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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PETROGLYPH ENERGY, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state how it was
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[ ] Fee paid previously with preliminary materials.
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previously. Identify the previous filing by registration statement number,
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1) Amount Previously Paid:
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PETROGLYPH ENERGY, INC.
1302 NORTH GRAND
HUTCHINSON, KANSAS 67501
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1998
To the Stockholders of
PETROGLYPH ENERGY, INC.
Notice is hereby given that the annual meeting of stockholders of
Petroglyph Energy, Inc., a Delaware corporation (the "Company"), will be held
on Thursday, May 28, 1998, at 9:00 a.m., local time, at the Kansas Cosmosphere
& Space Center, 1100 North Plum Street, Hutchinson, Kansas 67501 for the
following purposes:
1. To elect five directors to serve until the Annual Meeting of
Stockholders in 1999;
2. To approve the appointment of Arthur Andersen LLP as
independent auditors of the Company for the year ending
December 31, 1998; and
3. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on April 20, 1998
are entitled to notice of, and to vote at, the meeting or any adjournment(s)
thereof.
You are cordially invited and urged to attend the meeting, but if you
are unable to attend, please sign and date the enclosed proxy and return it
promptly in the enclosed self-addressed stamped envelope. A prompt response
will be appreciated. If you attend the meeting, you may vote in person, if you
wish, whether or not you have returned your proxy. In any event, a proxy may
be revoked at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT C. MURDOCK
President, Chief Executive Officer
and Chairman of the Board
Hutchinson, Kansas
April 30, 1998
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PETROGLYPH ENERGY, INC.
1302 NORTH GRAND
HUTCHINSON, KANSAS 67501
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1998
SOLICITATION OF PROXIES
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is furnished to holders of Petroglyph Energy, Inc.
("Petroglyph" or the "Company") common stock, $0.01 par value ("Common Stock"),
in connection with the solicitation of proxies on behalf of the Board of
Directors of the Company for use at the annual meeting of stockholders of
Petroglyph to be held on May 28, 1998, at 9:00 a.m., local time, Kansas
Cosmosphere & Space Center, 1100 North Plum Street, Hutchinson, Kansas 67501,
and at any adjournment(s) thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
Shares represented by a proxy in the form enclosed, duly signed, dated
and returned to the Company and not revoked, will be voted at the meeting in
accordance with the directions given, but in the absence of directions to the
contrary, such shares will be voted (i) for the election of the Board's
nominees for directors, (ii) for the appointment of Arthur Andersen LLP as
independent auditors of the Company for the year ending December 31, 1998 and
(iii) in accordance with the best judgment of the persons voting on any other
proposals that may come before the meeting. The Board of Directors knows of no
other matters, other than those stated in the foregoing notice, to be presented
for consideration at the meeting or any adjournment(s) thereof. If, however,
any other matters properly come before the meeting or any adjournment(s)
thereof, it is the intention of the persons named in the enclosed proxy to vote
such proxy in accordance with their judgment on any such matters. The persons
named in the enclosed proxy may also, if it is deemed to be advisable, vote
such proxy to adjourn the meeting from time to time.
Any stockholder executing and returning a proxy has the power to revoke
it at any time before it is voted by delivering to the Secretary of the
Company, 1302 North Grand, Hutchinson, Kansas 67501, a written revocation
thereof or by duly executing a proxy bearing a later date. Any stockholder
attending the annual meeting of stockholders may revoke his proxy by notifying
the Secretary at such meeting and voting in person if he desires to do so.
Attendance at the annual meeting will not by itself revoke a proxy.
The approximate date on which this proxy statement and the form of proxy
are first sent to stockholders is April 30, 1998.
The cost of soliciting proxies will be borne by the Company.
