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Filed by Bellwether Exploration Company
Pursuant to Rule 425 under the Securities Act of 1933
of the Securities Exchange Act of 1934
Subject Company: Bargo Energy Company
File No. 333-54798
Bellwether Exploration Company issued the following press release on May 15,
2001.
[BELLWETHER LOGO] [MISSION RESOURCES LOGO]
NEWS RELEASE
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE CONTACT:
MAY 15, 2001 LANCE L. WEAVER - DIRECTOR, INVESTOR RELATIONS
AND FINANCIAL ANALYSIS
weaverl@bellwetherexp.com
(713)495-3061
BELLWETHER EXPLORATION REPORTS FINANCIAL RESULTS AND
OPERATIONAL HIGHLIGHTS FOR FIRST QUARTER 2001
HOUSTON - Bellwether Exploration Company (NASDAQ: BELW) today announced the
following financial and operating results for the first quarter ending March 31,
2001:
CASH FLOW: Cash flow from operations, before changes in working capital, for the
quarter totaled $17.3 million or $1.19 per share (fully diluted), up 32% over
first quarter 2000 cash flow of $13.1 million or $0.93 per share.
NET INCOME: Income for the quarter, stated before the effect of a non-cash
charge relating to the adoption of SFAS 133, was $6.4 million or $0.44 per
share. Reported net income, stated after the effect of a non-cash charge
relating to the adoption of SFAS 133, was $3.6 million or $0.25 per share for
the quarter.
PRODUCTION AND REVENUE: The Company's production for the first quarter of 2001
averaged 5,478 barrels of oil per day ("Bopd") and 45.0 million cubic feet of
gas per day ("MMcfpd"), or 12,974 barrels of oil equivalent per day ("Boepd").
Production volumes are down 15% as compared to the first quarter 2000 daily
average due to the sale of several producing properties in late 2000. Improved
oil and gas prices resulted in revenues of $33.8 million, up 34% from revenue of
$25.2 million for the same period in 2000.
EBITDA: Earnings before interest, taxes and depreciation, less other non-cash
items ("EBITDA") for the first quarter of 2001, exclusive of the adoption of
SFAS 133, totaled
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$22.0 million, an increase of 34% when compared to EBITDA of $16.4 million for
the same period in 2000.
COSTS: Operating costs, including lease operating costs and production taxes,
for the first quarter totaled $7.9 million, or $6.79 per Boe. These costs are
higher than prior periods due workovers and pump replacements in the Tiguino and
Charapa fields in Ecuador. G&A was impacted by non-recurring separation costs
and non-cash vesting of Bellwether employee stock options.
FINANCIAL STATEMENTS: The attached pages outline in more detail the financial
statements of Bellwether for the first quarters of 2001 and 2000. Also attached
are the unaudited summary pro forma financial statements for Mission Resources
for the first quarter of 2001, reflecting the merger of Bellwether Exploration
Company and Bargo Energy Company.
OPERATIONAL HIGHLIGHTS: The Texaco Fee "A" # 1, located in the Mudlake/Second
Bayou Field in South Louisiana, was drilled and completed in the Planulina
formation. The well logged a total of 64 net feet of productive sand, and is
currently producing at a gross rate of 8.8 MMcfepd (1.6 MMcfepd net). Bellwether
has an 18% net revenue interest in the well and is planning additional drilling
activity in the project area later this year.
At the Company's Matagorda Island 605 Field located in the Gulf of Mexico, an
exploratory well was drilled to a depth of 6,500 feet and found three productive
zones in the Rob-L formation. All three zones will be on production by early May
at an expected rate of 10.6 MMcfepd (1.7 MMcfepd net), based on initial flow
test. Bellwether has a 16% net revenue interest in the well.
Finally, at Eugene Island Block 286, the D-9ST well was drilled to a total depth
of 5,210 feet and completed in the Trim A formation. The well is producing at a
gross rate of 10.9 MMcfepd (1.5 Mmcfepd net). Bellwether has a 14% net revenue
interest in the well.
