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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 2001
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COMMISSION FILE NUMBER 0-30475
TRANSTEXAS GAS CORPORATION
1300 NORTH SAM HOUSTON PARKWAY EAST
SUITE 310
HOUSTON, TEXAS 77032-2949
Registrant's telephone number, including area code: (281) 987-8600
76-0401023
DELAWARE (I.R.S. employer
(State of incorporation) identification no.)
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, $0.01 PAR VALUE
CLASS B COMMON STOCK, $0.01 PAR VALUE
SERIES A SENIOR PREFERRED STOCK, $0.001 PAR VALUE
SERIES A JUNIOR PREFERRED STOCK, $0.001 PAR VALUE
CLASS A COMMON STOCK PURCHASE WARRANTS
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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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant has filed all documents
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes [X] No [ ]
The aggregate market value of the common stock held by non-affiliates of
the registrant on April 20, 2001 was $13,187,518.
The number of shares of common stock of the registrant outstanding on April
20, 2001 was 1,250,251 consisting of 1,002,751 shares of Class A Common Stock
and 247,500 shares of Class B Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement to be filed with
the Commission not later than 120 days after the end of the fiscal year covered
by this Form 10-K in connection with the registrant's 2001 annual meeting of
stockholders are incorporated by reference into Part III of this Form 10-K.
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TABLE OF CONTENTS
PAGE
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PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 5
Item 3. Legal Proceedings........................................... 6
Item 4. Submission of Matters to a Vote of Security Holders......... 7
Executive Officers of the Registrant........................ 7
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 8
Item 6. Selected Financial Data..................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 12
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 19
Item 8. Financial Statements and Supplementary Data................. 21
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................. 53
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 53
Item 11. Executive Compensation...................................... 53
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 53
Item 13. Certain Relationships and Related Transactions.............. 53
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 54
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PART I
ITEM 1. BUSINESS
GENERAL
TransTexas Gas Corporation (the "Company" or "TransTexas") is engaged in
the exploration for and development and production of natural gas and
condensate, primarily along the upper Gulf Coast and in South Texas. TransTexas'
business strategy is to utilize its experience in drilling and operating wells
in South Texas to find, develop and produce reserves at a low cost.
The Company's long-term goal is to convert unproven acreage to proved
reserves through drilling in under-exploited areas. In order to meet its
long-term goals, TransTexas' strategy is to drill wells in areas of the Upper
Texas Gulf Coast where seismic data and well control indicate productive
potential and to drill development wells in its proven producing areas such as
the Eagle Bay field in Galveston County and the Southwest Bonus field in Wharton
County.
As of February 1, 2001, TransTexas' net proved reserves, as estimated by
Netherland, Sewell & Associates, Inc., were 132 Bcfe. As of January 31, 2001,
TransTexas owned approximately 62,750 gross (57,200 net) acres of mineral
interests. TransTexas' average net daily natural gas production for the year
ended January 31, 2001 was approximately 73 MMcfd, for a total net production of
26.8 Bcf of natural gas. TransTexas' average net daily condensate and oil
production for the year ended January 31, 2001 was approximately 4,259 Bpd, for
a total net production of 1,559 MBbls of condensate and oil. TransTexas' average
net daily production of natural gas liquids ("NGLs") for the year ended January
31, 2001 was approximately 131,972 gallons per day, for a total net production
of 48.3 million gallons of natural gas liquids.
REORGANIZATION
On April 19, 1999 (the "Petition Date"), TransTexas filed a voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware. TransTexas filed its
bankruptcy petition in order to preserve cash and to give the Company the
opportunity to restructure its debt. On April 20, 1999, the Company's then
parent, TransAmerican Energy Corporation ("TEC"), and its wholly owned
subsidiary, TransAmerican Refining Corporation ("TARC"), also filed voluntary
petitions under Chapter 11. On May 20, 1999, the cases were transferred to the
United States Bankruptcy Court for the Southern District of Texas, Corpus
Christi Division (the "Bankruptcy Court"). TransTexas' Chapter 11 filing did not
include its subsidiaries, including Galveston Bay Processing and Galveston Bay
Pipeline. The Company's Second Amended, Modified and Restated Plan of
Reorganization dated January 25, 2000 (the "Plan") was confirmed by the
Bankruptcy Court on February 7, 2000.
On March 17, 2000, the Effective Date of the Plan, the Company consummated
several transactions, most of which were dated as of March 15, 2000. The
Company:
- filed an Amended and Reinstated Certificate of Incorporation;
- issued 1,002,751 shares of Class A Common Stock and 247,500 shares of
Class B Common Stock;
- filed a Certificate of Designation relating to, and issued 222,455,320
shares of, Series A Senior Preferred Stock;
- filed a Certificate of Designation relating to, and issued 20,716,080
shares of, Series A Junior Preferred Stock;
- entered into an Indenture relating to, and issued $200 million of, 15%
Senior Secured Notes due 2005;
- entered into a $52.5 million Oil and Gas Credit Facility;
- entered into a $15 million Accounts Receivable Credit Facility; and
- sold a Production Payment with a primary sum outstanding as of March 15,
2000 of $35 million.
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These transactions are more fully described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" under Item 7 of this report.
EXPLORATION AND PRODUCTION
The exploration and production activities of TransTexas consist of
geological and geophysical evaluation of current and prospective properties, the
acquisition of mineral interests in prospects and the drilling, development and
operation of leased properties for the production and sale of natural gas,
condensate and crude oil. TransTexas' technical staff consists of geologists,
geophysicists and engineers. TransTexas' technical staff selects drilling
locations based on the interpretation of available well data, and 3-D and 2-D
seismic data. TransTexas operates substantially all of its producing properties.
Primary Operating Areas
Eagle Bay. In January 1998, TransTexas announced that it had successfully
drilled and completed the State Tract 331 #1 discovery well in Eagle Bay,
Galveston County, Texas. The well is located approximately one mile off the
coast of the City of San Leon, in a water depth of less than 10 feet. This
discovery well tested at a rate of 76.4 MMcfd of natural gas and 11,002 Bpd of
condensate. TransTexas has successfully drilled, completed and produced five
additional wells and, as of January 31, 2001, was drilling a seventh well in the
Eagle Bay field.
TransTexas intends to drill additional development wells in Eagle Bay as a
part of its strategy to further increase reserves and production and has
identified additional drilling locations from 3-D seismic data. For the fiscal
year ended January 31, 2001, TransTexas produced 18.7 Bcf (10.6 Bcf net) of
natural gas, 1.3 million barrels of condensate and 48.2 million gallons of
natural gas liquids from the Eagle Bay field at average net daily rates of 29
MMcfd, 3,486 Bpd and 131,700 gallons per day, respectively. Production from the
Eagle Bay field represents a significant percentage of the Company's total
production. See "Drilling and Production Data." As of January 31, 2001,
TransTexas owned a 75% working interest in approximately 4,692 net acres in the
Eagle Bay area.
Southwest Bonus. In 1998, TransTexas completed the Obenhaus #2 discovery
well in the Southwest Bonus field in Wharton County, Texas. Restrictions on
available capital prevented TransTexas from additional drilling until late 1999
when a development drilling program commenced with the drilling and completion
of the Schweinle #1. As of January 31, 2001, TransTexas had successfully
drilled, completed and produced 12 wells in the Southwest Bonus field. Recently,
a thirteenth well has been completed and is producing. TransTexas is currently
drilling four additional development wells in the field and has identified
additional drilling locations based upon seismic data. TransTexas intends to
increase the pace of development drilling in the Southwest Bonus field by adding
additional drilling rigs as a part of its strategy to further increase
recoverable reserves and production.
As of January 31, 2001, TransTexas held a 99% working interest covering
approximately 5,746 net acres in the Southwest Bonus area. For the fiscal year
ended January 31, 2001, TransTexas' Southwest Bonus properties produced 11.6 Bcf
(9.2 Bcf net) of natural gas, at an average net daily rate of 25 MMcfd.
Production from the Southwest Bonus field represents a significant percentage of
the Company's total production. See "Drilling and Production Data."
Bob West North. In late 1994, TransTexas made a natural gas discovery in
the Bob West North area of southern Zapata County, Texas. As of January 31,
2001, TransTexas had drilled 56 wells and completed 53 wells in the area. As of
January 31, 2001, TransTexas' mineral interests in the Bob West North area
consisted of a 100% working interest in 7,253 net acres. For the fiscal year
ended January 31, 2001, TransTexas produced 5.6 Bcf (4.0 Bcf net) of natural gas
from the Bob West North area at an average net daily rate of 11 MMcfd. Seismic
data indicates the potential for additional drilling locations to further
develop productive reservoirs in the area.
Other Areas. TransTexas also has an inventory of exploration and
exploitation prospects along the Upper Texas Gulf Coast which it continues to
assemble as part of its strategy to further increase reserves and
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production. The Company's primary focus is to seek areas that it believes are
under-exploited and are along the trend with existing proved fields and where
seismic data indicates productive potential. TransTexas has obtained acreage
positions in selected prospects that it intends to drill as part of a balanced
exploration program. Certain of these areas have been drilled and contain proved
reserves and production. The Company intends to drill these additional
exploration and exploitation prospects, which are located in the proximity of
TransTexas' existing producing fields and infrastructure.
Drilling and Production Data
During the five years ended January 31, 2001, TransTexas completed
approximately 62% of 325 wells. As of January 31, 2001, TransTexas was drilling
two gross (two net) wells. As of January 31, 2001, TransTexas had a total of 87
productive wells. TransTexas had a working interest in the following numbers of
wells that were drilled during the periods indicated:
YEAR ENDED JANUARY 31,
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2001 2000 1999
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GROSS NET GROSS NET GROSS NET
----- --- ----- --- ----- ---
Exploratory Wells(1):
Productive(2)................................ -- -- 1 1 9 9
Non-Productive............................... 4 3 6 5 6 5
% Productive................................. -- -- 14% 17% 60% 63%
Development Wells(1):
Productive(2)................................ 11 11 5 5 14 12
Non-Productive............................... 1 1 2 2 9 9
% Productive................................. 92% 92% 71% 71% 61% 58%
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(1) The number of net wells is the sum of the fractional working interests owned
in gross wells.
(2) Productive wells consist of producing wells and wells capable of production,
including gas wells awaiting pipeline connection. Wells that are completed
in more than one producing zone are counted as one well.
The following table sets forth information with respect to net production
and average unit prices and costs for the periods indicated:
YEAR ENDED JANUARY 31,
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2001 2000 1999
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Production:
Gas (Bcf)................................................ 26.8 27.8 35.6
NGLs (MMgals)............................................ 48.3 44.0 8.4
Condensate and oil (MBbls)............................... 1,559 1,827 1,120
Average sales prices:
Gas (dry) (per Mcf)...................................... $ 4.73 $ 2.32 $ 2.10
NGLs (per gallon)........................................ .49 .32 .21
Condensate and oil (per Bbl)............................. 30.04 19.88 11.91
Average lifting cost per Mcfe(1)........................... .47 .44 .39
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(1) Condensate and oil are converted to a common unit of measure on the basis of
six Mcf of natural gas to one barrel of condensate or oil. The components of
production costs may vary substantially among wells depending on the methods
of recovery employed and other factors.
TRANSPORTATION, PROCESSING AND MARKETING
TransTexas believes that there is currently adequate pipeline
transportation capacity for its hydrocarbon production in all of its operating
areas.
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TransTexas has entered into various agreements for the gathering,
transportation, processing and sale of substantially all of its natural gas and
natural gas liquids produced from its Eagle Bay prospects. Unless otherwise
stated, these agreements, described below, expire on June 30, 2003. TransTexas
monitors its transportation needs closely and is actively in discussions with
pipeline companies regarding additional agreements in order to meet future
production increases.
Galveston Bay Processing Corporation, a wholly owned subsidiary of
TransTexas, operates onshore facilities to separate produced natural gas and
condensate, dehydrate and treat natural gas for the removal of carbon dioxide
and stabilize condensate from the Company's Eagle Bay field. These facilities
are located approximately 60 miles east of Houston at Winnie, Texas.
TransTexas has entered into contracts with Tejas Ship Channel, LLC for
transportation of its production from the Eagle Bay field to the Winnie
facilities at a fixed negotiated rate. Under these contracts, the Company is
committed to deliver up to 75% of the initial 100,000 MMBtu per day of natural
gas and associated condensate.
The Company also entered into a contract with Centana Intrastate Pipeline
Company for transportation of natural gas on a firm and interruptible basis from
the Winnie facility to natural gas liquids recovery facilities located in the
Beaumont/Port Arthur, Texas area, and residue gas from these facilities to
various distribution points. Under the agreement, the Company is committed to
deliver up to a maximum of 56,250 Mcf of natural gas and up to 19,500 MMBtu of
residue gas per day. Transportation fees for natural gas and residue gas are
based on fixed negotiated rates.
TransTexas and Duke Energy Field Services, Inc. entered into a contract to
extract natural gas liquids from the high-Btu natural gas stream leaving the
Winnie facilities. TransTexas can elect, at its discretion on a monthly basis,
whether to process the natural gas to recover natural gas liquids. The Company's
decision whether to process the natural gas is based on prevailing market
prices.
TransTexas entered into gas purchase agreements with Tejas Gas Marketing,
LLC and PanEnergy Marketing Company, covering the sale by TransTexas of
substantially all of its gas production from the Eagle Bay field. The agreements
provide for deliveries in excess of 50,000 MMBtu per day of residue gas at a
price based on a published industry index.
For the year ended January 31, 2001, two purchasers represented
approximately 67% of the consolidated natural gas, condensate and NGL revenues
of TransTexas. TransTexas believes that the loss of any single purchaser would
not have a material adverse effect on TransTexas due to the availability of
other purchasers for TransTexas' production at comparable prices.
COMPETITION
TransTexas encounters significant competition from major oil and gas
companies and independent operators in the acquisition of desirable undeveloped
natural gas leases and in the sale of natural gas. Many of its competitors are
large, well-established companies with substantially greater capital and human
resources than TransTexas and which, in many instances, have been engaged in the
energy business longer than TransTexas.
The primary bases for competition in the natural gas and oil exploration
and production businesses are available capital and the costs involved in
finding and developing gas and oil resources combined with commodity sales
prices and market access.
EMPLOYEES
As of January 31, 2001, TransTexas had 186 employees, none of which are
parties to a collective bargaining agreement. TransTexas regularly engages the
services of independent geological, engineering, land and other consultants.
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GOVERNMENTAL REGULATION
TransTexas' gas exploration, production and related operations are subject
to extensive rules and regulations promulgated by federal and state agencies.
Failure to comply with such rules and regulations can result in substantial
penalties. The regulatory burden on the gas industry increases TransTexas' cost
of doing business and affects its profitability. Because such rules and
regulations are frequently amended or reinterpreted, TransTexas is unable to
predict the future cost or impact of complying with such laws.
The State of Texas (through the Texas Railroad Commission) and many other
states require permits for drilling operations, drilling bonds and reports
concerning operations, and impose other requirements related to the exploration
and production of natural gas. Such states also have statutes or regulations
addressing conservation matters, including provisions for the unitization or
pooling of gas properties, the establishment of maximum rates of production from
gas wells and the regulation of spacing, plugging and abandonment of such wells.
The statutes and regulations of the State of Texas limit the rate at which
natural gas can be produced from TransTexas' properties. Management believes
that these statutes and regulations have not materially impacted TransTexas'
results of operations; however, there can be no assurance that such statutes and
regulations will not affect TransTexas' operating results in the future.
Several major regulatory changes have been implemented by the Federal
Energy Regulatory Commission ("FERC") since 1985 that affect the economics of
natural gas production, transportation and sales. In addition, the FERC
continues to promulgate revisions to various aspects of the rules and
regulations affecting those segments of the natural gas industry, most notably
interstate natural gas transmission companies, that remain subject to the FERC's
jurisdiction. These initiatives may also affect the intrastate transportation of
gas under certain circumstances. The stated purpose of many of these regulatory
changes is to promote competition among the various sectors of the gas industry.
The ultimate impact on TransTexas of these complex and overlapping rules and
regulations, many of which are repeatedly subjected to judicial challenge and
interpretation, cannot be predicted.
ENVIRONMENTAL MATTERS
See Note 14 of Notes to Consolidated Financial Statements for a discussion
of environmental matters affecting TransTexas.
ITEM 2. PROPERTIES
ACREAGE AND PRODUCTIVE WELLS
The following table sets forth TransTexas' total developed and undeveloped
acreage and productive wells as of January 31, 2001:
DEVELOPED UNDEVELOPED PRODUCTIVE
ACREAGE ACREAGE WELLS(1)
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Gross................................................ 15,120 47,629 87
Net(2)............................................... 13,735 43,463 78
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(1) Of the total productive wells, 86 gross (77 net) were gas wells and one
gross (one net) was an oil well. As of January 31, 2001, TransTexas had
interests in three productive wells that had multiple completions.
(2) The number of net acres and net wells is the sum of the fractional working
interests owned in gross acres and gross wells, respectively.
RESERVES
As of February 1, 2001, TransTexas had total proved reserves of 112.9 Bcf
of natural gas and 3,154 MBbls of condensate and oil. See Note 20 of Notes to
Consolidated Financial Statements, which contains supplemental information
regarding TransTexas' proved reserves. Proved reserves are the estimated
quantities of natural gas, condensate and oil that geological and engineering
data demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating
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conditions. Proved developed reserves are proved reserves that can be expected
to be recovered through existing wells with existing equipment and operating
methods. The estimation of reserves requires substantial judgment on the part of
petroleum engineers, resulting in imprecise determinations, particularly with
respect to recent discoveries. The accuracy of any reserve estimate depends on
the quality of available data and engineering and geological interpretation and
judgment. Results of drilling, testing and production after the date of the
estimate may result in revisions of the estimate. Accordingly, estimates of
reserves are often materially different from the quantities of natural gas,
condensate and oil that are ultimately recovered, and these estimates will
change as future production and development information becomes available. The
reserve data represent estimates only and should not be construed as being
exact.
TITLE TO PROPERTIES/LIENS AND CLAIMS
As is customary in the oil and gas industry, TransTexas performs only a
preliminary title investigation before leasing undeveloped properties.
Accordingly, working interest percentages and gross and net acreage amounts for
undeveloped properties are preliminary. However, a title opinion is typically
obtained before the commencement of drilling operations and any material defects
in title are remedied prior to the time actual drilling of a well on the lease
is commenced. TransTexas has not obtained title opinions on all of its
properties. The Company is uncertain as to the impact that failure to obtain a
title opinion has on its title to developed properties. TransTexas' properties
are subject to customary royalty interests, liens incident to operating
agreements, liens for current taxes, liens of vendors and lenders and other
burdens.
ITEM 3. LEGAL PROCEEDINGS
Palmyra Minerals. The suit concerns the claims of several royalty owners,
Palmyra Minerals Ltd., et al., under several oil and gas leases held by
TransTexas. Plaintiffs allege that TransTexas underpaid royalties due the
plaintiffs under the leases back to the date of first production from the
involved wells. Plaintiffs claim approximately $2.8 million, including alleged
underpayments and interest thereon. Plaintiffs assert entitlement to recovery
under various theories including breach of contract, violation of Section
91.401, et seq., of the Texas Natural Resources Code, breach of the implied and
express duty to market, negligence per se, and constructive trust. The
plaintiffs asserted identical claims in TransTexas' bankruptcy proceeding. The
claims have been consolidated with the adversary proceeding. This matter was
tried in the Bankruptcy Court on February 13 and 14, 2001. No decision has yet
been rendered. The Bankruptcy Court requested that post-trial briefs be filed by
May 14, 2001. A related issue presented to the Bankruptcy Court was whether the
discharge afforded by the confirmation of TransTexas' plan of reorganization
would preclude termination of such leases. An adverse judgment in this
consolidated action could result in termination of these leasehold interests
should TransTexas fail to pay the amount of the judgment.
TransTexas is a party to various claims and routine litigation arising in
the normal course of its business. Any obligations of the Company in respect of
such claims and litigation arising out of activities prior to the Petition Date
were discharged or otherwise disposed of pursuant to the Plan. Recovery of these
obligations, if any, will be limited to any collateral held by the claimant
and/or such claimant's pro rata share of amounts available to pay general
unsecured claims.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
three months ended January 31, 2001.
Executive Officers of the Registrant
The following persons were serving as executive officers of the Company as
of April 30, 2001:
NAME OFFICE AGE
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John R. Stanley................ Director and Chief Executive Officer 62
Arnold H. Brackenridge......... President and Chief Operating Officer 68
Edwin B. Donahue............... Vice President, Chief Financial Officer and Secretary 50
Simon Ward..................... Vice President and Treasurer 45
George C. Wright............... Vice President of Accounting 58
Alan Drane..................... Vice President of Operations 39
Set forth below is a description of the business experience of each of the
executive officers.
John R. Stanley has been a director and Chief Executive Officer of the
Company since May 1993. He has been Chairman of the Board since March 2000. Mr.
Stanley is also the founder, Chairman of the Board, Chief Executive Officer and
sole stockholder of TNGC Holdings Corporation, which is the sole stockholder of
TransAmerican Natural Gas Corporation ("TransAmerican"), which until March 2000,
was the parent corporation of TransAmerican Energy Corporation. Mr. Stanley has
operated TransAmerican since 1958.
Arnold H. Brackenridge was elected President and Chief Operating Officer of
the Company in March 2001. Prior to his retirement in 1999, Mr. Brackenridge was
President and Chief Operating Officer of the Company since May 1993. From 1984
to 1992, he was President and Chief Executive Officer of Wintershall Energy, a
business group of BASF Corporation. Mr. Brackenridge has over 40 years of
experience in the domestic and international oil and gas industry.
Edwin B. Donahue has been Vice President, Chief Financial Officer and
Secretary of the Company since May 1993. Mr. Donahue has been employed in
various positions with affiliates of the Company for over 20 years.
Simon Ward has been Vice President and Treasurer of the Company since June
1999. He served as Manager of Investor Relations from 1994 until June 1999. From
1976 until 1994, he held various positions with ICO, Inc., Baker Hughes Vetco
Services, Inc. and Vetco Services, Inc.
George C. Wright has been Vice President of Accounting of the Company since
March 1999. He has been employed by the Company and its affiliates since June
1982.
Alan Drane has been Vice President of Operations of the Company since
November 1995. He has been employed by the Company and its affiliates since May
1993.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since April 24, 2000, prices for the Class A Common Stock of TransTexas
have been quoted on NASDAQ's Over The Counter Bulletin Board ("OTCBB") under the
symbol "TTXG." Prior to the Effective Date (from May 4, 1999 through March 21,
2000), prices for the Company's common stock were quoted on OTCBB under the
symbol "TTGGQ." TransTexas' old common stock traded on the New York Stock
Exchange ("NYSE") under the symbol "TTG" from October 30, 1997 until trading was
suspended on April 19, 1999 due to the Company's bankruptcy filing. The
following table sets forth, on a per-share basis for the periods indicated, the
high and low sales or bid prices for TransTexas' Class A common stock or its old
common stock, as applicable, as reported by the OTCBB (for periods beginning May
4, 1999) and the high and low sales prices for TransTexas' old common stock on
the New York Stock Exchange (for the period from February 1, 1999 through April
19, 1999). Over-the-counter quotations reflect inter-dealer prices without
retail mark-up, mark-down or commission and may not necessarily reflect actual
transactions.
HIGH LOW
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Fiscal year ended January 31, 2001:
Fourth Quarter............................................ $17.00 $11.50
Third Quarter............................................. 22.00 6.50
Second Quarter(1)......................................... 8.00 4.00
First Quarter(2).......................................... 3.75 2.75
Fiscal year ended January 31, 2000:
Fourth Quarter............................................ $ 1.50 $ 0.13
Third Quarter............................................. 0.63 0.19
Second Quarter(1)......................................... 0.56 0.25
First Quarter(2).......................................... 1.69 0.38
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(1) High and low bid prices are available for the month of July 2000, but are
unavailable for the months of April and May 2000. Reported high and low sale
prices for the second quarter (including May, June and July 2000) were $8.00
and $4.00, respectively.
(2) High and low bid prices are not available for the first quarter. Reported
high and low sale prices for the first quarter were $4.00 and $1.50,
respectively.
On January 31, 2001, the Company's equity securities consisted of (i)
257,519,826 shares of Series A Senior Preferred Stock, $0.001 par value, (ii)
22,308,951 shares of Series A Junior Preferred Stock, $0.001 par value (iii)
1,002,751 shares of Class A Common Stock, $0.01 par value, (iv) 247,500 shares
of Class B Common Stock, $0.01 par value, and (v) warrants exercisable to
purchase 625,000 shares of Class A Common Stock at a price of $120 per share.
The Series A Senior Preferred Stock (the "Senior Preferred Stock") has a
liquidation preference of $1.00 per share plus accrued and unpaid dividends. The
terms of the Senior Preferred Stock include a cumulative dividend preference,
payable quarterly out of funds legally available therefor, if any. During the
first two years following the Effective Date, the Company is required to pay
cash dividends at a rate of $0.10 per share per annum, or, at its option,
in-kind dividends of additional shares of Senior Preferred Stock at a rate of
$0.20 per share per annum. The Senior Preferred Stock is mandatorily redeemable
on March 15, 2006 at a rate of $1.00 per share plus accrued and unpaid
dividends. One-half of the then-outstanding shares of Senior Preferred Stock is
mandatorily convertible into shares of Class A Common Stock at a rate of 0.3461
shares of Class A Common Stock per $1.00 of liquidation preference if either (i)
more than 75 million shares of Senior Preferred Stock remain outstanding after
March 15, 2006 or (ii) the Company fails to pay dividends on the Senior
Preferred Stock on any two dividend payment dates. The Certificate of
Designation for the Senior Preferred Stock includes restrictive covenants
comparable to those included in the Indenture.