Solicitation may be made, without additional compensation, by directors,
officers and regular employees of the Company in person or by mail, telephone
or telegram. The Company may also request banking institutions, brokerage
firms, custodians, trustees, nominees and fiduciaries to forward solicitation
material to the beneficial owners of the Common Stock held of record by such
persons, and Petroglyph will reimburse the forwarding expense. All costs of
preparing, printing and mailing the form of proxy and the material used in the
solicitation thereof will be borne by the Company.
SHARES OUTSTANDING AND VOTING RIGHTS
The close of business on April 20, 1998 is the record date for
determination of stockholders entitled to notice of and to vote at the meeting
or any adjournment(s) thereof. The only voting security of the Company
outstanding is the Common Stock, each share of which entitles the holder
thereof to one vote. At the record date for the meeting, there were
outstanding and entitled to be voted 5,458,333 shares of Common Stock.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information concerning (i) the only persons
known by the Company, based upon statements filed by such persons pursuant to
Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to own beneficially in excess of 5% of the Common Stock as of
April 20, 1998 and (ii) the shares of Common Stock beneficially owned, as of
April 20, 1998, by each director of the Company, each executive officer listed
in the Summary Compensation Table included elsewhere in this proxy statement,
and all executive officers and directors of the Company as a group. Except as
indicated, each individual has sole voting power and sole investment power over
all shares listed opposite his name.
Shares Beneficially
Owned
-----------------------------
Name of Beneficial Owner Number Percent
------------------------ ------------- -------------
Directors and Named Executive Officers (1):
David R. Albin (2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,220 1.87%
Kenneth A. Hersh (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,055 *
A.J. Schwartz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,885 *
Robert C. Murdock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,043 1.76%
Robert A. Christensen . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,043 1.76%
Sidney Kennard Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,898 *
Executive Officers and Directors as a Group (7 persons) . . . . . . . . . . 343,144 6.29%
Holders of 5% or More Not Named Above
Natural Gas Partners, L.P. . . . . . . . . . . . . . . . . . . . . . . . . 1,137,883 20.85%
777 Main Street, Suite 2700
Fort Worth, Texas 76102
Natural Gas Partners II, L.P. . . . . . . . . . . . . . . . . . . . . . . . 648,920 11.89%
777 Main Street, Suite 2700
Fort Worth, Texas 76102
Natural Gas Partners III, L.P. . . . . . . . . . . . . . . . . . . . . . . 728,291 13.34%
777 Main Street, Suite 2700
Fort Worth, Texas 76102
R. Gamble Baldwin (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,155,290 21.17%
c/o Natural Gas Partners, L.P.
777 Main Street, Suite 2700
Fort Worth, Texas 76102
Wellington Management Company, LLP (5). . . . . . . . . . . . . . . . . . . 527,900 9.67%
75 State Street
Boston, MA 02109
Morgan Stanley, Dean Witter, Discover & Co. (6) . . . . . . . . . . . . . . 323,800 5.93%
1585 Broadway
New York, New York 10036
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* Represents less than 1% of outstanding Common Stock.
(1) The business address of each director and executive officer is care of
Petroglyph Energy, Inc., 1302 North Grand, Hutchinson, Kansas 67501.
(2) David R. Albin and Kenneth A. Hersh are each managing members of the
general partner of Natural Gas Partners II, L.P. and Natural Gas
Partners III, L.P. As such, Mr. Albin and Mr. Hersh may be deemed to
share voting and investment power with respect to the 648,920 shares
and 728,291 shares beneficially owned by
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Natural Gas Partners II, L.P. and Natural Gas Partners III, L.P.,
respectively. Each of Mr. Albin and Mr. Hersh disclaims beneficial
ownership of such shares, which are not included in the total number
of shares reported for each above.
(3) Includes 102,220 shares held in trust for Mr. Albin.
(4) Includes (i) 17,407 shares held by Mr. Baldwin and (ii) 1,137,883
shares held by Natural Gas Partners, L.P., over which Mr. Baldwin
exercises voting and investment power. R. Gamble Baldwin is the sole
general partner of G.F.W. Energy, L.P., which is the sole general
partner of Natural Gas Partners, L.P.