Doug Manner, Chairman and CEO commented, "These new wells are representative of
Mission's continued success in growing reserves and rate through the drill bit.
We are looking forward to applying this same expertise to a much larger asset
base which will be provided through our new merger and acquisition strategy. The
value growth should be impressive."
CONFERENCE CALL: A conference call to discuss the earning release will be held
Wednesday, May 16th, 2001 at 3:00 p.m. Eastern Standard Time (EST). If you would
like to participate, please call (212) 896-6088 just prior to the start time. A
replay of the conference call will be available for 48 hours after the finish of
the call. The replay can be accessed by dialing toll-free (800) 633-8284 (for
U.S.) and (858) 812-6440 (for International), reservation No. 18774058. In
addition, you may log on to the Bellwether Exploration website at
www.bellwetherexp.com to listen to a replay of the teleconference via Webcast.
NAME CHANGE & NEW TICKER SYMBOL: Bellwether Exploration Company will officially
change its name to Mission Resources Corporation after the annual shareholders
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meeting on May 16, 2001. The new NASDAQ ticker symbol for the company will be
MSSN.
Bellwether Exploration Company is an independent oil and gas exploration and
production company headquartered in Houston, Texas with oil and gas properties
located in three core areas: the Gulf of Mexico both onshore and offshore,
Southeast New Mexico/West Texas and Ecuador.
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This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations. All statements included in this press release that address
activities, events or developments that the companies expect, believe or
anticipate will or may occur in the future are forward-looking statements. This
includes completion of the proposed merger, completion of reserve estimates,
production, cash flow and EBITDA estimates, future financial performance, future
equity issuance and other matters. These statements are based on certain
assumptions made by the companies based on their experience and perception of
historical trends, current conditions, expected future developments and other
factors they believe are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the companies. Statements regarding future production are
subject to all of the risks and uncertainties normally incident to the
exploration for and development and production of oil and gas. These risks
include, but are not limited to, inflation or lack of availability of goods and
services, environmental risks, drilling risks and regulatory changes. Investors
are cautioned that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from those
projected in the forward-looking statements.
Investors and security holders are urged to read the proxy statement/prospectus
that was included in the Registration Statement on Form S-4 filed with the SEC
in connection with the proposed merger. Bellwether Exploration Company
("Bellwether") and Bargo Energy Company ("Bargo") have filed the proxy
statement/prospectus with the SEC. Investors and security holders may obtain a
free copy of the proxy statement/prospectus and other documents filed by
Bellwether and Bargo with the SEC at the SEC's web site at www.sec.gov. The
proxy statement/prospectus and such other documents (relating to Bellwether) may
also be obtained for free from Bellwether by directing such request to:
Bellwether Exploration Company, Bellwether Exploration Company, 1331 Lamar,
Suite 1455, Houston, Texas 77010, Attention: Lance Weaver; telephone: (713)
495-3061; e-mail: weaverl@bellwetherexp.com. The proxy statement/prospectus and
such other documents (relating to Bargo) may also be obtained for free from
Bargo by directing such request to: Bargo Energy Company, 700 Louisiana, Suite
3700, Houston, Texas 77002, Attention: Jerry Sears; telephone: (713) 236-9792;
e-mail: jsears@bargo.com.
Bellwether, its directors, executive officers and certain members of management
and employees may be considered "participants in the solicitation" of proxies
from Bellwether's shareholders in connection with the merger. Information
regarding such persons and a description of their interests in the merger are
contained in the Registration Statement on Form S-4.
Bargo, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" in connection
with the merger. Information regarding such persons and a description of their
interests in the merger are contained in the Registration Statement on Form S-4.
