 2000 at a price of $22.00 per bbl on 1,791,672 bbls. Additionally, the Company has secured a $21.00 per bbl floor for 2001 on a volume of 2,197,728 bbls. These floors protect approximately 60% of the Company's current projected oil production. The Company currently has no outstanding natural gas hedges. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of capital are its cash flows from operations, borrowings and issuance of debt and equity securities. The Company reported consolidated net income of $5,614,000 for the quarter ended September 30, 2000 compared to consolidated net income of $740,000 for the quarter ended September 30, 1999. This increase is due to the Company's significant acquisition activity. At September 30, 2000, the Company had working capital of $4,441,000, which was a $1,075,000 decrease from the $5,516,000 of working capital that the Company had as of December 31, 1999. The decrease in working capital as of September 30, 2000 is primarily due to an increase in accrued oil and gas receivables which are offset by increased payables, including accrued income taxes payable. Effective March 31, 2000, the Company entered into a new credit agreement with Chase Bank of Texas ("Chase")and several other energy lending banks, with Chase serving as the administrative agent(the "Credit Agreement"). Borrowings under the Credit Agreement are secured by mortgages covering substantially all of the Company's producing oil and gas properties as well as by certain pledges of the Company's Common Stock. The Credit Agreement provides a commitment amount of $200 million and the Company currently has a $170 million borrowing base ("Borrowing Base"). In addition to the $200 million commitment, the Credit Agreement also provided for a $45 million term loan which matures 9 months from the closing date. The Company received commitments from several of its current stockholders to purchase preferred stock, and also received a commitment from one of its lenders to convert a portion of the loan into preferred stock, in an amount sufficient in the aggregate to repay this term loan in full. These commitments to purchase preferred stock at maturity of the term loan also provided for the issuance of common stock. The Company has a choice of two different interest rates; the Base Rate or the LIBO Rate. While the term loan is outstanding, the debt under the Borrowing Base loan bears interest under the Base Rate (which is the higher of the lender's "Prime Rate" or the Federal Funds Rate plus .5%) plus an applicable margin of 1.0% or interest under the LIBO Rate at the LIBO rate (reserve adjusted) plus 2.5%. The term loan bears interest under the Base Rate plus an applicable margin of 2.0% and under the LIBO Rate plus 3.5%. The Company may convert any portion of the outstanding debt from one interest rate type to another in increments of $1,000,000 with a minimum transfer amount of $1,000,000. As of September 30, 2000 borrowings under the Credit Agreement were $20.1 million and $98.7 million for the term loan and the revolving credit facility, respectively. The borrowing base was adjusted to $170 million on October 4, 2000 in conjunction with the semi-annual borrowing base redetermination. Utilizing availability under the revolving credit facility, the company repaid the term loan in full on October 10, 2000. Now that the term facility is terminated, the applicable margin for borrowings under the Company's revolving credit facility will be computed based on Borrowing Base utilization ranging from 0%-.75% for Base Rate loans and 1.5%-2.25% for LIBO Rate loans. 15 As of November 14, 2000, the balance outstanding under the Company's revolving credit facility is $104 million. CASH FLOWS FROM OPERATING ACTIVITIES Operating activities of the Company during the nine months ended September 30, 2000 provided net cash of $32.1 million. In the same period during 1999, operations provided net cash of $82,000. The increase is due to the Company's acquisition activity along with higher commodity prices during 2000. Investing activities in the nine months ended September 30, 2000, used net cash of $118.1 million, due to the acquisition of oil and gas properties. Financing activities in the nine months ended September 30, 2000 provided net cash of $85.7 million primarily due to proceeds from the issuance of debt related to the Company's acquisition activity. RESULTS OF OPERATIONS Comparison of Quarters Ended September 30, 2000 and 1999 Production for the quarter ended September 30, 2000 increased by 1,031.4 MBOE, or 390%, to 1,295.6 MBOE versus the same period in 1999. This increased production is due to the Texaco acquisition completed in March, 2000. Total revenues for the three months ended September 30, 2000 increased to $36.4 million from $4.3 million for the same period in 1999, primarily due to increased production as a result of the Company's oil and gas property acquisitions. In addition, total revenues have increased due to stronger pricing in 2000. This represents a 747% increase over 1999. Production costs increased from $1,869,000 in the