(5) Represents shares held by Wellington Management Company, LLP ("WMC")
in its capacity as an investment adviser which are owned of record by
clients of WMC. WMC shares the power to vote or direct the vote of
394,700 of such shares and shares the power to dispose of or direct the
deposition of all 527,900 shares of which it may be deemed a
beneficial owner.
(6) Represents shares held by Morgan Stanley, Dean Witter, Discovery & Co.
("Morgan Stanley") in certain accounts managed on a discretionary
basis by a wholly-owned subsidiary of Morgan Stanley. Such accounts
have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, such shares.
PROPOSAL 1. ELECTION OF DIRECTORS
The business and affairs of the Company are managed by and under the
direction of the Board of Directors, which exercises all corporate powers of
the Company and establishes broad corporate policies.
The Company's Board of Directors formed standing audit and
compensation committees on April 30, 1998, and April 15, 1997, respectively,
each of which is composed of David R. Albin and Kenneth A. Hersh. The
Compensation Committee exercises the power of the Board of Directors in
connection with all matters relating to compensation of executive officers,
employee benefit plans and the administration of the Company's 1997 Option
Plan.
The Audit Committee's primary responsibilities will be to (i)
recommend the Company's independent auditors to the Board of Directors, (ii)
review with the Company's auditors the plan and scope of the auditor's annual
audit, the results thereof and the auditors' fees, (iii) review the Company's
financial statements and (iv) take such other action as it deems appropriate to
ensure the accuracy and completeness of the financial records of the Company
and the financial information gathering, reporting policies and procedures of
the Company.
All duly submitted and unrevoked proxies will be voted for the
nominees for directors selected by the Board of Directors, except where
authorization so to vote is withheld. If any nominee(s) should become
unavailable for election for any presently unforeseen reason, the persons
designated as proxies will have full discretion to cast votes for another
person(s) designated by the Board. The five nominees of the Board of Directors
of the Company are named below. Each of the nominees has consented to serve as
a director if elected. Set forth below is certain information with respect to
the nominees, including information as to each nominee's age as of April 30,
1998, position with the Company, business experience during the past five years
and directorships of publicly held companies.
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
Robert C. Murdock 41 President, Chief Executive Officer and Chairman of the Board
Robert A. Christensen 52 Executive Vice President, Chief Technical Officer and Director
David R. Albin 38 Director
Kenneth A. Hersh 35 Director
A. J. Schwartz 46 Director
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ROBERT C. MURDOCK has served as President, Chief Executive Officer and
Chairman of the Board of the Company since its formation in 1993. Prior to
forming the Company, from 1985, Mr. Murdock was President of GasTrak Holdings,
Inc., a natural gas gathering and marketing company. From 1982 to 1985, Mr.
Murdock held various staff and management positions at Panhandle Eastern Pipe
Line Company, where he was responsible for the development and implementation
of special marketing programs, natural gas supply acquisitions, natural gas
supply planning and forecasting, and for developing computer management systems
for natural gas contract administration.
ROBERT A. CHRISTENSEN has served as Executive Vice President, Chief
Technical Officer and Director of the Company since its formation in April
1993, and currently functions as Chief Technical Officer with primary
responsibility for property acquisition evaluations, business development and
strategic alliance formation. From April 1993 to 1996, Mr. Christensen served
as President of Petroglyph Operating Company, a wholly owned operating
subsidiary of the Company. From January 1992 to April 1993, Mr. Christensen
was the President of Bishop Resources, Inc., where he was responsible for
managing the oil and natural gas assets of the company. From April 1988 to
April 1993, Mr. Christensen was Manager of Project Development for Management
Resources Group, Ltd. From November 1985 to April 1988, Mr. Christensen was an
independent consultant in engineering operations and economic evaluations,
primarily in Kansas. Prior to November 1985, Mr. Christensen held various
positions with independent oil and natural gas exploration and production
companies, as well as a major service company. He is a member of the Society
of Petroleum Engineers, Society of Professional Well Log Analysts and has
completed the James M. Smith and William T. Cobb course in waterflooding.
