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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 20, 1996
APACHE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-4300 41-0747868
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification Number)
of incorporation)
2000 Post Oak Boulevard
Suite 100
Houston, Texas 77056-4400
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (713) 296-6000
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Item 2. Acquisition or Disposition of Assets
In the first quarter of 1996, Apache Corporation ("Apache") entered into
the Agreement and Plan of Merger (the "Merger Agreement"), dated March
27, 1996, among Apache, YPY Acquisitions Inc. ("YPY"), and The Phoenix
Resource Companies, Inc. ("Phoenix"), providing for the merger of YPY with
Phoenix (the "Merger") in a transaction by which Phoenix would become a
wholly-owned subsidiary of Apache. Apache issued a press release, dated
March 28, 1996, which is listed under Item 7 as Exhibit 99.1 and
incorporated herein by reference. The Merger Agreement is listed under Item
7 as Exhibit 2.1 and incorporated herein by reference.
On May 20, 1996, the Merger was consummated shortly after the
transaction was approved by the Phoenix shareholders. Upon consummation of
the Merger and pursuant to the Merger Agreement, each share of Phoenix common
stock then outstanding was converted into the right to receive (a) .75 shares
of Apache common stock, with any fractional shares paid in cash, without
interest, and (b) $4.00 in cash. Apache issued a press release, dated May 20,
1996, which is listed under Item 7 as Exhibit 99.2 and incorporated herein
by reference.
Phoenix's principal assets are its interest in the Khalda and Qarun oil
and gas concessions in the Western Desert of Egypt, which in the aggregate
contain 18 oil fields and six gas fields. The sale of crude oil and
natural gas accounted for all of Phoenix's operating revenues during the
past three years. Phoenix's operations include exploring, developing and
operating crude oil and natural gas properties in Egypt. Phoenix's oil and gas
operations are currently conducted through Egyptian operating companies owned
jointly by the Egyptian General Petroleum Corporation, Phoenix and certain
other participants. Apache is one of the participants with Phoenix in the
Qarun concession.
In conjunction with the Merger, George D. Lawrence, Jr., former
president and chief executive officer of Phoenix, joined Apache's board of
directors. Other than the relationships mentioned above or provided for
or contemplated by the Merger Agreement, there were no other material
relationships between Phoenix and Apache or any of Apache's affiliates,
officers or directors, or any associate of any officer or director of Apache.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) FINANCIAL STATEMENTS
(i) The audited consolidated balance sheet of Phoenix and subsidiaries
as of December 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity and cash flows for each
of the three years ended December 31, 1995, 1994 and 1993, together
with the related notes to consolidated financial statements and the
report of independent accountants, dated February 23, 1996,
previously filed with the Phoenix Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, as amended, are listed below
as Exhibit 99.4 and are incorporated herein by reference.
(ii) The unaudited consolidated balance sheet of Phoenix and subsidiaries
as of March 31, 1996, and the related consolidated statements of
income and cash flows for the fiscal quarters ended March 31, 1996
and 1995, together with the related notes to consolidated financial
statements, previously filed with the Phoenix Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 1996, are listed
below as Exhibit 99.5 and are incorporated herein by reference.
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(b) PRO FORMA FINANCIAL INFORMATION
APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited condensed financial statements and notes
thereto are presented to show the pro forma effects of the merger ("Merger") of
a wholly-owned subsidiary of Apache Corporation ("Apache") with The Phoenix
Resource Companies, Inc. ("Phoenix") on May 20, 1996, pursuant to which Phoenix
became a wholly-owned subsidiary of Apache. The Merger will be reported using
the purchase method of accounting.
The condensed pro forma statements of income are presented as if the
Merger occurred effective January 1 for each of the periods presented. The
condensed pro forma balance sheet assumes that the Merger occurred on March 31,
1996.
Pro forma data are based on assumptions and include adjustments as
explained in the notes to the unaudited pro forma consolidated condensed
financial statements. The pro forma data are not necessarily indicative of the
financial results that would have occurred had the transaction been effective
on and as of the dates referenced above, and should not be viewed as indicative
of operations in future periods. The unaudited pro forma consolidated
condensed financial statements should be read in conjunction with the notes
thereto, and Apache's and Phoenix's Annual Reports on Form 10-K for the fiscal
year ended December 31, 1995, and Apache's and Phoenix's Quarterly Reports on
Form 10-Q for the quarter ended March 31, 1996.