three months ended September 30, 1999 to $13,359,000 in the three months ended September 30, 2000 due to the purchase of proved reserves. General and administrative expenses increased to $3,155,000 from $709,000 in 1999 primarily due to $1.15 million of non-recurring accounting system implementation charges related to the Company's recent Texaco acquisition and $300,000 for the write-off of retainer fees. The Company had net income of $5,614,000 for the three months ended September 30, 2000 compared to net income of $740,000 for the same period in 1999. Income before income taxes and extraordinary items increased by $8,604,000 to $9,724,000 for the three months ended September 30, 2000 compared to net income of $1,120,000 for the comparable period in 1999. Total interest expense for the three months ended September 30, 2000 was $4,952,000 compared to $221,000 for the same period in 1999. This increase is related to an increased level of indebtedness associated with the Texaco acquisition. Non-cash interest expense (amortization of debt issues costs) for the three months ended September 30, 2000 totaled $1,677,000. Depreciation, depletion and amortization for the three months ended September 30, 2000 was $5,238,000. For the same period in 1999, the total was $386,000. This increase is primarily a result of increased production volumes resulting from the Texaco acquisition. Comparison of Nine Months ended September 30, 2000 and 1999 Production for the nine months ended September 30, 2000 increased by 2,465.4 MBOE, or 335%, to 3,201.6 MBOE versus the same period in 1999. This increased production is due to the Texaco acquisition completed March 31, 2000. Total revenues for the nine months ended September 30, 2000 increased to $83.2 million from $9.5 million for the same period in 1999, primarily due to an increase in production from the Company's oil and gas property acquisitions. This represents a 776% increase over 1999. Production costs increased from $4,187,000 in the nine months ended September 30, 1999 to $28,370,000 in the nine months ended June 30, 2000 due to the purchase of proved reserves. General and administrative expenses increased to $6,415,000 from $2,377,000 in 1999 is partially due to increased overhead associated with the Texaco acquisition as 16 well as non-recurring accounting system implementation charges of $1.15 million. The Company had net income of $13,716,000 for the nine months ended September 30, 2000 compared to a net loss of $810,000 for the same period in 1999. Income before income taxes and extraordinary items increased by $25,714,000 to $24,487,000 for the nine months ended September 30, 2000 compared to a net loss of $1,227,000 for the comparable period in 1999. Total interest expense for the nine months ended September 30, 2000 was $11,275,000 compared to $1,630,000 for the same period in 1999. This increase is due to higher levels of indebtedness in 2000 associated with the Texaco acquisition. For the nine months ended September 30, 2000, non-cash interest expense (amortization of debt issue costs) totaled $3,551,000. Depreciation, depletion and amortization for the nine months ended September 30, 2000 was $12,817,000. For the same period in 1999, the total was $2,559,000. This increase is primarily a result of increased production volumes resulting from the Texaco acquisition. INFLATION The Company's activities have not been, and in the near term are not expected to be, materially affected by inflation or changing prices in general. The Company's oil exploration and production activities are generally affected by prevailing prices for oil. 17 - -------------------------------------------------------------------------------- PART II OTHER INFORMATION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - -------------------------------------------------------------------------------- (a) Exhibits. EXHIBIT NUMBER TITLE OF DOCUMENT 2. Plan of acquisition, reorganization, arrangement, liquidation or succession 2.1 Purchase and Sale Agreement between Texaco Exploration & Production Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.2 Asset Purchase Agreement between Four Star Oil & Gas Company and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.2 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.3 Asset Purchase Agreement between McFarland Energy, Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.3 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000 and as amended by the Company's Current Report on Form 8-KA dated March 31, 2000 filed with the Securities and Exchange Commission on May 26, 2000.) * 3. Articles of Incorporation and By-laws 3.1 Articles of Incorporation of Bargo Energy Company (Incorporated by reference from Exhibit 3.1 to the Company's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.2 Agreement and Plan of Merger, dated as of April 6, 1999 between Future Petroleum Corporation and FPT Corporation (Incorporated by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 18 EXHIBIT NUMBER TITLE OF DOCUMENT 3.3 By-laws of Bargo Energy Company (Incorporated by