DAVID R. ALBIN has served as a director of the Company since its
formation. Since 1988, Mr. Albin has been a managing director of the NGP
investment funds, which were organized to make direct equity investments in the
North American oil and natural gas industry. From December 1984 until November
1988, Mr. Albin was employed by Bass Investment Limited Partnership, where he
was responsible for portfolio management. Mr. Albin serves as a director of
Titan Exploration, Inc.
KENNETH A. HERSH has served as a director of the Company since its
formation. Since 1989, Mr. Hersh has served as a managing director of the NGP
investment funds, which were organized to make direct equity investments in the
North American oil and natural gas industry. From 1985 to 1987, Mr. Hersh was
employed by the investment banking division of Morgan Stanley & Co.
Incorporated, where he was a member of the Energy Group specializing in oil and
natural gas financing and merger and acquisition transactions. Mr. Hersh
serves as a director of Pioneer Natural Resources Company, HS Resources, Inc.
and Titan Exploration, Inc.
A. J. SCHWARTZ has served as a director of the Company since April
1997. Since 1980, Mr. Schwartz has been a shareholder in the law firm of
Morris, Laing, Evans, Brock & Kennedy, Chartered.
COMPENSATION OF DIRECTORS
Fees and Expenses. Each director who is not an employee of the
Company will receive an annual fee of $5,000 for serving as a director. In
1997, each non-employee director received $925. The Company also reimburses
directors for travel, lodging and related expenses they may incur in attending
Board and committee meetings.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires directors and officers of the
Company, and persons who own more than 10 percent of the Common Stock, to file
with the SEC initial reports of ownership and reports of changes in ownership
of the Common Stock. Directors, officers and more than 10 percent stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the year ended
December 31, 1997, all Section 16(a) filing requirements applicable to its
directors, officers and more than 10 percent beneficial owners were met, except
that A.J. Schwartz was not timely in the filing of one monthly report of one
transaction.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain summary information concerning the
compensation paid or awarded to the Chief Executive Officer of the Company and
the other two most highly compensated executive officers of the Company
(collectively, the "named executive officers") for the years indicated.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL ---------------------------------- UNDERLYING ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) OTHER ($) OPTIONS (#) COMPENSATION
----------------------------- ------- ---------- ---------- ---------- ---------------- ------------------
Robert C. Murdock . . . . . . 1997 $ 100,617 $ 12,000 $ -- 80,000 $ --
President and Chief 1996 85,000 5,000 -- -- --
Executive Officer 1995 79,800 4,000 -- -- --
Robert A. Christensen . . . . 1997 $ 100,617 $ 12,000 -- 80,000 $ --
Executive Vice President 1996 85,000 5,000 -- -- --
and Chief Technical 1995 79,800 4,000 -- -- --
Officer
Sidney Kennard Smith . . . . 1997 $ 100,617 $ 12,000 $ -- 80,000 $ --
Executive Vice President 1996 85,000 5,000 -- -- --
and Chief Operating 1995 77,100 4,000 -- -- --
Officer
Option Grants
The following table provides certain information concerning options to
purchase Common Stock granted during the fiscal year ended December 31, 1997 to
the three executive officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
# of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation For
Options Employees Price Expiration Option Term
Name Granted (#) In 1997 ($/share) Date 5% 10%
------------------------- -------------- -------------- -------------- --------------- ------------ ------------
Robert C. Murdock 80,000 23.7% $12.50 11/01/2007 $449,600 $1,308,800
Robert A. Christensen 80,000 23.7% 12.50 11/01/2007 449,600 1,308,800
Sidney Kennard Smith 80,000 23.7% 12.50 11/01/2007 449,600 1,308,800
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Option Exercises and Year-End Option Values
The following table provides certain information concerning exercises of
options to purchase Common Stock during the fiscal year ended December 31, 1997
by the three executive officers named in the Summary Compensation Table and the
value of such officers' unexercised options at December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at FY-End (#) at FY-End ($)
Acquired on Value ---------------------------- -------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
-------------------- -------------- -------------- ------------ ------------- ------------- ---------------
(DOLLARS IN THOUSANDS)
Robert C. Murdock . . . -- -- 0 80,000 -- --
Robert A. Christensen . -- -- 0 80,000 -- --
Sidney Kennard Smith. . -- -- 0 80,000 -- --
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION POLICY
To the Stockholders
of Petroglyph Energy, Inc.:
As members of the compensation committee (the "Committee") of the Board of
Directors, it is our responsibility to review and set the compensation levels
of the Company's Chief Executive Officer ("CEO") and other executives, evaluate
the performance of management and consider management succession and related
matters. In addition, we administer the annual and long-term incentive
compensation plans of the Company. All decisions by the Committee relating to
the compensation of executive officers are reviewed and approved by the full
Board.
