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Filed by Bellwether Exploration Company
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Bargo Energy Company
File No. 333-54798
The following slide presentation was made by Bellwether Exploration Company:
[Slide 1]
[MISSION RESOURCES LOGO]
IPAA OIL & GAS
INVESTMENT SYMPOSIUM
April 19, 2001
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[Slide 2]
SAFE HARBOR DISCLOSURE
================================================================================
This presentation includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations. All statements included in this presentation that address
activities, events or developments that the companies expect, believe or
anticipate will or may occur in the future are forward-looking statements. This
includes completion of the proposed merger, completion of reserve estimates,
production, cash flow and EBITDA estimates, future financial performance, future
equity issuance and other matters. These statements are based on certain
assumptions made by the companies based on their experience and perception of
historical trends, current conditions, expected future developments and other
factors they believe are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the companies. Statements regarding future production are
subject to all of the risks and uncertainties normally incident to the
exploration for and development and production of oil and gas. These risks
include, but are not limited to, inflation or lack of availability of goods and
services, environmental risks, drilling risks and regulatory changes. Investors
are cautioned that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from those
projected in the forward-looking statements.
Investors and security holders are urged to read the proxy statement/prospectus
that will be included in the Registration Statement on Form S-4 filed with the
SEC in connection with the proposed merger. Bellwether Exploration Company
("Bellwether") and Bargo Energy Company ("Bargo") have filed the proxy
statement/prospectus with the SEC. Investors and security holders may obtain a
free copy of the proxy statement/prospectus (when available) and other documents
filed by Bellwether and Bargo with the SEC at the SEC's web site at www.sec.gov.
The proxy statement/prospectus and such other documents (relating to Bellwether)
may also be obtained for free from Bellwether by directing such request to:
Bellwether Exploration Company, 1331 Lamar, Suite 1455, Houston, Texas 77010,
Attention: Lance Weaver; telephone: (713) 495-3061; e-mail:
weaverl@bellwetherexp.com. The proxy statement/prospectus and such other
documents (relating to Bargo) may also be obtained for free from Bargo by
directing such request to: Bargo Energy Company, 700 Louisiana, Suite 3700,
Houston, Texas 77002, Attention: Jerry Sears; telephone: (713) 236-9792; e-mail:
jsears@bargo.com.
Bellwether, its directors, executive officers and certain members of management
and employees may be considered "participants in the solicitation" of proxies
from Bellwether's shareholders in connection with the merger. Information
regarding such persons and a description of their interests in the merger is
contained in the Registration Statement on Form S-4.
Bargo, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" in connection
with the merger. Information regarding such persons and a description of their
interests in the merger is contained in the Registration Statement on Form S-4.
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[Slide 3]
SITUATION - BELLWETHER & BARGO
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Bellwether (2000)
o Issues
- Scattered assets, low reserve life index, 30% operated, 85%
hedged, debt to book capital of 70%, inexperienced management,
too small
o Actions
- Sold $49 MM of properties
- Paid down debt
- Bought back 15,000 MMBTU/Day of hedges
- Acquired new management expertise - engineering, budget
control, finance
- Commenced acquisition/merger discussions
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[Slide 4]
SITUATION - BELLWETHER & BARGO
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Bellwether (2000)
o Desired position was:
- Focused assets
- 8 year reserve life index
- 70% operated
- Less than 50% hedged
- Debt to book capitalization less than 50%
- Strong management
- Billion dollar market capitalization with extensive market
coverage
o Strategy
- Base - Exploitation and low risk exploration, farm-out high
risk exploration
- Growth - Corporate consolidation and acquisition
- Looking for strategic corporate acquisition
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[Slide 5]
SITUATION - BELLWETHER & BARGO
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Bargo (2000)
o Strong results in executing acquisition strategy, and subsequent
optimization of operations
- Texaco acquisition quadrupled reserves to 75 MMBOE
o Focus on maximization of return on investments in long-life oil
properties
- Sold >$100 MM of assets for well above acquisition cost
o Minimal access to capital markets for further growth
o Shareholders desiring tax efficient liquidity
- Decided against IPO or addition of private equity
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[Slide 6]
MISSION RESOURCES - THE COMBINATION
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o Bellwether plus Bargo
- Asset overlap
- Increased reserve life index
- Increased operated production
- Hedge dilution
- Completed management team
- Increased market capitalization
o Pro forma asset statistics
- 78.5 MMBOE, net of January property sale
- R/P 9 years
- 23 MBOE/day production
- Three focus areas: Permian, Onshore Gulf Coast, Gulf of Mexico
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[Slide 7]
MERGER DETAILS
================================================================================
o $1.26 per share for Bargo common ($140 MM, approximately 40% in cash,
60% in Bellwether stock)
o Bargo preferred stockholders receive cash ($61 MM)
o Anticipate Bellwether Shareholder meeting in mid May
o Total deal (Pro Forma at December 31, 2000)
- $200 MM for common and preferred stock
($120MM Cash, $80MM stock)
- $29 MM assumed debt
- 46.9 MMBOE proved reserves
- Less than $5.00/BOE direct acquisition cost
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[Slide 8]
STRATEGIC DIRECTION
================================================================================
o Fully exploit existing asset base
- Focus on costs, full cycle economics
o Divest non-core, non-strategic properties
- Reduce Company's operating cost/BOE
o Growth through acquisition
- Corporate transactions via "unadvertised" opportunities,
public and private companies
- Property transactions in focus areas, potential addition of
new core area
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[Slide 9]
EXECUTIVE MANAGEMENT
================================================================================
[PHOTO]
Doug Manner
Chairman & CEO
Jon Clarkson
President & CFO
Kent Williamson Joe Nicknish Dan Foley
Sr. VP - Planning Sr. VP - Operations Sr. VP - Corporate
& Exploration & Exploitation Finance
Portfolio Management Field Operations Corporate M&A
Budget Control Drilling Accounting & Tax
Exploration Land Finance
Marketing
Administration
[This slide contains a management and organizational chart with Doug Manner as
Chairman & CEO, Jon Clarkson as President & CFO, Kent Williamson, Sr. as VP -
Planning & Exploration, Joe Nicknish as Sr. VP - Operations & Explorations and
Dan Foley as Sr. VP - Corporate Finance. It also contains a photo of those
individuals.]