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BELLWETHER EXPLORATION COMPANY
STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
----------------------------
2001 2000
---------- ----------
REVENUES:
Oil revenues $11,691 $10,884
Gas revenues 19,967 12,849
Gas plant revenues 1,609 1,205
Interest and other income 548 224
------- -------
33,815 25,162
------- -------
COSTS AND EXPENSES:
Production expenses 7,926 6314
Gas plant expenses 750 551
Transportation costs 40 66
Mining venture costs 779 --
Depreciation, depletion and amortization 7,938 7,290
General and administrative expenses 2,549 1,876
Interest expense 3,964 3,409
------- -------
23946 19,506
------- -------
INCOME BEFORE TAXES AND CHANGE IN ACCOUNTING METHOD 9,869 5,656
------- -------
Income taxes
Current 1,151 72
Deferred 2,322 (17,806)
------- -------
3,473 (17,734)
------- -------
INCOME BEFORE CHANGE IN ACCOUNTING METHOD $ 6,396 $23,390
------- -------
Cumulative effect of a change in accounting method, net of tax 2,767 --
------- -------
NET INCOME $ 3,629 $23,390
======= =======
Earnings per share before change in accounting method $ 0.46 $ 1.69
Earnings per share before change in accounting method
- diluted $ 0.44 $ 1.67
Earnings per share $ 0.26 $ 1.69
Earnings per share - diluted $ 0.25 $ 1.67
Discretionary cash flow per share $ 1.23 $ 0.95
Discretionary cash flow per share - diluted $ 1.19 $ 0.93
Common shares outstanding 14,028 13,859
Common shares outstanding - diluted 14,493 14,031
Discretionary cash flow $17,315 $13,101
EBITDA less other non cash items $21,976 $16,354
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BELLWETHER EXPLORATION COMPANY
SUMMARY OPERATING INFORMATION
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
-------- --------
AVERAGE SALES PRICE, INCLUDING
THE EFFECT OF HEDGES:
Oil and condensate ($/Bbl) $ 23.71 $ 19.37
Gas ($/Mcf) $ 4.93 $ 2.57
Equivalent ($/Boe) $ 27.10 $ 16.99
AVERAGE SALES PRICE, EXCLUDING
THE EFFECT OF HEDGES:
Oil and condensate ($/Bbl) $ 23.71 $ 22.70
Gas ($/Mcf) $ 7.13 $ 2.42
Equivalent ($/Boe) $ 34.71 $ 17.81
AVERAGE DAILY PRODUCTION:
Oil and condensate (Bbls) 5,478 6,176
Gas (Mcf) 44,978 55,033
Equivalent (Boe) 12,974 15,348
Equivalent (Mcfe) 77,846 92,089
TOTAL PRODUCTION:
Oil and condensate (MBbls) 493 562
Gas (MMcf) 4,048 5,008
Equivalent (MBoe) 1,168 1,397
OPERATING COSTS PER BOE:
Production expenses $ 6.79 $ 4.52
General and administrative expenses $ 2.18 $ 1.34
Depreciation, depletion, and amortization* $ 6.43 $ 4.95
* Depreciation of gas plants and other assets is excluded.
