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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):
MARCH 19, 1998
QUEEN SAND RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
STATE OF DELAWARE 0-21179 75-2615565
(STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)
3500 OAK LAWN
SUITE 380, LB #31
DALLAS, TEXAS 75219-4398
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 521-9959
NO CHANGE
(FORMER NAME OR FORMER ADDRESS, IF CHANGE SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS
Queen Sand Resources, Inc. (the "Company") has executed a definitive
purchase and sale agreement (the "Agreement") to acquire certain non-operated
royalty and net profits overriding royalty interests from two commingled pension
trust funds for which Morgan Guaranty Trust Company of New York serves as
trustee. The purchase price is $150 million in cash subject to standard closing
adjustments for net production revenues since October 1, 1997 and capital
expenditures incurred since that date. The Company has made a non-refundable
deposit of $15 million under the Agreement. The effective date of the
transaction is October 1, 1997 with an anticipated closing on or before April
22, 1998. Bank of Montreal and affiliates of Enron Corp. have provided a
commitment for $156 million in bridge financing to be funded on closing. The
obligation of the lenders to fund under the commitments is subject to
satisfaction of customary conditions precedent, including, but not limited to,
negotiation, execution and delivery of definitive lending documentation
containing customary representations, covenants, conditions and other terms.
There is no assurance this will be accomplished on terms acceptable to the
Company.
The acquisition encompasses interests in over 530 wells in
approximately 40 different fields located primarily in East Texas, South Texas
and the Mid-continent area. The Company's independent engineers, Ryder Scott
Company, estimate that total proved reserves consist of approximately 127.7
billion cubic feet (bcf) of natural gas and 3.7 million barrels of oil. The
reserves are approximately 85% natural gas, having an estimated
reserve-to-production ratio of over 10 years, and 80% are classified by Ryder
Scott Company as proved developed producing. The non-operated royalty and net
profits overriding royalty interests in the various properties range from 2% to
80%.
The Company has purchased an option to enter into a swap, hedging the
natural gas production of the Company over the next 5 years at $2.15 per mmbtu.
The Company expects to replace this option with a comprehensive hedging strategy
prior to the expiry of the option on May 1, 1998.
The information in this Current Report on Form 8-K includes certain
forward-looking statements that are based on assumptions that in the future may
prove not to have been accurate. These statements, and the Company's business
and prospects, are subject to a number of risks, including production variances
from expectations, uncertainties about estimates of reserves, volatility of oil
and natural gas prices, the need to develop and replace its reserves, the
substantial capital expenditures required to fund its operations, environmental
risks, drilling and operating risks, risks related to exploratory and
developmental drilling, competition, government regulation, and the ability of
the Company to implement its business strategy. These and other risks are
described in the Company's Annual Report on Form 10-KSB for the year ended June
30, 1997, which report is available from the Company and the Securities and
Exchange Commission.
ITEM 7. EXHIBITS.
10.1 Purchase and Sale Agreement among Morgan Guaranty Trust Company of
New York, as Trustee under Declaration of Trust dated November 10, 1982, as
amended, for the Commingled Pension Trust Fund (Petroleum), Morgan Guaranty
Trust Company of New York, as Trustee under Declaration of Trust dated November
10, 1982, as amended, for the Commingled Pension Trust Fund (Petroleum II),
Investment Royalty Corporation, Milam Royalty Corporation and Queen Sand
Resources, Inc., a Nevada corporation.
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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 hereunto duly authorized.
QUEEN SAND RESOURCES, INC.
Date: April 7, 1998 By: /s/ Ronald I. Benn
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Name: Ronald I. Benn
Title: Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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10.1 Purchase and Sale Agreement among Morgan Guaranty Trust Company of New
York, as Trustee under Declaration of Trust dated November 10, 1982, as
amended, for the Commingled Pension Trust Fund (Petroleum), Morgan
Guaranty Trust Company of New York, as Trustee under Declaration of
Trust dated November 10, 1982, as amended, for the Commingled Pension
Trust Fund (Petroleum II), Investment Royalty Corporation, Milam
Royalty Corporation and Queen Sand Resources, Inc., a Nevada
corporation.
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