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Holders of Senior Preferred Stock have the right, voting separately as a
class, to elect four (4) of the five (5) directors to the Board of Directors;
provided, that if the Company has not paid dividends with respect to the
payments due commencing March 15, 2002, such holders will have the right, voting
separately as a class, to elect all five (5) directors to the Board of
Directors. Holders of Senior Preferred Stock have one vote per share, voting
together with the Class A Common Stock, the Series A Junior Preferred Stock and
any other series or classes of stock entitled to vote with the Class A Common
Stock, on all matters on which the holders of the Class A Common Stock are
entitled to vote generally. Voting rights of the Senior Preferred Stock may not
be changed without the consent of the holders of 75% of the shares of Senior
Preferred Stock, voting as a class.
The Series A Junior Preferred Stock (the "Junior Preferred Stock") has a
liquidation preference of $1.00 per share plus accrued and unpaid dividends. The
terms of the Junior Preferred Stock include a cumulative dividend preference,
payable quarterly out of funds legally available therefor, if any. During the
first six years following the Effective Date, the Company is required to pay
in-kind dividends of additional shares of Junior Preferred Stock at a rate of
$0.10 per share per annum. Thereafter, dividends are payable both in cash at a
rate of $0.10 per share per annum and in-kind at a rate of $0.10 per share per
annum. The Junior Preferred Stock is mandatorily redeemable on March 15, 2010 at
a rate of $1.00 per share plus accrued and unpaid dividends. Each share of
Junior Preferred Stock is mandatorily convertible into shares of Class A Common
Stock at the rate of 0.1168 shares of Class A Common Stock per $1.00 of
liquidation preference if either (i) more than 75 million shares of Senior
Preferred Stock remain outstanding after March 15, 2006 or (ii) the Company
fails to pay dividends on the Senior Preferred Stock on any two dividend payment
dates. The Certificate of Designation for the Junior Preferred Stock includes
restrictive covenants comparable to those included in the Indenture. Such
covenants will become effective when all of the Notes (and any refinancings
thereof) have been repaid and all of the Senior Preferred Stock has been
redeemed.
Holders of Junior Preferred Stock have one vote per share, voting together
with holders of the Class A Common Stock, the Senior Preferred Stock and any
other series or classes of stock entitled to vote with the Class A Common Stock,
on all matters on which holders of the Class A Common Stock are entitled to
vote. If no shares of the Senior Preferred Stock are outstanding, holders of the
shares of Junior Preferred Stock will have the right, voting separately as a
class, to elect two directors to the Board of Directors. Voting rights of the
Junior Preferred Stock may not be changed without the consent of the holders of
75% of the shares of the Junior Preferred Stock, voting as a class.
Based on the reorganization value of the Company, the fair value of the
Junior Preferred Stock, together with the Senior Preferred Stock, (the
"Preferred Stock") and the Class A Common Stock, together with the Class B
Stock, (the "Common Stock"), was estimated to be zero. The Senior Preferred
Stock and Junior Preferred Stock are mandatorily redeemable in 2006 and 2010,
respectively. As a result, the Company accretes, in the form of a non-cash
dividend deducted to arrive at net income (loss) available to common
stockholders and charged to retained earnings, an amount equal to the combined
redemption amount totaling $243.2 million (initial liquidation value) over the
period prior to redemption. In addition, net income (loss) available to common
stockholders reflects dividends earned and accrued on the Preferred Stock.
Accrued preferred stock dividends are recorded at fair value. Any difference
between the initial fair value and the redemption value will be accreted in the
same manner as described above. For the year ended January 31, 2001, accretion
of Preferred Stock totaled $25.7 million.
On April 24, 2000, prices for the Class A Common Stock commenced quotation
on the OTCBB under the symbol "TTXG." As of April 20, 2001, there were 124
record holders of the Class A Common Stock. The last sale price of the Class A
Common Stock on April 20, 2001 was $14.75.
Pursuant to the terms of the Company's Preferred Stock, if either (i) more
than 75 million shares of Senior Preferred Stock are outstanding at any time
after March 15, 2006 or (ii) the Company fails to pay dividends on the Senior
Preferred Stock on any two dividend payment dates, one-half of the Senior
Preferred Stock and all of the Junior Preferred Stock would automatically
convert into shares of Class A Common Stock. Such a conversion would result in
very substantial dilution to the holders of the Class A Common Stock.
9
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On July 25, August 30, and October 31, 2000, the Board of Directors of the
Company authorized the payment of quarterly dividends to the holders of the
Company's Preferred Stock of record on June 1, September 1, and December 1,
2000, respectively. The quarterly dividends were paid in-kind on August 15,
September 15, and December 15, 2000 in additional shares of Preferred Stock of
the same class at an annual rate of $0.20 per share for each share of Series A
Senior Preferred Stock and at an annual rate of $0.10 per share for each share
of Series A Junior Preferred Stock in accordance with the Certificate of
Designation for Series A Senior Preferred Stock and the Certificate of
Designation for Series A Junior Preferred Stock, respectively. Fractional shares
were not issued, but were settled in cash.
The Company has not paid any cash dividends on its common stock since
inception, except a dividend of approximately $33 million to its then parent
TransAmerican from the proceeds of its initial public offering in March 1994.
The terms of the Company's senior secured notes due 2005, its oil and gas credit
facility, its accounts receivable facility and its Preferred Stock prohibit the
payment of dividends. Because of these prohibitions, the Company does not
anticipate paying any dividends on its common stock in the foreseeable future.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
For a description of the securities issued by the Company pursuant to the
Plan on the Effective Date, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." All of the securities issued pursuant to the Plan were issued
pursuant to the exemption from registration provided in Section 1145(a)(1) of
the Bankruptcy Reform Act of 1978, as amended, Title 11, United States Code. The
Company did not receive any proceeds from the issuance of these securities.
On March 9, 2001, the Board of Directors of the Company authorized the
Amendment of the Warrant Agreement dated March 15, 2000 between the Company and
ChaseMellon Shareholder Services, L.L.C. to provide for an increase in the
authorized number of warrants the Company may issue from 625,000 to 738,004. The
Warrant Agreement had inadvertently failed to provide for additional reserve
warrants for the rounding up provisions of the Warrant Agreement and for
additional warrants to be issued to Mr. Stanley pursuant to the terms of his
Employment Agreement.
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected historical financial data for the
Company as of and for each of the periods presented. From April 19, 1999 through
March 17, 2000, TransTexas operated under Chapter 11 of the United States
Bankruptcy Code. The Company adopted fresh-start reporting as of January 31,
2000; therefore, the Company does not believe that the consolidated balance
sheet data as of January 31, 2000 and 2001 is comparable to that of previous
years in certain material respects. The following data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's financial statements included
elsewhere in this report.
SUCCESSOR PREDECESSOR
--------- -------------------------------------------
YEAR ENDED JANUARY 31,
-------------------------------------------------------
2001 2000 1999 1998 1997
--------- --------- --------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA: |
Gas, condensate and NGL revenues................ $187,883 | $ 112,898 $ 92,159 $167,758 $366,367
Transportation revenues......................... -- | -- -- 12,055 34,423
Gain (loss) on the sale of assets............... -- | (438) 61,247 543,365 7,856
Other revenues.................................. 2,208 | 2,770 4,200 3,313 609
-------- | --------- --------- -------- --------
190,091 | 115,230 157,606 726,491 409,255
Operating costs and expenses.................... 26,283 | 29,935 30,322 65,576 139,927
Depreciation, depletion, and amortization....... 81,483 | 75,044 86,137 82,659 132,453
General and administrative expenses............. 20,303 | 19,883 21,938 48,156 45,596
Litigation settlements.......................... -- | -- -- -- (96,000)
Loss on asset impairment........................ -- | -- 425,966 -- --
-------- | --------- --------- -------- --------
Operating income (loss)....................... 62,022 | (9,632) (406,757) 530,100 187,279
Net interest expense(1)......................... 33,495 | 38,054 78,716 68,187 91,463
Reorganization items............................ -- | (50,511) -- -- --
Income taxes and other.......................... 9,984 | 10,000 (38,882) 161,669 12,491
Extraordinary (gain) loss, net of taxes......... -- | (436,490) 1,142 72,043 --
-------- | --------- --------- -------- --------
Net income (loss)............................. $ 18,543 | $ 429,315 $(447,733) $228,201 $ 83,325
======== | ========= ========= ======== ========
Accretion of preferred stock.................... $ 25,722 | $ -- $ -- $ -- $ --
======== | ========= ========= ======== ========
Net income (loss) available to common |
stockholders.................................. $ (7,179) | $ 429,315 $(447,733) $228,201 $ 83,325
======== | ========= ========= ======== ========
Net income (loss) per share: |
Income (loss) before extraordinary item......... $ (5.74) | $ (0.13) $ (7.76) $ 4.49 $ 1.13
Extraordinary item............................ -- | 7.59 (.02) (1.08) --
-------- | --------- --------- -------- --------
Net income (loss)............................. $ (5.74) | $ 7.46 $ (7.78) $ 3.41 $ 1.13
======== | ========= ========= ======== ========
Dividends declared per common share(2).......... -- | -- -- -- --
SUCCESSOR PREDECESSOR
------------------- ---------------------------------
YEAR ENDED JANUARY 31,
-------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- | --------- -------- ----------
|
BALANCE SHEET DATA: |
Working capital (deficit)(3).................... $ 20,589 $ 8,900 | $ 27,072 $(22,122) $ 71,586
Net property and equipment...................... 332,328 327,087 | 292,143 701,598 846,393
Total assets.................................... 402,243 369,254 | 345,367 816,635 1,053,152
Liabilities subject to compromise............... -- -- | 718,139 -- --
Total debt(4)................................... 285,540 251,570 | 56,260 630,103 941,922
Redeemable preferred stock...................... 25,722 -- | -- -- --
Stockholders' equity (deficit).................. 17,846 -- | (430,015) 24,637 (150,795)
- ---------------
(1) Interest expense for the year ended January 31, 2000 excludes $55.5 million
in interest stayed as a result of the bankruptcy filing.
(2) TransTexas' existing debt and equity instruments contain certain
restrictions with respect to the payment of dividends on its common stock.
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(3) Working capital as of January 31, 1997 includes $46.0 million of cash
restricted for the payment of interest.
(4) Excludes long-term debt included in liabilities subject to compromise of
$583.1 million as of January 31, 1999.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with TransTexas'
Consolidated Financial Statements and Notes thereto included under Item 8 of
this report.
RESULTS OF OPERATIONS
TransTexas' results of operations are dependent upon natural gas production
volumes and unit prices from sales of natural gas, condensate and natural gas
liquids. The profitability of TransTexas also depends on its ability to minimize
finding and lifting costs and maintain its reserve base while maximizing
production. See "Liquidity and Capital Resources."
From April 19, 1999 through March 17, 2000, the Company operated as a
debtor-in-possession under Chapter 11 of the United States Bankruptcy Code.
Effective January 31, 2000, the Company adopted fresh-start reporting in
accordance with AICPA Statement of Position 90-7. Pursuant to fresh-start
reporting, a new reporting entity was created. The new reporting entity's assets
were recorded at the reorganization value based on the confirmed Plan of
Reorganization, and postpetition liabilities were recorded at the present value
of amounts to be paid. The Company's reorganization value was estimated by
management to be $369 million based primarily on an analysis of discounted cash
flows. The value of postpetition liabilities was estimated to be $369 million.
The present value of liabilities was adjusted for imputed interest at a rate of
15% for the period from February 1, 2000 to the Effective Date of the Plan. The
imputed interest was charged to interest expense during the first quarter of
fiscal 2001.
TransTexas' operating data for the years ended January 31, 2001, 2000 and
1999 are as follows:
YEAR ENDED JANUARY 31,
------------------------
2001 2000 1999
------ ------ ------
Sales volumes:
Gas (Bcf)................................................ 26.8 27.8 35.6
NGLs (MMgals)............................................ 48.3 44.0 8.4
Condensate and oil (MBbls)............................... 1,559 1,827 1,120
Average prices:
Gas (dry) (per Mcf)...................................... $ 4.73 $ 2.32 $ 2.10
NGLs (per gallon)........................................ .49 .32 .21
Condensate and oil (per Bbl)............................. 30.04 19.88 11.91
Number of gross wells drilled.............................. 16 14 38
Percentage of wells completed.............................. 69% 43% 61%
TransTexas uses the full-cost method of accounting for exploration and
development costs. Under the full-cost method, the cost for successful, as well
as unsuccessful, exploration and development activities is capitalized and
amortized on a unit-of-production basis over the life of the remaining proved
reserves. Net capitalized costs of gas and oil properties are limited to the
lower of unamortized cost or the cost center ceiling, defined as the sum of the
present value (10% discount rate) of estimated unescalated future net revenues
from proved reserves; plus the cost of properties not being amortized, if any;
plus the lower of cost or estimated fair value of unproved properties included
in the costs being amortized, if any; less related income tax effects. For the
year ended January 31, 1999, TransTexas recorded pre-tax impairments of its gas
and oil properties aggregating $426 million primarily as a result of the
limitations on net capitalized costs of gas and oil properties. Due to higher
gas and oil prices realized by the Company subsequent to January 31, 1999, the
impairment was less than would have been recorded using January 31, 1999 prices.
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A summary of TransTexas' operating expenses is set forth below (in millions
of dollars):
SUCCESSOR PREDECESSOR
--------- -------------
YEAR ENDED JANUARY 31,
-------------------------
2001 2000 1999
------- | ----- -----
|
Operating costs and expenses: |
Lease..................................................... $10.7 | $10.9 $11.2
Pipeline and gathering.................................... 8.4 | 9.2 8.7
Other..................................................... -- | -- 3.3
----- | ----- -----
19.1 | 20.1 23.2
Taxes other than income taxes(1)............................ 7.2 | 9.8 7.1
----- | ----- -----
$26.3 | $29.9 $30.3
===== | ===== =====
- ---------------
(1) Taxes other than income taxes include severance, property and other taxes.
TransTexas' average depletion rates have been as follows:
SUCCESSOR PREDECESSOR
--------- -------------
YEAR ENDED JANUARY 31,
-------------------------
2001 2000 1999
-------- | ----- -----
|
Depletion rates (per Mcfe).................................. $2.22 | $1.89 $1.96
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities," which was amended by
Statement of Financial Accounting Standards No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities." These pronouncements
establish accounting and reporting standards for derivative instruments and for
hedging activities, which generally require recognition of all derivatives as
either assets or liabilities in the balance sheet at their fair value. The
accounting for changes in fair value depends on the intended use of the
derivative and its resulting designation. The Company adopted SFAS 133 on
February 1, 2001 and recorded a cumulative effect charge to earnings of
approximately $1.3 million to recognize the fair market value of its derivative
instruments.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." Management of the Company believes that SAB No. 101 will not have a
material impact on the Company.
The Emerging Issues Task Force ("EITF") issued EITF 00-10, "Accounting for
Shipping and Handling Fees and Costs," which requires that certain
transportation fees that were previously netted against revenues be reclassified
as costs and expenses. The Company adopted the provisions of EITF 00-10 for the
year ended January 31, 2001. As a result, certain transportation fees have been
reclassified to costs and expenses. Prior period results have been reclassified
to conform to the current presentation.
YEAR ENDED JANUARY 31, 2001, COMPARED WITH THE YEAR ENDED JANUARY 31, 2000
Gas, condensate and NGL revenues for the year ended January 31, 2001
increased by $75.0 million from the prior period, due primarily to higher prices
for all products and an increase in NGL sales volumes. The average monthly
prices received per Mcf of gas ranged from $2.64 to $9.75 in the year ended
January 31, 2001, compared to a range of $1.74 to $2.90 in the prior period.
Other revenues decreased by $0.6 million for the year ended January 31, 2001 due
to lower transportation and gathering revenues. For the year ended January 31,
2000, TransTexas recognized a pre-tax loss of $0.4 million on the sale of
certain vehicles and other equipment.
Lease operating expenses for the year ended January 31, 2001 decreased $0.2
million from the prior period due primarily to decreases in maintenance costs.
Pipeline and gathering expenses decreased $0.8 million primarily due to the
termination of certain natural gas transportation contracts in connection with
the
13
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Company's bankruptcy proceedings. Depreciation, depletion and amortization
expense for the year ended January 31, 2001 increased $6.4 million due to an
increase in the depletion rate resulting from higher cost properties and
unsuccessful drilling results in prior periods. General and administrative
expenses increased by $0.4 million primarily as a result of increased
professional fees and higher insurance costs, partially offset by a lower
provision for bad debts. Taxes other than income taxes decreased by $2.6 million
over the prior period due primarily to decreases in severance taxes since a
greater number of TransTexas' wells qualified for exemption from severance
taxes.
Interest expense for the year ended January 31, 2001 decreased $4.5 million
due primarily to the Company's reorganization as of January 31, 2000 which
resulted in an overall decrease in the amount of outstanding debt.
Reorganization items of $8.3 million for the year ended January 31, 2000
included legal and other professional fees and expenses directly related to
TransTexas' Chapter 11 proceedings and an adjustment to record assets at
reorganization value. The extraordinary item for the year ended January 31, 2000
represents the discharge of certain liabilities subject to compromise pursuant
to the Plan.
Based on the reorganization value of the Company, the fair value of the
Preferred Stock and Common Stock was estimated to be zero. The Senior Preferred
Stock and Junior Preferred Stock are mandatorily redeemable in 2006 and 2010,
respectively. As a result, the Company will accrete, in the form of a non-cash
dividend deducted from net income available to common stockholders and charged
to retained earnings, an amount equal to the combined redemption amount totaling
$243.2 million (initial liquidation value) over the period prior to redemption.
In addition, earnings available to common stockholders will be reduced by
dividends paid on the Preferred Stock. For the year ended January 31, 2001,
accretion of Preferred Stock totaled $25.7 million.
YEAR ENDED JANUARY 31, 2000, COMPARED WITH THE YEAR ENDED JANUARY 31, 1999
Gas, condensate and NGL revenues for the year ended January 31, 2000
increased by $20.7 million from the prior period due primarily to increases in
condensate and NGL sales volumes and higher prices for all products, offset in
part by a decrease in natural gas sales volumes. The average monthly prices
received per Mcf of gas ranged from $1.74 to $2.90 in the year ended January 31,
2000, compared to a range of $1.90 to $2.36 in the prior period. Other revenues
decreased by $1.4 million for the year ended January 31, 2000 due to the sale of
certain drilling services division assets in the prior period. For the year
ended January 31, 1999, TransTexas recognized a pretax gain of $63.6 million
from the sale of certain drilling services division assets and a pretax loss of
$2.4 million due to postclosing adjustments to the Lobo Sale purchase price.
Lease operating expenses for the year ended January 31, 2000 decreased $0.3
million from the prior period due primarily to decreases in maintenance costs.
Pipeline and gathering expenses increased $0.5 million primarily due to
operations at Galveston Bay Processing's natural gas treating facility at
Winnie, Texas. Other operating expenses for the year ended January 31, 2000
decreased $3.3 million due to the sale of certain drilling assets in the prior
period. Depreciation, depletion and amortization expense for the year ended
January 31, 2000 decreased $11.1 million due to a decrease in natural gas
volumes and a $0.07 decrease in the depletion rate. General and administrative
expenses decreased by $2.1 million primarily as a result of a decrease in
personnel and related costs. Taxes other than income taxes increased by $2.7
million over the prior period due primarily to increases in property taxes. The
impairment loss of $426.0 million for the year ended January 31, 1999 related to
a write-down of $420.5 million of TransTexas' net capitalized costs of gas and
oil properties to the cost center ceiling and a $5.5 million write-down of an
underutilized pipeline system that was exchanged as part of a settlement of
certain natural gas delivery commitments.
Interest income for the year ended January 31, 2000 decreased by $0.7
million as compared to the prior period due to lower cash balances available for
investment. Interest expense decreased $41.4 million primarily as a result of
discontinuing interest accruals on prepetition unsecured debt obligations.
Reorganization items of $8.3 million for the year ended January 31, 2000
included legal and other professional fees and expenses directly related to
TransTexas' Chapter 11 proceedings and an adjustment to record assets at
reorganization value. The extraordinary item for the year ended January 31, 2000
represents the discharge of certain liabilities subject to compromise pursuant
to the Plan.
14
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LIQUIDITY AND CAPITAL RESOURCES
On April 19, 1999, TransTexas filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code. As a result of the Chapter 11 filing,
the Company was prohibited from paying, and creditors were prohibited from
attempting to collect, claims or debts arising prior to the bankruptcy. The
United States Bankruptcy Court for the Southern District of Texas, Corpus
Christi Division confirmed the Company's Second Amended, Modified and Restated
Plan of Reorganization dated January 25, 2000 (the "Plan") on February 7, 2000.
The Effective Date of the Plan is March 17, 2000. In connection with the
Effective Date of the Plan, the Company:
(1) paid approximately $2.6 million in cash to settle certain accounts
payable and royalty claims;
(2) agreed to pay approximately $28.3 million to settle certain
accounts payable, severance, property and franchise taxes. The
$28.3 million is payable in quarterly installments generally over
a five year period with stated interest ranging from 8% to 10%.
The Company paid $7.6 million of this amount in fiscal 2001.
(3) paid approximately $21.9 million in cash, issued $200 million
principal amount of 15% Senior Secured Notes due 2005 (the
"Notes"), 222,455,320 shares of Series A Senior Preferred Stock,
20,716,080 shares of Series A Junior Preferred Stock, 1,002,751
shares of Class A Common Stock, 247,500 shares of Class B Common
Stock and 625,000 warrants to purchase Class A Common Stock to
settle the TransTexas Senior Secured Notes Claims. A portion of
this distribution was reallocated pursuant to the Plan as follows:
(a) $20 million in cash and five million shares of Senior Preferred
Stock to settle on a pro rata basis all general prepetition
unsecured claims;
(b) $1.8 million in cash, 2,455,320 shares of Senior Preferred
Stock and all of the Junior Preferred Stock to the holders of
TransTexas 13 3/4% Senior Subordinated Notes;
(c) 52,500 shares of Class A Common Stock and warrants exercisable
to purchase 109,879 shares of Class A Common Stock at a price
of $120 per share to the holders of the old TransTexas common
stock who are not Affiliates of the Debtor (as defined in the
Plan); and
(d) all of the Class B Common Stock and warrants exercisable to
purchase 515,625 shares of Class A Common Stock at an exercise
price of $120 per share to John R. Stanley.
(4) issued $6.7 million in secured notes in exchange for old secured
notes and related accrued interest; and
(5) canceled all of the old TransTexas common stock and 13 3/4% Senior
Subordinated Notes.
On the Effective Date, the Company, as Borrower, and Galveston Bay
Processing Corporation and Galveston Bay Pipeline Company, as Guarantors,
entered into an Oil and Gas Revolving Credit and Term Loan Agreement, dated as
of March 15, 2000 (the "Oil and Gas Facility") with GMAC Commercial Credit LLC
("GMACC"), as a Lender and as Agent. The Oil and Gas Facility consists of a term
loan (the "Term Loan") in the amount of $22.5 million and a revolving facility
(the "Revolving Loan") in a maximum amount of $30 million (all of which was
funded on the Effective Date). The Term Loan bears interest at a rate of 14% per
annum and the Revolving Loan bears interest at a rate of 13 1/2% per annum.
Interest on the Term Loan and the Revolving Loan is payable monthly in arrears.
Principal amortization of the Term Loan is due in 20 quarterly installments of
$56,250 each beginning June 14, 2000, with the balance due March 14, 2005;
however, the Company may, and in certain circumstances must, make prepayments of
such amount. If, subsequent to such prepayments, the Company demonstrates
sufficient collateral value meeting the requirements of the Oil and Gas Facility
provisions, the Company may be entitled to borrow additional advances under the
Revolving Loan. The Oil and Gas Facility is secured by substantially all of the
assets of the Company. The security interest in accounts receivable and
inventory securing the Oil and Gas Facility is subordinated to the security
interest of GMACC under the Accounts Receivable Facility.
15
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On the Effective Date, the Company, as Issuer, Galveston Bay Pipeline
Company and Galveston Bay Processing Corporation, as Guarantors, and Firstar
Bank, N.A., as Trustee, entered into an Indenture dated as of March 15, 2000,
pursuant to which the Company issued the Notes. Interest on the Notes is due
semi-annually on March 15 and September 15. The Notes are secured by
substantially all of the assets of the Company other than accounts receivable
and inventory. The Indenture contains certain covenants that restrict the
Company's ability to incur indebtedness, engage in related party transactions,
dispose of assets or engage in sale/leaseback transactions, issue dividends on
common stock, change its line of business, consolidate or merge with or into
another entity or convey, transfer or lease all or substantially all of its
assets, and suffer a change of control. The security interest in favor of the
Trustee is subordinated to the Security Interest in favor of the Agent under the
Oil and Gas Facility.
On the Effective Date, the Company and GMACC entered into a Third Amended
and Restated Accounts Receivable Management and Security Agreement, dated as of
March 15, 2000 (the "Accounts Receivable Facility"). The Accounts Receivable
Facility is a revolving credit facility secured by accounts receivable and
inventory. The maximum loan amount under the facility is $20 million, against
which the Company may from time to time, subject to the conditions of the
Accounts Receivable Facility, borrow, repay and reborrow. Advances under the
facility bear interest at a rate per annum equal to the higher of (i) the prime
commercial lending rate of The Bank of New York plus 1/2 of 1%, and (ii) the
Federal Funds Rate plus 1% payable monthly in arrears. As of January 31, 2001,
the outstanding principal balance under the Accounts Receivable Facility was
$17.9 million with availability for additional advances of approximately $2.1
million and will be due on March 14, 2005.