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[Slide 10]
MISSION RESOURCES - STATUS & GOALS
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o Integration of Bellwether and Bargo is well underway
o Major goals for 2001
- Maintain production levels with targeted capex - predominantly
exploitation, nominal exploration
- Reduce costs by managing the portfolio and improving operation
efficiencies
- Increase balance sheet liquidity
- Pursue corporate consolidation opportunities, close one or
more
- Improve visibility and perception in capital markets
o Mission Resources is a unique mid-cap E&P investment opportunity
- New, enthusiastic management team with expertise in
exploitation, M&A, and capital markets
- Growth philosophy coupled with extensive industry contacts
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[Slide 11]
AREAS OF OPERATION
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[MAP]
[This slide depicts a map showing New Mexico, Texas, Louisiana and the Gulf of
Mexico with a map showing Ecuador inserted in the lower left corner. The map
contains circles indicating the location of the following areas of operation:
Permian, East Texas, Onshore/Offshore Gulf of Mexico and Ecuador.]
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[Slide 12]
PROPERTY OVERVIEW
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[MAP]
TOP TWENTY FIELDS
1 East Texas TX Oil
2 Leroy North LA Gas
3 Waddell TX Oil
4 Levelland/Slaughter TX Oil
5 Cross Creek TX Gas
6 Bright Falcon TX Gas
7 Tiguino EC OIl
8 Eugene Island Block 292 FO Gas
9 Wasson TX Oil
10 Raccoon Bend TX Oil
11 Second Bayou LA Gas
12 Goldsmith OBO TX Oil
13 Ship Shoal Block 246 FO Gas
14 Charapa EC Oil
15 Giddings TX Mix
16 TXL TX Oil
17 High Island Block 552 FO Gas
18 Porter's Creek TX Gas
19 Bedford TX Oil
20 Reddell LA Gas
[This slide depicts a map showing New Mexico, Texas, Louisiana, and the Gulf of
Mexico with a map of Ecuador inserted in the lower left corner. The map contains
squares numbered 1-20 indicating the location of the top 20 fields.
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[Slide 13]
RESERVES BY REGION
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o Pro Forma reserves at December 31, 2000 of 78.5 MMBOE
[PIE CHART]
[This slide depicts a pie chart. The text of the chart is as follows:
PERMIAN 39%
EAST TEXAS 14%
GULF COAST ONSHORE 20%
GULF COAST OFFSHORE 8%
GULF COAST COMBINED 28%
ECUADOR 10%
OTHER 9%]
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[Slide 14]
RESERVE PROFILE
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o Production approximately 23,000 BOE per day, reserve life index 9 years
[PIE CHART] [PIE CHART] [PIE CHART]
RESERVE CATEGORIES OIL vs. GAS OPERATED vs.