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BELLWETHER EXPLORATION COMPANY
CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2001 2000
------------- ------------
ASSETS:
Current assets $ 29,531 $ 44,658
Property, plant and equipment, net 154,403 148,936
Leasehold, furniture and equipment, net 2,298 2,378
Investment 6,246 4,554
Deferred tax asset 20,577 15,141
Other assets 5,239 5,878
-------- --------
$218,294 $221,545
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 24,115 $ 37,446
Commodity derivative liability 21,275 --
Long-term debt 115,354 125,450
Interest rate swap 4,627 --
Other long-term liabilities 1,732 1,689
Other comprehensive income (loss), net of taxes (10,187) --
Stockholders' equity 61,378 56,960
-------- --------
$218,294 $221,545
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BELLWETHER EXPLORATION COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
--------------------------------
2001 2000
----------- ----------
OPERATING ACTIVITIES:
Net income $ 3,629 $ 23,390
Adjustments to reconcile net income to net cash
provided by operating activities: 13,686 (10,289)
-------- --------
Discretionary cash flow 17,315 13,101
Net changes in operating assets and liabilities 37 (1,281)
-------- --------
Net cash provided by operating activities 17,352 11,820
INVESTING ACTIVITIES:
Acquisition of oil and gas properties (948) (2,217)
Capital expenditures (8,953) (19,326)
Leasehold, furniture and equipment (44) (603)
Long term note receivable -- (663)
Property divestiture costs (2,940) 65
-------- --------
Net cash used in investing activities (12,885) (22,744)
FINANCING ACTIVITIES:
Net proceeds from equity activities 537 35
Net bank debt activity (10,408) 4,900
-------- --------
Net cash provided by (used in) financing activities (9,871) 4,935
-------- --------
Net decrease in cash and cash equivalents (5,404) (5,989)
Cash and cash equivalents at beginning of period 14,464 6,101
-------- --------
Cash and cash equivalents at end of period $ 9,060 $ 112
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MISSION RESOURCES
PRO FORMA STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, 2001
------------------
REVENUES:
Oil revenues $ 32,079
Gas revenues 28,542
Gas plant revenues 1,609
Interest and other income 672
-----------------
62,902
-----------------
COSTS AND EXPENSES:
Production expenses 18,055
Gas plant expenses 750
Transportation costs 40
Mining venture costs 779
Commodity derivative transactions 1,410
Depreciation, depletion and amortization 13,691
General and administrative expenses 4,076
Interest expense 6,814
Amortization of goodwill and intangible assets 512
-------------------
46,127
-------------------
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES 16,775
-------------------
Income taxes
Current 719
Deferred (6,227)
-------------------
(5,508)
-------------------
NET INCOME FROM CONTINUING OPERATIONS $ 22,283
===================
Earnings per share $0.95
Earnings per share - diluted $0.93
Discretionary cash flow per share $1.36
Discretionary cash flow per share - diluted $1.33
Common shares outstanding 23,488
Common shares outstanding - diluted 23,953
Discretionary cash flow $31,891
EBITDA less other non cash items $38,895
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MISSION RESOURCES
PRO FORMA OPERATING INFORMATION
(Unaudited)
THREE MONTHS ENDED
MARCH 31, 2001
------------------
AVERAGE SALES PRICE, INCLUDING
THE EFFECT OF HEDGES:
Oil and condensate ($/Bbl) $ 25.93
Gas ($/Mcf) $ 5.24
Equivalent ($/Boe) $ 28.25
AVERAGE SALES PRICE, EXCLUDING
THE EFFECT OF HEDGES:
Oil and condensate ($/Bbl) $ 25.93
Gas ($/Mcf) $ 6.87
Equivalent ($/Boe) $ 32.39
AVERAGE DAILY PRODUCTION:
Oil and condensate (Bbls) 13,744
Gas (Mcf) 60,567
Equivalent (Boe) 23,839
Equivalent (Mcfe) 143,031
TOTAL PRODUCTION:
Oil and condensate (MBbls) 1,237
Gas (MMcf) 5,451
Equivalent (MBoe) 2,146
OPERATING COSTS PER BOE:
Production expenses $ 8.41
General and administrative expenses $ 1.90
Depreciation, depletion, and amortization* $ 6.17
* Depreciation of gas plants and other assets is excluded.
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MISSION RESOURCES
PRO FORMA CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
MARCH 31,
2001
-------------
ASSETS:
Current assets $ 43,889
Property, plant and equipment, net 414,224
Goodwill, net of accumulated amortization 20,326
Leasehold, furniture and equipment, net 2,298
Investment 6,246
Other assets 7,608
--------
$494,591
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 45,002
Commodity derivative liability 21,275
Long-term debt 252,912
Interest rate swap 4,627
Other long-term liabilities 1,732
Deferred tax liability 38,522
Other comprehensive income (loss), net of taxes (10,187)
Stockholders' equity 140,708
--------
$494,591
========