As of the Effective Date, the Company had outstanding 222,455,320 shares of
Series A Senior Preferred Stock (the "Senior Preferred Stock") with a
liquidation preference of $1.00 per share plus accrued and unpaid dividends. The
terms of the Senior Preferred Stock include a cumulative dividend preference,
payable quarterly out of funds legally available therefor, if any. During the
first two years following the Effective Date, the Company will be required to
pay cash dividends at a rate of $0.10 per share per annum, or, at its option,
in-kind dividends of additional shares of Senior Preferred Stock at a rate of
$0.20 per share per annum. The Senior Preferred Stock is mandatorily redeemable
on March 15, 2006 at a rate of $1.00 per share plus accrued and unpaid
dividends. One-half of the then-outstanding shares of Senior Preferred Stock is
mandatorily convertible into shares of Class A Common Stock at a rate of 0.3461
shares of Class A Common Stock per $1.00 of liquidation preference if either (i)
more than 75 million shares of Senior Preferred Stock remain outstanding after
March 15, 2006 or (ii) the Company fails to pay dividends on the Senior
Preferred Stock on any two dividend payment dates. The Certificate of
Designation for the Senior Preferred Stock includes restrictive covenants
comparable to those included in the Indenture.
As of the Effective Date, the Company had outstanding 20,716,080 shares of
Series A Junior Preferred Stock (the "Junior Preferred Stock" and, together with
the Senior Preferred Stock, the "Preferred Stock") with a liquidation preference
of $1.00 per share plus accrued and unpaid dividends. The terms of the Junior
Preferred Stock include a cumulative dividend preference, payable quarterly out
of funds legally available therefor, if any. During the first six years
following the Effective Date, the Company will be required to pay in-kind
dividends of additional shares of Junior Preferred Stock at a rate of $0.10 per
share per annum. Thereafter, dividends will be payable both in cash at a rate of
$0.10 per share per annum and in-kind at a rate of $0.10 per share per annum.
The Junior Preferred Stock is mandatorily redeemable on March 15, 2010 at a rate
of $1.00 per share plus accrued and unpaid dividends. Each share of Junior
Preferred Stock is mandatorily convertible into shares of Class A Common Stock
at the rate of 0.1168 shares of Class A Common Stock per $1.00 of liquidation
preference if either (i) more than 75 million shares of Senior Preferred Stock
remain outstanding after March 15, 2006 or (ii) the Company fails to pay
dividends on the Senior Preferred Stock on any two dividend payment dates. The
Certificate of Designation for the Junior Preferred Stock includes restrictive
covenants comparable to those included in the Indenture. Such covenants will
become effective when all of the Notes (and any refinancings thereof) have been
repaid and all of the Senior Preferred Stock has been redeemed.
On July 25, August 30, and October 31, 2000, the Board of Directors of the
Company authorized the payment of quarterly dividends to the holders of the
Company's Preferred Stock of record on June 1,
16
19
September 1, and December 1, 2000, respectively. The quarterly dividends were
paid in-kind on August 15, September 15, and December 15, 2000 in additional
shares of Preferred Stock of the same class at an annual rate of $0.20 per share
for each share of Series A Senior Preferred Stock and at an annual rate of $0.10
per share for each share of Series A Junior Preferred Stock in accordance with
the Certificate of Designation for Series A Senior Preferred Stock and the
Certificate of Designation for Series A Junior Preferred Stock, respectively.
Fractional shares were not issued, but were settled in cash.
In 1998, TransTexas entered into two production payment agreements with an
unaffiliated third party pursuant to which the Company conveyed certain
properties (the "Original Subject Interests") in the form of a term overriding
royalty interest. In March 2000, the Original Subject Interests were reconveyed
to TransTexas and a new production payment drilling program agreement was
entered into between TransTexas and two unaffiliated third parties in the form
of a term overriding royalty interest carved out of and burdening certain
properties including the Original Subject Interests (collectively, the "New
Subject Interests"). The Company has the right to offer additional properties
("Offered Wells") to the production payment parties at a negotiated purchase
price, up to an aggregate maximum for all such wells, of up to $52 million. Upon
acceptance of the Offered Wells, one of the third parties would be committed to
pay to the Company either the drilling costs of the Offered Wells or, at the
third party's discretion, a higher, mutually agreed upon amount. The production
payment calls for the repayment of the primary sum plus an amount equivalent to
a 15% annual interest rate on the unpaid portion of such primary sum. The Oil
and Gas Facility places certain restrictions on the amount that may be
outstanding under the production payment. As of January 31, 2001, the aggregate
purchase price of all wells purchased pursuant to this production payment
drilling program was $27 million and the outstanding balance of the production
payment was $14.8 million, of which $2.1 million attributable to produced
reserves is included in accrued liabilities.
In June 2000, under provisions of the new production payment, the Company
offered an additional well ("Offered Well") to the two unaffiliated third
parties. One of the third parties agreed to a negotiated purchase price for the
additional Offered Well of $8.0 million. In September and November 2000, the
Company closed the Second and Third Supplements to the production payment. In
exchange for additional properties being made subject to the production payment,
the Company received $10 million and $4.5 million, respectively. In February
2001, the Company closed the Fourth Supplement to the production payment. In
exchange for additional properties being made subject to the production payment,
the Company received $19.8 million.
In connection with the production payment, the Company entered into various
marketing and processing agreements with one of the third parties. Pursuant to
these agreements, the Company will pay a nominal marketing fee with respect to
the Company's production associated with the New Subject Interests. In addition,
the third party will pay a fee for certain processing services to be provided by
Galveston Bay Processing. See Item 7A for information about certain hedging
provisions in the new production payment agreements.
TransTexas is highly leveraged and has significant cash requirements for
debt service and significant charges for Preferred Stock dividends to net income
available for common stockholders.
In order to maintain or increase its proved oil and gas reserves,
TransTexas must continue to make substantial capital expenditures for the
exploration and development of its natural gas and oil prospects. For the year
ended January 31, 2001, total capital expenditures incurred were $105 million,
including $21 million for nonproducing leases, $80 million for drilling and
development and $4 million for gas gathering, other equipment and seismic.
Capital expenditures for fiscal 2002 are estimated to be approximately $114
million. Management plans to fund TransTexas' 2002 debt service requirements and
capital expenditures with cash flows from existing producing properties, certain
identified relatively low risk prospects to be drilled and completed during
fiscal 2002 and additional production payment financing.
Should TransTexas' drilling prospects not be productive or should oil and
gas prices decline for a prolonged period, absent other sources of capital, the
Company would substantially reduce its capital expenditures, which would limit
its ability to maintain or increase production and in turn meet its debt service
requirements. Asset sales and financings are restricted under the terms of
TransTexas' debt documents and Senior Preferred Stock. In August 2000,
TransTexas sold certain producing properties in Jim Hogg County,
17
20
Texas for a sales price of $6.5 million, exclusive of closing costs. In December
2000, TransTexas sold certain producing properties in Kent, Starr, Wharton and
Zapata Counties, Texas for a sales price of $11.0 million, exclusive of closing
costs.
Potential Tax Liabilities
Part of the refinancing of TransAmerican's debt in 1993 involved the
cancellation of approximately $65.9 million of accrued interest and of a
contingent liability for interest of $102 million owed by TransAmerican.
TransAmerican has taken the federal tax position that the entire amount of this
debt cancellation is excluded from its income under the cancellation of
indebtedness provision (the "COD Exclusion") of the Internal Revenue Code of
1986, as amended (the "Tax Code"), and has reduced its tax attributes (including
its net operating loss and credit carryforwards) as a consequence of the COD
Exclusion. No federal tax opinion was rendered with respect to this transaction,
however, and TransAmerican has not obtained a ruling from the Internal Revenue
Service ("IRS") regarding this transaction. TransTexas believes that there is
substantial legal authority to support the position that the COD Exclusion
applies to the cancellation of TransAmerican's indebtedness. However, due to
factual and legal uncertainties, there can be no assurance that the IRS will not
challenge this position, or that any such challenge would not be upheld. Prior
to the Effective Date, TransTexas filed a consolidated tax return with
TransAmerican. Income taxes were due from or payable to TransAmerican in
accordance with a tax allocation agreement, as amended, between TransTexas, TNGC
Holdings Corporation, TransAmerican and TransAmerican's other subsidiaries (the
"Tax Allocation Agreement"). Under the Tax Allocation Agreement, TransTexas has
agreed to pay an amount equal to any federal tax liability (which would be
approximately $25.4 million) attributable to the inapplicability of the COD
Exclusion. Any such tax would be offset in future years by alternative minimum
tax credits and retained loss and credit carryforwards to the extent recoverable
from TransAmerican.
As a former member of the affiliated group for tax purposes (the "TNGC
Consolidated Group") which included TNGC Holdings Corporation, the sole
stockholder of TransAmerican ("TNGC"), TransAmerican, TEC, TransTexas and TARC,
TransTexas will be severally liable for any tax liability resulting from any
transaction of the TNGC Consolidated Group that occurred during any taxable year
of the TNGC Consolidated Group during which TransTexas was a member, including
the above-described transactions. The IRS has commenced an audit of the
consolidated federal income tax returns of the TNGC Consolidated Group for its
taxable years ended July 31, 1994 and July 31, 1995. The Company has not been
advised by the IRS as to whether any tax deficiencies will be proposed by the
IRS as a result of its review.
TransTexas expects that a significant portion of its net operating loss
carryovers ("NOLs") will be eliminated and the use of those NOLs that are not
eliminated will be severely restricted as a consequence of the Plan. In
addition, certain other tax attributes of TransTexas may under certain
circumstances be eliminated or reduced as a consequence of the Plan. The
potential elimination or reduction of NOLs and such other tax attributes may
substantially increase the amount of tax payable by TransTexas.
Inflation and Changes in Prices
TransTexas' results of operations and the value of its gas properties are
highly dependent upon the prices TransTexas receives for its natural gas,
condensate and oil. Substantially all of TransTexas' sales of natural gas,
condensate and oil are made pursuant to long-term contracts at market prices.
Accordingly, the prices received by TransTexas for its natural gas production
are dependent upon numerous factors beyond the control of TransTexas, including
the level of consumer product demand, the North American supply of natural gas,
government regulations and taxes, the price and availability of alternative
fuels, the level of foreign imports of oil and natural gas and the overall
economic environment. Demand for natural gas is seasonal, with demand typically
higher during the summer and winter, and lower during the spring and fall, with
concomitant changes in price. As a result of high demand for drilling services,
TransTexas experienced increases in the cost of oilfield services and equipment
used in exploration and development drilling, and to a lesser extent well
completion and production costs.
18
21
Any significant decline in current prices for natural gas could have a
material adverse effect on TransTexas' financial condition, results of
operations and quantities of reserves recoverable on an economic basis. Based on
an assumed average net daily production level of approximately 89 MMcfd,
TransTexas estimates that a $0.10 per MMBtu change in average gas prices
received would change annual operating income by approximately $2.4 million.
Forward-Looking Statements
Forward-looking statements, within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
are included throughout this report. All statements other than statements of
historical facts included in this report regarding TransTexas' financial
position, business strategy, and plans and objectives of management for future
operations, including, but not limited to words such as "anticipates,"
"expects," "estimates," "believes" and "likely" indicate forward-looking
statements. TransTexas' management believes its current views and expectations
are based on reasonable assumptions; however, there are significant risks and
uncertainties that could significantly affect expected results. Factors that
could cause actual results to differ materially from those in the
forward-looking statements include fluctuations in the commodity prices for
natural gas, crude oil, condensate and natural gas liquids, the extent of
TransTexas' success in discovering, developing and producing reserves,
conditions in the equity and capital markets, competition and the ultimate
resolution of litigation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from adverse changes in prices for
natural gas, condensate and oil and interest rates as discussed below.
The Company's revenues, profitability, access to capital and future rate of
growth are substantially dependent upon the prevailing prices of natural gas,
condensate and oil. These prices are subject to wide fluctuations in response to
relatively minor changes in supply and demand and a variety of additional
factors beyond the Company's control. From time to time, the Company has
utilized hedging transactions with respect to a portion of its gas and oil
production to achieve a more predictable cash flow, as well as to reduce
exposure to price fluctuations. While hedging limits the downside risk of
adverse price movements, it may also limit future revenues from favorable price
movements. Because gains or losses associated with hedging transactions are
included in gas and oil revenues when the hedged volumes are delivered, such
gains and losses are generally offset by similar changes in the realized prices
of commodities.
Pursuant to the terms of the Company's production payment agreement entered
into in March 2000, the production payment purchasers entered into the following
hedge arrangements with respect to a portion of the natural gas and condensate
production associated therewith and which effectively hedge a portion of the
Company's production.
CONTRACT PRICE
----------------
COLLAR
TOTAL VOLUMES ----------------
PERIOD IN MMBTUS/BBLS FLOOR CEILING
- ------ -------------- ------ -------
Natural gas:
April 2000 -- October 2000......................... 3,745,000 $ 2.10 $ 3.40
November 2000 -- March 2001........................ 1,887,500 2.35 3.95
Condensate:
April 2000 -- September 2000....................... 228,750 18.50 32.50
October 2000 -- March 2001......................... 182,000 18.50 29.25
Under these contracts, the counterparty is required to make payment to the
production payment purchasers if the settlement price (based on New York
Mercantile Exchange prices) for the period is below the floor, and the
production payment purchasers are required to make payment to the counterparty
if the settlement price for any period is above the ceiling price. For the year
ended January 31, 2001, the Company recognized hedging losses of $6.7 million
under these contracts. As of January 31, 2001, the Company had
19
22
additional deferred losses of $1.9 million under these contracts. The Company
has been advised that the production payment purchasers are examining the
possibility of entering into additional hedging arrangements in connection with
the production payment agreement.
In November 2000, the Company entered into the following commodity price
hedging arrangement with respect to a portion of the Company's natural gas
production.
CONTRACT PRICE
---------------
COLLAR
TOTAL VOLUMES ---------------
PERIOD IN MMBTUS FLOOR CEILING
- ------ ------------- ----- -------
Natural gas:
December 2000 -- November 2001........................ 7,300,000 $3.50 $6.00
Under terms of this collar transaction, the counterparty is required to
make payment to the Company if the settlement price (based on a published
industry index of natural gas prices at Houston Ship Channel) for any settlement
period is below the floor price for such transaction and the Company is required
to make payment to the counterparty if the settlement price for any settlement
period is above the ceiling price for such transaction. This hedging arrangement
is supported by a letter of credit for drawings by the counterparty of up to
$6.5 million. For the year ended January 31, 2001, the Company recognized
hedging losses of $2.4 million under this contract. As of January 31, 2001, the
Company had additional deferred losses of $0.1 million under this contract.
Because substantially all of its long-term obligations at January 31, 2001
are at fixed rates, the Company considers its interest rate exposure to be
minimal. The Company's borrowings under its credit facility ($17.9 million
outstanding at January 31, 2001) are subject to a rate of interest that
fluctuates based on short-term interest rates. The Company had no interest rate
hedges at January 31, 2001.
20
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE
----
Report of Independent Accountants........................... 22
Financial Statements:
Consolidated Balance Sheet................................ 23
Consolidated Statement of Operations...................... 24
Consolidated Statement of Stockholders' Equity
(Deficit).............................................. 25
Consolidated Statement of Cash Flows...................... 26
Notes to Consolidated Financial Statements................ 27
21
24
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
TransTexas Gas Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statement of operations, stockholders' equity (deficit) and cash
flows present fairly, in all material respects, the financial position of
TransTexas Gas Corporation (successor) at January 31, 2001 and 2000, and the
results of operations and cash flow for the period ended January 31, 2001, and
the results of operations and cash flow for TransTexas Gas Corporation
(predecessor) for the two years ended January 31, 2000 and 1999 (successor and
predecessor are collectively referred to as the "Company"), in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 2 to the consolidated financial statements, on April
19, 1999, the Company filed a voluntary petition for relief under Chapter 11 of
the U.S. Bankruptcy Code. The Company's Plan of Reorganization, as amended,
became effective on March 17, 2000 and the Company emerged from Chapter 11. In
connection with its emergence from Chapter 11, the Company adopted fresh-start
reporting as of January 31, 2000.
PricewaterhouseCoopers LLP
Houston, Texas
April 25, 2001
22
25
TRANSTEXAS GAS CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
JANUARY 31,
-------------------
2001 2000
-------- --------
ASSETS
Current assets:
Cash and cash equivalents................................. $ 20,715 $ 18,288
Accounts receivable....................................... 42,533 19,592
Receivable from affiliates................................ 21 1,107
Inventories............................................... 1,476 1,741
Other..................................................... 2,521 926
-------- --------
Total current assets.............................. 67,266 41,654
-------- --------
Property and equipment...................................... 413,811 327,087
Less accumulated depreciation, depletion and amortization... 81,483 --
-------- --------
Net property and equipment -- based on the full cost
method of accounting for gas and oil properties of
which $81,381 and $90,000 was excluded from
amortization at January 31, 2001 and 2000,
respectively........................................... 332,328 327,087
-------- --------
Other assets................................................ 2,649 513
-------- --------
$402,243 $369,254
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt...................... $ 4,269 $ 6,934
Accounts payable.......................................... 9,255 15,759
Accrued liabilities....................................... 33,153 10,061
-------- --------
Total current liabilities......................... 46,677 32,754
-------- --------
Long-term debt, net of current maturities................... 281,271 48,290
Production payments, net of current portion................. 12,732 32,460
Note payable to affiliate................................... -- 196,346
Deferred income taxes....................................... 9,984 10,000
Other liabilities........................................... 8,011 49,404
Redeemable preferred stock.................................. 25,722 --
Commitments and contingencies (Note 14)..................... -- --
Stockholders' equity (deficit) (Note 2):
Common stock, $0.01 par value, 100,247,500 shares and
100,000,000 shares authorized at January 31, 2001 and
2000, respectively; 1,250,251 shares and 57,515,566
shares issued and outstanding at January 31, 2001 and
2000, respectively..................................... 12 740
Additional paid-in capital.................................. 25,013 (740)
Retained earnings........................................... (7,179) --
-------- --------
Total stockholders' equity........................ 17,846 --
-------- --------
$402,243 $369,254
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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26
TRANSTEXAS GAS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
SUCCESSOR PREDECESSOR
---------- -------------------------
YEAR ENDED JANUARY 31,
--------------------------------------
2001 2000 1999
---------- | ----------- -----------
|
Revenues: |
Gas, condensate and natural gas liquids.............. $ 187,883 | $ 112,898 $ 92,159
Gain (loss) on the sale of assets.................... -- | (438) 61,247
Other................................................ 2,208 | 2,770 4,200
---------- | ----------- -----------
Total revenues............................... 190,091 | 115,230 157,606
---------- | ----------- -----------
Costs and expenses: |
Operating............................................ 19,127 | 20,147 23,192
Depreciation, depletion and amortization............. 81,483 | 75,044 86,137
General and administrative........................... 20,303 | 19,883 21,938
Taxes other than income taxes........................ 7,156 | 9,788 7,130
Impairment of gas and oil properties................. -- | -- 425,966
---------- | ----------- -----------
Total costs and expenses..................... 128,069 | 124,862 564,363
---------- | ----------- -----------
Operating income (loss)...................... 62,022 | (9,632) (406,757)
---------- | ----------- -----------
Other income (expense): |
Interest income...................................... 574 | 472 1,205
Interest expense, net................................ (34,069)| (38,526) (79,921)
---------- | ----------- -----------
Total other expense.......................... (33,495)| (38,054) (78,716)
---------- | ----------- -----------
Income (loss) before reorganization items, |
income taxes and extraordinary item........ 28,527 | (47,686) (485,473)
---------- | ----------- -----------
Reorganization items: |
Legal and professional fees.......................... -- | (8,325) --
Revaluation of assets to fair market value........... -- | 58,836 --
---------- | ----------- -----------
Total reorganization items................... -- | 50,511 --
---------- | ----------- -----------
Income tax expense (benefit)........................... 9,984 | 10,000 (38,882)
---------- | ----------- -----------
Income (loss) before extraordinary item...... 18,543 | (7,175) (446,591)
Extraordinary item -- gain (loss) on early |
extinguishment of debt, net of tax................... -- | 436,490 (1,142)
---------- | ----------- -----------
Net income (loss)............................ $ 18,543 | $ 429,315 $ (447,733)
========== | =========== ===========
Accretion of preferred stock........................... $ 25,722 | $ -- $ --
========== | =========== ===========
Net income (loss) available to common |
stockholders............................... $ (7,179)| $ 429,315 $ (447,733)
========== | =========== ===========
Basic and diluted net income (loss) per share: |
Loss before extraordinary item....................... $ (5.74)| $ (0.13) $ (7.76)
Extraordinary item................................... -- | 7.59 (0.02)
---------- | ----------- -----------
$ (5.74)| $ 7.46 $ (7.78)
========== | =========== ===========
Weighted average number of shares outstanding for basic |
and diluted net loss per share....................... 1,250,251 | 57,515,566 57,515,566
========== | =========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
24
27
TRANSTEXAS GAS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
RETAINED
COMMON STOCK ADDITIONAL PAID- EARNINGS TOTAL
-------------------- IN CAPITAL (ACCUMULATED TREASURY STOCKHOLDERS'
SHARES AMOUNT (CAPITAL DEFICIT) DEFICIT) STOCK EQUITY (DEFICIT)
----------- ------ ----------------- ------------ --------- ----------------
PREDECESSOR:
Balance at January 31,
1998....................... 74,000,000 $ 740 $ 26,834 $ 259,468 $(262,405) $ 24,637
Advance to affiliate....... -- -- (6,919) -- -- (6,919)
Net loss................... -- -- -- (447,733) -- (447,733)
----------- ----- -------- --------- --------- ---------
Balance at January 31,
1999....................... 74,000,000 740 19,915 (188,265) (262,405) (430,015)
Contribution from TEC...... -- -- 700 -- -- 700
Adoption of fresh-start
reporting................ -- -- (21,355) (241,050) 262,405 --
Net income................. -- -- -- 429,315 -- 429,315
----------- ----- -------- --------- --------- ---------
SUCCESSOR:
Balance at January 31,
2000....................... 74,000,000 740 (740) -- -- --
Cancellation of old common
stock.................... (74,000,000) (740) 740 -- -- --
Issuance of new common
stock.................... 1,250,251 12 (12) -- -- --
Proceeds from short-swing
sale..................... -- -- 25 -- -- 25
Accretion of preferred
stock.................... -- -- -- (25,722) -- (25,722)
Adjustment to
reorganization value..... -- -- 25,000 -- -- 25,000
Net income................. -- -- -- 18,543 -- 18,543
----------- ----- -------- --------- --------- ---------
Balance at January 31,
2001....................... 1,250,251 $ 12 $ 25,013 $ (7,179) $ -- $ 17,846
=========== ===== ======== ========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
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28
TRANSTEXAS GAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
SUCCESSOR PREDECESSOR
--------- ---------------------
YEAR ENDED JANUARY 31,
---------------------------------
2001 2000 1999
--------- | --------- ---------
|
Operating activities: |
Net income (loss)....................................... $ 18,543 | $ 429,315 $(447,733)
Adjustments to reconcile net income (loss) to net cash |
provided (used) by operating activities: |
Reorganization adjustments: |
Extraordinary item................................. -- | (436,490) 1,142
Revaluation of assets.............................. -- | (58,836) --
Depreciation, depletion and amortization............. 81,483 | 75,044 86,137
Impairment of gas and oil properties................. -- | -- 425,966
Accretion of discount on long-term debt.............. 3,813 | -- --
Amortization of debt issue costs..................... 343 | 1,641 5,730
(Gain) loss on the sale of assets.................... -- | 438 (61,247)
Deferred income taxes................................ 9,984 | 10,000 (38,882)
Changes in assets and liabilities |
Accounts receivable................................ (22,941)| (3,501) 965
Receivable from affiliates......................... 1,086 | 179 (1,286)
Inventories........................................ 265 | 1,469 13,227
Other current assets............................... (1,595)| 2,767 7,026
Accounts payable................................... (6,567)| 5,430 7,981
Accrued interest payable to affiliates............. -- | 14,628 1,851
Accrued liabilities................................ 23,255 | (3,271) 9,177
Transactions with affiliates, net.................. -- | 700 (6,166)
Other assets....................................... (112)| 378 126
Other liabilities.................................. (26,635)| 6,691 (5,384)
--------- | --------- ---------
Net cash provided (used) by operating |
activities.................................... 80,922 | 46,582 (1,370)
--------- | --------- ---------
Investing activities: |
Capital expenditures.................................... (101,189)| (42,342) (190,601)
Proceeds from the sale of assets........................ 16,182 | 445 156,212
Advances to affiliate................................... -- | -- (1,648)
--------- | --------- ---------
Net cash used by investing activities........... (85,007)| (41,897) (36,037)
--------- | --------- ---------
Financing activities: |
Issuance of note payable................................ -- | 30,000 --
Issuance of long-term debt.............................. 32,500 | -- 19,650
Principal payments on long-term debt.................... (16,943)| (1,896) (62,235)
Revolving credit agreement, net......................... 13,739 | 3,860 (7,572)
Issuance of production payments......................... 27,000 | -- 69,824
Principal payments on production payments............... (47,303)| (22,136) (17,355)
Issuance of note payable to affiliate................... -- | -- 1,395
Proceeds from short-swing sale.......................... 25 | -- --
Debt issue costs........................................ (2,506)| -- (1,027)
--------- | --------- ---------
Net cash provided by financing activities....... 6,512 | 9,828 2,680
--------- | --------- ---------
Increase (decrease) in cash and cash |
equivalents................................... 2,427 | 14,513 (34,727)
Beginning cash and cash equivalents....................... 18,288 | 3,775 38,502
--------- | --------- ---------
Ending cash and cash equivalents.......................... $ 20,715 | $ 18,288 $ 3,775
========= | ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
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29
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
TransTexas Gas Corporation (together with its subsidiaries, the "Company"
or "TransTexas") was incorporated in Delaware in May 1993. Prior to March 17,
2000 (the "Effective Date"), TransTexas was a subsidiary of TransAmerican Energy
Corporation ("TEC"), which is wholly owned by TEC/TransAmerican LLC, which is
wholly owned by TransAmerican Natural Gas Corporation ("TransAmerican"). Unless
otherwise noted, the term "TransTexas" refers to TransTexas Gas Corporation and
its subsidiaries, including Galveston Bay Processing Corporation and Galveston
Bay Pipeline Company. See Note 2 for a discussion of TransTexas' reorganization.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. TransTexas' most significant financial estimates are based on
remaining proved gas and oil reserves. Actual results could differ from these
estimates.
