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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 30, 1996
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SOUTHERN MINERAL CORPORATION
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(Exact name of registrant as specified in charter)
Nevada
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(State or other jurisdiction of incorporation)
0-8043 36-2068676
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(Commission File Number) (IRS Employer Identification No.)
500 Dallas Street, Suite 2800, Houston, Texas 77002-4708
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 658-9444
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 30, 1996, Southern Mineral Corporation (the "Company" or
"Registrant") purchased from an affiliate of Torch Energy Finance Company
("Torch"), the limited partnership interest in SMC Development, L. P., a Texas
limited partnership, for $3,000,000 cash. SMC Development, L. P. was dissolved
and its oil and gas properties distributed to the Company and its co-venturer,
Diasu Oil & Gas Co., Inc. ("Diasu"). Upon the dissolution, the Company and Diasu
acquired an undivided 93% and 7% interest in the properties, respectively,
except that the Company's interest in certain of the properties will decrease
to 81.5% after the Company has recovered its costs of acquiring Torch's limited
partnership interest.
The Company financed the purchase price with internally generated funds
and an increase in the Company's borrowing base under its credit facility with
Compass Bank-Houston to $11,700,000 as of August 30, 1996, from $10,300,000.
Commencing on October 1, 1996, the amount of the borrowing base reduces by
$175,000 per month.
This summary is qualified in its entirety by the August 30, 1996, Purchase
and Sale Agreement and Assignment of Partnership Interest between the Company
and Torch, the Agreement Regarding Dissolution of Partnerships between the
Company and Diasu, and the Amendment to Credit Agreements between the Company
and Compass Bank-Houston filed herewith as exhibits. The September 3, 1996,
News Release of the Company concerning the subject transactions is attached
hereto as an exhibit and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
SMC Development, L. P. was formed on January 5, 1996, to acquire minority
non-operated working interests in nineteen oil and gas properties and to drill
four development wells. Three of the four development wells were successfully
completed and are expected to commence production in September of 1996.
Financial statements of the acquired operations are not included, since
historical results of operations are not material.
(b) Pro Forma Financial Information.
On August 30, 1996, the Company acquired the limited partnership interest
in SMC Development, L. P. for $3,000,000. The Company previously owned a 7%
general partnership interest in the partnership. The partnership's assets
consisted of proved producing and proved undeveloped oil and gas properties,
with most of the value related to the proved undeveloped properties that were
drilled in 1996.
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The pro forma condensed combined balance sheet as of June 30, 1996,
presents the acquisition of the SMC Development, L. P. properties as if it had
occurred at June 30, 1996, while the condensed combined statements of earnings
for the twelve months ended December 31, 1995, and six months ended June 30,
1996, present the transaction as if it had occurred at January 1, 1995.
(c) Exhibits.
2.1 Purchase and Sale Agreement and Assignment of Partnership
Interest, dated August 30, 1996, by and between Torch Energy
Finance Fund Limited Partnership I and Southern Mineral
Corporation (filed herewith).
2.2 Agreement Regarding Dissolution of Partnerships, dated August
30, 1996, between Southern Mineral Corporation and Diasu Oil
& Gas Co., Inc. (filed herewith without Annexes indexed
therein, which will be furnished upon the Commission's
request).
10.1 Amendment to Credit Agreements between Southern Mineral
Corporation et al and Compass Bank-Houston dated August 30,
1996 (filed herewith).
99 News Release of Southern Mineral Corporation dated September
3, 1996 (filed herewith).
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INDEX TO PRO FORMA FINANCIAL STATEMENTS
Page Number
Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1996 (Unaudited) 5
Pro Forma Condensed Consolidated Statement of
Operations for the Twelve Months Ended
December 31, 1995 (Unaudited) 6
Pro Forma Condensed Consolidated Statement of
Operations for the Six Months Ended
June 30, 1996 (Unaudited) 7
Notes to Pro Forma Condensed Consolidated Financial 8
Statements for the Balance Sheet as of June 30, 1996,
the Statement of Earnings for the Twelve Months Ended December 31,
1995, and the Statement of Earnings for the Six Months Ended June
30, 1996 (Unaudited)
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SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
As of June 30, 1996
(Unaudited)
(000's Omitted)
SOUTHERN SMC PRO FORMA ADJUSTMENTS
MINERAL DEVELOPMENT, NOTE PRO FORMA
CORPORATION L.P. AMOUNT REFERENCE CONSOLIDATED
---------------- ------------ --------------------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 200 -- -- $ 200
Receivables 1,562 120 -- 1,682
Other 108 28 (28) (2) 108
-------- -------- -------- --------
Total Current Assets 1,870 148 (28) 1,990
-------- -------- -------- --------
Property and Equipment, Net 17,397 2,486 422 (3) 20,305
Other Assets 1,954 -- -- 1,954
-------- -------- -------- --------
$ 21,221 $ 2,634 $ 394 $ 24,249
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 419 $ 28 -- $ 447
Accrued Taxes 226 -- -- 226
-------- -------- -------- --------
Total Current Liabilities 645 28 0 673
-------- -------- -------- --------
Deferred Income Taxes 774 -- -- 774
Long-term debt 12,900 -- 3,000 (2) 15,900
