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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
JANUARY 12, 2001
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED)
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)
NOT APPLICABLE
(FORMER NAME AND FORMER ADDRESS,
IF CHANGED SINCE LAST REPORT)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
NOT APPLICABLE
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ON JANUARY 12, 2001, WE COMPLETED THE SALE OF OUR CALIFORNIA PROPERTIES
LOCATED IN KERN COUNTY, CALIFORNIA FOR $39.45 MILLION BEFORE FINAL CLOSING
ADJUSTMENTS. THE EFFECTIVE DATE OF THE SALE IS DECEMBER 1, 2000. AGGREGATE
CURRENT NET PRODUCTION FROM THE CALIFORNIA PROPERTIES TOTALS APPROXIMATELY 550
BARRELS OF OIL AND 4.9 MILLION CUBIC FEET OF GAS PER DAY.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
NOT APPLICABLE
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
NOT APPLICABLE
ITEM 5. OTHER EVENTS
NOT APPLICABLE.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
NOT APPLICABLE
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
(b) PRO FORMA FINANCIAL INFORMATION.
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BARGO ENERGY COMPANY
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined statements of operations for the nine
months ended September 30, 2000 and the year ended December 31, 1999 reflect the
disposition of the California Properties by Bargo Energy Company (Bargo) that
occurred in January 2001 as if the disposition occurred January 1, 1999. The pro
forma statements of operations adjust the operating results of Bargo for the
nine months ended September 30, 2000 and the year ended December 31, 1999 to
exclude the historical revenues and direct operating expenses of the California
Properties for the same periods.
The pro forma statements of operations also reflect the following transactions:
(1) the acquisition of the East Texas properties in September 1999 and (2) the
Texaco acquisition on March 31, 2000. These items are reflected in the pro forma
statements of operations as if they had occurred January 1, 1999.
The accompanying unaudited pro forma combined balance sheet as of September 30,
2000 includes the disposition of the California Properties as if such
disposition had occurred on September 30, 2000.
These unaudited pro forma financial statements should be read in conjunction
with the historical financial statements of Bargo as filed in its periodic
reports with the Securities and Exchange Commission. These unaudited pro forma
financial statements should not be construed to be indicative of future results
or results that actually would have occurred if the transactions had occurred at
the dates presented.
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UNAUDITED COMBINED BALANCE SHEET
(IN THOUSANDS)
Bargo Actual California Pro forma
September 30, 2000 Properties September 30, 2000
------------------ ---------- ------------------
Assets
Current assets:
Cash $ 2,175 $ 2,175
Accounts receivable $ 23,385 $ 23,385
Other current asset $ -- $ --
-------- -------- --------
Total current assets $ 25,560 $ -- $ 5,560
-------- -------- --------
Property and equipment, at cost:
Oil and gas properties (full cost method) $193,679 $(39,450)(f) $154,229
Other property and equipment $ 832 $ 832
-------- -------- --------
$194,511 $(39,450) $155,061
Less - accum depreciation, depletion and amortization $(18,515) $(18,515)
-------- -------- --------
Total property and equipment $175,996 $(39,450) $136,546
-------- -------- --------
Goodwill $ 1,642 $ -- $ 1,642
Other noncurrent assets $ 9,662 $ -- $ 9,662
TOTAL ASSETS $212,860 $(39,450) $173,410
======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 13,538 $ 13,538
Current portion of notes Payable $ -- $ --
Accrued income taxes payable $ 7,582 $ 7,582
-------- -------- --------
Total current liabilities $ 21,120 $ -- $ 21,120
-------- -------- --------
Long Term Notes payable - senior $118,750 $(39,450)(f) $ 79,300
Deferred Tax Liability $ 3,317 $ -- $ 3,317
Redeemable Preferred Stock $ 56,021 $ -- $ 56,021
Stockholders' Equity
Common Stock $ 921 $ 921
Additional paid-in capital $ 6,878 $ 6,878
Treasury stock $ (2,041) $ (2,041)
Retained earnings (deficit) $ 7,894 $ 7,894
-------- -------- --------
Total Stockholders Equity $ 13,652 $ -- $ 13,652
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $212,860 $(39,450) $173,410
======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS.