Cash and Cash Equivalents
TransTexas considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash and cash
equivalents at January 31, 2001 and 2000 include $2.2 million and $1.4 million,
respectively, restricted for payments of future goods and services provided by
certain vendors.
Inventories
TransTexas' inventories, consisting primarily of tubular goods, are stated
at the lower of average cost or market.
Gas and Oil Properties
TransTexas uses the full cost method of accounting for exploration and
development costs. Under this method of accounting, the cost of all exploration
and development activities are capitalized. Such capitalized costs and estimated
future development and reclamation costs are amortized on a unit-of-production
method. Net capitalized costs of gas and oil properties are limited to the lower
of unamortized cost or the cost center ceiling, defined as the sum of the
present value (10% discount rate) of estimated unescalated future net revenues
from proved reserves; plus the cost of properties not being amortized, if any;
plus the lower of cost or estimated fair value of unproved properties included
in the costs being amortized, if any; less related income tax effects. As of
January 31, 1999, TransTexas' net capitalized costs of gas and oil properties
exceeded the cost center ceiling. TransTexas adjusted its net capitalized costs
which resulted in a non-cash pre-tax loss of approximately $426 million for the
year ended January 31, 1999. Due to higher gas and oil prices realized by the
Company subsequent to January 31, 1999, the impairment was less than would have
been recorded using January 31, 1999 prices.
Proceeds from the sale of gas and oil properties are applied to reduce the
costs in the cost center unless the sale involves a significant quantity of
reserves in relation to the cost center, in which case a gain or loss is
recognized.
Unevaluated properties and associated costs not currently being amortized
and included in gas and oil properties were $81 million and $90 million at
January 31, 2001 and 2000, respectively. The properties represented by these
costs were undergoing exploration activities at such date, or are properties on
which
27
30
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TransTexas intends to commence such activities in the future. TransTexas
believes that the unevaluated properties at January 31, 2001 will be
substantially evaluated in 12 to 24 months and it will begin to amortize these
costs at such time.
Other Property and Equipment
Other property and equipment are stated at cost. The cost of repairs and
minor replacements is charged to operating expense while the cost of renewals
and betterments is capitalized. At the time depreciable assets are retired or
otherwise disposed of, the cost and related accumulated depreciation or
amortization are removed from the accounts. Gains or losses on dispositions in
the ordinary course of business are included in the consolidated statement of
operations. Impairment of other property and equipment is reviewed whenever
events or changes in circumstances indicate that the carrying value of assets
may not be recoverable.
Depreciation of oilfield services equipment and other buildings and
equipment is computed by the straight-line method at rates that will amortize
the unrecovered cost of depreciable property over their estimated useful lives
of 4 to 10 years.
Costs of improving leased property are amortized over the estimated useful
lives of the assets or the terms of the leases, whichever is shorter.
Environmental Remediation Costs
Environmental expenditures are expensed or capitalized as appropriate,
depending on their future economic benefit. Expenditures that relate to an
existing condition caused by past operations and that do not have future
economic benefits are expensed. Liabilities for these expenditures are provided
when the responsibility to remediate is probable and the amount of associated
costs is reasonably estimable.
Debt Issue Costs
Costs related to the issuance of long-term debt are classified as "Other
assets." Capitalized debt costs are amortized to interest expense over the
scheduled maturity of the debt utilizing the interest method. In the event of a
redemption of long-term debt, the related debt issue costs will be charged to
income in the period of presentation.
Defined Contribution Plan
TransTexas maintains a defined contribution plan, which incorporates a
"401(k) feature" as allowed under the Internal Revenue Code. All investment
transactions are administered by Massachusetts Mutual Life Insurance Company.
Employees who are at least 21 years of age and have completed one year of
credited service are eligible to participate on the first day of the month
following their eligibility. TransTexas matches employee contributions up to a
maximum of 100% of the first 3% and 50% of the next 2% of the participant's
compensation. TransTexas' contributions with respect to this plan totaled $0.2
million, $0.2 million and $0.3 million for years ended January 31, 2001, 2000
and 1999, respectively. All Company contributions are currently funded.
Fair Value of Financial Instruments
TransTexas includes fair value information in the Notes to Consolidated
Financial Statements when the fair value of its financial instruments can be
determined and is different from the book value. TransTexas generally assumes
that the book value of financial instruments classified as current approximates
fair value because of the short maturity of these instruments. For noncurrent
financial instruments, TransTexas uses quoted market prices or, to the extent
that there are no available quoted market prices, market prices for
28
31
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
similar instruments. Due to the adoption of fresh-start reporting, all financial
instruments were recorded at estimated fair value, based on the present value of
amounts to be paid, at January 31, 2000.
Revenue Recognition
TransTexas recognizes revenues from the sales of natural gas, condensate
and natural gas liquids in the period of delivery. Revenues are recognized from
transportation of natural gas in the period the service is provided. The sales
method is used for natural gas imbalances that arise from jointly produced
properties. Volumetric production is monitored to minimize these natural gas
imbalances. A natural gas imbalance liability is recorded in other liabilities
if TransTexas' excess sales of natural gas exceed its share of estimated
remaining recoverable reserves for such properties.
Concentrations
Financial instruments that potentially expose TransTexas to credit risk
consist principally of cash and trade receivables. TransTexas selects depository
banks based upon management's review of the financial stability of the
institution. Balances generally exceed the $100,000 level covered by federal
deposit insurance. To date, TransTexas has not incurred any losses due to excess
deposits in any financial institution. Trade accounts receivable are generally
from companies with significant natural gas marketing activities, which would be
impacted by conditions or occurrences affecting that industry. TransTexas
performs ongoing credit evaluations and, generally, requires no collateral from
its customers. TransTexas is not aware of any significant credit risk relating
to its customers and has not experienced significant credit losses associated
with such receivables.
Approximately 58% of the Company's production was produced from five wells
in the Company's Eagle Bay field.
Hedging Agreements
From time to time, TransTexas enters into commodity price swap agreements
(the "Hedge Agreements") to reduce its exposure to price risk in the spot market
for natural gas. The Hedge Agreements are accounted for as hedges if the pricing
of the hedge agreement correlates with the pricing of the natural gas and oil
production hedged. Accordingly, gains or losses are deferred and recognized as
an increase or decrease in revenues in the respective month the physical volumes
are sold.
Pursuant to the terms of the Company's production payment agreement entered
into in March 2000, the production payment purchasers entered into the following
hedge arrangements with respect to a portion of the natural gas and condensate
production associated therewith and which effectively hedge a portion of the
Company's production.
CONTRACT PRICE
----------------
TOTAL COLLAR
VOLUMES IN ----------------
PERIOD MMBTUS/BBLS FLOOR CEILING
- ------ ----------- ------ -------
Natural gas:
April 2000 -- October 2000.......................... 3,745,000 $ 2.10 $ 3.40
November 2000 -- March 2001......................... 1,887,500 2.35 3.95
Condensate:
April 2000 -- September 2000........................ 228,750 18.50 32.50
October 2000 -- March 2001.......................... 182,000 18.50 29.25
Under these contracts, the counterparty is required to make payment to the
production payment purchasers if the settlement price (based on New York
Mercantile Exchange prices) for the period is below
29
32
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the floor, and the production payment purchasers are required to make payment to
the counterparty if the settlement price for any period is above the ceiling
price. For the year ended January 31, 2001, the Company recognized hedging
losses of $6.7 million under these contracts. As of January 31, 2001, the
Company had additional deferred losses of $1.9 million under these contracts.
The Company has been advised that the production payment purchasers are
examining the possibility of entering into additional hedging arrangements in
connection with the production payment agreement.
In November 2000, the Company entered into the following commodity price
hedging arrangement with respect to a portion of the Company's natural gas
production.
CONTRACT PRICE
---------------
TOTAL COLLAR
VOLUMES IN ---------------
PERIOD MMBTUS FLOOR CEILING
- ------ ---------- ----- -------
Natural gas:
December 2000 -- November 2001.......................... 7,300,000 $3.50 $6.00
Under terms of this collar transaction, the counterparty is required to
make a payment to the Company if the settlement price (based on a published
industry index of natural gas prices at Houston Ship Channel) for any settlement
period is below the floor price for such transaction and the Company is required
to make payment to the counterparty if the settlement price for any settlement
period is above the ceiling price for such transaction. This hedging arrangement
is supported by a letter of credit for drawings by the counterparty of up to
$6.5 million. For the year ended January 31, 2001, the Company recognized
hedging losses of $2.4 million under this contract. As of January 31, 2001, the
Company had additional deferred losses of $0.1 million under this contract.
Income Taxes
Prior to the Effective Date, TransTexas filed a consolidated tax return
with TransAmerican. Income taxes were due from or payable to TransAmerican in
accordance with a tax allocation agreement, as amended, between TransTexas, TNGC
Holdings Corporation, TransAmerican and TransAmerican's other subsidiaries (the
"Tax Allocation Agreement"). It was TransTexas' policy to record income tax
expense as though TransTexas had filed separately. Subsequent to the Effective
Date, TransTexas and its wholly owned subsidiaries file a consolidated tax
return. Deferred income taxes are recognized, at enacted tax rates, to reflect
the future effects of temporary differences arising between the financial
reporting and tax bases of assets and liabilities. Income taxes include federal
and state income taxes.
Net Income (Loss) Per Share
Basic and diluted net income (loss) per share has been calculated based on
the weighted average number of shares of common stock outstanding during each
period, excluding treasury shares. After adopting fresh-start reporting, the
number of common shares used to calculate basic earnings per share is 1,250,251.
At January 31, 2001, potential common shares to be included in diluted earnings
per share, if they were dilutive, are as follows:
Series A Senior Preferred Stock......................... 44,563,806
Series A Junior Preferred Stock......................... 2,605,685
Class A Common Stock.................................... 1,002,751
Class B Common Stock.................................... 247,500
Class A Common Stock Warrants........................... 625,000
----------
49,044,742
==========
30
33
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Recently Issued Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities," which was amended by
Statement of Financial Accounting Standards No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities." These pronouncements
establish accounting and reporting standards for derivative instruments and for
hedging activities, which generally, require recognition of all derivatives as
either assets or liabilities in the balance sheet at their fair value. The
accounting for changes in fair value depends on the intended use of the
derivative and the resulting designation. The Company adopted SFAS 133 on
February 1, 2001 and recorded a cumulative effect charge to earnings of
approximately $1.3 million to recognize the fair market value of its derivative
instruments.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." Management of the Company believes that SAB No. 101 will not have a
material impact on the Company.
The Emerging Issues Task Force ("EITF") issued EITF 00-10, "Accounting for
Shipping and Handling Fees and Costs," which requires that certain
transportation fees that were previously netted against revenues be reclassified
as costs and expenses. The Company adopted the provisions of EITF 00-10 for the
year ended January 31, 2001. As a result, certain transportation fees have been
reclassified to costs and expenses. Prior period results have been reclassified
to conform to the current presentation.
2. REORGANIZATION
On April 19, 1999, TransTexas filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for
the District of Delaware. TransTexas filed its bankruptcy petition in order to
preserve cash and to give the Company the opportunity to restructure its debt.
On April 20, 1999, TEC and its wholly owned subsidiary, TransAmerican Refining
Corporation ("TARC") also filed voluntary petitions under Chapter 11. On May 20,
1999, the cases were transferred to the United States Bankruptcy Court for the
Southern District of Texas, Corpus Christi Division (the "Bankruptcy Court").
TransTexas' Chapter 11 filing did not include its subsidiaries, including
Galveston Bay Processing and Galveston Bay Pipeline. The Company's Second
Amended, Modified and Restated Plan of Reorganization dated January 25, 2000
(the "Plan") was confirmed by the Bankruptcy Court on February 7, 2000. The
Effective Date of the Plan is March 17, 2000.
In connection with the Effective Date of the Plan, the Company:
(1) paid approximately $2.6 million in cash to settle certain accounts
payable and royalty claims;
(2) agreed to pay approximately $28.3 million to settle certain accounts
payable, severance, property and franchise taxes. The $28.3 million
is payable in quarterly installments generally over a five year
period with stated interest ranging from 8% to 10%. The Company paid
$7.6 million of this amount in fiscal 2001.
(3) paid approximately $21.9 million in cash, issued $200 million
principal amount of 15% Senior Secured Notes due 2005 (the "Notes"),
222,455,320 shares of Series A Senior Preferred Stock, 20,716,080
shares of Series A Junior Preferred Stock, 1,002,751 shares of Class
A Common Stock, 247,500 shares of Class B Common Stock and 625,000
warrants to purchase Class A Common Stock to settle the TransTexas
Senior Secured Notes Claims. A portion of this distribution was
reallocated pursuant to the Plan as follows:
(a) $20 million in cash and five million shares of Senior Preferred
Stock to settle on a pro rata basis all general prepetition
unsecured claims;
31
34
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(b) $1.8 million in cash, 2,455,320 shares of Senior Preferred Stock
and all of the Junior Preferred Stock to the holders of
TransTexas 13 3/4% Senior Subordinated Notes;
(c) 52,500 shares of Class A Common Stock and warrants exercisable to
purchase 109,879 shares of Class A Common Stock at a price of
$120 per share to the holders of the old TransTexas common stock
who were not Affiliates of the Debtor (as defined in the Plan);
and
(d) all of the Class B Common Stock and warrants exercisable to
purchase 515,625 shares of Class A Common Stock at an exercise
price of $120 per share to John R. Stanley;
(4) issued $6.7 million in secured notes in exchange for old secured
notes and related accrued interest; and
(5) canceled all of the old TransTexas common stock and 13 3/4% Senior
Subordinated Notes.
The January 31, 2000 consolidated balance sheet is the opening balance
sheet of reorganized TransTexas, the successor company, in accordance with the
American Institute of Certified Public Accountants Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code."
The January 31, 2000 consolidated balance sheet includes all adjustments
necessary to reflect assets at the reorganization value and the Plan's treatment
of creditor claims and previous equity interests. Since the January 31, 2000
consolidated balance sheet was affected by fresh-start reporting, it is not
comparable in certain material respects to the consolidated balance sheets of
any prior period. The consolidated statements of operations and cash flows for
the years ended January 31, 2000 and 1999 reflect the activities of the
predecessor reporting entity; however, the statements for fiscal 2000 reflect
certain reorganization items.
Pursuant to fresh-start reporting, the Company's reorganization value as of
January 31, 2000 was estimated by management and allocated to identified assets
based on their relative fair values. Postpetition liabilities were valued at the
present value of amounts to be paid. The present value of liabilities was
adjusted for imputed interest at a rate of 15% for the period from February 1,
2000 to the Effective Date of the Plan. The imputed interest was charged to
interest expense during the first quarter of fiscal 2001.
On January 31, 2001, the Company's equity securities consisted of (i)
257,519,826 shares of Series A Senior Preferred Stock, $0.001 par value, (ii)
22,308,951 shares of Series A Junior Preferred Stock, $0.001 par value (iii)
1,002,751 shares of Class A Common Stock, $0.01 par value, (iv) 247,500 shares
of Class B Common Stock, $0.01 par value, and (v) warrants exercisable to
purchase 625,000 shares of Class A Common Stock at a price of $120 per share.
Redeemable Preferred Stock
The Series A Senior Preferred Stock (the "Senior Preferred Stock") has a
liquidation preference of $1.00 per share plus accrued and unpaid dividends. The
terms of the Senior Preferred Stock include a cumulative dividend preference,
payable quarterly out of funds legally available therefor, if any. During the
first two years following the Effective Date, the Company is required to pay
cash dividends at a rate of $0.10 per share per annum, or, at its option,
in-kind dividends of additional shares of Senior Preferred Stock at a rate of
$0.20 per share per annum. The Senior Preferred Stock is mandatorily redeemable
on March 15, 2006 at a rate of $1.00 per share plus accrued and unpaid
dividends. One-half of the then-outstanding shares of Senior Preferred Stock is
mandatorily convertible into shares of Class A Common Stock at a rate of 0.3461
shares of Class A Common Stock per $1.00 of liquidation preference if either (i)
more than 75 million shares of Senior Preferred Stock remain outstanding after
March 15, 2006 or (ii) the Company fails to pay dividends on the Senior
Preferred Stock on any two dividend payment dates. The Certificate of
Designation for the Senior Preferred Stock includes restrictive covenants
comparable to those included in the Indenture.
32
35
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Holders of Senior Preferred Stock have the right, voting separately as a
class, to elect four (4) of the five (5) directors to the Board of Directors;
provided, that if the Company has not paid dividends with respect to the
payments due commencing March 15, 2002, such holders will have the right, voting
separately as a class, to elect all five (5) directors to the Board of
Directors. Holders of Senior Preferred Stock have one vote per share, voting
together with the Class A Common Stock, the Junior Preferred Stock and any other
series or classes of stock entitled to vote with the Class A Common Stock, on
all matters on which the holders of the Class A Common Stock are entitled to
vote generally. Voting rights of the Senior Preferred Stock may not be changed
without the consent of the holders of 75% of the shares of Senior Preferred
Stock, voting as a class.
The Series A Junior Preferred Stock (the "Junior Preferred Stock") has a
liquidation preference of $1.00 per share plus accrued and unpaid dividends. The
terms of the Junior Preferred Stock include a cumulative dividend preference,
payable quarterly out of funds legally available therefor, if any. During the
first six years following the Effective Date, the Company is required to pay
in-kind dividends of additional shares of Junior Preferred Stock at a rate of
$0.10 per share per annum. Thereafter, dividends are payable both in cash at a
rate of $0.10 per share per annum and in-kind at a rate of $0.10 per share per
annum. The Junior Preferred Stock is mandatorily redeemable on March 15, 2010 at
a rate of $1.00 per share plus accrued and unpaid dividends. Each share of
Junior Preferred Stock is mandatorily convertible into shares of Class A Common
Stock at the rate of 0.1168 shares of Class A Common Stock per $1.00 of
liquidation preference if either (i) more than 75 million shares of Senior
Preferred Stock remain outstanding after March 15, 2006 or (ii) the Company
fails to pay dividends on the Senior Preferred Stock on any two dividend payment
dates. The Certificate of Designation for the Junior Preferred Stock includes
restrictive covenants comparable to those included in the Indenture. Such
covenants will become effective when all of the Notes (and any refinancings
thereof) have been repaid and all of the Senior Preferred Stock has been
redeemed.
Holders of Junior Preferred Stock have one vote per share, voting together
with holders of the Class A Common Stock, the Senior Preferred Stock and any
other series or classes of stock entitled to vote with the Class A Common Stock,
on all matters on which holders of the Class A Common Stock are entitled to
vote. If no shares of the Senior Preferred Stock are outstanding, holders of the
shares of Junior Preferred Stock will have the right, voting separately as a
class, to elect two directors to the Board of Directors. Voting rights of the
Junior Preferred Stock may not be changed without the consent of the holders of
75% of the shares of the Junior Preferred Stock, voting as a class.
Based on the reorganization value of the Company, the fair value of the
Junior Preferred Stock, together with the Senior Preferred Stock, (the
"Preferred Stock") and the Class A Common Stock, together with the Class B
Common Stock, (the "Common Stock") was estimated to be zero. The Senior
Preferred Stock and Junior Preferred Stock are mandatorily redeemable in 2006
and 2010, respectively. As a result, the Company accretes, in the form of a
non-cash dividend deducted to arrive at net income (loss) available to common
stockholders and charged to retained earnings, an amount equal to the combined
redemption amount totaling $243.2 million (initial liquidation value) over the
period prior to redemption. In addition, net income (loss) available to common
stockholders reflects dividends earned and accrued on the Preferred Stock.
Accrued preferred stock dividends are recorded at fair value. Any difference
between the initial fair value and the redemption value are accreted in the same
manner as described above. For the year ended January 31, 2001, accretion of
preferred stock totaled $25.7 million.
3. LIQUIDITY
In order to maintain or increase proved oil and gas reserves, TransTexas is
required to make substantial capital expenditures for the exploration and
development of natural gas and oil reserves in the normal course of business.
TransTexas remains highly leveraged and a substantial portion of its cash
flow will be required for debt service. In addition, cash flow from operations
is dependent on the level of gas and oil prices, which are
33
36
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
historically volatile. Management plans to fund TransTexas' 2002 debt service
requirements and capital expenditures with cash flows from existing producing
properties, certain identified relatively low risk prospects to be drilled and
completed during fiscal 2002 and additional production payment financing. Should
these drilling prospects not be productive or should oil and gas prices decline
for a prolonged period, absent other sources of capital, the Company would
substantially reduce its capital expenditures, which would limit its ability to
maintain or increase production and in turn meet its debt service requirements.
Asset sales and financings are restricted under the terms of TransTexas' debt
documents and Senior Preferred Stock.
4. OTHER CURRENT ASSETS
The major components of other current assets are as follows (in thousands
of dollars):
JANUARY 31,
-------------------
2001 2000
-------- --------
Prepayments:
Trade..................................................... $ 362 $ 478
Insurance................................................. 147 240
Deferred commodity hedging contract losses.................. 1,972 --
Other....................................................... 40 208
-------- --------
$ 2,521 $ 926
======== ========
5. PROPERTY AND EQUIPMENT
The major components of property and equipment, at cost (estimated fair
value at January 31, 2000), are as follows (in thousands of dollars):
JANUARY 31,
-------------------
2001 2000
-------- --------
Gas and oil properties...................................... $364,171 $279,844
Gas gathering and transportation............................ 43,774 40,920
Equipment and other......................................... 5,866 6,323
-------- --------
$413,811 $327,087
======== ========
In August 2000, TransTexas sold certain producing properties in Jim Hogg
County, Texas for a sales price of $6.5 million, exclusive of closing costs. In
December 2000, TransTexas sold certain producing properties in Kent, Starr,
Wharton and Zapata Counties, Texas for a sales price of $11.0 million, exclusive
of closing costs.
TransTexas incurred approximately $48.2 million, $41.2 million and $89.6
million of interest charges of which approximately $14.1 million, $2.7 million
and $9.7 million were capitalized for the years ended January 31, 2001, 2000 and
1999, respectively. Capitalized interest is included as part of the cost of gas
and oil properties. TransTexas uses capitalization rates based on its weighted
average cost of borrowings used to finance such expenditures.
34
37
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. OTHER ASSETS
The major components of other assets are as follows (in thousands of
dollars):
JANUARY 31,
-------------------
2001 2000
-------- --------
Debt issue costs, net of accumulated amortization of $482 at
January 31, 2001.......................................... $ 2,024 $ --
Other....................................................... 625 513
-------- --------
$ 2,649 $ 513
======== ========
7. LONG-TERM DEBT AND PRODUCTION PAYMENTS
Long-Term Debt
Long-term debt consists of the following (in thousands of dollars):
JANUARY 31,
-------------------
2001 2000
-------- --------
15% Senior Secured Notes due 2005........................... $200,000 $ --
Revolving Credit Note....................................... 30,000 --
Term Note................................................... 22,331 --
Revolving credit agreement.................................. 17,944 4,205
Notes payable, ranging from 8% to 10%, due through 2005..... 15,265 49,212
13 3/4% Senior Subordinated Notes due 2001.................. -- 1,807
-------- --------
Total long-term debt................................... 285,540 55,224
Less current maturities..................................... 4,269 6,934
-------- --------
$281,271 $ 48,290
======== ========
Aggregate annual maturities of long-term debt for fiscal years 2002 to 2006
are $5.3 million, $3.3 million, $4.6 million, $1.8 million and $252.7 million,
respectively.
On the Effective Date, the Company and GMAC Commercial Credit LLC ("GMACC")
entered into a Third Amended and Restated Accounts Receivable Management and
Security Agreement, dated as of March 15, 2000 (the "Accounts Receivable
Facility"). The Accounts Receivable Facility is a revolving credit facility
secured by accounts receivable and inventory. The maximum loan amount under the
facility is $20 million, against which the Company may from time to time,
subject to the conditions of the Accounts Receivable Facility, borrow, repay and
reborrow. Advances under the facility bear interest at a rate per annum equal to
the higher of (i) the prime commercial lending rate of The Bank of New York plus
1/2 of 1%, and (ii) the Federal Funds Rate plus 1% payable monthly in arrears.
As of January 31, 2001, the outstanding principal balance under the Accounts
Receivable Facility was $17.9 million with availability for additional advances
of approximately $2.1 million and will be due on March 14, 2005.
On the Effective Date, the Company, as Borrower, and Galveston Bay
Processing Corporation and Galveston Bay Pipeline Company, as Guarantors,
entered into an Oil and Gas Revolving Credit and Term Loan Agreement, dated as
of March 15, 2000 (the "Oil and Gas Facility") with GMACC, as a Lender and as
Agent. The Oil and Gas facility consists of a term loan (the "Term Loan") in the
amount of $22.5 million and a revolving facility (the "Revolving Loan") in a
maximum amount of $30 million (all of which was funded on the Effective Date).
The Term Loan bears interest at a rate of 14% per annum and the Revolving Loan
bears interest at a rate of 13 1/2% per annum. Interest on the Term Loan and the
Revolving Loan is payable monthly in arrears. Principal amortization of the Term
Loan is due in 20 quarterly installments of $56,250 each
35
38
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
beginning June 14, 2000, with the balance due March 14, 2005; however the
Company may, and in certain circumstances must, make prepayments of such amount.