Stockholders' Equity
Partnership Capital Contribution -- 2,530 (2,530) (2) 0
Common Stock 66 -- -- 66
Additional Paid in Capital 3,313 -- -- 3,313
Retained Earnings 3,576 76 (76) 3,576
-------- -------- -------- --------
6,955 2,606 (2,606) (2) 6,955
Treasury stock (53) -- -- (53)
-------- -------- -------- --------
Total Stockholders' Equity 6,902 2,606 (2,606) 6,902
-------- -------- -------- --------
$ 21,221 $ 2,634 $ 394 $ 24,249
======== ======== ======== ========
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SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Twelve Months Ended December 31, 1995
(Unaudited)
(000's Omitted, except for Share and Per Share Amounts)
SOUTHERN SMC PRO FORMA ADJUSTMENTS
MINERAL DEVELOPMENT, NOTE PRO FORMA
CORPORATION L.P. AMOUNT REFERENCE CONSOLIDATED
---------------- ------------ --------------------- ------------
Revenues
Oil and Gas $ 2,044 $ 313 -- $ 2,357
------- ------- ------- -------
Expenses
Production 656 110 -- 766
Exploration 221 -- -- 221
Depletion and depreciation 792 -- 87 (5) 879
General and administrative 702 -- 2 (2) 704
Interest -- -- 248 (4) 248
Other 117 -- -- 117
------- ------- ------- -------
2,488 110 337 2,935
------- ------- ------- -------
Other income (expense) 316 -- -- 316
------- ------- ------- -------
Net income (loss) before
income taxes (128) 203 (337) (262)
Income tax 9 -- -- 9
------- ------- ------- -------
Net income (loss) $ (137) $ 203 $ (337) $ (271)
======= ======= ======= =======
Net income per share $ (0.02) $ (0.05)
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Weighted average shares
outstanding 5,507 5,507
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SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
(000's Omitted, except for Share and Per Share Amounts)
SOUTHERN SMC PRO FORMA ADJUSTMENTS
MINERAL DEVELOPMENT, NOTE PRO FORMA
CORPORATION L.P. AMOUNT REFERENCE CONSOLIDATED
---------------- ------------ --------------------- ------------
Revenues
Oil and Gas $ 5,210 $ 121 -- $ 5,331
------- ------- ------- -------
Expenses
Production 1,163 68 -- 1,231
Exploration 83 -- -- 83
Depletion and depreciation 1,181 5 28 (5) 1,214
General and administrative 822 1 -- 823
Interest 619 -- 124 (4) 743
Other 189 -- -- 189
------- ------- ------- -------
4,057 74 152 4,283
------- ------- ------- -------
Other income (expense) 812 29 -- 841
------- ------- ------- -------
Net income (loss) before
income taxes 1,965 76 (152) 1,889
Income tax 521 -- (26) 495
------- ------- ------- -------
Net income (loss) $ 1,444 $ 76 $ (126) $ 1,394
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Net income per share $ 0.22 $ 0.22
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Weighted average shares
outstanding 6,465 6,465
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SOUTHERN MINERAL CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
Note 1: On August 30, 1996 Southern Mineral Corporation (Southern Mineral)
acquired the limited partnership interest in SMC Development, L.P.
for $3,000,000. Southern Mineral previously owned a 7% general
partnership interest in the partnership. The partnership's assets
consisted of proved producing and proved undeveloped oil and gas
properties, with most of the value related to proved undeveloped
properties and wells drilled in 1996, but not yet producing.
The pro forma balance sheet presents the acquisition of the SMC
Development, L. P. limited partnership interest as if it had occurred
at June 30, 1996, while the pro forma statement of operations for the
six months ended June 30, 1996 and the year ended December 31, 1995
present the transaction as if it had occurred at January 1, 1995.
These statements should be read in conjunction with the separate
financial statements and notes thereto of Southern Mineral's
previously filed statements. The pro forma statement of operations is
not necessarily indicative of the results of operations of the
Company as it may be in the future or as if it might have been had
the acquisition been effective at January 1, 1995.
Historical amounts for the 1995 statement of operations were
obtained from Diasu Oil & Gas Co., Inc., the owners of the properties
prior to their purchase by SMC Development, L. P. The amounts for
the six months ended June 30, 1996 are from the partnership records.
Note 2: Reflects purchase of the limited partnership interest. Financing
was obtained through additional long-term debt.
Note 3: Reflects adjustment of the Partnership's historical cost basis in
assets to fair value.
Note 4: Reflects additional interest expense as a result of debt financing of
the acquisition.
Note 5: Reflects depreciation, depletion and amortization, including amount
related to the increase in oil and gas property bases.
Note 6: Reflects reduction in income tax expense caused by reduction in pro
forma earnings.
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SIGNATURES
Pursuant to the requirements 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.
SOUTHERN MINERAL CORPORATION
Date September 16, 1996 By /s/ James H Price
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James H Price
Vice President-Finance
(Chief Accounting Officer)
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INDEX TO EXHIBITS
2.1 Purchase and Sale Agreement and Assignment of Partnership
Interest, dated August 30, 1996, by and between Torch Energy
Finance Fund Limited Partnership I and Southern Mineral
Corporation (filed herewith).
2.2 Agreement Regarding Dissolution of Partnerships, dated August
30, 1996, between Southern Mineral Corporation and Diasu Oil
& Gas Co., Inc. (filed herewith without Annexes indexed
therein, which will be furnished upon the Commission's
request).
10.1 Amendment to Credit Agreements between Southern Mineral
Corporation et al and Compass Bank-Houston dated August 30,
1996 (filed herewith).
99 News Release of Southern Mineral Corporation dated September
3, 1996 (filed herewith).