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APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
APACHE PHOENIX PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------
REVENUES:
Oil and gas production revenues................... $ 653,144 $ 33,255 $ (6,298)(f) $ 680,101
Gathering, processing and marketing revenues...... 97,207 0 97,207
Other revenues.................................... 351 1,781 (1,436)(d) 696
--------- --------- ---------- ---------
750,702 35,036 (7,734) 778,004
--------- --------- ---------- ---------
OPERATING EXPENSES:
Depreciation, depletion and amortization.......... 297,485 5,795 8,505 (a) 311,785
Operating costs................................... 211,742 6,421 218,163
Gathering, processing and marketing costs......... 91,243 - 91,243
Administrative, selling and other................. 36,552 2,194 38,746
Merger costs...................................... 9,977 - 9,977
Financing costs, net.............................. 70,560 - (11,708)(b) 61,837
4,421 (c)
(1,436)(d)
--------- --------- ---------- ---------
717,559 14,410 (218) 731,751
--------- --------- ---------- ---------
INCOME BEFORE INCOME TAXES......................... 33,143 20,626 (7,516) 46,253
Provision for income taxes....................... 12,936 10,015 (3,748)(f) 19,203
--------- --------- ---------- ---------
NET INCOME......................................... $ 20,207 $ 10,611 $ (3,768) $ 27,050
--------- --------- ---------- ---------
INCOME PER COMMON SHARE............................ $ 0.28 $ 0.65 $ 0.32
========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING...................................... 71,792 12,190 (g) 83,982
========= ========== =========
The accompanying notes to unaudited pro forma consolidated
condensed financial statements are an integral part of this statement.
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APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
APACHE PHOENIX PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------- ----------- ---------
REVENUES:
Oil and gas production revenues.............. $ 171,921 $ 12,436 $ (1,957)(f) $ 182,400
Gathering, processing and marketing revenues. 33,949 0 33,949
Other revenues............................... 600 413 (366)(d) 647
----------- ---------- ---------- ---------
206,470 12,849 (2,323) 216,996
----------- ---------- ---------- ---------
OPERATING EXPENSES:
Depreciation, depletion and amortization..... 71,861 2,282 2,642 (a) 76,785
Operating costs.............................. 52,512 2,183 54,695
Gathering, processing and marketing costs.... 32,410 0 32,410
Administrative, selling and other............ 8,858 751 9,609
Merger costs................................. 0 334 (334)(e) 0
Financing costs, net......................... 15,423 209 (2,739)(b) 13,548
1,021 (c)
(366)(d)
----------- ---------- ---------- ---------
181,064 5,759 224 187,047
----------- ---------- ---------- ---------
INCOME BEFORE INCOME TAXES..................... 25,406 7,090 (2,547) 29,949
Provision for income taxes................... 9,751 3,395 (1,355)(f) 11,791
----------- ---------- ---------- ---------
NET INCOME..................................... $ 15,655 $ 3,695 $ (1,192) $ 18,158
=========== ========== ========== =========
INCOME PER COMMON SHARE........................ $ 0.20 $ 0.22 $ 0.20
=========== ========== ========== =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.................................. $ 77,422 12,190 (g) $ 89,612
=========== ========== =========
The accompanying notes to unaudited pro forma consolidated
condensed financial statements are an integral part of this statement.
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APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF MARCH 31,1996
(IN THOUSANDS)
APACHE PHOENIX PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------
ASSETS:
Current assets...................... $ 221,877 $ 47,654 $ $ 269,531
Property and equipment, net......... 2,454,335 31,426 396,349 (h) 2,841,709
3,000 (i)
9,800 (j)
(53,201)(k)
Other assets........................ 69,795 7,283 77,078
---------- --------- ----------- ----------
$2,746,007 $ 86,363 $ 355,948 $3,188,318
========== ========= =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities................. $ 213,948 $ 13,163 $ 3,000 (i) $ 239,111
9,000 (l)
Long-term debt...................... 1,137,697 12,500 64,488 (h) 1,214,685
Other non-current liabilities....... 98,896 1,173 100,069
Deferred tax liabilities............ 190,349 6,326 9,800 (j) 206,475
Shareholders' equity................ 1,105,117 53,201 331,861 (h) 1,427,978
(53,201)(k)
(9,000)(l)
---------- --------- ----------- ----------
$2,746,007 $ 86,363 $ 355,948 $3,188,318
========== ========= =========== ==========
The accompanying notes to unaudited pro forma consolidated condensed
financial statements are an integral part of this statement.