If, subsequent to such prepayments, the Company demonstrates sufficient
collateral value meeting the requirements of the Oil and Gas Facility
provisions, the Company may be entitled to borrow additional advances under the
Revolving Loan. The Oil and Gas Facility is secured by substantially all of the
assets of the Company. The security interest in accounts receivable and
inventory securing the Oil and Gas Facility is subordinated to the security
interest of GMACC under the Accounts Receivable Facility.
On the Effective Date, the Company, as Issuer, Galveston Bay Pipeline
Company and Galveston Bay Processing Corporation, as Guarantors, and Firstar
Bank, N.A., as Trustee, entered into an Indenture dated as of March 15, 2000,
pursuant to which the Company issued the Notes. Interest on the Notes is due
semi-annually on March 15 and September 15. The Notes are secured by
substantially all of the assets of the Company other than accounts receivable
and inventory. The Indenture contains certain covenants that restrict the
Company's ability to incur indebtedness, engage in related party transactions,
dispose of assets or engage in sale/leaseback transactions, issue dividends on
common stock, change its line of business, consolidate or merge with or into
another entity or convey, transfer or lease all or substantially all of its
assets, and suffer a change of control. The security interest in favor of the
Trustee is subordinated to the Security Interest in favor of the Agent under the
Oil and Gas Facility. The fair value of the Notes, based on quoted market prices
on January 31, 2001, was $150.0 million.
In December 1998, TransTexas borrowed $5.65 million from an unaffiliated
third party in order to meet a portion of its December 31, 1998 interest payment
obligations. In accordance with the Plan, the principal amount of the note was
increased to $6.7 million, bears interest at 8% and is collateralized by a
pledge of the stock of Galveston Bay Processing Corporation and a mortgage on
the Winnie, Texas processing facility. At January 31, 2001, the undiscounted
principal balance outstanding of this note was $5.6 million.
Additional notes payable totaling $10.2 million and $13.9 million at
January 31, 2001 and 2000, respectively, consist of amounts payable pursuant to
the Plan in settlement of the claims of certain creditors. Such amounts are
generally payable over a five year period with stated interest rates ranging
from 8% to 10%; however, these notes have been discounted to an effective
interest rate of 14%.
Prior to the Effective Date, the Company had outstanding $115.8 million
principal amount of 13 3/4% Senior Subordinated Notes due 2001 (the
"Subordinated Notes"). As described in Note 2, in accordance with the Plan, the
holders of the Subordinated Notes received $1.8 million cash, 2,455,320 shares
of Senior Preferred Stock and 20,716,080 shares of Junior Preferred Stock and
the Subordinated Notes were canceled.
Production Payments
In 1998, TransTexas entered into two production payment agreements with an
unaffiliated third party pursuant to which the Company conveyed certain
properties (the "Original Subject Interests") in the form of a term overriding
royalty interest. In March 2000, the Original Subject Interests were reconveyed
to TransTexas and a new production payment drilling program agreement was
entered into between TransTexas and two unaffiliated third parties in the form
of a term overriding royalty interest carved out of and burdening certain
properties including the Original Subject Interests (collectively, the "New
Subject Interests"). The Company has the right to offer additional properties
("Offered Wells") to the production payment parties at a negotiated purchase
price, up to an aggregate maximum for all such wells, of up to $52 million. Upon
acceptance of the Offered Wells, one of the third parties would be committed to
pay to the Company either the drilling costs of the Offered Wells or, at the
third party's discretion, a higher, mutually agreed upon amount. The production
payment calls for the repayment of the primary sum plus an amount equivalent to
a 15% annual interest rate on the unpaid portion of such primary sum. The Oil
and Gas Facility places certain restrictions on the amount that may be
outstanding under the production payment. As of January 31, 2001, the
36
39
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
aggregate purchase price of all wells purchased pursuant to this production
payment drilling program was $27 million and the outstanding balance of the
production payment was $14.8 million, of which $2.1 million attributable to
produced reserves is included in accrued liabilities.
In June 2000, under the provisions of the new production payment, the
Company offered an additional well ("Offered Well") to the two unaffiliated
third parties. One of the third parties agreed to a negotiated purchase price
for the additional Offered Well of $8.0 million. In September and November 2000,
the Company closed the Second and Third Supplements to the production payment.
In exchange for additional properties being made subject to the production
payment, the Company received $10 million and $4.5 million, respectively. In
February 2001, the Company closed the Fourth Supplement to the production
payment. In exchange for additional properties being made subject to the
production payment, the Company received $19.8 million.
In connection with the production payment, the Company entered into various
marketing and processing agreements with one of the third parties. Pursuant to
these agreements, the Company will pay a nominal marketing fee with respect to
the Company's production associated with the New Subject Interests. In addition,
the third party will pay a fee for certain processing services to be provided by
Galveston Bay Processing.
8. NOTES PAYABLE TO AFFILIATES
Notes payable to affiliates consist of the following (in thousands of
dollars):
JANUARY 31,
-------------------
2001 2000
-------- --------
TransTexas Intercompany Loan................................ $ -- $196,346
======== ========
Prior to the Effective Date, the Company had outstanding a $450 million
note payable to TEC (the "TransTexas Intercompany Loan"). The TransTexas
Intercompany Loan accrued interest at a rate of 10 7/8% per annum and was
pledged to secure TEC's obligations on its 11 1/2% Senior Secured Notes and 13%
Senior Secured Discount Notes due 2002. As described in Note 2, the TransTexas
Intercompany Loan was settled on the Effective Date pursuant to the Plan.
During the year ended January 31, 1999, TEC made advances to TransTexas
pursuant to a $50 million promissory note which was scheduled to mature on June
14, 2002. This note was canceled on the Effective Date pursuant to the Plan.
9. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The following information reflects TransTexas' noncash financing activities
(in thousands of dollars):
SUCCESSOR PREDECESSOR
--------- --------------------
YEAR ENDED JANUARY 31,
--------------------------------
2001 2000 1999
-------- | -------- --------
|
Financing activities: |
Accretion of stock................................. $ 25,722 | $ -- $ --
======== | ======== ========
Cancellation of old preferred common stock......... $ 740 | $ -- $ --
======== | ======== ========
Issuance of new common stock....................... $ 12 | $ -- $ --
======== | ======== ========
37
40
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash paid for interest is as follows (in thousands of dollars):
SUCCESSOR PREDECESSOR
--------- -------------------
YEAR ENDED JANUARY 31,
-------------------------------
2001 2000 1999
--------- | -------- --------
|
Interest............................................. $ 16,352 | $ 9,616 $ 69,970
======== | ======== ========
Cash paid during the year ended January 31, 2000 for reorganization items
was $6.2 million.
10. ACCRUED LIABILITIES
Accrued liabilities classified as current liabilities consist of the
following (in thousands of dollars):
JANUARY 31,
---------------------
2001 2000
--------- ---------
Royalties................................................... $ 5,849 $ 1,581
Taxes other than income taxes............................... 749 899
Accrued interest............................................ 13,511 44
Payroll..................................................... 1,283 1,197
Current portion of production payments...................... 2,072 2,647
Accrued insurance........................................... 1,675 --
Commodity hedging contract losses........................... 5,178 --
Reorganization claims....................................... 2,446 2,629
Other....................................................... 390 1,064
--------- ---------
$ 33,153 $ 10,061
========= =========
11. OTHER LIABILITIES
The major components of other liabilities are as follows (in thousands of
dollars):
JANUARY 31,
---------------------
2001 2000
--------- ---------
Reorganization claims....................................... $ 8,011 $ 34,404
Long-term payables and other................................ -- 15,000
--------- ---------
$ 8,011 $ 49,404
========= =========
12. INCOME TAXES
Income tax expense (benefit) includes the following (in thousands of
dollars):
SUCCESSOR PREDECESSOR
--------- ---------------------
YEAR ENDED JANUARY 31,
---------------------------------
2001 2000 1999
--------- | --------- ---------
|
Federal: |
Deferred................................. $ 9,984 | $ 10,000 $ (39,497)
======== | ========= =========
38
41
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Total income tax expense differs from amounts computed by applying the
statutory federal income tax rate to income before income taxes. The items
accounting for this difference are as follows (in thousands of dollars):
SUCCESSOR PREDECESSOR
--------- ---------------------
YEAR ENDED JANUARY 31,
---------------------------------
2001 2000 1999
--------- | --------- ---------
|
Federal income tax expense (benefit) at the |
statutory rate................................... $ 9,984 | $ 153,760 $(170,530)
Increase (decrease) in tax resulting from |
Debt discharged pursuant to Plan................. -- | (160,641) --
Adjustment of tax assumption..................... -- | 10,000 (75,000)
Valuation allowance.............................. -- | 6,881 206,033
-------- | --------- ---------
$ 9,984 | $ 10,000 $ (39,497)
======== | ========= =========
Significant components of TransTexas' tax attributes are as follows (in
thousand of dollars):
JANUARY 31,
-----------------
2001 2000
------- -------
Deferred tax liabilities:
Tax assumption............................................ $ -- $10,000
Depreciation, depletion and amortization.................. 12,694 --
------- -------
Net deferred tax liabilities.............................. 12,694 10,000
Deferred tax assets:
Net operating loss carryforwards.......................... 2,710 --
------- -------
$ 9,984 $10,000
======= =======
Part of the refinancing of TransAmerican's debt in 1993 involved the
cancellation of approximately $65.9 million of accrued interest and of a
contingent liability for interest of $102 million owed by TransAmerican.
TransAmerican has taken the federal tax position that the entire amount of this
debt cancellation is excluded from its income under the cancellation of
indebtedness provision (the "COD Exclusion") of the Internal Revenue Code of
1986, as amended (the "Tax Code"), and has reduced its tax attributes (including
its net operating loss and credit carryforwards) as a consequence of the COD
Exclusion. No federal tax opinion was rendered with respect to this transaction,
however, and TransAmerican has not obtained a ruling from the Internal Revenue
Service ("IRS") regarding this transaction. TransTexas believes that there is
substantial legal authority to support the position that the COD Exclusion
applies to the cancellation of TransAmerican's indebtedness. However, due to
factual and legal uncertainties, there can be no assurance that the IRS will not
challenge this position, or that any such challenge would not be upheld. Prior
to the Effective Date, TransTexas filed a consolidated tax return with
TransAmerican. Income taxes were due from or payable to TransAmerican in
accordance with a tax allocation agreement, as amended, between TransTexas, TNGC
Holdings Corporation, TransAmerican and TransAmerican's other subsidiaries (the
"Tax Allocation Agreement"). Under the Tax Allocation Agreement, TransTexas has
agreed to pay an amount equal to any federal tax liability (which would be
approximately $25.4 million) attributable to the inapplicability of the COD
Exclusion. Any such tax would be offset in future years by alternative minimum
tax credits and retained loss and credit carryforwards to the extent recoverable
from TransAmerican.
As a former member of the affiliated group for tax purposes (the "TNGC
Consolidated Group") which included TNGC Holdings Corporation, the sole
stockholder of TransAmerican ("TNGC"), TransAmerican, TEC, TransTexas and TARC,
TransTexas will be severally liable for any tax liability resulting from any
39
42
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
transaction of the TNGC Consolidated Group that occurred during any taxable year
of the TNGC Consolidated Group during which TransTexas was a member, including
the above described transactions. The IRS has commenced an audit of the
consolidated federal income tax returns of the TNGC Consolidated Group for its
taxable years ended July 31, 1994 and July 31, 1995. The Company has not been
advised by the IRS as to whether any tax deficiencies will be proposed by the
IRS as a result of its review.
TransTexas expects that a significant portion of its net operating loss
carryovers ("NOLs") will be eliminated and the use of those NOLs that are not
eliminated will be severely restricted as a consequence of the Plan. In
addition, certain other tax attributes of TransTexas may under certain
circumstances be eliminated or reduced as a consequence of the Plan. The
potential elimination or reduction of NOLs and such other tax attributes may
substantially increase the amount of tax payable by TransTexas.
13. TRANSACTIONS WITH AFFILIATES
In March 2000, a services agreement was entered into between TNGC and the
Company. Pursuant to the agreement, TransTexas will provide certain accounting,
legal, administrative and other services to TNGC and its affiliates in exchange
for a monthly fee of $2,000. This agreement expires on the earlier of September
30, 2001 or upon 30 days written notice by either party.
During the year ended January 31, 1999, TEC made advances to TransTexas
pursuant to a $50 million promissory note which was scheduled to mature on June
14, 2002. The note accrued interest at a rate of 11.375% per annum. As of
January 31, 2000, the outstanding balance of the note was $6.5 million, and the
accrued interest was $0.3 million. This note was canceled on March 17, 2000
pursuant to the Plan. In April 1999, TEC made a cash contribution of $0.7
million to TransTexas.
14. COMMITMENTS AND CONTINGENCIES
Environmental Matters
TransTexas' operations and properties are subject to extensive federal,
state, and local laws and regulations relating to the generation, storage,
handling, emission, transportation, and discharge of materials into the
environment. Permits are required for various of TransTexas' operations, and
these permits are subject to revocation, modification, and renewal by issuing
authorities. TransTexas also is subject to federal, state, and local laws and
regulations that impose liability for the cleanup or remediation of property
which has been contaminated by the discharge or release of hazardous materials
or wastes into the environment. Governmental authorities have the power to
enforce compliance with their regulations, and violations are subject to fines
or injunctions, or both. Certain aspects of TransTexas' operations may not be in
compliance with applicable environmental laws and regulations, and such
noncompliance may give rise to compliance costs and administrative penalties. It
is not anticipated that TransTexas will be required in the near future to expend
amounts that are material to the financial condition or operations of TransTexas
by reason of environmental laws and regulations, but because such laws and
regulations are frequently changed and, as a result, may impose increasingly
strict requirements, TransTexas is unable to predict the ultimate cost of
complying with such laws and regulations.
Legal Proceedings
Palmyra Minerals. The suit concerns the claims of several royalty owners,
Palmyra Minerals Ltd., et al., under several oil and gas leases held by
TransTexas. Plaintiffs allege that TransTexas underpaid royalties due the
plaintiffs under the leases back to the date of first production from the
involved wells. Plaintiffs claim approximately $2.8 million, including alleged
underpayments and interest thereon. Plaintiffs assert entitlement to recovery
under various theories including breach of contract, violation of Section
91.401, et seq., of the
40
43
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Texas Natural Resources Code, breach of the implied and express duty to market,
negligence per se, and constructive trust. The plaintiffs asserted identical
claims in TransTexas' bankruptcy proceeding. The claims have been consolidated
with the adversary proceeding. This matter was tried in the Bankruptcy Court on
February 13 and 14, 2001. No decision has yet been rendered. The Bankruptcy
Court requested that post-trial briefs be filed by May 14, 2001. A related issue
presented to the Bankruptcy Court was whether the discharge afforded by the
confirmation of TransTexas' plan of reorganization would preclude termination of
such leases. An adverse judgment in this consolidated action could result in
termination of these leasehold interests should TransTexas fail to pay the
amount of the judgment.
TransTexas is a party to various claims and routine litigation arising in
the normal course of its business. Any obligations of the Company in respect of
such claims and litigation arising out of activities prior to the Petition Date
were discharged or otherwise disposed of pursuant to the Plan. Recovery of these
obligations, if any, will be limited to any collateral held by the claimant
and/or such claimant's pro rata share of amounts available to pay general
unsecured claims.
Operating Leases
As of January 31, 2001, TransTexas had long-term leases covering land and
other property and equipment. Rental expense was approximately $3 million for
each of the years ended January 31, 2001, 2000, and 1999, respectively. Future
minimum rental payments required under operating leases that have initial or
remaining noncancellable lease terms in excess of one year as of January 31,
2001, are as follows (in thousands of dollars): 2002 -- $361; 2003 -- $286;
2004 -- $90; 2005 -- $60.
Gas Delivery Commitments
TransTexas has entered into contracts with Tejas Ship Channel LLC for
transportation of its production from the Eagle Bay field to the Winnie
facilities at a fixed negotiated rate. Under these contracts, the Company is
committed to deliver up to 75% of the initial 100,000 MMBtu per day of natural
gas and associated condensate.
The Company also entered into a contract with Centana Intrastate Pipeline
Company for transportation of natural gas on a firm and interruptible basis from
the Winnie facility to natural gas liquids recovery facilities located in the
Beaumont/Port Arthur, Texas area, and residue gas from these facilities to
various distribution points. Under the agreement, the Company is committed to
deliver up to a maximum of 56,250 Mcf of natural gas and up to 19,500 MMBtu of
residue gas per day. Transportation fees for natural gas and residue gas are
based on fixed negotiated rates.
15. PREFERRED STOCK DIVIDENDS
On July 25, August 30, and October 31, 2000, the Board of Directors of the
Company authorized the payment of quarterly dividends to the holders of the
Company's Preferred Stock of record on June 1, September 1, and December 1,
2000, respectively. The quarterly dividends were paid in-kind on August 15,
September 15, and December 15, 2000 in additional shares of Preferred Stock of
the same class at an annual rate of $0.20 per share for each share of Series A
Senior Preferred Stock and at an annual rate of $0.10 per share for each share
of Series A Junior Preferred Stock in accordance with the Certificate of
Designation for Series A Senior Preferred Stock and the Certificate of
Designation for Series A Junior Preferred Stock, respectively. Fractional shares
were not issued, but were settled in cash.
16. SHORT-SWING SALE
During the year ended January 31, 2001 the Company received $25,000 in cash
from a stockholder as a result of such stockholder's compliance with the
requirement of the Securities Exchange Act of 1934, as
41
44
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
amended, that profits from the sale of certain securities of a company that were
held less than six months by certain officers, directors and principal
stockholders must be returned to the Company. The Company recorded the proceeds
as an increase to additional paid-in capital.
17. BUSINESS SEGMENTS
TransTexas currently conducts its operations in one industry segment,
exploration and production ("E&P"), which explores for, develops, produces and
markets natural gas, condensate and natural gas liquids. All of TransTexas'
significant gas and oil operations are located along the Texas Gulf Coast and in
South Texas. TransTexas' revenues are derived principally from sales to
interstate and intrastate gas pipelines, direct end users, industrial companies,
marketers and refiners located in the United States.
For the year ended January 31, 2001, two customers provided approximately
$124 million in E&P revenues. For the year ended January 31, 2000, three
customers provided approximately $62 million in E&P revenues. For the year ended
January 31, 1999, five customers provided approximately $65 million in E&P
revenues. TransTexas believes that the loss of any single purchaser would not
have a material adverse effect on TransTexas due to the availability of other
purchasers for its production at comparable prices.
18. CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data)
SUCCESSOR
------------------------------------------
YEAR ENDED JANUARY 31, 2001
------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
-------- ------- --------- ---------
Revenues.......................................... $ 38,609 $44,240 $ 50,082 $ 57,160
Operating income.................................. 6,949 13,206 19,044 22,823
Net income (loss)................................. (2,232) 3,917 6,912 9,946
Net income (loss) per share -- basic and
diluted......................................... (5.72) (5.03) 2.69 2.32
PREDECESSOR
------------------------------------------
YEAR ENDED JANUARY 31, 2000
------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
-------- ------- --------- ---------
Revenues.......................................... $ 19,078 $28,584 $ 29,415 $ 38,153
Operating income (loss)........................... (13,217) (4,116) 2,855 4,846
Net income (loss)................................. (35,881) (6,954) (4,406) 476,556(1)
Net income (loss) per share -- basic and
diluted......................................... (0.62) (0.12) (0.08) 8.28
PREDECESSOR
------------------------------------------
YEAR ENDED JANUARY 31, 1999
------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
-------- ------- --------- ---------
Revenues.......................................... $ 34,122 $72,403 $ 33,209 $ 17,872
Operating income (loss)........................... 8,488 21,059(2) (162,674) (273,630)
Net income (loss)................................. (6,803) (806) (147,763) (292,361)
Net income (loss) per share -- basic and
diluted......................................... (0.12) (0.01) (2.57) (5.08)
- ---------------
(1) Net income for the fourth quarter of 2000 includes a $436.5 million
extraordinary gain on the extinguishment of debt and a $50.5 million credit
for reorganization items.
(2) Operating income for the second quarter of 1999 includes a $47.6 million
gain on the sale of assets.
42
45
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. SUPPLEMENTAL GUARANTOR INFORMATION
Galveston Bay Pipeline Company and Galveston Bay Processing Corporation are
guarantors of the Notes and the Oil and Gas Facility. Separate financial
statements of the Guarantors are not considered to be material to holders of the
Notes and GMACC. The following condensed consolidating financial statements
present supplemental information of the Guarantors as of and for the years ended
January 31, 2001 and 2000.