NON-OPERATED
[This slide depicts 3 pie charts. The pie chart titled Reserve Categories
contains the following text:
PUD 20%
PDP 70%
PDN 10%
The pie chart titled Oil vs. Gas contains the following text:
Gas 32%
Oil 68%
The pie chart titled Operated vs. Non-operated contains the following text:
Non-Op 54%
Operated 46%]
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[Slide 15]
PROJECTED CAPITAL EXPENDITURES
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2001 ESTIMATED CAPEX 2002 ESTIMATED CAPEX
$110 MM $160 MM
--------- ---------
[PIE CHART] [PIE CHART]
[This slide depicts two pie charts. The pie chart titled 2001 Estimated CAPEX
$110MM contains the following text:
*Exploratory $11MM
Land/Seis./Oth $ 8MM
Development $41MM
Acquisition $50MM
The pie chart titled 2002 Estimated CAPEX $160MM contains the following text:
Acquisition $100MM
Development $ 30MM
*Exploratory $ 20MM
Land/Seis./Oth $ 10MM
* includes all non-proved drilling]
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[Slide 16]
CAPITAL PROJECT INVENTORY
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Number Net Net
Of Capital Unrisked
Project Type Projects Cost Potential
- ------------ -------- ---- ---------
Proved
(Low risk exploitation) 472 $ 80 MM 26 MMBOE
Other Potential
(Exploitation & exploratory) 209 $142 MM Not disclosed
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[Slide 17]
================================================================================
Jonathan Clarkson
President & CFO
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[Slide 18]
BALANCE SHEET COMPARISON ($ in millions)
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DECEMBER 31, 2000
------------------------- MISSION
MISSION MAY 2001
BELW BARGO PRO FORMA EST. CLOSING
---- ----- --------- ------------
Current Assets 45 29 74
Property, Plant & Equipment 151 155 411
Goodwill -- 2 27
Other Assets 26 10 13
--- --- ---
Total Assets 222 196 525
=== === ===
Current Liabilities 37 25 73
Bank Debt 25 85 170 150
Sub Debt 100 -- 100 100
Deferred Tax & Other Liabilities 3 6 46
Preferred Stock -- 58 --
Stockholders' Equity 57 22 136
--- --- ---
Total Liabilities & Equity 222 196 525
=== === ===
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[Slide 19]
FINANCIAL STRATEGY
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o Maintain liquidity and balance sheet capacity
- Limit capex in 2001 and 2002, free cash flow used to pay down
bank debt
- Utilize high yield debt to increase liquidity under senior
revolver
- Long Term objective of 50% debt to book capital and $100 MM of
unused bank capacity
o Reduce cost of capital
- Increased liquidity in stock and analyst coverage - equity and
high yield
- Lower cost of debt capital
o Focus on reducing G&A and LOE per BOE - divestitures, outsourcing
o Hedging policy
o Use equity to fund acquisition transactions
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[Slide 20]
FINANCIAL HIGHLIGHTS
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REPORTED PRO FORMA
BELW MISSION MISSION
2000 2001 EST. 2002 EST.
-------- ----------- -------------
Total Production (MMBOE) 5.8 8.3 - 8.7 10.5 - 11.5
Production (MBOE/D) 15.8 22 - 24 29 - 32
Spot WTI Price ($/BBL) 30.14 26.53 24.15
Spot Henry Hub Price ($/MCF) 3.91 5.47 4.86
Total Revenue ($MM) 119 200 - 210 255 - 265
OP. Cost (inc. prod. tax) per BOE 5.27 6.70 - 6.90 6.40 - 6.60
G&A per BOE 1.58 1.55 - 1.65 1.30 - 1.40
Recurring G&A per BOE 1.37 1.35 - 1.45 1.30 - 1.40
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[Slide 21]
FINANCIAL HIGHLIGHTS
================================================================================
REPORTED PRO FORMA
BELW MISSION MISSION
2000 2001 EST. 2002 EST.
-------- ----------- -------------
Recurring EDITDA* ($MM) 68 125 -140 170 - 185
Discretionary Cash flow ($MM) 63 95 - 105 125 - 140
DCF/share 4.42 4.10 - 4.50 4.25 - 4.70
Recurring Net Income* ($MM) 18 30 - 40 40 - 50
Recurring NI*/share 1.25 1.30 - 1.70 1.35 - 1.70
*Excludes potential one time non-cash losses in 2001
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[Slide 22]
FINANCIAL HIGHLIGHTS
================================================================================
REPORTED PRO FORMA
BELW MISSION MISSION
2000 2001 EST. 2002 EST.
-------- ------------ -------------
Proved Reserves (MMBOE) 31.6 (Jan 01) 78.5
Reserve Life (R/P) 6 9
Cash Interest expense $MM 14.8 25 - 30 25 - 30
Total Assets $MM* 221.5 500 - 550 550 - 600
Total Debt $MM* 125.5 250 - 280 180 - 220
Stockholders equity $MM* 57.0 150 - 170 310 - 330
Total Book Capitalization $MM* 182.5 400 - 450 490 - 550
Recurring EBITDA **/Interest Exp. 4.6x 4.6x - 5.3x 6.0 - 6.4
Total Debt/Recurring EBITDA** 1.8x 1.8x - 2.1x 1.1x - 1.4x
Total Debt/Book Capitalization 69% 60% - 64% 35% - 40%
* As of year end
**Excludes potential one time non-cash losses in 2001
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[Slide 23]
CORPORATE M&A OBJECTIVES
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o Focus will be on uncovering opportunities before they reach the auction
market
- Information from Board of Directors, shareholders, industry contacts
and potential sellers
o Deal structures will utilize Mission Resources' common equity to the
extent possible
- Potential use of bridge financing or liquidity under senior revolver
to bridge to secondary stock offering
o Goal of at least one corporate transaction this year
o Interesting areas include three current core areas (permian, Gulf Coast,
Gulf of Mexico), as well as Canada, Mid continent, Rockies, and South
Texas
- No foreign acquisitions
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[Slide 24]
[MISSION RESOURCES LOGO]
[This slide depicts the Mission Resources logo.]