The Committee considers information with respect to the reasonableness of
compensation paid to senior officers of the Company, as well as all employees
of the Company and its subsidiaries in managerial positions. The Committee
also takes into account how compensation compares to compensation paid by
competitors in the Company's industry as well as the performance of the
Company.
COMPENSATION POLICIES AND PROGRAMS
The Company's executive compensation policy is designed to attract,
motivate, reward and retain the key executive talent necessary to achieve the
Company's business objectives and contribute to the long-term success of the
Company. In order to meet these goals, the Company's compensation policy for
its executive officers focuses primarily on determining appropriate salary
levels and providing long-term stock-based incentives. To a lesser extent, the
Company's compensation policy also contemplates performance-based cash bonuses.
The Company's compensation principles for the Chief Executive Officer are
identical to those of the Company's other executive officers. The executive
compensation program for 1997 consisted of three elements: base salary, annual
incentive bonus and employee stock options.
Base Salary. Base salary for executive officers is determined principally
by competitive factors and the marketplace. In determining its recommendations
for adjustments to officers' base salaries for fiscal 1997, the Company focused
primarily on the scope of each officer's responsibilities, each officer's
contributions to the Company's success in moving toward its long-term goals
during the fiscal year, the successful completion of the Company's initial
public offering of Common Stock, the Company's assessment of the quality of
services rendered by the officer, comparison with compensation for officers of
comparable companies and an appraisal of the Company's financial position.
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Annual Incentive Bonus. The compensation policy of the Company is that a
part of the annual compensation of each officer be related to and contingent
upon the performance of the Company and the prospects of the Company as a
result of that performance, as well as the individual contribution of each
officer. Based on these performance evaluations, the Committee then determined
whether and to what extent to grant bonuses to the executive officers based on
a comparison of bonuses and total compensation paid to executive officers in
similar positions with relatively comparable companies in the oil and gas
industry. As a result of these evaluations and determinations, in December
1997 the Compensation Committee granted to four executive officers, including
the Chief Executive Officer, aggregate cash bonuses of $43,000 for their
respective contributions to the Company during the fiscal year ended December
31, 1997.
Employee Stock Options. The grant of stock options to executive officers
constitutes an important element of long- term compensation for the executive
officers. The grant of stock options increases management's equity ownership
in the Company with the goal of ensuring that the interests of management
remain closely aligned with those of the Company's stockholders. The Board
believes that stock options in the Company provide a direct link between
executive compensation and stockholder value. By attaching vesting
requirements, stock options also create an incentive for executive officers to
remain with the Company for the long term.
CHIEF EXECUTIVE OFFICER COMPENSATION
As indicated above, the factors and criteria upon which the compensation of
Robert C. Murdock, the Chief Executive Officer, is based are identical to the
criteria used in evaluating the compensation packages of the other executive
officers of the Company. The Chief Executive Officer's individual
contributions to the Company included his leadership role in establishing and
retaining a strong management team, developing and implementing the Company's
business plans and successfully completing the Company's initial public
offering. In addition, the Company reviewed compensation levels of chief
executive officers at comparable companies in the Company's industry. In
November 1997, the Committee approved an increase in salary for the CEO to
$125,000 per year, based upon competitive and financial factors.