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APACHE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 -- BASIS OF PRESENTATION
The unaudited pro forma consolidated condensed financial statements
are based on the audited statements of Apache and Phoenix for the year ended
December 31, 1995, on unaudited statements for the quarter ended March 31,
1996, and on the adjustments and assumptions described below.
Pursuant to the terms of the Agreement and Plan of Merger, dated March
27, 1996, pro forma data reflect the issuance on May 20, 1996, of 12,121,150
shares of Apache Common Stock for 16,161,533 shares of Phoenix Common Stock
outstanding as of the Merger date and 68,768 Apache shares issued in connection
with Phoenix stock options exercised by Phoenix directors and employees
immediately after closing. Merger consideration consisted of .75 shares of
Apache common stock and $4.00 in cash for each share of Phoenix stock
outstanding and for each stock option exercised, net of option exercise
proceeds. A net value of approximately $14.9 million has been assigned to
approximately 1.1 million Phoenix stock options assumed by Apache and not
exercised immediately after closing that may be exercised in the future. The
value for the Apache shares issued and for the unexercised Phoenix stock
options equates to a total of approximately $331.9 million based on a price of
$26.00 per Apache common share. In addition, approximately $64.5 million in
net cash was paid to Phoenix stockholders and to directors and employees
exercising their stock options.
The purchase price, as described above, before consideration of
transaction costs and a deferred tax liability adjustment required by
accounting rules, totals approximately $396.3 million. Of this total,
approximately $54 million has been allocated to pipelines and facilities, $160
million to proved properties, $61 million to unproved properties, $99 million
to international concession rights, with the remaining value attributable to
working capital and miscellaneous assets. International concession rights
include the estimated value attributable to approximately
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APACHE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
(CONTINUED)
50 drilling prospects identified to date on 4.3 million gross acres on the
Qarun and Khalda concessions in Egypt. Under features of the production sharing
contracts, costs incurred to explore and develop will be reimbursable through
increased future production sharing ratios.
NOTE 2 -- PRO FORMA ADJUSTMENTS
The unaudited pro forma condensed statements of consolidated income
reflect the following adjustments.
(a) Record incremental depreciation, depletion and amortization
expense based on the purchase price allocation, and using a
combined units-of-production rate for Egyptian properties and
a 20-year straight-line method for facilities and pipelines.
(b) Record capitalized interest relating to approximately $173
million of unevaluated properties, including international
concession rights, assuming interest rates of 6.87 percent and
6.33 percent for the year ended December 31, 1995 and for the
three months ended March 31, 1996, respectively.
(c) Record interest expense on debt incurred with respect to the
cash consideration paid to Phoenix stockholders, assuming
interest rates of 6.87 percent for the year ended December
31, 1995 and 6.33 percent for the three months ended March 31,
1996.
(d) Reclassification of Phoenix's interest income from revenues to
financing costs, net, to conform to Apache's presentation.
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APACHE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
(CONTINUED)
(e) Eliminate non-recurring expenses recorded by Phoenix in the
first quarter of 1996 relating to the Merger.
(f) Adjust tax provision and the related Phoenix Egyptian tax
gross-up to reflect pro forma adjustments (a), (b), (c) and
(e).
(g) Increase Apache's weighted average shares outstanding by
approximately 12,190,000 shares to reflect Apache shares
issued at and immediately after closing. The effect of common
stock equivalents associated with unexercised Phoenix stock
options, along with all other Apache common stock equivalent
shares, were insignificant for the periods presented.
The unaudited consolidated condensed pro forma balance sheet reflects
the following adjustments:
(h) Record the consideration issued totaling $396.3 million,
consisting of approximately 12,190,000 shares of Apache Common
Stock valued at $26 per share, $14.9 million of net value
associated with unexercised Phoenix stock options, and $64.5
million cash, and the related debt incurred.
(i) Record estimated severance and other costs relating to the
merger.
(j) Record SFAS No. 109 deferred tax liability for the book basis
in excess of tax basis after adjustment for assumed
utilization of Phoenix net operating loss carryforwards and
foreign tax credits.