reference from Exhibit 3.2 to the Company's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.4 Amendment to Bargo Energy Company By-laws (Incorporated by reference from Exhibit 3.4 to the Company's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 3.5 Articles of Amendment to the Articles of Incorporation of Bargo Energy Company (Incorporated by reference from Exhibit 3.5 to the Company's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 4. Instruments defining the rights of security holders 4.1 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series B (Incorporated by reference from Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 4.2 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series C (Incorporated by reference from Exhibit 3.5 to the Company's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 10. Material Contracts 10.1 Subscription Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.2 First Amendment to Second Amended and Restated Shareholders' Agreement, dated March 31, 2000, among Bargo Energy Company, B. Carl Price, Don Wm. Reynolds, Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, BER Partnership L.P., TJG 19 EXHIBIT NUMBER TITLE OF DOCUMENT Investments, Inc., BEC Partnership, BOC Operating Corporation, Inc., Tim J. Goff, Thomas Barrow, James E. Sowell, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.3 Third Amendment to Registration Rights Agreement dated March 31, 2000 among Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.4 First Amendment to Stock Purchase Agreement dated March 31, 2000, among Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC and Bargo Energy Company. (Incorporated by reference from Exhibit 10.4 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.5 Assignment, Acknowledgment, Consent and Waiver dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.5 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.6 Escrow Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., EnCap Equity 1994, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, 20 EXHIBIT NUMBER TITLE OF DOCUMENT L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.6 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.7 Acknowledgment and Consent dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Capital Partners II LLC. (Incorporated by reference from Exhibit 10.7 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.8 Indemnification Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Bankers Trust Company. (Incorporated by reference from Exhibit 10.8 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.9 Consent to Amendment to Registration Rights Agreement by TJG Investments, Inc., BEC Partnership, BER Partnership, L.P., BOC Operating Corporation, Tim J. Goff, Thomas Barrow, James E. Sowell, B. Carl Price, Don Wm. Reynolds, Christie Price, Robert Price and Charles D. Laudeman. (Incorporated by reference from Exhibit 10.9 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.10 Credit Agreement dated March 31, 2000, among Bargo Energy Company, Chase Bank of Texas National Association, as administrative agent, Bankers Trust Company, as syndication agent and the other agents and lenders signatory thereto. (Incorporated by reference from Exhibit 10.10 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 11. Statement regarding computation of per share earnings (1) 21 EXHIBIT NUMBER TITLE OF DOCUMENT 15. Letter on unaudited interim financial information (1) 18. Letter on change in accounting principles (1) 21. Subsidiaries of the Registrant (2) 22. Published report regarding matters submitted to vote (1) 23. Consents of experts and counsel (1) 24. Power of attorney (1) 27. Financial data schedule (2) 99. Additional exhibits (1) - ---------- (1) Inapplicable to this filing. (2) Included herewith. * Confidential treatment has been requested. 22 (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarterly period ended September 30, 2000. - -------------------------------------------------------------------------------- SIGNATURES - -------------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BARGO ENERGY COMPANY (Registrant) Dated: November 14, 2000 By: /s/ Jonathan M. Clarkson Jonathan M. Clarkson, On behalf of the Registrant and as President 23 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - -------------- ----------- 2. Plan of acquisition, reorganization, arrangement, liquidation or succession 2.1 Purchase and Sale Agreement between Texaco Exploration & Production Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.2 Asset Purchase Agreement between Four Star Oil & Gas Company and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.2 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) * 2.3 Asset Purchase Agreement between McFarland Energy, Inc. and Bargo Petroleum Corporation (Incorporated by reference from Exhibit 2.3 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000 and as amended by the Company's Current Report on Form 8-KA dated March 31, 2000 filed with the 24 EXHIBIT NUMBER DESCRIPTION - -------------- ----------- Securities and Exchange