SUMMARY
The members of the Committee believe that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate goals and stockholder interests. As performance goals are met or
exceeded, resulting in increased value to stockholders, executive officers are
to be rewarded commensurately. The members of the Committee believe that
compensation levels during 1998 adequately reflect the compensation goals and
policies of the Company.
April 30, 1998
COMPENSATION COMMITTEE
David R. Albin, Chairman
Kenneth A. Hersh
SECTION 162(m) OF THE INTERNAL REVENUE CODE.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
generally limits (to $1 million per covered executive) the deductibility for
federal income tax purposes of annual compensation paid to a Company's chief
executive officer and each of its other four most highly compensated executive
officers. All options granted under the Company's 1997 Option Plan in 1997
will qualify for an exemption from the application of Section 162(m) of the
Code, thereby preserving the deductibility for federal income tax purposes of
compensation that may be attributable to the exercise of such options.
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EMPLOYMENT AGREEMENTS
Each of Messrs. Murdock, Christensen and Smith and Tim A. Lucas is a
party to a confidentiality and noncompete agreement with the Company. Each
such agreement provides that if the Company terminates the employee's
employment other than for cause, the Company may elect, at its option, to make
severance payments to such employee in an amount equal to the employee's salary
for a period not less than six months or greater than 18 months. The Company
may discontinue such payments for any reason.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
David R. Albin and Kenneth A Hersh, directors of the Company, serve as
members of the compensation committee of the Company's Board of Directors.
Messrs. Albin and Hersh each are managing members of the respective general
partners of Natural Gas Partners II, L.P. ("NGP II") and Natural Gas Partners
III, L.P. ("NGP III"), which, as of December 31, 1997, owned 648,920 shares
(11.89%) and 728,291 shares (13.34%) of Common Stock respectively. Messrs.
Albin and Hersh are two of the four managing members of the general partners of
each of NGP II and NGP III and also own limited partnership interests in NGP
II's and NGP III's respective general partners. In addition to the shares of
Common Stock owned by NGP II and NGP III, Mr. Albin beneficially owns 102,220
shares of Common Stock held by a trust on his behalf and Mr. Hersh directly
owns 13,055 shares of Common Stock. Messrs. Albin and Hersh disclaim
beneficial ownership of the Common Stock owned by NGP II and NGP III except to
the extent of their pecuniary interests therein.
The Company has entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with Natural Gas Partners, L.P. ("NGP"), NGP
II, NGP III, Robert C. Murdock, Robert A. Christensen, Sidney Kennard Smith,
the Albin Income Trust, R. Gamble Baldwin, John S. Foster, Kenneth A. Hersh and
Bruce B. Selkirk, III (the "Shareholder Parties"). Pursuant to the
Registration Rights Agreement, on up to three separate occasions, commencing on
the 180th day following the date of the Company's initial registration
statement under the securities laws, Shareholder Parties owning at least 35% of
the outstanding shares then subject to such agreement may require the Company
to register shares held by them under applicable securities laws, provided that
the shares to be registered have an estimated aggregate offering price to the
public of at least $5.0 million. The Registration Rights Agreement also
provides that the Shareholder Parties have piggyback registration rights
pursuant to which such persons may include shares of Common Stock held by them
in certain registrations initiated by the Company or by any other holder of the
Company's Common Stock. The piggyback rights are subject to customary cutback
provisions. The Registration Rights Agreement provides for customary
indemnities by the Company in favor of persons including shares in a
registration pursuant to the Registration Rights Agreement, and by such persons
in favor of the Company, with respect to information to be included in the
relevant registration statement. These registration rights have been waived in
connection with this offering and for 180 days after the date of this
Prospectus.
