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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
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CURRENT REPORT
AMENDMENT NO. 1
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): AUGUST 18, 1999
PETROGLYPH ENERGY, INC.
(Exact name of registrant as specified in is charter)
Commission File Number: 000-23185
DELAWARE 74-2826234
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1302 N. GRAND
HUTCHINSON, KANSAS 67501
(Address of principal executive offices) (Zip Code)
(316) 665-8500
(Registrant's telephone number, including area code)
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AMENDMENT NO. 1
Amend Item 7. Financial Statements and Exhibits by deleting such item in its
entirety and substituting therefore the following:
(a) Financial Statements of Businesses Acquired.
Report of Independent Public Accountants
Audited Statements of Revenues and Direct Operating Expenses
for the Years Ended December 31, 1998, 1997, and 1996
Notes to Statements of Revenues and Direct Operating Expenses
(b) Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Balance Sheet as of
June 30, 1999
Unaudited Pro Forma Consolidated Statements of Operations
for the Year Ended December 31, 1998 and the Six Months
Ended June 30, 1999
Notes to Unaudited Pro Forma Consolidated Financial Statements
(c) Exhibits.
None.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Petroglyph Energy, Inc.:
We have audited the accompanying statements of revenues and direct
operating expenses of the Antelope Creek Acquisition as described in
Note 1 for the years ending December 31, 1998, 1997, and 1996. These
statements are the responsibility of the management of Petroglyph
Energy, Inc. (the "Company"). Our responsibility is to express an
opinion on these statements based on our audit.
We conducted our audit in accordance with general accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statements of revenues
and direct operating expenses are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the statements of revenues and direct
operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall presentation of the statements of revenues
and direct operating expenses. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statements of revenues and direct operating expenses
were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission as described in
Note 1 and are not intended to be a complete presentation of the
Company's revenues and expenses.
In our opinion, the statements of revenues and direct operating
expenses referred to above present fairly, in all material respects,
the revenues and direct operating expenses of the Antelope Creek
Acquisition as described in Note 1 for the years ended December 31,
1998, 1997, and 1996 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Dallas, Texas
November 1, 1999
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ANTELOPE CREEK ACQUISITION
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEARS ENDED
December 31, December 31, December 31,
1998 1997 1996
----------- ----------- -----------
REVENUES
Oil $2,221,828 $3,225,609 $1,463,599
Gas 937,205 834,603 251,481
---------- ---------- ----------
Total 3,159,033 4,060,212 1,715,080
---------- ---------- ----------
DIRECT OPERATING EXPENSES
Lease operating expense 1,736,881 1,364,814 533,166
Severance taxes 170,715 169,268 70,328
---------- ---------- ----------
Total 1,907,596 1,534,082 603,494
---------- ---------- ----------
EXCESS OF REVENUES OVER
DIRECT OPERATING EXPENSES $1,251,437 $2,526,130 $1,111,586
========== ========== ==========
See Accompanying Notes to Statements of Revenues and Direct Operating Expenses.
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ANTELOPE CREEK ACQUISITION
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
1. BASIS OF PRESENTATION
Antelope Creek Acquisition
On August 20, 1999, Petroglyph Energy, Inc. (the "Company") acquired
the remaining 50% working interest in the Antelope Creek Field in the
Uinta Basin of Utah (the "Antelope Creek Property") from its
non-operated working interest partner, Williams Production Rocky
Mountain Company ("Williams"), for a purchase price of $6.9 million
(the "Antelope Creek Acquisition"). The Antelope Creek Acquisition,
which was effective August 1, 1999, gives the Company a 100% working
interest in the Antelope Creek Property.
In order to finance the Antelope Creek Acquisition, the Company
borrowed $2.5 million on an existing revolving credit facility with The
Chase Manhattan Bank ("Chase") pursuant to Amendment No. 1 dated as of
August 20, 1999 to the Second Amended and Restated Credit Agreement by
and between the Company and Chase dated as of September 30, 1998.