Commission on May 26, 2000.) * 3. Articles of Incorporation and By-laws 3.1 Articles of Incorporation of Bargo Energy Company (Incorporated by reference from Exhibit 3.1 to the Company's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.2 Agreement and Plan of Merger, dated as of April 6, 1999 between Future Petroleum Corporation and FPT Corporation (Incorporated by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.3 By-laws of Bargo Energy Company (Incorporated by reference from Exhibit 3.2 to the Company's Current Report on Form 8-K dated April 26, 1999, filed with the Securities and Exchange Commission on April 29, 1999) 3.4 Amendment to Bargo Energy Company By-laws (Incorporated by reference from Exhibit 3.4 to the Company's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 3.5 Articles of Amendment to the Articles of Incorporation of Bargo Energy Company (Incorporated by reference from Exhibit 3.5 to the Company's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 4. Instruments defining the rights of security holders 4.1 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series B (Incorporated by reference from Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB for the period ended March 31, 1999, filed with the Securities and Exchange Commission on May 21, 1999) 4.2 Certificate of Designations of Cumulative Redeemable Preferred Stock, Series C (Incorporated by reference from Exhibit 3.5 to the Company's Quarterly report on Form 10-QSB for the period ended March 31, 2000 filed with the SEC on May 15, 2000.) 10. Material Contracts 10.1 Subscription Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap 25 EXHIBIT NUMBER DESCRIPTION - -------------- ----------- Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.2 First Amendment to Second Amended and Restated Shareholders' Agreement, dated March 31, 2000, among Bargo Energy Company, B. Carl Price, Don Wm. Reynolds, Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, BER Partnership L.P., TJG Investments, Inc., BEC Partnership, BOC Operating Corporation, Inc., Tim J. Goff, Thomas Barrow, James E. Sowell, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.3 Third Amendment to Registration Rights Agreement dated March 31, 2000 among Energy Capital Investment Company PLC, EnCap Equity 1994 Limited Partnership, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC. (Incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.4 First Amendment to Stock Purchase Agreement dated March 31, 2000, among Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II LLC and Bargo Energy Company. (Incorporated by reference from Exhibit 10.4 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.5 Assignment, Acknowledgment, Consent and Waiver dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy 26 EXHIBIT NUMBER DESCRIPTION - -------------- ----------- Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.5 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.6 Escrow Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., EnCap Equity 1994, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase Bank of Texas, National Association. (Incorporated by reference from Exhibit 10.6 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.7 Acknowledgment and Consent dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Capital Partners II LLC. (Incorporated by reference from Exhibit 10.7 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.8 Indemnification Agreement dated March 31, 2000, among Bargo Energy Company, Energy Capital Investment Company PLC, EnCap Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC, and Bankers Trust Company. (Incorporated by reference from Exhibit 10.8 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 10.9 Consent to Amendment to Registration Rights Agreement by TJG Investments, Inc., BEC Partnership, BER Partnership, L.P., BOC Operating Corporation, Tim J. Goff, Thomas Barrow, James E. Sowell, B. Carl Price, Don Wm. Reynolds, Christie Price, Robert Price and Charles D. Laudeman. (Incorporated by reference from Exhibit 10.9 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 27 EXHIBIT NUMBER DESCRIPTION - -------------- ----------- 10.10 Credit Agreement dated March 31, 2000, among Bargo Energy Company, Chase Bank of Texas National Association, as administrative agent, Bankers Trust Company, as syndication agent and the other agents and lenders signatory thereto. (Incorporated by reference from Exhibit 10.10 to the Company's Current Report on Form 8-K dated March 31, 2000, filed with the Securities and Exchange Commission on April 17, 2000) 11. Statement regarding computation of per share earnings (1) 15. Letter on unaudited interim financial information (1) 18. Letter on change in accounting principles (1) 21. Subsidiaries of the Registrant (2) 22. Published report regarding matters submitted to vote (1) 23. Consents of experts and counsel (1) 24. Power of attorney (1) 27. Financial data schedule (2) 99. Additional exhibits (1) - ---------- (1) Inapplicable to this filing. (2) Included herewith. * Confidential treatment has been requested.