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UNAUDITED COMBINED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
ACQUISITIONS DISPOSITIONS
BARGO ---------------------------- -----------------------------
ACTUAL CALIFORNIA PRO FORMA
9/30/00 TEXACO ADJUSTMENTS PROPERTIES ADJUSTMENTS 9/30/00
---------- ------------- ------------- -------------- ------------- ----------
Income:
Oil and gas sales $ 83,213 $ 23,950 (a) $ -- $ 5,190 (a) $ -- $ 101,973
--------- --------- --------- ------------ --------- ---------
$ 83,213 $ 23,950 $ -- $ 5,190 $ -- $ 101,973
--------- --------- --------- ------------ --------- ---------
Expenses:
Lease operating expenses and production
taxes $ 28,370 $ 7,865 (a) $ 845 (a) $ 35,390
Depreciation, depletion and amortization $ 12,817 $ -- $ 4,043 (b) $ 792 (b) $ 16,068
General and administrative $ 6,415 $ -- $ 790 (c) $ 24 (c) $ 7,181
--------- --------- --------- ------------ --------- ---------
$ 47,602 $ 7,865 $ 4,833 $ 845 $ 816 $ 58,639
--------- --------- --------- ------------ --------- ---------
Operating income/(loss) $ 35,611 $ 16,085 $ (4,833) $ 4,345 $ (816) $ 43,334
--------- --------- --------- ------------ --------- ---------
Other (income) and expense:
Interest expense $ 11,275 $ -- $ 3,780 (d) $ 690 (d) $ 14,365
Other income $ (151) $ -- $ -- $ (151)
--------- --------- --------- ------------ --------- ---------
$ 11,124 $ -- $ 3,780 $ -- $ 690 $ 14,214
--------- --------- --------- ------------ --------- ---------
Income (loss) before income taxes and
extraordinary item $ 24,487 $ 16,085 $ (8,613) $ 4,345 $ (1,506) $ 29,120
Income tax benefit/(expense) $ (9,720) $ (2,424)(e) $ -- $ (1,079)(e) $ (11,065)
--------- --------- --------- ------------ --------- ---------
Net income (loss) before extraordinary item $ 14,767 $ 16,085 $ (11,037) $ 4,345 $ (2,585) $ 18,055
Extraordinary loss on extinguishment of debt $ 1,051 $ -- $ -- $ -- $ -- $ 1,051
Net income (loss) $ 13,716 $ 16,085 $ (11,037) $ 4,345 $ (2,585) $ 17,004
Redeemable preferred stock dividends $ 4,358 $ -- $ -- $ -- $ -- $ 4,358
--------- --------- --------- ------------ --------- ---------
Net income (loss) allocable to common
shareholders $ 9,358 $ 16,085 $ (11,037) $ 4,345 $ (2,585) $ 12,646
========= ========= ========= ============ ========= =========
Net income (loss) per common share - basic $ 0.11 $ 0.14
Net income (loss) per common share - diluted $ 0.09 $ 0.12
Net income before extraordinary item - Basic $ 0.12 $ 0.16
Net income before extraordinary item - Diluted $ 0.10 $ 0.13
Weighted average common shares outstanding -
Basic 87,933 87,933
Weighted average common shares outstanding -
Diluted 103,280 103,280
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS.