43
46
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET -- SUCCESSOR
JANUARY 31, 2001
(IN THOUSANDS OF DOLLARS)
GALVESTON GALVESTON
BAY BAY CONSOLIDATED
TRANSTEXAS PIPELINE PROCESSING ELIMINATIONS TRANSTEXAS
---------- --------- ---------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents..................... $ 19,902 $ 39 $ 774 $ -- $ 20,715
Accounts receivable, net...................... 42,127 -- 406 -- 42,533
Receivables from affiliates................... 11,660 -- -- (11,639) 21
Inventories................................... 1,476 -- -- -- 1,476
Other......................................... 2,486 -- 35 -- 2,521
--------- --------- --------- --------- ---------
Total current assets.................. 77,651 39 1,215 (11,639) 67,266
--------- --------- --------- --------- ---------
Property and equipment.......................... 401,290 1,917 10,604 -- 413,811
Less accumulated depreciation, depletion and
amortization.................................. 79,181 314 1,988 -- 81,483
--------- --------- --------- --------- ---------
Net property and equipment............ 322,109 1,603 8,616 -- 332,328
--------- --------- --------- --------- ---------
Other assets.................................... 2,651 -- -- (2) 2,649
--------- --------- --------- --------- ---------
$ 402,411 $ 1,642 $ 9,831 $ (11,641) $ 402,243
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt.......... $ 3,641 $ 14 $ 614 $ -- $ 4,269
Accounts payable.............................. 9,070 27 158 -- 9,255
Accrued liabilities........................... 33,145 -- 8 -- 33,153
--------- --------- --------- --------- ---------
Total current liabilities............. 45,856 41 780 -- 46,677
--------- --------- --------- --------- ---------
Payable to affiliates........................... -- 1,114 10,525 (11,639) --
Long-term debt, net of current maturities....... 280,240 828 203 -- 281,271
Production payments, net of current portion..... 12,732 -- -- -- 12,732
Deferred income taxes........................... 9,984 -- -- -- 9,984
Other liabilities............................... 8,011 -- -- -- 8,011
Redeemable preferred stock...................... 25,722 -- -- -- 25,722
Stockholders' equity (deficit):
Common stock.................................. 12 -- -- -- 12
Additional paid-in capital.................... 25,013 1 1 (2) 25,013
Retained earnings (accumulated deficit)....... (5,159) (342) (1,678) -- (7,179)
--------- --------- --------- --------- ---------
Total stockholders' equity
(deficit)........................... 19,866 (341) (1,677) (2) 17,846
--------- --------- --------- --------- ---------
$ 402,411 $ 1,642 $ 9,831 $ (11,641) $ 402,243
========= ========= ========= ========= =========
44
47
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET -- SUCCESSOR
JANUARY 31, 2000
(IN THOUSANDS OF DOLLARS)
GALVESTON GALVESTON
BAY BAY CONSOLIDATED
TRANSTEXAS PIPELINE PROCESSING ELIMINATIONS TRANSTEXAS
---------- --------- ---------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents..................... $ 17,851 $ 44 $ 393 $ -- $ 18,288
Accounts receivable, net...................... 19,143 110 339 -- 19,592
Receivables from affiliates................... 10,246 -- -- (9,139) 1,107
Inventories................................... 1,741 -- -- -- 1,741
Other......................................... 908 -- 18 -- 926
--------- --------- --------- --------- ---------
Total current assets.................. 49,889 154 750 (9,139) 41,654
--------- --------- --------- --------- ---------
Property and equipment.......................... 315,367 1,771 9,949 -- 327,087
Less accumulated depreciation, depletion and
amortization.................................. -- -- -- -- --
--------- --------- --------- --------- ---------
Net property and equipment............ 315,367 1,771 9,949 -- 327,087
--------- --------- --------- --------- ---------
Other assets.................................... 514 -- 1 (2) 513
--------- --------- --------- --------- ---------
$ 365,770 $ 1,925 $ 10,700 $ (9,141) $ 369,254
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt.......... $ 4,938 $ 536 $ 1,460 $ -- $ 6,934
Accounts payable.............................. 15,652 3 104 -- 15,759
Accrued liabilities........................... 9,995 11 55 -- 10,061
--------- --------- --------- --------- ---------
Total current liabilities............. 30,585 550 1,619 -- 32,754
--------- --------- --------- --------- ---------
Payable to affiliates........................... -- 637 8,502 (9,139) --
Production payments, net of current portion..... 32,460 -- -- -- 32,460
Long-term debt, net of current maturities....... 46,975 737 578 -- 48,290
Deferred income taxes........................... 196,346 -- -- -- 196,346
Other liabilities............................... 10,000 -- -- -- 10,000
Redeemable preferred stock...................... 49,404 -- -- -- 49,404
Stockholders' equity (deficit):
Common stock.................................. 740 -- -- -- 740
Additional paid-in capital.................... (740) 1 1 (2) (740)
Retained earnings (accumulated deficit)....... -- -- -- -- --
--------- --------- --------- --------- ---------
Total stockholders' equity
(deficit)........................... -- 1 1 (2) --
--------- --------- --------- --------- ---------
$ 365,770 $ 1,925 $ 10,700 $ (9,141) $ 369,254
========= ========= ========= ========= =========
45
48
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS -- SUCCESSOR
YEAR ENDED JANUARY 31, 2001
(IN THOUSANDS OF DOLLARS)
GALVESTON GALVESTON
BAY BAY CONSOLIDATED
TRANSTEXAS PIPELINE PROCESSING ELIMINATIONS TRANSTEXAS
---------- --------- ---------- ------------ ------------
Revenues:
Gas, condensate and natural gas liquids....... $ 187,883 $ -- $ -- $ -- $ 187,883
Other......................................... 520 599 6,830 (5,741) 2,208
--------- --------- --------- --------- ---------
Total revenues........................ 188,403 599 6,830 (5,741) 190,091
--------- --------- --------- --------- ---------
Costs and expenses:
Operating..................................... 20,559 34 4,275 (5,741) 19,127
Depreciation, depletion and amortization...... 79,182 314 1,987 -- 81,483
General and administrative.................... 19,713 132 458 -- 20,303
Taxes other than income taxes................. 7,104 7 45 -- 7,156
--------- --------- --------- --------- ---------
Total costs and expenses.............. 126,558 487 6,765 (5,741) 128,069
--------- --------- --------- --------- ---------
Operating income (loss)............... 61,845 112 65 -- 62,022
--------- --------- --------- --------- ---------
Other income (expense):
Interest income............................... 574 -- -- -- 574
Interest expense, net......................... (31,872) (454) (1,743) -- (34,069)
--------- --------- --------- --------- ---------
Total other expense................... (31,298) (454) (1,743) -- (33,495)
--------- --------- --------- --------- ---------
Income before income taxes............ 30,547 (342) (1,678) -- 28,527
Income taxes -- deferred........................ 9,984 -- -- -- 9,984
--------- --------- --------- --------- ---------
Net income (loss)..................... $ 20,563 $ (342) $ (1,678) $ -- $ 18,543
========= ========= ========= ========= =========
46
49
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS -- PREDECESSOR
YEAR ENDED JANUARY 31, 2000
(IN THOUSANDS OF DOLLARS)
GALVESTON GALVESTON
BAY BAY CONSOLIDATED
TRANSTEXAS PIPELINE PROCESSING ELIMINATIONS TRANSTEXAS
---------- --------- ---------- ------------ ------------
Revenues:
Gas, condensate and natural gas liquids....... $ 112,898 $ -- $ -- $ -- $ 112,898
Gain (loss) on the sale of assets............. (438) -- -- -- (438)
Other......................................... 834 696 7,261 (6,021) 2,770
--------- --------- --------- --------- ---------
Total revenues........................ 113,294 696 7,261 (6,021) 115,230
--------- --------- --------- --------- ---------
Costs and expenses:
Operating..................................... 22,604 6 3,558 (6,021) 20,147
Depreciation, depletion and amortization...... 72,833 337 1,874 -- 75,044
General and administrative.................... 19,598 2 283 -- 19,883
Taxes other than income taxes................. 9,610 13 165 -- 9,788
--------- --------- --------- --------- ---------
Total costs and expenses.............. 124,645 358 5,880 (6,021) 124,862
--------- --------- --------- --------- ---------
Operating income (loss)............... (11,351) 338 1,381 -- (9,632)
--------- --------- --------- --------- ---------
Other income (expense):
Interest income............................... 467 -- 5 -- 472
Interest expense, net......................... (38,481) -- (45) -- (38,526)
--------- --------- --------- --------- ---------
Total other expense................... (38,014) -- (40) -- (38,054)
--------- --------- --------- --------- ---------
Income (loss) before reorganization
items, income taxes and
extraordinary item.................. (49,365) 338 1,341 -- (47,686)
--------- --------- --------- --------- ---------
Reorganization items:
Legal and professional fees................... (8,325) -- -- -- (8,325)
Revaluation of assets to fair market value.... 58,836 -- -- -- 58,836
--------- --------- --------- --------- ---------
Total reorganization items............ 50,511 -- -- -- 50,511
--------- --------- --------- --------- ---------
Income taxes -- deferred........................ 10,000 -- -- -- 10,000
--------- --------- --------- --------- ---------
Income (loss) before extraordinary
item................................ (8,854) 338 1,341 -- (7,175)
Extraordinary item -- gain on early
extinguishment of debt.............. 436,490 -- -- -- 436,490
--------- --------- --------- --------- ---------
Net income (loss)..................... $ 427,636 $ 338 $ 1,341 $ -- $ 429,315
========= ========= ========= ========= =========
47
50
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS -- SUCCESSOR
YEAR ENDED JANUARY 31, 2001
(IN THOUSANDS OF DOLLARS)
GALVESTON GALVESTON
BAY BAY CONSOLIDATED
TRANSTEXAS PIPELINE PROCESSING ELIMINATIONS TRANSTEXAS
---------- --------- ---------- ------------ ------------
Operating activities:
Net income (loss)............................. $ 20,563 $ (342) $ (1,678) $ -- $ 18,543
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation, depletion and amortization... 79,182 314 1,987 -- 81,483
Accretion of discount on long-term debt.... 3,571 58 184 -- 3,813
Amortization of debt issue costs........... 343 -- -- -- 343
Deferred income taxes...................... 9,984 -- -- -- 9,984
Changes in assets and liabilities:
Accounts receivable...................... (22,984) 110 (67) -- (22,941)
Receivable from affiliates............... (1,414) -- -- 2,500 1,086
Inventories.............................. 265 -- -- -- 265
Other current assets..................... (1,578) -- (17) -- (1,595)
Accounts payable......................... (6,645) 24 54 -- (6,567)
Accrued liabilities...................... 23,313 (11) (47) -- 23,255
Transactions with affiliates, net........ -- 477 2,023 (2,500) --
Other assets............................. (113) -- 1 -- (112)
Other liabilities........................ (26,635) -- -- -- (26,635)
--------- --------- --------- --------- ---------
Net cash provided by operating
activities.......................... 77,852 630 2,440 -- 80,922
--------- --------- --------- --------- ---------
Investing activities:
Capital expenditures.......................... (99,853) (682) (654) -- (101,189)
Proceeds from the sale of assets.............. 15,646 536 -- -- 16,182
--------- --------- --------- --------- ---------
Net cash used by investing
activities.......................... (84,207) (146) (654) -- (85,007)
--------- --------- --------- --------- ---------
Financing activities:
Issuance of production payments............... 27,000 -- -- -- 27,000
Principal payments on production payments..... (47,303) -- -- -- (47,303)
Issuance of long-term debt.................... 32,500 -- -- -- 32,500
Principal payments on long-term debt.......... (15,049) (489) (1,405) -- (16,943)
Revolving credit agreement, net............... 13,739 -- -- -- 13,739
Proceeds from short-swing sale................ 25 -- -- -- 25
Debt issue costs.............................. (2,506) -- -- -- (2,506)
--------- --------- --------- --------- ---------
Net cash provided (used) by financing
activities.......................... 8,406 (489) (1,405) -- 6,512
--------- --------- --------- --------- ---------
Increase (decrease) in cash and cash
equivalents......................... 2,051 (5) 381 -- 2,427
Beginning cash and cash equivalents............. 17,851 44 393 -- 18,288
--------- --------- --------- --------- ---------
Ending cash and cash equivalents................ $ 19,902 $ 39 $ 774 $ -- $ 20,715
========= ========= ========= ========= =========
48
51
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS -- PREDECESSOR
YEAR ENDED JANUARY 31, 2000
(IN THOUSANDS OF DOLLARS)
GALVESTON GALVESTON
BAY BAY CONSOLIDATED
TRANSTEXAS PIPELINE PROCESSING ELIMINATIONS TRANSTEXAS
---------- --------- ---------- ------------ ------------
Operating activities:
Net income.................................. $ 427,636 $ 338 $ 1,341 $ -- $ 429,315
Adjustments to reconcile net income to net
cash provided by operating activities:
Reorganization adjustments:
Extraordinary item..................... (436,490) -- -- -- (436,490)
Revaluation of assets.................. (58,836) -- -- -- (58,836)
Depreciation, depletion and
amortization........................... 75,044 -- -- -- 75,044
Amortization of debt issue costs.......... 1,641 -- -- -- 1,641
Gain on the sale of assets................ 438 -- -- -- 438
Deferred income taxes..................... 10,000 -- -- -- 10,000
Changes in assets and liabilities:
Accounts receivable.................... (3,052) (110) (339) -- (3,501)
Receivable from affiliates............. (9,635) -- -- 9,814 179
Inventories............................ 1,469 -- -- -- 1,469
Other current assets................... 2,785 -- (18) -- 2,767
Accounts payable....................... 5,323 3 104 -- 5,430
Accrued interest payable to
affiliates........................... 14,628 -- -- -- 14,628
Accrued liabilities.................... (3,337) 11 55 -- (3,271)
Transactions with affiliates, net...... -- 1,573 8,941 (9,814) 700
Other assets........................... 378 -- -- -- 378
Other liabilities...................... 6,691 -- -- -- 6,691
--------- ------- ------- ------- ---------
Net cash provided by operating
activities......................... 34,683 1,815 10,084 -- 46,582
--------- ------- ------- ------- ---------
Investing activities:
Capital expenditures........................ (30,766) (1,771) (9,805) -- (42,342)
Proceeds from the sale of assets............ 445 -- -- -- 445
--------- ------- ------- ------- ---------
Net cash used by investing
activities......................... (30,321) (1,771) (9,805) -- (41,897)
--------- ------- ------- ------- ---------
Financing activities:
Issuance of note payable.................... 30,000 -- -- -- 30,000
Principal payments on production payments... (22,136) -- -- -- (22,136)
Principal payments on long-term debt........ (1,896) -- -- -- (1,896)
Revolving credit agreement, net............. 3,860 -- -- -- 3,860
--------- ------- ------- ------- ---------
Net cash provided by financing
activities......................... 9,828 -- -- -- 9,828
--------- ------- ------- ------- ---------
Increase in cash and cash
equivalents........................ 14,190 44 279 -- 14,513
Beginning cash and cash equivalents........... 3,661 -- 114 -- 3,775
--------- ------- ------- ------- ---------
Ending cash and cash equivalents.............. $ 17,851 $ 44 $ 393 $ -- $ 18,288
========= ======= ======= ======= =========
49
52
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
20. SUPPLEMENTAL GAS AND OIL DISCLOSURE (UNAUDITED)
The accompanying tables present information concerning TransTexas' gas and
oil producing activities and are prepared in accordance with Statement of
Financial Accounting Standards No. 69, "Disclosures about Oil and Gas Producing
Activities."
Estimates of TransTexas' proved reserves and proved developed reserves were
prepared by Netherland, Sewell & Associates, Inc., an independent firm of
petroleum engineers, based on data supplied to them by TransTexas. Such
estimates are inherently imprecise and may be subject to substantial revisions
as additional information such as reservoir performance, additional drilling,
technological advancements and other factors become available.
Capitalized costs relating to gas and oil producing activities are as
follows (in thousands of dollars):
JANUARY 31,
---------------------
2001 2000
--------- ---------
Proved properties........................................... $ 326,564 $ 230,764
Unproved properties......................................... 81,381 90,000
--------- ---------
Total............................................. 407,945 320,764
Less accumulated depreciation, depletion and amortization... 80,145 --
--------- ---------
$ 327,800 $ 320,764
========= =========
Costs incurred for gas and oil producing activities are as follows (in
thousands of dollars):
SUCCESSOR PREDECESSOR
--------- ---------------------
YEAR ENDED JANUARY 31,
---------------------------------
2001 2000 1999
--------- | --------- ---------
|
Property acquisitions............................. $ 20,594 | $ 6,175 $ 13,084
Exploration....................................... 82,004 | 43,238 98,294
Development....................................... -- | 4,350 77,322
--------- | --------- ---------
$ 102,598 | $ 53,763 $ 188,700
========= | ========= =========
Results of operations for gas and oil producing activities are as follows
(in thousands of dollars):
SUCCESSOR PREDECESSOR
--------- ---------------------
YEAR ENDED JANUARY 31,
---------------------------------
2001 2000 1999
--------- | --------- ---------
|
Revenues.......................................... $ 187,883 | $ 112,898 $ 92,159
--------- | --------- ---------
Expenses: |
Production costs................................ 25,723 | 29,935 28,534
Depreciation, depletion and amortization........ 80,145 | 73,721 84,883
General and administrative...................... 8,578 | 10,572 9,767
Impairment of gas and oil properties............ -- | -- 425,966
--------- | --------- ---------
Total operating expenses................ 114,446 | 114,228 549,150
--------- | --------- ---------
Income before income taxes.............. 73,437 | (1,330) (456,991)
Income taxes (benefit)............................ 25,703 | (466) (159,947)
--------- | --------- ---------
$ 47,734 | $ (864) $(297,044)
========= | ========= =========
Depletion rate per net equivalent Mcf............. $ 2.22 | $ 1.89 $ 1.96
========= | ========= =========
50
53
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reserve Quantity Information
Proved reserves are estimated quantities of natural gas, condensate and
natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. Proved developed reserves are
those proved reserves that can be expected to be recovered through existing
wells with existing equipment and operating methods. Natural gas quantities
represent gas volumes which include amounts that will be extracted as natural
gas liquids. TransTexas' estimated net proved reserves and proved developed
reserves of natural gas (billions of cubic feet) and condensate (millions of
barrels) are shown in the table below.
SUCCESSOR PREDECESSOR
------------ --------------------------------
YEAR ENDED JANUARY 31,
------------------------------------------------
2001 2000 1999
------------ ------------- ----------------
GAS OIL GAS OIL GAS OIL
----- | ---- ----- ----- ------ -----
|
Proved reserves: |
Beginning of year.............................. 95.6 | 3.7 120.7 6.6 348.7 15.9
Increase (decrease) during the year |
attributable to: |
Revisions of previous estimates............. 7.9 | 0.4 (4.1) (1.2) (127.1)(1) (9.7)
Extensions, discoveries and other |
additions................................. 42.4 | 0.8 6.8 0.1 26.1 2.0
Sales of reserves........................... (6.2)| (0.2) -- -- (91.4) (0.5)
Production.................................. (26.8)| (1.5) (27.8) (1.8) (35.6) (1.1)
----- | ---- ----- ----- ------ -----
End of year (SUCCESSOR IN 2000).................. 112.9 | 3.2 95.6 3.7 120.7 6.6
===== | ==== ===== ===== ====== =====
Proved developed reserves: |
Beginning of year.............................. 82.3 | 3.5 87.8 5.0 134.3 4.2
End of year (SUCCESSOR IN 2000)(2)............. 66.9 | 2.0 82.3 3.5 87.8 5.0
- ---------------
(1) Reserve estimates were revised downward principally as a result of
additional seismic information which indicated more highly faulted
structures in certain key properties causing reserves to be reclassified
from proved to probable.
(2) As of January 31, 2001, proved undeveloped reserves in the amount of 5.7 Bcf
of natural gas and 0.5 MMBbls of condensate became proved developed reserves
in February 2001 with the casing of a well in the Eagle Bay field.
Standardized Measure Information
The calculation of estimated future net cash flows in the following table
assumed the continuation of existing economic conditions and applied year-end
prices (except for future price changes as allowed by contract) of gas and
condensate to the expected future production of such reserves, less estimated
future expenditures (based on current costs) to be incurred in developing and
producing those proved reserves.
51
54
TRANSTEXAS GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The standardized measure of discounted future net cash flows does not
purport, nor should it be interpreted, to present the fair market value of
TransTexas' gas and oil reserves. These estimates reflect proved reserves only
and ignore, among other things, changes in prices and costs, revenues that could
result from probable reserves which could become proved reserves in fiscal 2002
or later years and the risks inherent in reserve estimates. The standardized
measure of discounted future net cash flows relating to proved gas and oil
reserves is as follows (in thousands of dollars):
SUCCESSOR PREDECESSOR
--------------------- -----------
YEAR ENDED JANUARY 31,
------------------------------------
2001 2000 1999
--------- --------- | -----------
|
Future cash inflows................................ $ 810,031 $ 361,411 | $296,831
Future production costs............................ (103,245) (61,810) | (57,453)
Future development costs........................... (81,004) (18,302) | (33,180)
Future income taxes................................ (97,259) (18,611) | --
--------- --------- | --------
Future net cash flows.................... 528,523 262,688 | 206,198
Annual discount (10%) for estimated timing of cash |
flows............................................ (118,355) (49,085) | (44,668)
--------- --------- | --------
Standardized measure of discounted future |
net cash flows......................... $ 410,168 $ 213,603 | $161,530
========= ========= | ========
Principal sources of change in the standardized measure of discounted
future net cash flows are as follows (in thousands of dollars):
SUCCESSOR PREDECESSOR
--------- ---------------------
YEAR ENDED JANUARY 31,
----------------------------------
2001 2000 1999
--------- | --------- ---------
|
Beginning of year.................................. $ 213,603 | $ 161,530 $ 395,673
Revisions: |
Quantity estimates and production rates.......... 84,923 | (18,829) (194,041)(1)
Prices, net of lifting costs..................... 162,231 | 136,550 (76,157)
Estimated future development costs............... 7,403 | 14,534 58,455
Additions, extensions, discoveries and improved |
recovery......................................... 163,384 | 10,467 42,184
Net sales of production............................ (170,832) | (93,481) (73,819)
Development costs incurred......................... -- | 4,350 77,322
Accretion of discount.............................. 18,322 | 13,615 39,566
Net changes in income taxes........................ (60,347) | (15,133) --
Purchases (sales) of reserves...................... (8,519) | -- (107,653)
--------- | --------- ---------
End of year (SUCCESSOR IN 2000).................. $ 410,168 | $ 213,603 $ 161,530
========= | ========= =========
- ---------------
(1) Reserve estimates were revised downward principally as a result of
additional seismic information which indicated more highly faulted
structures in certain key properties causing reserves to be reclassified
from proved to probable.
Year-end wellhead prices received by TransTexas from sales of natural gas,
including margins from natural gas liquids, were $6.39, $2.74 and $1.79 per Mcf
for 2001, 2000 and 1999 respectively. Year-end condensate prices were $28.23,
$26.89 and $12.12 per barrel for 2001, 2000 and 1999, respectively.
52
55
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference from
TransTexas' definitive proxy statement to be filed with the Commission within
120 days after the end of the fiscal year covered by this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from
TransTexas' definitive proxy statement to be filed with the Commission within
120 days after the end of the fiscal year covered by this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from
TransTexas' definitive proxy statement to be filed with the Commission within
120 days after the end of the fiscal year covered by this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from
TransTexas' definitive proxy statement to be filed with the Commission within
120 days after the end of the fiscal year covered by this Form 10-K.
53
56
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements, Schedules and Exhibits
PAGE
----
(1) Report of Independent Accountants........................... 22
Consolidated Balance Sheet.................................. 23
Consolidated Statement of Operations........................ 24
Consolidated Statement of Stockholders' Equity (Deficit).... 25
Consolidated Statement of Cash Flows........................ 26
Notes to Consolidated Financial Statements.................. 27
Report of Independent Accountants on Financial Statement
(2) Schedule.................................................... 66
Schedule II -- Valuation and Qualifying Accounts............ 67
(3) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1 -- Second Amended, Modified and Restated Plan of
Reorganization dated January 25, 2000 (filed as an
exhibit to the Company's current report on Form 8-K dated
February 7, 2000, and incorporated herein by reference).
2.2 -- Order Confirming Plan of Reorganization dated February 7,
2000 (filed as an exhibit to the Company's current report
on Form 8-K dated February 7, 2000, and incorporated
herein by reference).
3.1 -- Articles of Incorporation (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
33-75050), and incorporated herein by reference).
3.2 -- By-laws of TransTexas (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
3375050), and incorporated herein by reference).
3.3 -- Amended and Restated Certificate of Incorporation (filed
as an exhibit to the Company's Registration Statement on
Form 8-A (No. 0-30475), and incorporated herein by
reference).
3.4 -- Certificate of Designation, Series A Senior Preferred
Stock (filed as an exhibit to the Company's Registration
Statement on Form 8-A (No. 0-30475), and incorporated
herein by reference).
3.5 -- Certificate of Designation, Series A Junior Preferred
Stock (filed as an exhibit to the Company's Registration
Statement on Form 8-A (No. 0-30475), and incorporated
herein by reference).
3.6 -- Amended and Restated Bylaws (filed as an exhibit to the
Company's Registration Statement on Form 8-A (No.
0-30475), and incorporated herein by reference).
3.7 -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
3.8 -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation (regarding Amendments to
Certificates of Designation) (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
54
57
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 -- Indenture dated as of June 15, 1995, among TransTexas,
TTC and American Bank National Association, as Trustee
(the "Indenture Trustee"), with respect to the Senior
Secured Notes including the forms of Senior Secured Note
and Senior Secured Guarantee as exhibits (filed as an
exhibit to TransTexas' current report on Form 8-K dated
June 20, 1995, and incorporated herein by reference).
4.2 -- Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement, effective as
of June 23, 1995, from TransTexas to James A. Taylor, as
trustee for the benefit of the Indenture Trustee (filed
as an exhibit to TransTexas' current report on Form 8-K
dated June 20, 1995, and incorporated herein by
reference).
4.3 -- Pipeline Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement, dated as of June 20,
1995, from TTC to James A. Taylor, as trustee for the
benefit of the Indenture Trustee (filed as an exhibit to
TransTexas' current report on Form 8-K dated on June 20,
1995, and incorporated herein by reference).
4.4 -- Security Agreement, Pledge and Financing Statement, dated
as of June 20, 1995, by TransTexas in favor of the
Indenture Trustee (filed as an exhibit to TransTexas'
current report on Form 8-K dated June 20, 1995, and
incorporated herein by reference).
4.5 -- Security Agreement, Pledge and Financing Statement, dated
as of June 20, 1995, by TTC in favor of the Indenture
Trustee (filed as an exhibit to TransTexas' current
report on Form 8-K dated June 20, 1995, and incorporated
herein by reference).
4.6 -- Cash Collateral and Disbursement Agreement, dated as of
June 20, 1995, among TransTexas, the Indenture Trustee
and the Disbursement Agent (filed as an exhibit to
TransTexas' current report on Form 8-K dated June 20,
1995, and incorporated herein by reference).
4.7 -- Pledge and Security Agreement dated as of September 19,
1996, between TransAmerican Exploration Corporation and
Fleet National Bank (previously filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended October 31,
1996, and incorporated herein by reference).
4.8 -- Registration Rights Agreement dated as of September 19,
1996, by and among TransTexas, TransAmerican,
TransAmerican Exploration Corporation and Fleet National
Bank (filed as an exhibit to TransTexas' Form 10-Q for
the quarter ended October 31, 1996, and incorporated
herein by reference).
4.9 -- Pledge Agreement dated as of February 23, 1995, between
TEC and First Fidelity Bank, National Association, as
Trustee (filed as an exhibit to Post-Effective Amendment
No. 5 to TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.10 -- Pledge Agreement dated as of February 23, 1995, between
TARC and First Fidelity Bank, National Association, as
Trustee (filed as an exhibit to Post-Effective Amendment
No. 5 to TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.11 -- Registration Rights Agreement dated as of February 23,
1995, among TransTexas, TARC and TEC (filed as an exhibit
to Post-Effective Amendment No. 5 to the Company's
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
55
58
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.12 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and Halliburton Company (filed
as an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.13 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and RECO Industries, Inc.
(filed as an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.14 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and Frito-Lay, Inc. (filed as
an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.15 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and EM Sector Holdings, Inc.
(filed as an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.16 -- Stock Pledge Agreement dated January 27, 1995, between
TransAmerican and ITT Commercial Corp. (filed as an
exhibit to Post-Effective Amendment No. 5 to TransTexas'
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
4.17 -- Registration Rights Agreement dated January 27, 1995,
among TransAmerican, TransTexas and ITT Commercial
Finance Corp. (filed as an exhibit to Post-Effective
Amendment No. 5 to TransTexas' Registration Statement on
Form S-3 (33-91494), and incorporated herein by
reference).
4.18 -- Note Purchase Agreement dated December 13, 1996 between
TransTexas and the Purchasers of 13 1/4% Series A Senior
Subordinated Notes due 2003 (filed as an exhibit to
Post-Effective Amendment No. 5 to TransTexas'
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
4.19 -- Indenture dated December 13, 1996 between TransTexas and
Bank One, Columbus, NA, as Trustee (filed as an exhibit
to Post-Effective Amendment No. 5 to TransTexas'
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
4.20 -- Registration Rights Agreement dated December 13, 1996
between TransTexas and each of the Purchasers of the
Subordinated Notes (filed as an exhibit to Post-
Effective Amendment No. 5 to TransTexas' Registration
Statement on Form S-3 (33-91494), and incorporated herein
by reference).
4.21 -- First Supplemental Indenture dated May 29, 1997 by and
among TransTexas, TTC and Firstar Bank of Minnesota,
N.A., as trustee (filed as an exhibit to TransTexas'
current report on Form 8-K dated May 29, 1997, and
incorporated herein by reference).
4.22 -- Second Supplemental Indenture dated June 13, 1997 between
TransTexas, as issuer, and Firstar Bank of Minnesota,
N.A., as trustee (filed as an exhibit to TransTexas'
current report on Form 8-K dated June 13, 1997, and
incorporated herein by reference).
4.23 -- Indenture dated June 13, 1997 governing TransTexas'
Senior Subordinated Notes due 2001 between TransTexas, as
issuer, and Bank One, N.A., as trustee (filed as an
exhibit to TransTexas' Registration Statement on Form S-4
(333-33803), and incorporated herein by reference).
56
59
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.24 -- Registration Rights Agreement dated June 13, 1997 between
TransTexas and the holders of TransTexas' Senior
Subordinated Notes due 2001 (filed as an exhibit
TransTexas' Registration Statement on Form S-4
(333-33803), and incorporated herein by reference).
4.25 -- Loan Agreement dated June 13, 1997 between TransTexas and
TEC (filed as an exhibit to TransTexas' current report on
Form 8-K dated June 13, 1997, and incorporated herein by
reference).
4.26 -- Security and Pledge Agreement dated June 13, 1997 by
TransTexas in favor of TEC (filed as an exhibit to
TransTexas' current report on Form 8-K dated June 13,
1997, and incorporated herein by reference).