Additionally, the Company sold $5 million of 8% senior subordinated
notes due 2004 (the "Notes") to Intermountain Industries, Inc., an
Idaho corporation ("Intermountain"). The Notes required the Company to
deliver to Intermountain a stock purchase warrant to acquire 150,000
shares of Common Stock of the Company at an exercise price of $3.00 per
share and the ability for Intermountain to obtain additional stock
purchase warrants over the life of the Notes. The number of future
stock purchase warrants will be based on the future stock price
performance and the amount and duration of the Notes outstanding. The
maximum number of shares of Common Stock issuable under the stock
purchase warrants for any given period is limited to 250,000 shares in
any one year, 400,000 over the first three years and 750,000 over the
five-year life of the notes. The Company may redeem the Notes at par
without penalty at any time. Upon redemption of the Notes, any
remaining unissued and unearned stock purchase warrants will expire.
The Company utilized proceeds from the Notes to finance the remaining
purchase price of the Antelope Creek Acquisition and for working
capital needs.
The accompanying statements of revenues and direct operating expenses
do not include general and administrative expense, interest income or
expense, a provision for depreciation, depletion and amortization or
any provision for income taxes because the property interests acquired
represent only a portion of a business and the costs incurred by
Williams are not necessarily indicative of the costs to be incurred by
the Company.
Historical financial information reflecting financial position, results
of operations and cash flows of the Antelope Creek Acquisition is not
presented because the entire acquisition cost was assigned to the oil
and gas property interests. Accordingly, the historical statements of
revenues and direct operating expenses have been presented in lieu of
the financial statements required under Rule 3-05 of Securities and
Exchange Commission Regulation S-X.
2. SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)
Estimated Quantities of Proved Oil and Gas Reserves
Reserve information presented below has been estimated by the Company's
internal engineers using June 30, 1999 prices and costs. Proved
reserves are estimated quantities of crude oil and natural gas which,
based on geologic and engineering data, are estimated to be reasonably
recoverable in future years from known reservoirs under existing
economic and operating conditions. Proved developed reserves are those
which are expected to be recovered through existing wells with existing
equipment and operating methods. Because of inherent uncertainties
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and the limited nature of reservoir data, such estimates are subject to
change as additional information becomes available.
Proved Oil and Gas Reserves at
June 30, 1999 Oil (Bbls) Gas (Mcf)
Proved reserves 8,148,000 14,736,000
========= ==========
Proved developed reserves 4,708,000 8,865,000
========= ==========
Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves
The standardized measure of discounted future net cash flows
("Standardized Measure") is prepared using assumptions required by the
Financial Accounting Standards Board. Such assumptions include the use
of period-end prices for oil and gas and period-end costs for estimated
future development and production expenditures to produce period-end
estimated proved reserves. Discounted future net cash flows are
calculated using a 10% rate.
The Standardized Measure does not represent the Company's estimate of
future net cash flows or the value of proved oil and gas reserves.
Probable and possible reserves, which may become proved in the future,
are excluded from the calculations. Furthermore, period-end prices,
used to determine the Standardized Measure, are influenced by seasonal
demand and other factors and may not be the most representative in
estimating future reserves or reserve data.
June 30, 1999 weighted average oil price used in the estimation of
proved reserves and calculation of the Standardized Measure was $15.75.
June 30, 1999 weighted average gas price was $2.32 per Mcf.
Standardized Measure of Discounted Future Net Cash Flows at June 30,
1999
(in thousands)
Future cash inflows $ 164,253
Future costs:
Production (29,873)
Development (20,828)
----------
Future net cash inflows 113,552
10% annual discount (61,654)
----------
Standardized measure of discounted future
Net cash flows before income taxes $ 51,898
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PETROGLYPH ENERGY, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The accompanying Pro Forma Consolidated Financial Statements have been
prepared by recording pro forma adjustments to the historical
consolidated financial statements of Petroglyph Energy, Inc. ("the
Company"). The Pro Forma Consolidated Balance Sheet as of June 30, 1999
has been prepared as if the Antelope Creek Acquisition (as described in
Note 2) was consummated on January 1, 1998. The Pro Forma Consolidated
Statements of Operations for the year ended December 31, 1998 and for
the six months ended June 30, 1999 have been prepared as if the
Antelope Creek Acquisition (as described in Note 2) was consummated on
January 1, 1998.