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UNAUDITED COMBINED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
ACQUISITIONS DISPOSITIONS
BARGO -------------------------- ------------------------------
ACTUAL TEXACO & CALIFORNIA PRO FORMA
1999 EAST TEXAS ADJUSTMENTS PROPERTIES ADJUSTMENTS 1999
--------- ------------ ------------ ---------------- ------------ ---------
Income:
Oil and gas sales $ 19,134 $ 81,323 (a) $ 2,484 (a) $ 97,973
-------- -------- -------- ------------ -------- --------
$ 19,134 $ 81,323 $ 2,484 $ 97,973
-------- -------- -------- ------------ -------- --------
Expenses:
Lease operating expenses/production taxes $ 7,685 $ 37,269 (a) $942 (a) $ 44,012
Depreciation, depletion and amortization $ 4,898 $ 18,723 (b) $ 653 (b) $ 22,968
General and administrative $ 3,659 $ 3,272 (c) $ 18 (c) $ 6,913
-------- -------- -------- ------------ -------- --------
$ 16,242 $ 37,269 $ 21,995 $ 942 $ 671 $ 73,893
-------- -------- -------- ------------ -------- --------
Operating income/(loss) $ 2,892 $ 44,054 $(21,995) $ 1,542 $ (671) $ 24,080
-------- -------- -------- ------------ -------- --------
Other (income) and expense:
Interest expense $ 2,378 $ -- $ 16,080 (d) $ 720 (d) $ 17,738
Other income $ (8) $ -- $ -- $ -- $ (8)
-------- -------- -------- ------------ -------- --------
$ 2,370 $ -- $ 16,080 $ -- $ 720 $ 17,730
-------- -------- -------- ------------ -------- --------
Income (loss) before income taxes $ 522 $ 44,054 $(38,075) $ 1,542 $ (1,391) $ 6,350
Income tax benefit/(expense) $ 141 $ -- $ (2,611)(e) $ -- $ (57)(e) $ (2,413)
-------- -------- -------- ------------ -------- --------
Net income (loss) $ 663 $ 44,054 $(40,686) $ 1,542 $ (1,448) $ 3,937
Redeemable preferred stock dividends $ 3,473 $ -- $ -- $ -- $ -- $ 3,473
-------- -------- -------- ------------ -------- --------
Net income/(loss) allocable to common
shareholders $ (2,810) $ 44,054 $(40,686) $ 1,542 $ (1,448) $ 464
======== ======== ======== ============ ======== ========
Net income (loss) per common share - basic $ (0.04) $ 0.01
Net income (loss) per common share - diluted $ (0.04) $ 0.01
Weighted average common shares outstanding -
Basic 75,942 75,942
Weighted average common shares outstanding -
Diluted 75,942 81,689
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS.
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BARGO ENERGY COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
The pro forma adjustments are described as follows:
(a) Reflects the recognition of revenues and direct operating expenses for
the respective periods.
(b) Adjustment to depletion and depreciation resulting from the effects of
transactions as if such transactions occurred January 1, 1999.
Adjustments were calculated based on historical depletion and
depreciation rates per BOE.
(c) Adjustment to general and administrative expense directly attributable
to the properties acquired / disposed of in the transactions.
(d) Adjustment to record interest expense that would have been incurred if
the Company had additional borrowings to fund the acquisitions. In
addition, adjustments to reflect a reduction in interest expense based
on reduced borrowings due to the disposition. The applicable interest
rate was 9% at September 30, 2000. A 1/8 percent increase in the
accrued interest rate would increase net pro forma interest expense by
approximately $212,000 and $40,000 for the year ended December 31, 1999
and the nine months ending September 30, 2000, respectively.
(e) Reflects pro forma income tax provision, assuming a 38% rate based upon
the pro forma change in pre-tax income.
(f) Reflects proceeds of $39.45 million as a reduction of the oil and gas
properties full cost pool and a corresponding reduction of debt at
September 30, 2000. The consideration to be received has not been
reduced by the net cash flows from the properties for the period from
December 1, 2000 to January 12, 2001 which will be treated as a
reduction in the purchase price.
(C) EXHIBITS
EXHIBIT
NUMBER TITLE OF DOCUMENTS
2. PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OF
SUCCESSION
2.1 PURCHASE AND SALE AGREEMENT DATED NOVEMBER 10, 2000 BETWEEN
FUTURE CAL-TEX CORPORATION AND MERIT PARTNERS, L.P. AND MERIT
ENERGY PARTNERS III, L.P.
ITEM 8. CHANGE IN FISCAL YEAR
NOT APPLICABLE
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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 HEREUNTO DULY AUTHORIZED.
BARGO ENERGY COMPANY
BY: /s/ JONATHAN M. CLARKSON
-------------------------------
JONATHAN M. CLARKSON, PRESIDENT
DATED: JANUARY 26, 2001
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2. PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION
OF SUCCESSION
2.1 PURCHASE AND SALE AGREEMENT DATED NOVEMBER 10, 2000 BETWEEN
FUTURE CAL-TEX CORPORATION AND MERIT PARTNERS, L.P. AND MERIT
ENERGY PARTNERS III, L.P.