4.27 -- Disbursement Agreement dated June 13, 1997 among
TransTexas, TEC and Firstar Bank of Minnesota, as
disbursement agent and Trustee (filed as an exhibit to
TransTexas' current report on Form 8-K dated June 13,
1997, and incorporated herein by reference).
4.28 -- Forms of Mortgage dated June 13, 1997 between TransTexas
and TransAmerican Energy Corporation, (filed as an
exhibit to TransTexas' Registration Statement on Form S-4
(333-33803), and incorporated herein by reference).
4.29 -- Intercreditor and Collateral Agency Agreement dated June
13, 1997 among Firstar Bank of Minnesota, TEC and
TransTexas (filed as an exhibit to TEC's Form 10-Q for
the quarter ended July 31, 1997, and incorporated herein
by reference).
4.30 -- Registration Rights Agreement dated August 12, 1997, by
and among TransTexas, Firstar Bank of Minnesota, N.A.,
TEC and TARC (filed as an exhibit to Post-Effective
Amendment No. 6 to TransTexas' Registration Statement on
Form S-4 (33-91494) and incorporated herein by
reference).
4.31 -- First Supplemental Indenture dated as of September 2,
1997, between TransTexas, as issuer, and Bank One, N.A.,
as trustee (filed as an exhibit to TransTexas'
Registration Statement on Form S-4 (333-33803), and
incorporated herein by reference).
4.32 -- First Amendment to Loan Agreement dated December 30, 1997
between TransTexas and TEC (filed as an exhibit to
TransTexas' annual report on Form 10-K for the year ended
January 31, 1998, and incorporated herein by reference).
4.33 -- First Amendment to Disbursement Agreement dated December
30, 1997 between TransTexas, TEC and Firstar Bank of
Minnesota, as disbursement agent and Trustee (filed as an
exhibit to TransTexas' annual report on Form 10-K for the
year ended January 31, 1998, and incorporated herein by
reference).
4.34 -- Second Amendment dated December 15, 1998 to Loan
Agreement between TransTexas and TEC (filed as an exhibit
to TEC's current report on Form 8-K dated February 23,
1999, and incorporated herein by reference).
4.35 -- Indenture dated March 15, 2000 between the Company and
Firstar Bank, N.A., Indenture Trustee, governing the
Company's 15% Senior Secured Notes due 2005 (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
4.36 -- Form of Mortgage dated March 15, 2000 between the Company
and Firstar Bank, N.A. (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
57
60
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.37 -- Security and Pledge Agreement dated March 15, 2000
between the Company and Firstar Bank, N.A. (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
4.38 -- Oil and Gas Revolving Credit and Term Loan Agreement
dated March 15, 2000 among GMAC Commercial Credit LLC, as
Lender and Agent, the Company, as Borrower, and Galveston
Bay Processing Corporation and Galveston Bay Pipeline
Company, as Guarantors (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
4.39 -- Form of Mortgage dated March 15, 2000 between the Company
and GMAC Commercial Credit LLC (filed as an exhibit to
the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
4.40 -- Security and Pledge Agreement dated March 15, 2000
between the Company and GMAC Commercial Credit LLC (filed
as an exhibit to the Company's annual report on Form 10-K
for the year ended January 31, 2000, and incorporated
herein by reference).
4.41 -- Intercreditor Agreement dated March 15, 2000 between
Firstar Bank, N.A. and GMAC Commercial Credit LLC (filed
as an exhibit to the Company's annual report on Form 10-K
for the year ended January 31, 2000, and incorporated
herein by reference).
4.42 -- Warrant Agreement, including form of Warrant Certificate,
dated March 15, 2000 between the Company and ChaseMellon
Shareholder Services, LLC, Warrant Agent (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
4.43 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the Notes named
therein (filed as an exhibit to the Company's annual
report on Form 10-K for the year ended January 31, 2000,
and incorporated herein by reference).
4.44 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the common stock
named therein (filed as an exhibit to the Company's
annual report on Form 10-K for the year ended January 31,
2000, and incorporated herein by reference).
4.45 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the Senior
Preferred Stock named therein (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
4.46 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the Junior
Preferred Stock named therein (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
4.47 -- First Supplemental Indenture dated as of June 28, 2000 by
and among the Company, Galveston Bay Processing
Corporation, Galveston Bay Pipeline Company and Firstar
Bank, N.A., Indenture Trustee, governing the Company's
15% Senior Secured Notes due 2005 (filed as an exhibit to
the Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
58
61
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*4.48 -- Amendment to Warrant Agreement dated as of March 28, 2001
between TransTexas and ChaseMellon Shareholder Services,
L.L.C., Warrant Agent.
10.1 -- Services Agreement dated August 24, 1993, by and among
TransTexas and TransAmerican (filed as an exhibit to
TransTexas' current report on Form 8-K dated August 24,
1993, and incorporated herein by reference).
10.2 -- Tax Allocation Agreement dated August 24, 1993, by and
among TransAmerican, TransTexas, and the other
subsidiaries of TransAmerican, as amended (filed as an
exhibit to TransTexas' Registration Statement on Form S-1
(No. 33-75050), and incorporated herein by reference).
10.3 -- Interruptible Gas Sales Terms and Conditions, between
TransTexas and TARC, as amended (filed as an exhibit to
TARC's Registration Statement on Form S-1 (No. 33-82200),
and incorporated herein by reference).
10.4 -- Bank Group Agreement dated August 24, 1993, by and among
TransAmerican, TransTexas, and the Bank Group (filed as
an exhibit to TransTexas' current report on Form 8-K
dated August 24, 1993, and incorporated herein by
reference).
10.5 -- Gas Purchase Agreement dated June 8, 1987, by and between
TransAmerican and The Coastal Corporation, as amended by
the Amendment to Gas Purchase Agreement dated February
13, 1990, by and between TransAmerican and Texcol Gas
Services, Inc., as successor to The Coastal Corporation
(filed as an exhibit to TransTexas' Registration
Statement on Form S-1 (No. 33-62740), and incorporated
herein by reference).
10.6 -- Gas Purchase Agreement dated October 29, 1987, by and
between TransAmerican and The Coastal Corporation as
amended by the Amendment to Gas Purchase Agreement dated
February 13, 1990, by and between TransAmerican and
Texcol Gas Services, Inc., successor to The Coastal
Corporation (filed as an exhibit to TransTexas'
Registration Statement on Form S-1 (No. 33-62740), and
incorporated herein by reference).
10.7 -- Gas Transportation Agreement dated the Effective Date (as
therein defined), by and between TransAmerican and The
Coastal Corporation, as amended by the Amendment to Gas
Transportation Agreement dated February 13, 1990, by and
between TransAmerican and Texcol Gas Services, Inc.,
successor to The Coastal Corporation (filed as an exhibit
to TransTexas' Registration Statement on Form S-1 (No.
33-62740), and incorporated herein by reference).
10.8 -- Firm Natural Gas Sales Agreement dated September 30,
1993, by and between TransTexas and Associated Natural
Gas, Inc. (filed as an exhibit to TransTexas' Form 10-Q
for the quarter ended October 31, 1993, and incorporated
herein by reference).
10.9 -- Form of Indemnification Agreement by and between
TransTexas and each of its directors (filed as an exhibit
to TransTexas' current report on Form 8-K dated August
24, 1993 and incorporated herein by reference).
10.10 -- Gas Purchase Agreement dated November 1, 1985, between
TransAmerican and Washington Gas and Light Company,
Frederick Gas Company, Inc., and Shenandoah Gas Company
(filed as an exhibit to TransTexas' Registration
Statement on Form S-1 (No. 33-75050), and incorporated
herein by reference).
10.11 -- Natural Gas Sales Agreement between TransTexas and
Associated Natural Gas, Inc. dated September 30, 1993
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended October 31, 1993, and incorporated herein
by reference).
59
62
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.12 -- Amendment Extending Gas Purchase Agreement between
TransTexas and Washington Gas Light Company, Inc., and
Shenandoah Gas Company, as amended, dated November 1,
1993 (filed as an exhibit to TransTexas' Form 10-Q for
the quarter ended January 31, 1994, and incorporated
herein by reference).
10.13 -- Agreement for Purchase of Production Payment between
TransTexas and Southern States Exploration, Inc. dated
April 1, 1994 (filed as an exhibit to TransTexas' Form
10-Q for the quarter ended April 30, 1994, and
incorporated herein by reference).
10.14 -- Assignment of Proceeds Production Payment between
TransTexas and Southern States Exploration, Inc. dated
April 1, 1994 (filed as an exhibit to TransTexas' Form
10-Q for the quarter ended April 30, 1994, and
incorporated herein by reference).
10.15 -- Transfer Agreement dated August 24, 1993, by and among
TransAmerican, TransTexas, TTC, and John R. Stanley
(filed as an exhibit to TransTexas' current report on
Form 8-K dated August 24, 1993, and incorporated herein
by reference).
10.16 -- Amended and Restated Accounts Receivable Management and
Security Agreement between TransTexas and BNY Financial
Corporation (filed as an exhibit to TransTexas' Form 10-Q
for the quarter ended October 31, 1995, and incorporated
herein by reference).
10.17 -- Note Purchase Agreement, dated as of May 10, 1996, among
TransTexas, TCW Shared Opportunity Fund II, L.P. and
Jefferies & Company, Inc. (filed as an exhibit to the
Company's Form 10-Q for the quarter ended April 30, 1996,
and incorporated herein by reference).
10.18 -- Master Swap Agreement, dated June 6, 1996, between
TransTexas and AIG Trading Corporation (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
April 30, 1996, and incorporated herein by reference).
10.19 -- Purchase Agreement, dated January 30, 1996, between
TransTexas and Sunflower Energy Finance Company (filed as
an exhibit to TransTexas' Form 10-Q for the quarter ended
April 30, 1996, and incorporated herein by reference).
10.20 -- Production Payment Conveyance, executed on January 30,
1996, from TransTexas to Sunflower Energy Finance Company
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended April 30, 1996, and incorporated herein by
reference).
10.21 -- First Supplement to Purchase Agreement, dated as of
February 12, 1996, among TransTexas, Sunflower Energy
Finance Company and TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P. (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended April 30,
1996, and incorporated herein by reference).
10.22 -- First Supplement to Production Payment Conveyance,
executed February 12, 1996, among TransTexas, Sunflower
Energy Finance Company and TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P. (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended April 30,
1996, and incorporated herein by reference).
10.23 -- Purchase Agreement, dated May 14, 1996, among TransTexas,
TCW Portfolio No. 1555 DR V Sub-Custody Partnership, L.P.
and Sunflower Energy Finance Company (filed as an exhibit
to TransTexas' Form 10-Q for the quarter ended April 30,
1996, and incorporated herein by reference).
60
63
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.24 -- Production Payment Conveyance, executed May 14, 1996,
from TransTexas to TCW Portfolio No. 1555 Dr V
Sub-Custody Partnership, L.P. and Sunflower Energy
Finance Company (filed as an exhibit to TransTexas' Form
10-Q for the quarter ended April 30, 1996, and
incorporated herein by reference).
10.25 -- Employment Agreement between TransTexas and Richard
Bianchi dated August 12, 1996 (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended October 31,
1996, and incorporated herein by reference).
10.26 -- Employment Agreement between TransTexas and Arnold
Brackenridge dated August 12, 1996 (filed as an exhibit
to TransTexas' Form 10-Q for the quarter ended October
31, 1996, and incorporated herein by reference).
10.27 -- Stock Purchase Agreement dated as of May 29, 1997 by and
between TransTexas and First Union Bank of Connecticut,
as trustee (filed as an exhibit to TransTexas' current
report on Form 8-K dated May 29, 1997, and incorporated
herein by reference).
10.28 -- Interruptible Gas Transportation Agreement dated
Effective March 1, 1997 between TransTexas, as shipper,
and Lobo Pipeline Company, as transporter (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
July 31, 1997, and incorporated herein by reference).
10.29 -- Intrastate Firm Gas Transportation Agreement dated
effective March 1, 1997 between TransTexas, as shipper,
and Lobo Pipeline Company, as transporter (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
July 31, 1997, and incorporated herein by reference).
10.30 -- Master Services Contract dated May 30, 1997 between
Conoco Inc. and TransTexas (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended July 31,
1997, and incorporated herein by reference).
10.31 -- Agreement for Services dated effective March 1, 1997
between Conoco Inc. and TransTexas (filed as an exhibit
to TransTexas' Form 10-Q for the quarter ended July 31,
1997, and incorporated herein by reference).
10.32 -- Services Agreement dated June 13, 1997 among TNGC
Holdings Corporation, TransAmerican, TEC, TARC,
TransTexas and TTXD (filed as an exhibit to TransTexas'
Form 10-Q for the quarter ended July 31, 1997, and
incorporated herein by reference).
10.33 -- Amendment No. 3 to Tax Allocation Agreement dated May 29,
1997 (filed as an exhibit to TransTexas' Form 10-Q for
the quarter ended July 31, 1997, and incorporated herein
by reference).
10.34 -- Amendment No. 4 to Tax Allocation Agreement dated June
13, 1997 (filed as an exhibit to TransTexas' Form 10-Q
for the quarter ended July 31, 1997, and incorporated
herein by reference).
10.35 -- Amendment No. 2 to Transfer Agreement dated May 29, 1997
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended July 31, 1997, and incorporated herein by
reference).
10.36 -- Amendment No. 3 to Transfer Agreement dated June 13, 1997
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended July 31, 1997, and incorporated herein by
reference).
61
64
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.37 -- Second Amended and Restated Accounts Receivable
Management Agreement dated October 14, 1997 between
TransTexas and BNY Financial Corporation (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
October 31, 1997, and incorporated herein by reference).
10.38 -- Employment Agreement dated December 1, 1997 between
TransTexas and Arnold Brackenridge (filed as an exhibit
to TransTexas' annual report on Form 10-K for the year
ended January 31, 1998, and incorporated herein by
reference).
10.39 -- Employment Agreement Settlement dated April 28, 1998
between TransTexas and Richard Bianchi (filed as an
exhibit to TransTexas' annual report on Form 10-K for the
year ended January 31, 1998, and incorporated herein by
reference).
10.40 -- Severance Agreement dated November 21, 1997 between
TransTexas and Lee Muncy (filed as an exhibit to
TransTexas' annual report on Form 10-K for the year ended
January 31, 1998, and incorporated herein by reference).
10.41 -- Purchase Agreement dated February 23, 1998 between
TransTexas and TCW (filed as an exhibit to TransTexas'
annual report on Form 10-K for the year ended January 31,
1998, and incorporated herein by reference).
10.42 -- Production Payment Conveyance dated February 23, 1998
between TransTexas and TCW (filed as an exhibit to
TransTexas' annual report on Form 10-K for the year ended
January 31, 1998, and incorporated herein by reference).
10.43 -- Asset Purchase Agreement dated May 26, 1998 by and among
TransTexas, Bayard Drilling, L.P. and Bayard Drilling
Technologies, Inc. (filed as an exhibit to TransTexas'
current report on Form 8-K dated June 26, 1998, and
incorporated herein by reference).
10.44 -- Employment Agreement between the Company and John R.
Stanley dated November 1, 1998 (filed as an exhibit to
the Company's annual report on Form 10-K for the year
ended January 31, 1999, and incorporated herein by
reference).
10.45 -- Employment Agreement between the Company and Ed Donahue
dated December 1, 1998 (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 1999, and incorporated herein by reference).
10.46 -- Credit Agreement dated April 27, 1999 among TransTexas,
Credit Suisse First Boston Management Corporation, the
Lenders named therein and TEC and TARC, as guarantors
(filed as an exhibit to the Company's annual report on
Form 10-K for the year ended January 31, 1999, and
incorporated herein by reference).
10.47 -- Post-Petition Amendment No. 1 to Financing Agreement
dated as of April 19, 1999 between the Company and GMAC
Commercial Credit LLC (filed as an exhibit to the
Company's quarterly report on Form 10-Q for the quarter
ended April 30, 1999, and incorporated herein by
reference).
10.48 -- Amendment No. 1 dated June 28, 1999 to Credit Agreement
dated April 27, 1999 among TransTexas, Credit Suisse
First Boston Management Corporation, the Lenders named
therein, and TEC and TARC, as guarantors (filed as an
exhibit to the Company's quarterly report on Form 10-Q
for the quarter ended July 31, 1999, and incorporated
herein by reference).
10.49 -- Employment Agreement dated November 8, 1999 between the
Company and Ronald P. Nowak (filed as an exhibit to the
Company's quarterly report on Form 10-Q for the quarter
ended October 31, 1999, and incorporated herein by
reference).
62
65
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.50 -- Employment Agreement dated March 17, 2000 between the
Company and John R. Stanley (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
10.51 -- Severance Agreement dated May 27, 1998 between the
Company and Simon J. Ward (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
10.52 -- Purchase Agreement dated March 14, 2000 between the
Company, Southern Producer Services, L.P.("SPS"), and TCW
Portfolio No. 1555 DR V Sub-Custody Partnership, L.P.,
TCW DR VI Investment Partnership, L.P. and TCW Asset
Management Company ("TCW") (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
10.53 -- Production Payment Conveyance dated March 14, 2000
between the Company, SPS and TCW (filed as an exhibit to
the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
10.54 -- Gas and Natural Gas Liquids Purchase Agreement dated
March 14, 2000 between SPS and TTG (filed as an exhibit
to the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
10.55 -- Crude Oil Purchase Agreement dated March 14, 2000 between
SPS and TTG (filed as an exhibit to the Company's annual
report on Form 10-K for the year ended January 31, 2000,
and incorporated herein by reference).
10.56 -- Natural Gas Treating and Condensate Handling Agreement
dated March 14, 2000 between Galveston Bay Processing
Corporation and SPS (filed as an exhibit to the Company's
annual report on Form 10-K for the year ended January 31,
2000, and incorporated herein by reference).
10.57 -- Third Amended and Restated Accounts Receivable Management
and Security Agreement dated March 15, 2000 between the
Company and GMAC Commercial Credit LLC (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
10.58 -- Services Agreement dated March 17, 2000 between TNGC
Holdings Corporation and the Company (filed as an exhibit
to the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
10.59 -- First Supplement to 2000 Production Payment Agreement,
dated as of June 7, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
10.60 -- First Supplement to 2000 Production Payment Conveyance,
dated as of June 7, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
10.61 -- Second Supplement to 2000 Production Payment Agreement,
dated as of September 8, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
10.62 -- Second Supplement to 2000 Production Payment Conveyance,
dated as of September 8, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
63
66
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.63 -- Subordination Agreement, dated as of September 7, 2000
between the Company and Firstar Bank of Minnesota,
relating to the Second Supplement to 2000 Production
Payment Conveyance (filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 333-38252), and
incorporated herein by reference).
10.64 -- Subordination Agreement, dated as of September 7, 2000
between the Company and GMAC Commercial Credit, LLC,
relating to the Second Supplement to 2000 Production
Payment Conveyance (filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 333-38252), and
incorporated herein by reference).
*10.65 -- Amendment No. 1 to Third Amended and Restated Accounts
Receivable Management and Security Agreement dated
October 1, 2000 between the Company and GMAC Commercial
Credit LLC.
*10.66 -- Third Supplement to 2000 Production Payment Agreement,
dated November 7, 2000.
*10.67 -- Third Supplement to 2000 Production Payment Conveyance,
dated November 7, 2000.
*10.68 -- Subordination Agreement, dated as of February 7, 2001
between the Company and Firstar Bank of Minnesota,
relating to the Fourth Supplement to 2000 Production
Payment Conveyance.
*10.69 -- Subordination Agreement, dated as of February 7, 2001
between the Company and GMAC Commercial Credit LLC as
Agent, relating to the Fourth Supplement to 2000
Production Payment Conveyance.
*10.70 -- Subordination Agreement, dated as of February 7, 2001
between the Company and GMAC Commercial Credit LLC,
relating to the Fourth Supplement to 2000 Production
Payment Conveyance.
*10.71 -- Fourth Supplement to 2000 Production Payment Agreement,
dated February 7, 2001.
*10.72 -- Fourth Supplement to 2000 Production Payment Conveyance,
dated February 7, 2001.
21.1 -- Schedule of Subsidiaries of TransTexas (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 1999, and incorporated herein
by reference).
*21.2 -- Schedule of Subsidiaries of TransTexas.
*23.1 -- Consent of Netherland, Sewell & Associates, Inc.
- ---------------
* filed herewith
(b) There were no reports on Form 8-K filed during the three months ended
January 31, 2001.
64
67
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on May 1, 2001.
TRANSTEXAS GAS CORPORATION
By: /s/ JOHN R. STANLEY
----------------------------------
John R. Stanley,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities indicated on May 1, 2001.
NAME TITLE
---- -----
/s/ JOHN R. STANLEY Director and Chief Executive Officer
- ----------------------------------------------------- (Principal Executive Officer)
John R. Stanley
/s/ JOHN WHITMIRE Director
- -----------------------------------------------------
John Whitmire
/s/ WALTER S. PIONTEK Director
- -----------------------------------------------------
Walter S. Piontek
/s/ R. GERALD BENNETT Director
- -----------------------------------------------------
R. Gerald Bennett
/s/ RONALD BENSON Director
- -----------------------------------------------------
Ronald Benson
/s/ ED DONAHUE Vice President and Chief Financial Officer
- ----------------------------------------------------- (Principal Financial and Accounting
Ed Donahue Officer)
65
68
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Stockholders and Board of Directors
TransTexas Gas Corporation
Our audits of the consolidated financial statements referred to in our
report dated April 25, 2001 appearing in the January 31, 2001 Form 10-K of
TransTexas Gas Corporation also included an audit of the financial statement
schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
PricewaterhouseCoopers LLP
Houston, Texas
April 25, 2001
66
69
SCHEDULE II
TRANSTEXAS GAS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS)
BALANCE AT BALANCE AT
BEGINNING ADDITIONS OTHER OTHER END OF
DESCRIPTION OF PERIOD AT COSTS RETIREMENTS CHANGES PERIOD
- ----------- ---------- --------- ----------- ------- ----------
PREDECESSOR:
Year ended January 31, 1999:
Valuation allowance -- accounts
receivable.......................... $ -- $ 191 $ -- $ -- $191
==== ====== ===== ======= ====
Year ended January 31, 2000:
Valuation allowance -- accounts
receivable.......................... $191 $2,898 $ -- $(3,089)(1) $ --(2)
==== ====== ===== ======= ====
SUCCESSOR:
Year ended January 31, 2001:
Valuation allowance -- accounts
receivable.......................... $ -- $ 850 $(531) $ (319) $ --
==== ====== ===== ======= ====
- ---------------
(1) Adjustment for fresh-start reporting.
(2) Successor balance at January 31, 2000.
67
70
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1 -- Second Amended, Modified and Restated Plan of
Reorganization dated January 25, 2000 (filed as an
exhibit to the Company's current report on Form 8-K dated
February 7, 2000, and incorporated herein by reference).
2.2 -- Order Confirming Plan of Reorganization dated February 7,
2000 (filed as an exhibit to the Company's current report
on Form 8-K dated February 7, 2000, and incorporated
herein by reference).
3.1 -- Articles of Incorporation (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
33-75050), and incorporated herein by reference).
3.2 -- By-laws of TransTexas (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
3375050), and incorporated herein by reference).
3.3 -- Amended and Restated Certificate of Incorporation (filed
as an exhibit to the Company's Registration Statement on
Form 8-A (No. 0-30475), and incorporated herein by
reference).
3.4 -- Certificate of Designation, Series A Senior Preferred
Stock (filed as an exhibit to the Company's Registration
Statement on Form 8-A (No. 0-30475), and incorporated
herein by reference).
3.5 -- Certificate of Designation, Series A Junior Preferred
Stock (filed as an exhibit to the Company's Registration
Statement on Form 8-A (No. 0-30475), and incorporated
herein by reference).
3.6 -- Amended and Restated Bylaws (filed as an exhibit to the
Company's Registration Statement on Form 8-A (No.
0-30475), and incorporated herein by reference).
3.7 -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
3.8 -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation (regarding Amendments to
Certificates of Designation) (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
4.1 -- Indenture dated as of June 15, 1995, among TransTexas,
TTC and American Bank National Association, as Trustee
(the "Indenture Trustee"), with respect to the Senior
Secured Notes including the forms of Senior Secured Note
and Senior Secured Guarantee as exhibits (filed as an
exhibit to TransTexas' current report on Form 8-K dated
June 20, 1995, and incorporated herein by reference).
4.2 -- Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement, effective as
of June 23, 1995, from TransTexas to James A. Taylor, as
trustee for the benefit of the Indenture Trustee (filed
as an exhibit to TransTexas' current report on Form 8-K
dated June 20, 1995, and incorporated herein by
reference).
4.3 -- Pipeline Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement, dated as of June 20,
1995, from TTC to James A. Taylor, as trustee for the
benefit of the Indenture Trustee (filed as an exhibit to
TransTexas' current report on Form 8-K dated on June 20,
1995, and incorporated herein by reference).
4.4 -- Security Agreement, Pledge and Financing Statement, dated
as of June 20, 1995, by TransTexas in favor of the
Indenture Trustee (filed as an exhibit to TransTexas'
current report on Form 8-K dated June 20, 1995, and
incorporated herein by reference).
71
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.5 -- Security Agreement, Pledge and Financing Statement, dated
as of June 20, 1995, by TTC in favor of the Indenture
Trustee (filed as an exhibit to TransTexas' current
report on Form 8-K dated June 20, 1995, and incorporated
herein by reference).
4.6 -- Cash Collateral and Disbursement Agreement, dated as of
June 20, 1995, among TransTexas, the Indenture Trustee
and the Disbursement Agent (filed as an exhibit to
TransTexas' current report on Form 8-K dated June 20,
1995, and incorporated herein by reference).