The Pro Forma Consolidated Financial Statements are not necessarily
indicative of the financial position or results of operations that
would have occurred had the transactions been effected on the assumed
date. Additionally, future results may vary significantly from the
results reflected in the Pro Forma Consolidated Statements of
Operations due to normal production declines, changes in prices, future
transactions and other factors. These statements should be read in
conjunction with the Company's 1998 Form 10-K, the Company's
consolidated financial statements and the related notes for the six
months ended June 30, 1999 included in the Company's Form 10-Q for the
quarter ended June 30, 1999 and the statements of revenues and direct
operating expenses of the Antelope Creek Acquisition for the years
ended December 31, 1998, 1997, and 1996.
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PETROGLYPH ENERGY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(UNAUDITED)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 946,563 $ 1,131,011 (1) $ 2,077,574
Accounts receivable:
Oil and Gas Sales 278,556 -- 278,556
Other 39,111 -- 39,111
------------ ------------ ------------
Total Accounts Receivable 317,667 -- 317,667
Inventory 1,500,863 -- 1,500,863
Prepaid expenses and Other Current Assets 164,822 -- 164,822
------------ ------------ ------------
Total Current Assets 2,929,915 1,131,011 4,060,926
------------ ------------ ------------
Property and Equipment, Successful efforts method at cost:
Proved properties 31,913,848 6,900,000 (2) 38,813,848
Unproved properties 10,644,854 -- 10,644,854
Pipelines, gathering and other 10,360,832 -- 10,360,832
------------ ------------ ------------
52,919,534 6,900,000 59,819,534
Less: accumulated depreciation, depletion, and amortization (11,677,217) (836,358)(3) (12,513,575)
------------ ------------ ------------
Property and equipment, net 41,242,317 6,063,642 47,305,959
------------ ------------ ------------
Note receivable from officers 246,500 -- 246,500
Other assets, net 211,879 -- 211,879
------------ ------------ ------------
Total Assets $ 44,630,611 $ 7,194,653 $ 51,825,264
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities:
Trade $ 297,419 $ -- $ 297,419
Oil and natural gas sales payable 301,254 -- 301,254
Accrued taxes Payable 165,604 -- 165,604
Current portion of long-term debt -- -- --
Other 389,992 -- 389,992
------------ ------------ ------------
Total Current Liabilities 1,154,269 -- 1,154,269
------------ ------------ ------------
Long-term debt 8,000,000 6,802,350 (4) 14,802,350
Deferred Tax Liability - Long-term 360,858 95,054 (5) 455,912
Stockholders' equity:
Common Stock, par value $.01 per share; 25,000,000 shares
authorized; 5,458,333 shares issued and outstanding 54,583 -- 54,583
Warrants outstanding -- 139,500 (6) 139,500
Paid-in-Capital 46,134,018 -- 46,134,018
Retained Earnings (deficit) (11,073,117) 157,749 (7)(8) (10,915,368)
------------ ------------ ------------
Total Stockholders' Equity 35,115,484 297,249 35,412,733
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 44,630,611 $ 7,194,653 $ 51,825,264
============ ============ ============
See Accompanying Notes to Pro Forma Consolidated Financial Statements.