CERTAIN TRANSACTIONS
In connection with the formation of the Company as the holding company of
Petroglyph Gas Partners, L.P. (the "Partnership"), the Company made loans to
each of Messrs. Murdock, Christensen and Smith. The proceeds of those loans
were contributed by Messrs. Murdock, Christensen and Smith to the capital of an
affiliate of the Partnership and applied to retire certain outstanding
indebtedness of such affiliate and to discharge each such individuals' personal
guarantees of the debt. The loans made to Messrs. Murdock, Christensen and
Smith are evidenced by promissory notes bearing interest at a rate of 9.0% per
annum, maturing June 30, 1999. The principal balance of these promissory
notes, plus accrued interest, as of March 31, 1998 was approximately $154,800,
$154,800 and $54,600 for Messrs. Murdock, Christensen and Smith, respectively.
The Company leases its office building from Hutch Realty LLC ("Hutch"),
an entity controlled by certain directors and executive officers of the
Company. Rentals paid to Hutch for such lease were $34,800 for the year ended
December 31, 1997. Rentals paid during 1996 and 1995 totaled $34,800 and
$39,200, respectively.
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On August 22, 1997, the Company and NGP entered into a financial advisory
services agreement whereby NGP has agreed to provide financial advisory
services to the Company for a quarterly fee of $13,750. In addition, NGP will
be reimbursed for its out of pocket expenses incurred in performing such
services. The agreement is for a one year term and can be terminated by NGP at
the end of any fiscal quarter. Under the agreement, NGP will assist the
Company in managing its public and private financing activities, its public
financial reporting obligations, its budgeting and planning processes, and its
investor relations program, as well as provide ongoing strategic advice. NGP
will not receive any other transaction-related compensation for its advisory
assistance. Advisory fees paid to NGP during 1997 totaled $10,163.
For the years ended December 31, 1997 and 1996, the Company paid legal
fees of $139,384 and $109,000, respectively, to the law firm of Morris Laing,
Evans, Brock & Kennedy, Chartered, where A. J. Schwartz, a director of the
Company, is a shareholder.
The Company is party to the Registration Rights Agreement with the
Shareholder Parties. Pursuant to the Registration Rights Agreement, on three
separate occasions, commencing on the 180th day following the date off the
Company's initial public offering under the securities laws, Shareholder
Parties owning at least 35% of the outstanding shares then subject to such
agreement may require the Company to register shares held by them under
applicable securities laws, provided that the shares to be registered have an
estimated aggregate offering price to the public of at least $5.0 million. The
Registration Rights Agreement also provides that the Shareholder Parties have
piggyback registration rights pursuant to which such persons may include shares
of Common Stock held by them in certain registrations initiated by the Company
or by any other holder of Common Stock. The piggyback rights are subject to
customary cutback provisions.
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PERFORMANCE GRAPH
The following performance graph reflects the percentage change in
cumulative total stockholder return from October 20, 1997 to December 31, 1997
on (i) the Company's Common Stock, (ii) the National Securities Dealers
Automated Quotation System ("NASDAQ") Stock Market Index of U.S. Companies and
(iii) a peer group index.
STOCK PERFORMANCE GRAPH
(ASSUMES $100 INVESTMENT ON 10/20/97)
COMPARISON OF CUMULATIVE STOCKHOLDER TOTAL RETURN (1) AMONG THE
COMPANY, NASDAQ STOCK MARKET INDEX OF U.S. COMPANIES AND COMPOSITE PEER GROUP
October 20, 1997 December 31, 1997
---------------- -----------------
Petroglyph . . . . . . . . . . . . . . . . . . $100 $66
NASDAQ Stock Market Index of U.S. Companies . . 100 94
Peer Group (2) . . . . . . . . . . . . . . . . 100 78
- ---------------
(1) Total return assuming reinvestment of dividends. Assumes $100 invested
on October 20, 1997 in Common Stock of Petroglyph, the NASDAQ Stock
Market Index of U.S. Companies and the composite peer group.