4.7 -- Pledge and Security Agreement dated as of September 19,
1996, between TransAmerican Exploration Corporation and
Fleet National Bank (previously filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended October 31,
1996, and incorporated herein by reference).
4.8 -- Registration Rights Agreement dated as of September 19,
1996, by and among TransTexas, TransAmerican,
TransAmerican Exploration Corporation and Fleet National
Bank (filed as an exhibit to TransTexas' Form 10-Q for
the quarter ended October 31, 1996, and incorporated
herein by reference).
4.9 -- Pledge Agreement dated as of February 23, 1995, between
TEC and First Fidelity Bank, National Association, as
Trustee (filed as an exhibit to Post-Effective Amendment
No. 5 to TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.10 -- Pledge Agreement dated as of February 23, 1995, between
TARC and First Fidelity Bank, National Association, as
Trustee (filed as an exhibit to Post-Effective Amendment
No. 5 to TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.11 -- Registration Rights Agreement dated as of February 23,
1995, among TransTexas, TARC and TEC (filed as an exhibit
to Post-Effective Amendment No. 5 to the Company's
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
4.12 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and Halliburton Company (filed
as an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.13 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and RECO Industries, Inc.
(filed as an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.14 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and Frito-Lay, Inc. (filed as
an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.15 -- Pledge Agreement dated as of February 23, 1995, among
TransAmerican, TransTexas and EM Sector Holdings, Inc.
(filed as an exhibit to Post-Effective Amendment No. 5 to
TransTexas' Registration Statement on Form S-3
(33-91494), and incorporated herein by reference).
4.16 -- Stock Pledge Agreement dated January 27, 1995, between
TransAmerican and ITT Commercial Corp. (filed as an
exhibit to Post-Effective Amendment No. 5 to TransTexas'
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
72
EXHIBIT
NUMBER DESCRIPTION
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4.17 -- Registration Rights Agreement dated January 27, 1995,
among TransAmerican, TransTexas and ITT Commercial
Finance Corp. (filed as an exhibit to Post-Effective
Amendment No. 5 to TransTexas' Registration Statement on
Form S-3 (33-91494), and incorporated herein by
reference).
4.18 -- Note Purchase Agreement dated December 13, 1996 between
TransTexas and the Purchasers of 13 1/4% Series A Senior
Subordinated Notes due 2003 (filed as an exhibit to
Post-Effective Amendment No. 5 to TransTexas'
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
4.19 -- Indenture dated December 13, 1996 between TransTexas and
Bank One, Columbus, NA, as Trustee (filed as an exhibit
to Post-Effective Amendment No. 5 to TransTexas'
Registration Statement on Form S-3 (33-91494), and
incorporated herein by reference).
4.20 -- Registration Rights Agreement dated December 13, 1996
between TransTexas and each of the Purchasers of the
Subordinated Notes (filed as an exhibit to Post-
Effective Amendment No. 5 to TransTexas' Registration
Statement on Form S-3 (33-91494), and incorporated herein
by reference).
4.21 -- First Supplemental Indenture dated May 29, 1997 by and
among TransTexas, TTC and Firstar Bank of Minnesota,
N.A., as trustee (filed as an exhibit to TransTexas'
current report on Form 8-K dated May 29, 1997, and
incorporated herein by reference).
4.22 -- Second Supplemental Indenture dated June 13, 1997 between
TransTexas, as issuer, and Firstar Bank of Minnesota,
N.A., as trustee (filed as an exhibit to TransTexas'
current report on Form 8-K dated June 13, 1997, and
incorporated herein by reference).
4.23 -- Indenture dated June 13, 1997 governing TransTexas'
Senior Subordinated Notes due 2001 between TransTexas, as
issuer, and Bank One, N.A., as trustee (filed as an
exhibit to TransTexas' Registration Statement on Form S-4
(333-33803), and incorporated herein by reference).
4.24 -- Registration Rights Agreement dated June 13, 1997 between
TransTexas and the holders of TransTexas' Senior
Subordinated Notes due 2001 (filed as an exhibit
TransTexas' Registration Statement on Form S-4
(333-33803), and incorporated herein by reference).
4.25 -- Loan Agreement dated June 13, 1997 between TransTexas and
TEC (filed as an exhibit to TransTexas' current report on
Form 8-K dated June 13, 1997, and incorporated herein by
reference).
4.26 -- Security and Pledge Agreement dated June 13, 1997 by
TransTexas in favor of TEC (filed as an exhibit to
TransTexas' current report on Form 8-K dated June 13,
1997, and incorporated herein by reference).
4.27 -- Disbursement Agreement dated June 13, 1997 among
TransTexas, TEC and Firstar Bank of Minnesota, as
disbursement agent and Trustee (filed as an exhibit to
TransTexas' current report on Form 8-K dated June 13,
1997, and incorporated herein by reference).
4.28 -- Forms of Mortgage dated June 13, 1997 between TransTexas
and TransAmerican Energy Corporation, (filed as an
exhibit to TransTexas' Registration Statement on Form S-4
(333-33803), and incorporated herein by reference).
4.29 -- Intercreditor and Collateral Agency Agreement dated June
13, 1997 among Firstar Bank of Minnesota, TEC and
TransTexas (filed as an exhibit to TEC's Form 10-Q for
the quarter ended July 31, 1997, and incorporated herein
by reference).
73
EXHIBIT
NUMBER DESCRIPTION
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4.30 -- Registration Rights Agreement dated August 12, 1997, by
and among TransTexas, Firstar Bank of Minnesota, N.A.,
TEC and TARC (filed as an exhibit to Post-Effective
Amendment No. 6 to TransTexas' Registration Statement on
Form S-4 (33-91494) and incorporated herein by
reference).
4.31 -- First Supplemental Indenture dated as of September 2,
1997, between TransTexas, as issuer, and Bank One, N.A.,
as trustee (filed as an exhibit to TransTexas'
Registration Statement on Form S-4 (333-33803), and
incorporated herein by reference).
4.32 -- First Amendment to Loan Agreement dated December 30, 1997
between TransTexas and TEC (filed as an exhibit to
TransTexas' annual report on Form 10-K for the year ended
January 31, 1998, and incorporated herein by reference).
4.33 -- First Amendment to Disbursement Agreement dated December
30, 1997 between TransTexas, TEC and Firstar Bank of
Minnesota, as disbursement agent and Trustee (filed as an
exhibit to TransTexas' annual report on Form 10-K for the
year ended January 31, 1998, and incorporated herein by
reference).
4.34 -- Second Amendment dated December 15, 1998 to Loan
Agreement between TransTexas and TEC (filed as an exhibit
to TEC's current report on Form 8-K dated February 23,
1999, and incorporated herein by reference).
4.35 -- Indenture dated March 15, 2000 between the Company and
Firstar Bank, N.A., Indenture Trustee, governing the
Company's 15% Senior Secured Notes due 2005 (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
4.36 -- Form of Mortgage dated March 15, 2000 between the Company
and Firstar Bank, N.A. (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
4.37 -- Security and Pledge Agreement dated March 15, 2000
between the Company and Firstar Bank, N.A. (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
4.38 -- Oil and Gas Revolving Credit and Term Loan Agreement
dated March 15, 2000 among GMAC Commercial Credit LLC, as
Lender and Agent, the Company, as Borrower, and Galveston
Bay Processing Corporation and Galveston Bay Pipeline
Company, as Guarantors (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
4.39 -- Form of Mortgage dated March 15, 2000 between the Company
and GMAC Commercial Credit LLC (filed as an exhibit to
the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
4.40 -- Security and Pledge Agreement dated March 15, 2000
between the Company and GMAC Commercial Credit LLC (filed
as an exhibit to the Company's annual report on Form 10-K
for the year ended January 31, 2000, and incorporated
herein by reference).
4.41 -- Intercreditor Agreement dated March 15, 2000 between
Firstar Bank, N.A. and GMAC Commercial Credit LLC (filed
as an exhibit to the Company's annual report on Form 10-K
for the year ended January 31, 2000, and incorporated
herein by reference).
74
EXHIBIT
NUMBER DESCRIPTION
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4.42 -- Warrant Agreement, including form of Warrant Certificate,
dated March 15, 2000 between the Company and ChaseMellon
Shareholder Services, LLC, Warrant Agent (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
4.43 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the Notes named
therein (filed as an exhibit to the Company's annual
report on Form 10-K for the year ended January 31, 2000,
and incorporated herein by reference).
4.44 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the common stock
named therein (filed as an exhibit to the Company's
annual report on Form 10-K for the year ended January 31,
2000, and incorporated herein by reference).
4.45 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the Senior
Preferred Stock named therein (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
4.46 -- Registration Rights Agreement dated March 15, 2000
between the Company and the holders of the Junior
Preferred Stock named therein (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
4.47 -- First Supplemental Indenture dated as of June 28, 2000 by
and among the Company, Galveston Bay Processing
Corporation, Galveston Bay Pipeline Company and Firstar
Bank, N.A., Indenture Trustee, governing the Company's
15% Senior Secured Notes due 2005 (filed as an exhibit to
the Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
*4.48 -- Amendment to Warrant Agreement dated as of March 28, 2001
between TransTexas and ChaseMellon Shareholder Services,
L.L.C., Warrant Agent.
10.1 -- Services Agreement dated August 24, 1993, by and among
TransTexas and TransAmerican (filed as an exhibit to
TransTexas' current report on Form 8-K dated August 24,
1993, and incorporated herein by reference).
10.2 -- Tax Allocation Agreement dated August 24, 1993, by and
among TransAmerican, TransTexas, and the other
subsidiaries of TransAmerican, as amended (filed as an
exhibit to TransTexas' Registration Statement on Form S-1
(No. 33-75050), and incorporated herein by reference).
10.3 -- Interruptible Gas Sales Terms and Conditions, between
TransTexas and TARC, as amended (filed as an exhibit to
TARC's Registration Statement on Form S-1 (No. 33-82200),
and incorporated herein by reference).
10.4 -- Bank Group Agreement dated August 24, 1993, by and among
TransAmerican, TransTexas, and the Bank Group (filed as
an exhibit to TransTexas' current report on Form 8-K
dated August 24, 1993, and incorporated herein by
reference).
10.5 -- Gas Purchase Agreement dated June 8, 1987, by and between
TransAmerican and The Coastal Corporation, as amended by
the Amendment to Gas Purchase Agreement dated February
13, 1990, by and between TransAmerican and Texcol Gas
Services, Inc., as successor to The Coastal Corporation
(filed as an exhibit to TransTexas' Registration
Statement on Form S-1 (No. 33-62740), and incorporated
herein by reference).
75
EXHIBIT
NUMBER DESCRIPTION
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10.6 -- Gas Purchase Agreement dated October 29, 1987, by and
between TransAmerican and The Coastal Corporation as
amended by the Amendment to Gas Purchase Agreement dated
February 13, 1990, by and between TransAmerican and
Texcol Gas Services, Inc., successor to The Coastal
Corporation (filed as an exhibit to TransTexas'
Registration Statement on Form S-1 (No. 33-62740), and
incorporated herein by reference).
10.7 -- Gas Transportation Agreement dated the Effective Date (as
therein defined), by and between TransAmerican and The
Coastal Corporation, as amended by the Amendment to Gas
Transportation Agreement dated February 13, 1990, by and
between TransAmerican and Texcol Gas Services, Inc.,
successor to The Coastal Corporation (filed as an exhibit
to TransTexas' Registration Statement on Form S-1 (No.
33-62740), and incorporated herein by reference).
10.8 -- Firm Natural Gas Sales Agreement dated September 30,
1993, by and between TransTexas and Associated Natural
Gas, Inc. (filed as an exhibit to TransTexas' Form 10-Q
for the quarter ended October 31, 1993, and incorporated
herein by reference).
10.9 -- Form of Indemnification Agreement by and between
TransTexas and each of its directors (filed as an exhibit
to TransTexas' current report on Form 8-K dated August
24, 1993 and incorporated herein by reference).
10.10 -- Gas Purchase Agreement dated November 1, 1985, between
TransAmerican and Washington Gas and Light Company,
Frederick Gas Company, Inc., and Shenandoah Gas Company
(filed as an exhibit to TransTexas' Registration
Statement on Form S-1 (No. 33-75050), and incorporated
herein by reference).
10.11 -- Natural Gas Sales Agreement between TransTexas and
Associated Natural Gas, Inc. dated September 30, 1993
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended October 31, 1993, and incorporated herein
by reference).
10.12 -- Amendment Extending Gas Purchase Agreement between
TransTexas and Washington Gas Light Company, Inc., and
Shenandoah Gas Company, as amended, dated November 1,
1993 (filed as an exhibit to TransTexas' Form 10-Q for
the quarter ended January 31, 1994, and incorporated
herein by reference).
10.13 -- Agreement for Purchase of Production Payment between
TransTexas and Southern States Exploration, Inc. dated
April 1, 1994 (filed as an exhibit to TransTexas' Form
10-Q for the quarter ended April 30, 1994, and
incorporated herein by reference).
10.14 -- Assignment of Proceeds Production Payment between
TransTexas and Southern States Exploration, Inc. dated
April 1, 1994 (filed as an exhibit to TransTexas' Form
10-Q for the quarter ended April 30, 1994, and
incorporated herein by reference).
10.15 -- Transfer Agreement dated August 24, 1993, by and among
TransAmerican, TransTexas, TTC, and John R. Stanley
(filed as an exhibit to TransTexas' current report on
Form 8-K dated August 24, 1993, and incorporated herein
by reference).
10.16 -- Amended and Restated Accounts Receivable Management and
Security Agreement between TransTexas and BNY Financial
Corporation (filed as an exhibit to TransTexas' Form 10-Q
for the quarter ended October 31, 1995, and incorporated
herein by reference).
10.17 -- Note Purchase Agreement, dated as of May 10, 1996, among
TransTexas, TCW Shared Opportunity Fund II, L.P. and
Jefferies & Company, Inc. (filed as an exhibit to the
Company's Form 10-Q for the quarter ended April 30, 1996,
and incorporated herein by reference).
76
EXHIBIT
NUMBER DESCRIPTION
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10.18 -- Master Swap Agreement, dated June 6, 1996, between
TransTexas and AIG Trading Corporation (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
April 30, 1996, and incorporated herein by reference).
10.19 -- Purchase Agreement, dated January 30, 1996, between
TransTexas and Sunflower Energy Finance Company (filed as
an exhibit to TransTexas' Form 10-Q for the quarter ended
April 30, 1996, and incorporated herein by reference).
10.20 -- Production Payment Conveyance, executed on January 30,
1996, from TransTexas to Sunflower Energy Finance Company
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended April 30, 1996, and incorporated herein by
reference).
10.21 -- First Supplement to Purchase Agreement, dated as of
February 12, 1996, among TransTexas, Sunflower Energy
Finance Company and TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P. (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended April 30,
1996, and incorporated herein by reference).
10.22 -- First Supplement to Production Payment Conveyance,
executed February 12, 1996, among TransTexas, Sunflower
Energy Finance Company and TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P. (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended April 30,
1996, and incorporated herein by reference).
10.23 -- Purchase Agreement, dated May 14, 1996, among TransTexas,
TCW Portfolio No. 1555 DR V Sub-Custody Partnership, L.P.
and Sunflower Energy Finance Company (filed as an exhibit
to TransTexas' Form 10-Q for the quarter ended April 30,
1996, and incorporated herein by reference).
10.24 -- Production Payment Conveyance, executed May 14, 1996,
from TransTexas to TCW Portfolio No. 1555 Dr V
Sub-Custody Partnership, L.P. and Sunflower Energy
Finance Company (filed as an exhibit to TransTexas' Form
10-Q for the quarter ended April 30, 1996, and
incorporated herein by reference).
10.25 -- Employment Agreement between TransTexas and Richard
Bianchi dated August 12, 1996 (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended October 31,
1996, and incorporated herein by reference).
10.26 -- Employment Agreement between TransTexas and Arnold
Brackenridge dated August 12, 1996 (filed as an exhibit
to TransTexas' Form 10-Q for the quarter ended October
31, 1996, and incorporated herein by reference).
10.27 -- Stock Purchase Agreement dated as of May 29, 1997 by and
between TransTexas and First Union Bank of Connecticut,
as trustee (filed as an exhibit to TransTexas' current
report on Form 8-K dated May 29, 1997, and incorporated
herein by reference).
10.28 -- Interruptible Gas Transportation Agreement dated
Effective March 1, 1997 between TransTexas, as shipper,
and Lobo Pipeline Company, as transporter (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
July 31, 1997, and incorporated herein by reference).
10.29 -- Intrastate Firm Gas Transportation Agreement dated
effective March 1, 1997 between TransTexas, as shipper,
and Lobo Pipeline Company, as transporter (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
July 31, 1997, and incorporated herein by reference).
10.30 -- Master Services Contract dated May 30, 1997 between
Conoco Inc. and TransTexas (filed as an exhibit to
TransTexas' Form 10-Q for the quarter ended July 31,
1997, and incorporated herein by reference).
77
EXHIBIT
NUMBER DESCRIPTION
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10.31 -- Agreement for Services dated effective March 1, 1997
between Conoco Inc. and TransTexas (filed as an exhibit
to TransTexas' Form 10-Q for the quarter ended July 31,
1997, and incorporated herein by reference).
10.32 -- Services Agreement dated June 13, 1997 among TNGC
Holdings Corporation, TransAmerican, TEC, TARC,
TransTexas and TTXD (filed as an exhibit to TransTexas'
Form 10-Q for the quarter ended July 31, 1997, and
incorporated herein by reference).
10.33 -- Amendment No. 3 to Tax Allocation Agreement dated May 29,
1997 (filed as an exhibit to TransTexas' Form 10-Q for
the quarter ended July 31, 1997, and incorporated herein
by reference).
10.34 -- Amendment No. 4 to Tax Allocation Agreement dated June
13, 1997 (filed as an exhibit to TransTexas' Form 10-Q
for the quarter ended July 31, 1997, and incorporated
herein by reference).
10.35 -- Amendment No. 2 to Transfer Agreement dated May 29, 1997
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended July 31, 1997, and incorporated herein by
reference).
10.36 -- Amendment No. 3 to Transfer Agreement dated June 13, 1997
(filed as an exhibit to TransTexas' Form 10-Q for the
quarter ended July 31, 1997, and incorporated herein by
reference).
10.37 -- Second Amended and Restated Accounts Receivable
Management Agreement dated October 14, 1997 between
TransTexas and BNY Financial Corporation (filed as an
exhibit to TransTexas' Form 10-Q for the quarter ended
October 31, 1997, and incorporated herein by reference).
10.38 -- Employment Agreement dated December 1, 1997 between
TransTexas and Arnold Brackenridge (filed as an exhibit
to TransTexas' annual report on Form 10-K for the year
ended January 31, 1998, and incorporated herein by
reference).
10.39 -- Employment Agreement Settlement dated April 28, 1998
between TransTexas and Richard Bianchi (filed as an
exhibit to TransTexas' annual report on Form 10-K for the
year ended January 31, 1998, and incorporated herein by
reference).
10.40 -- Severance Agreement dated November 21, 1997 between
TransTexas and Lee Muncy (filed as an exhibit to
TransTexas' annual report on Form 10-K for the year ended
January 31, 1998, and incorporated herein by reference).
10.41 -- Purchase Agreement dated February 23, 1998 between
TransTexas and TCW (filed as an exhibit to TransTexas'
annual report on Form 10-K for the year ended January 31,
1998, and incorporated herein by reference).
10.42 -- Production Payment Conveyance dated February 23, 1998
between TransTexas and TCW (filed as an exhibit to
TransTexas' annual report on Form 10-K for the year ended
January 31, 1998, and incorporated herein by reference).
10.43 -- Asset Purchase Agreement dated May 26, 1998 by and among
TransTexas, Bayard Drilling, L.P. and Bayard Drilling
Technologies, Inc. (filed as an exhibit to TransTexas'
current report on Form 8-K dated June 26, 1998, and
incorporated herein by reference).
10.44 -- Employment Agreement between the Company and John R.
Stanley dated November 1, 1998 (filed as an exhibit to
the Company's annual report on Form 10-K for the year
ended January 31, 1999, and incorporated herein by
reference).
78
EXHIBIT
NUMBER DESCRIPTION
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10.45 -- Employment Agreement between the Company and Ed Donahue
dated December 1, 1998 (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 1999, and incorporated herein by reference).
10.46 -- Credit Agreement dated April 27, 1999 among TransTexas,
Credit Suisse First Boston Management Corporation, the
Lenders named therein and TEC and TARC, as guarantors
(filed as an exhibit to the Company's annual report on
Form 10-K for the year ended January 31, 1999, and
incorporated herein by reference).
10.47 -- Post-Petition Amendment No. 1 to Financing Agreement
dated as of April 19, 1999 between the Company and GMAC
Commercial Credit LLC (filed as an exhibit to the
Company's quarterly report on Form 10-Q for the quarter
ended April 30, 1999, and incorporated herein by
reference).
10.48 -- Amendment No. 1 dated June 28, 1999 to Credit Agreement
dated April 27, 1999 among TransTexas, Credit Suisse
First Boston Management Corporation, the Lenders named
therein, and TEC and TARC, as guarantors (filed as an
exhibit to the Company's quarterly report on Form 10-Q
for the quarter ended July 31, 1999, and incorporated
herein by reference).
10.49 -- Employment Agreement dated November 8, 1999 between the
Company and Ronald P. Nowak (filed as an exhibit to the
Company's quarterly report on Form 10-Q for the quarter
ended October 31, 1999, and incorporated herein by
reference).
10.50 -- Employment Agreement dated March 17, 2000 between the
Company and John R. Stanley (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
10.51 -- Severance Agreement dated May 27, 1998 between the
Company and Simon J. Ward (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
10.52 -- Purchase Agreement dated March 14, 2000 between the
Company, Southern Producer Services, L.P.("SPS"), and TCW
Portfolio No. 1555 DR V Sub-Custody Partnership, L.P.,
TCW DR VI Investment Partnership, L.P. and TCW Asset
Management Company ("TCW") (filed as an exhibit to the
Company's annual report on Form 10-K for the year ended
January 31, 2000, and incorporated herein by reference).
10.53 -- Production Payment Conveyance dated March 14, 2000
between the Company, SPS and TCW (filed as an exhibit to
the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
10.54 -- Gas and Natural Gas Liquids Purchase Agreement dated
March 14, 2000 between SPS and TTG (filed as an exhibit
to the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
10.55 -- Crude Oil Purchase Agreement dated March 14, 2000 between
SPS and TTG (filed as an exhibit to the Company's annual
report on Form 10-K for the year ended January 31, 2000,
and incorporated herein by reference).
10.56 -- Natural Gas Treating and Condensate Handling Agreement
dated March 14, 2000 between Galveston Bay Processing
Corporation and SPS (filed as an exhibit to the Company's
annual report on Form 10-K for the year ended January 31,
2000, and incorporated herein by reference).
10.57 -- Third Amended and Restated Accounts Receivable Management
and Security Agreement dated March 15, 2000 between the
Company and GMAC Commercial Credit LLC (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 2000, and incorporated herein
by reference).
79
EXHIBIT
NUMBER DESCRIPTION
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10.58 -- Services Agreement dated March 17, 2000 between TNGC
Holdings Corporation and the Company (filed as an exhibit
to the Company's annual report on Form 10-K for the year
ended January 31, 2000, and incorporated herein by
reference).
10.59 -- First Supplement to 2000 Production Payment Agreement,
dated as of June 7, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
10.60 -- First Supplement to 2000 Production Payment Conveyance,
dated as of June 7, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
10.61 -- Second Supplement to 2000 Production Payment Agreement,
dated as of September 8, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
10.62 -- Second Supplement to 2000 Production Payment Conveyance,
dated as of September 8, 2000 (filed as an exhibit to the
Company's Registration Statement on Form S-1 (No.
333-38252), and incorporated herein by reference).
10.63 -- Subordination Agreement, dated as of September 7, 2000
between the Company and Firstar Bank of Minnesota,
relating to the Second Supplement to 2000 Production
Payment Conveyance (filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 333-38252), and
incorporated herein by reference).
10.64 -- Subordination Agreement, dated as of September 7, 2000
between the Company and GMAC Commercial Credit, LLC,
relating to the Second Supplement to 2000 Production
Payment Conveyance (filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 333-38252), and
incorporated herein by reference).
*10.65 -- Amendment No. 1 to Third Amended and Restated Accounts
Receivable Management and Security Agreement dated
October 1, 2000 between the Company and GMAC Commercial
Credit LLC.
*10.66 -- Third Supplement to 2000 Production Payment Agreement,
dated November 7, 2000.
*10.67 -- Third Supplement to 2000 Production Payment Conveyance,
dated November 7, 2000.
*10.68 -- Subordination Agreement, dated as of February 7, 2001
between the Company and Firstar Bank of Minnesota,
relating to the Fourth Supplement to 2000 Production
Payment Conveyance.
*10.69 -- Subordination Agreement, dated as of February 7, 2001
between the Company and GMAC Commercial Credit LLC as
Agent, relating to the Fourth Supplement to 2000
Production Payment Conveyance.
*10.70 -- Subordination Agreement, dated as of February 7, 2001
between the Company and GMAC Commercial Credit LLC,
relating to the Fourth Supplement to 2000 Production
Payment Conveyance.
*10.71 -- Fourth Supplement to 2000 Production Payment Agreement,
dated February 7, 2001.
*10.72 -- Fourth Supplement to 2000 Production Payment Conveyance,
dated February 7, 2001.
21.1 -- Schedule of Subsidiaries of TransTexas (filed as an
exhibit to the Company's annual report on Form 10-K for
the year ended January 31, 1999, and incorporated herein
by reference).
80
EXHIBIT
NUMBER DESCRIPTION
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*21.2 -- Schedule of Subsidiaries of TransTexas.
*23.1 -- Consent of Netherland, Sewell & Associates, Inc.
- ---------------
* filed herewith