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PETROGLYPH ENERGY, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ ------------
(Audited) (Unaudited) (Unaudited)
Operating Revenues:
Oil sales $ 2,912,293 $ 2,221,828 (1) $ 5,134,121
Natural gas sales 1,365,850 937,205 (1) 2,303,055
Other 189,924 -- 189,924
------------ ------------ ------------
Total operating revenues 4,468,067 3,159,033 7,627,100
------------ ------------ ------------
Operating Expenses:
Lease operating 1,927,334 1,736,881 (1) (5) 3,664,215
Production taxes 218,129 170,715 (1) 388,844
Exploration Costs 192,526 -- 192,526
Depreciation, depletion, and amortization 1,866,111 619,529 (2) 2,485,640
Impairments 4,848,218 -- 4,848,218
General and administrative 2,128,774 236,438 (5) 2,365,212
------------ ------------ ------------
Total operating expenses 11,181,092 2,763,563 13,944,655
------------ ------------ ------------
Operating Gain (Loss) (6,713,025) 395,470 (6,317,555)
------------ ------------ ------------
Other Income (Expenses):
Interest Income (expense), net 406,975 (579,900)(3) (4) (172,925)
Gain (loss) on sales of property & equip, net 58,577 -- 58,577
------------ ------------ ------------
Net income (loss) before income taxes (6,247,473) (184,430) (6,431,903)
------------ ------------ ------------
Income Tax Expense (Benefit):
Current -- -- --
Deferred (2,061,666) (69,346)(6) (2,131,012)
------------ ------------ ------------
Total income tax (benefit) expense (2,061,666) (69,346) (2,131,012)
------------ ------------ ------------
Net Income (Loss) $ (4,185,807) $ (115,084) $ (4,300,891)
============ ============ ============
See Accompanying Notes to Pro Forma Consolidated Financial Statements
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PETROGLYPH ENERGY, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
Operating Revenues:
Oil sales $ 1,219,964 $ 946,342 (1) $ 2,166,306
Natural gas sales 625,039 324,424 (1) 949,463
Other 140,525 -- 140,525
----------- ----------- -----------
Total operating revenues 1,985,528 1,270,766 3,256,294
----------- ----------- -----------
Operating Expenses:
Lease operating 950,754 774,990 (1) (5) 1,725,744
Production taxes 99,997 94,818 (1) 194,815
Depreciation, depletion, and amortization 824,633 216,829 (2) 1,041,462
General and administrative 904,366 64,446 (5) 968,812
----------- ----------- -----------
Total operating expenses 2,779,750 1,151,083 3,930,833
----------- ----------- -----------
Operating Gain (Loss) (794,222) 119,683 (674,539)
----------- ----------- -----------
Other Income (Expenses):
Interest Income (expense), net (196,782) (289,950)(3) (4) (486,732)
Gain (loss) on sales of property & equip, net 876,842 607,500 (6) 1,484,342
----------- ----------- -----------
Net income (loss) before income taxes (114,162) 437,233 323,071
----------- ----------- -----------
Income Tax Expense (Benefit):
Current -- -- --
Deferred (29,085) 164,400 (7) 135,315
----------- ----------- -----------
Total income tax (benefit) expense (29,085) 164,400 135,315
----------- ----------- -----------
Net Income (Loss) Before Change in Accounting Principles: $ (85,077) $ 272,833 $ 187,756
Accounting Change - Expense of Start Up Costs (net of tax) (111,190) -- (111,190)
----------- ----------- -----------
Net Income (Loss) $ (196,267) $ 272,833 $ 76,566
=========== =========== ===========
See Accompanying Notes to Pro Forma Consolidated Financial Statements
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PETROGLYPH ENERGY, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying Pro Forma Consolidated Balance Sheet at June 30, 1999
and the Pro Forma Consolidated Statements of Operations for the year
ended December 31, 1998 and the six months ended June 30, 1999 have
been prepared assuming that Petroglyph Energy, Inc. ("the Company")
consummated the Antelope Creek Acquisition (see Note 2) on January 1,
1998. The Pro Forma Consolidated Statements of operations are not
necessarily indicative of the results of operations had the
above-described transactions occurred on the assumed date.
2. ACQUISITION
On August 20, 1999, the Company acquired the remaining 50% working
interest in the Antelope Creek Field in the Uinta Basin of Utah (the
"Antelope Creek Property") from its non-operated working interest
partner, Williams Production Rocky Mountain Company ("Williams"), for a
purchase price of $6.9 million (the "Antelope Creek Acquisition"). The
Antelope Creek Acquisition, which was effective August 1, 1999, gives
the Company a 100% working interest in the Antelope Creek Property.
In order to finance the Antelope Creek Acquisition, the Company
borrowed $2.5 million on an existing revolving credit facility with The
Chase Manhattan Bank ("Chase") pursuant to Amendment No. 1 dated as of
August 20, 1999 to the Second Amended and Restated Credit Agreement by
and between the Company and Chase dated as of September 30, 1998.