(k) Eliminate historical Phoenix stockholders' equity.
(l) Record Apache Common Stock issuance costs.
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(c) EXHIBITS
EXHIBIT NO. DESCRIPTION
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2.1 Agreement and Plan of Merger among Registrant, YPY and Phoenix
dated March 27, 1996 (incorporated by reference to Exhibit
99.1 to Registrant's Current Report on Form 8-K, dated March
27, 1996, SEC File No. 1-4300).
3.1* Bylaws of Registrant, As Amended July 11, 1996; Effective as
of May 2, 1996.
23.1* Consent of Arthur Andersen LLP
99.1 Press Release, dated March 28, 1996, "Apache and Phoenix to
Merge" (incorporated by reference to Exhibit 99.2 to
Registrant's Current Report on Form 8-K, dated March 27,
1996, SEC File No. 1-4300).
99.2 Press Release, dated May 20, 1996, "Apache and Phoenix
Complete Merger" (incorporated by reference to Exhibit 99.2
to Registrant's Current Report on Form 8-K, dated May 20,
1996, SEC File No. 1-4300).
99.3* Seventh Amendment to the Third Amended and Restated Credit
Agreement, dated as of May 8, 1996, among the Registrant, the
Lenders named therein, and The First National Bank of
Chicago, as Administrative Agent and Arranger, and Chemical
Bank, as Co-Agent and Arranger.
99.4 The audited consolidated balance sheet of Phoenix and
subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity and
cash flows for each of the three years ended December 31,
1995, 1994 and 1993, together with the related notes to
consolidated financial statements and the report of
independent accountants (incorporated by reference to the
Phoenix Annual Report on Form 10-K for the year ended
December 31, 1995, SEC File No. 1-547).
99.5 The unaudited consolidated balance sheet of Phoenix and
subsidiaries as of March 31, 1996, and the related
consolidated statements of income and cash flows for the
fiscal quarters ended March 31, 1996 and 1995, together with
the related notes to consolidated financial statements
(incorporated by reference to the Phoenix Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, SEC File
No. 1-547).
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*filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 on Form 8-K/A to be signed on
its behalf by the undersigned thereunto duly authorized.
APACHE CORPORATION
Date: July 18, 1996 /s/ Thomas L. Mitchell
-----------------------------------------
Thomas L. Mitchell
Controller and Chief Accounting Officer
/s/ Z. S. Kobiashvili
-----------------------------------------
Z. S. Kobiashvili
Vice President and General Counsel
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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2.1 Agreement and Plan of Merger among Registrant, YPY and Phoenix
dated March 27, 1996 (incorporated by reference to Exhibit
99.1 to Registrant's Current Report on Form 8-K, dated March
27, 1996, SEC File No. 1-4300).
3.1* Bylaws of Registrant, As Amended July 11, 1996; Effective as
of May 2, 1996.
23.1* Consent of Arthur Andersen LLP
99.1 Press Release, dated March 28, 1996, "Apache and Phoenix to
Merge" (incorporated by reference to Exhibit 99.2 to
Registrant's Current Report on Form 8-K, dated March 27,
1996, SEC File No. 1-4300).
99.2 Press Release, dated May 20, 1996, "Apache and Phoenix
Complete Merger" (incorporated by reference to Exhibit 99.2
to Registrant's Current Report on Form 8-K, dated May 20,
1996, SEC File No. 1-4300).
99.3* Seventh Amendment to the Third Amended and Restated Credit
Agreement, dated as of May 8, 1996, among the Registrant, the
Lenders named therein, and The First National Bank of
Chicago, as Administrative Agent and Arranger, and Chemical
Bank, as Co-Agent and Arranger.
99.4 The audited consolidated balance sheet of Phoenix and
subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity and
cash flows for each of the three years ended December 31,
1995, 1994 and 1993, together with the related notes to
consolidated financial statements and the report of
independent accountants (incorporated by reference to the
Phoenix Annual Report on Form 10-K for the year ended
December 31, 1995, SEC File No. 1-547).
99.5 The unaudited consolidated balance sheet of Phoenix and
subsidiaries as of March 31, 1996, and the related
consolidated statements of income and cash flows for the
fiscal quarters ended March 31, 1996 and 1995, together with
the related notes to consolidated financial statements
(incorporated by reference to the Phoenix Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, SEC File
No. 1-547).
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*filed herewith