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(2) Composite peer group includes the following companies: Abraxas
Petroleum Corp, Corrizo Oil & Gas, Inc., Clayton Williams Energy, Inc.,
DLB Oil & Gas, Inc., Inland Resources Inc., Maynard Oil Company, McMoRan
Oil & Gas Company, Panaco, Inc., Parallel Petroleum Corporation,
Petroleum Development Corp, Prima Energy and Remington Oil & Gas Company.
PROPOSAL 2. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, and recommends the approval of the
appointment of, Arthur Andersen LLP, who have been the Company's auditors since
the Company's formation on April 15, 1997, as independent auditors for the year
ending December 31, 1998. Representatives of Arthur Andersen LLP are expected
to be present at the Annual Meeting and will be given the opportunity to make a
statement, if they desire to do so, and to respond to appropriate questions.
Unless stockholders specify otherwise in the proxy, proxies solicited by
the Board of Directors will be voted by the persons named in the proxy at the
Annual Meeting to ratify the selection of Arthur Andersen LLP as the Company's
auditors for 1998. The affirmative vote of a majority of the votes cast at the
Annual Meeting will be required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP.
OTHER MATTERS
The Board of Directors of the Company does not intend to present any
other matters at the meeting and knows of no other matters which will be
presented. However, if any other matters come before the meeting, it is the
intention of the persons named in the enclosed proxy to vote in accordance with
their judgment on such matters.
STOCKHOLDER PROPOSALS
It is contemplated that the 1999 annual meeting of stockholders of the
Company will take place during the last week of May 1999. Stockholder
proposals for inclusion in the Company's proxy materials for the 1999 annual
meeting of stockholders must be received at the Company's principal executive
office in Hutchinson, Kansas, addressed to the Secretary of the Company, not
less than 60 days prior to such meeting; provided that if the 1999 annual
meeting of stockholders is changed by more than 30 days from the presently
contemplated date, proposals must be so received a reasonable time in advance
of the meeting.
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FORM 10-K ANNUAL REPORT
The Company will provide without charge to each person from whom a proxy
is solicited by this proxy statement, upon the written request of any such
person, a copy of the Company's annual report on Form 10-K, including the
financial statements and the schedules thereto, required to be filed with the
Securities and Exchange Commission pursuant to Section 13(a)-1 under the 1934
Act for the Company's most recent fiscal year. Requests should be directed to
the Vice President/Chief Financial Officer, Petroglyph Energy, Inc., 1302 North
Grand, Hutchinson, Kansas 67501.
By Order of the Board of Directors
Robert C. Murdock
President, Chief Executive Officer
and Chairman of the Board
April 30, 1998
Hutchinson, Kansas
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PETROGLYPH ENERGY, INC.
1302 NORTH GRAND
HUTCHINSON, KANSAS 67501
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert C. Murdock and Tim A.
Lucas, and each of them, as the undersigned's attorneys and proxies,
each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as directed below, all the shares of
common stock of PETROGLYPH ENERGY, INC. (the "Company") held of record
by the undersigned on April 20, 1998, at the annual meeting of
stockholders of the Company to be held on May 28, 1998, at 9:00 a.m.,
local time, at the Kansas Cosmosphere & Space Center, 1100 North Plum
Street, Hutchinson, Kansas 67501, and at any adjournment(s) thereof.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary below) nominees listed above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.)
Robert C. Murdock Robert A. Christensen David R. Albin Kenneth A. Hersh A.J. Schwartz
2. PROPOSAL TO RATIFY APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote with respect to any other matter which may properly
come before the meeting or any adjournment(s) thereof.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR MANAGEMENT'S NOMINEES FOR ELECTION
AS DIRECTORS AND FOR THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1998.
Dated: 1998
------------,
----------------------------
Signature
----------------------------
Signature
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.
SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.