Additionally, the Company sold $5 million of 8% senior subordinated
notes due 2004 (the "Notes") to Intermountain. The Notes required the
Company to deliver to Intermountain a stock purchase warrant to acquire
150,000 shares of Common Stock of the Company at an exercise price of
$3.00 per share and the ability for Intermountain to obtain additional
stock purchase warrants over the life of the Notes. The number of
future stock purchase warrants will be based on the future stock price
performance and the amount and duration of the Notes outstanding. The
maximum number of shares of Common Stock issuable under the stock
purchase warrants for any given period is limited to 250,000 shares in
any one year, 400,000 over the first three years and 750,000 over the
five-year life of the notes. The Company may redeem the Notes at par
without penalty at any time. Upon redemption of the Notes, any
remaining unissued and unearned stock purchase warrants will expire.
The Company utilized proceeds from the Notes to finance the remaining
purchase price of the Antelope Creek Acquisition and for working
capital needs.
3. PRO FORMA ADJUSTMENTS
The following are notes to the Pro Forma Consolidated Balance Sheet
dated June 30, 1999:
(1) To reflect pro forma cash flows from January 1, 1998 through
June 30, 1999:
Oil and natural gas sales $ 4,429,799
Production taxes (265,533)
LOE & G&A expenses (2,812,755)
Interest expense (828,000)
Sale of equipment 607,500
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Net cash $ 1,131,011
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(2) The purchase price of the additional 50% working interest in
the Antelope Creek Field.
(3) Depreciation, depletion, and amortization expense for 18
months attributable to the Antelope Creek Acquisition.
(4) Additional borrowings to finance the Antelope Creek
Acquisition.
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(5) Income tax expense of $164,400 for six months of 1999 less
$69,346 tax benefit from the net loss in 1998 from operations
of the Antelope Creek Acquisition.
(6) To reflect the calculated value of a warrant to purchase
150,000 shares of Common Stock granted on the sale of Notes.
(7) To reflect the net loss (after income tax benefit) from
operations of the Antelope Creek Acquisition for 1998.
(8) To reflect the net income (after income tax expense) from
operations of the Antelope Creek Acquisition for the first six
months of 1999.
The following are notes to the Pro Forma Consolidated Statement of
Operations dated December 31, 1998:
(1) To add oil and natural gas revenues and volumes, production
taxes, and operating expenses attributable to the Antelope
Creek Acquisition for the period January 1, 1998 through
December 31, 1998.
(2) To reflect depreciation, depletion, and amortization expense
on the Antelope Creek Field as if the Company had owned a 100%
working interest for all of 1998.
(3) To add interest expense related to the debt required to
purchase the additional 50% of the Antelope Creek Field:
$6,900,000 at 8% interest outstanding for all of 1998.
(4) Includes $27,900 amortization of $139,500 calculated value of
a warrant to purchase 150,000 shares of Common Stock granted
on the sale of Notes.
(5) To reflect the increase in general and administrative expense
and decrease in lease operating expense resulting from owning
100% of the Antelope Creek Field and billing no overhead and
service income fees to third parties.
(6) The pro forma tax expense was computed at a combined rate of
37.6%.
The following are notes to the Pro Forma Consolidated Statement of
Operations dated June 30, 1999:
(1) To add oil and natural gas revenues and volumes, production
taxes, and operating expenses attributable to the Antelope
Creek Acquisition for the period January 1, 1999 through June
30, 1999.
(2) To reflect depreciation, depletion, and amortization expense
on the Antelope Creek Field as if the Company had owned a 100%
working interest for the first six months of 1999.
(3) To add interest expense related to the debt required to
purchase the additional 50% of the Antelope Creek Field:
$6,900,000 at 8% interest outstanding for the first six months
of 1999.
(4) Includes $13,950 amortization of $139,500 calculated value of
a warrant to purchase 150,000 shares of Common Stock granted
on the sale of Notes.
(5) To reflect the increase in general and administrative expense
and decrease in lease operating expense resulting from owning
100% of the Antelope Creek Field and billing no overhead and
service income fees to third parties.
(6) To reflect the sale of equipment in the first half of 1999
attributable to the Antelope Creek Acquisition.
(7) The pro forma tax expense was computed at a combined rate of
37.6%.
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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.
Date: November 1, 1999 PETROGLYPH ENERGY, INC.
By: /s/ Robert C. Murdock
------------------------------------------
Robert C. Murdock, President and
Chief Executive Officer
By: /s/ Tim A. Lucas
------------------------------------------
Tim A. Lucas, Vice-President and
Chief Financial Officer
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