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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K/A
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 27, 1998
MIDDLE BAY OIL COMPANY, INC.
(Exact name of registrant as specified in charter)
Alabama 0-21702 63-1081013
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1221 Lamar Street, Suite 1020, Houston, TX 77010
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 759-6808
Former name or former address, if changed since last report: N/A
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION, AND EXHIBITS
This is amendment no. 2 to Form 8-K filed with the Commission on May 6,
1998 (the "Original 8-K")
(B) PRO FORMA FINANCIAL INFORMATION
MIDDLE BAY OIL COMPANY, INC.
Unaudited Condensed Pro Forma Financial Statements
As discussed in Item 2 of the Original 8-K Middle Bay Oil Company, Inc.,
("Middle Bay") acquired on March 27, 1998, 1,064,432 shares of the common stock
of Enex Resources Corporation, a Delaware corporation, ("Enex"), for $15,966,480
or $15 per share pursuant to Middle Bay's tender offer (the "tender offer")
which began on February 19, 1998. The Enex shares acquired by Middle Bay
represent 79.2% of the total outstanding Enex common shares. Enex is the general
partner of Enex Consolidated Partners, L.P., (the "Enex Partnership"), a New
Jersey Limited Partnership whose principal business is oil and gas production.
Enex's general partner interest is 4.1%. Enex also owns an approximate 55%
interest in the partnership as a limited partner.
The following pro forma data presents the results of the Company for the
year ended December 31, 1997 and for the three months ended March 31, 1998, as
if the Enex acquisition had occurred on January 1, 1997. The pro forma financial
statements are also based, in part, on the historical financial statements of
Shore Oil Company ("Shore") and Bison Energy Corp. ("Bison"). Middle Bay
acquired 100% of Shore effective June 30, 1997 and 100% of Bison effective
February 28, 1997. Such historical financial statements for the Shore merger are
included in the Form 8-K/A filed by Middle Bay on September 3. 1997 and such
historical financial statements for the Bison merger are included in the Form
8-K/A filed by Middle Bay on April 25, 1997.
The proforma results are presented for comparative purposes only and are
not necessarily indicative of the results which would have been obtained had the
acquisition been consummated as presented. The following data reflects pro forma
adjustments for oil and gas revenues, production costs, depreciation and
depletion related to the properties and business acquired, and the related
income tax effects. The unaudited condensed pro forma financial statements
should be read in conjunction with the notes thereto.
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Middle Bay Oil Company, Inc.
Unaudited Pro Forma Statement of Operations
For The Three Months Ended March 31, 1998
(In Thousands, Except Per Share Data)
Enex
Acquisition Pro Forma
REVENUES Historical of Enex Adjustments Notes Pro Forma
Oil and gas production and plant income $ 2,632 2,122 -- $ 4,754
Other revenue 125 682 -- 807
---------- --------- -------- ---------
Total Revenue 2,757 2,804 -- 5,561
---------- --------- -------- ---------
COSTS AND EXPENSES
Well operating 1,184 1,003 -- 2,187
Geological and geophysical 746 -- -- 746
Dryhole costs 469 -- -- 469
Depreciation, depletion and amortization 1,118 548 235 (9) 1,901
Interest 255 -- 210 (10) 465
General and administrative 1,127 1,416 -- 2,543
---------- --------- --------- ---------
Total Expenses 4,899 2,967 445 8,311
---------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS (2,142) (163) (445) (2,750)
MINORITY INTEREST -- (348) 88 (12) (260)
---------- --------- --------- ---------
Income (loss) before income taxes
and investee earnings (2,142) (511) (357) (3,010)
Income Tax (Benefit) (728) (87) (151) (11) (966)
---------- --------- --------- ---------
NET INCOME (LOSS) (1,414) (424) (206) (2,044)
DIVIDENDS TO PREFERRED STOCKHOLDERS 68 -- -- 68
---------- --------- --------- ---------
NET LOSS AVAILABLE TO STOCKHOLDERS $ (1,482) (424) (206) $ (2,112)
========== ========= ========= =========
Weighted Average Common Shares Outstanding
Basic 6,720 6,720
========== =========
Diluted 6,720 6,720
========== =========
NET LOSS PER COMMON SHARE
Basic $ (0.22) (0.31)
========== =========
Diluted $ (0.22) (0.31)
========== =========
See Accompanying Notes.
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Middle Bay Oil Company, Inc.
Unaudited Pro Forma Statement of Operations
For The Year Ended December 31, 1997
(In Thousands, Except Per Share Data)
Acquisition
of Bison Pro Forma Acquisition Pro Forma
REVENUES Historical & Shore Adjustments Notes of Enex Adjustments Notes Pro Forma
Oil and gas production and plant income $ 10,213 2,519 -- 10,096 $ 22,828
Other revenue 1,220 826 (26) (6) 1,367 3,387
-------- ----- ------- ------- ---------
Total Revenue 11,433 3,345 (26) 11,463 26,215
-------- ----- ------- ------- ---------
COSTS AND EXPENSES
Well operating 3,849 933 -- 4,774 9,556
Geological and geophysical 223 -- -- -- 223
Abandonment costs 1,119 2 -- -- 1,121
Impairments 21,148 -- -- -- 21,148
Depreciation, depletion and amortization 4,567 582 1,163 (1) 1,634 335 (9) 8,281
Interest 671 160 (70) (3) -- 997 (10) 1,758
General and administrative 2,880 603 (21) (6) 2,061 5,523
-------- ----- ------- ------- ------- --------
Total Expenses 34,457 2,280 1,072 8,469 1,332 47,610
-------- ----- ------- ------- ------- --------
INCOME (LOSS) FROM OPERATIONS (23,024) 1,065 (1,098) 2,994 (1,332) (21,395)
MINORITY INTEREST -- -- -- (1,013) (409) (12) (1,422)
-------- ----- ------- ------- ------- --------
Income (loss) before income taxes
and investee earnings (23,024) 1,065 (1,098) 1,981 (1,741) (22,813)
Equity in net earnings of equity investees -- 37 (37) (7) -- -- 0
INCOME TAX EXPENSE (BENEFIT) (7,445) 302 (313) (4) 16 (453) (11) (7,893)
-------- ----- ------- ------- ------- --------
NET INCOME (LOSS) (15,579) 800 (822) 1,965 (1,288) (14,924)
DIVIDENDS TO PREFERRED STOCKHOLDERS 605 -- 173 (2) -- 778
-------- ----- ------- ------- ------- --------
NET LOSS AVAILABLE TO STOCKHOLDERS $(16,184) 800 (995) 1,965 (1,288) $(15,702)
======== ===== ======= ======= ======= ========
Weighted Average Common Shares Outstanding
Basic 3,397 4,473
======== ========
Diluted 3,397 4,473
======== ========
NET LOSS PER COMMON SHARE
Basic $ (4.76) (3.51)
======== ========
Diluted $ (4.76) (3.51)
======== ========
See Accompanying Notes.
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MIDDLE BAY OIL COMPANY, INC.
Notes to Unaudited Condensed Pro Forma Financial Statements
Note A - Pro Forma Adjustments for Bison and Shore Mergers
On February 10, 1997, Middle Bay and Bison entered into a Merger Agreement
whereby Bison was merged into Middle Bay, effective February 28, 1997. The
merger was accounted for using the purchase method of accounting. In completing
the merger, Middle Bay issued 605,556 shares of Middle Bay common stock and paid
$6,654,114 in cash in exchange for all of the issued and outstanding Bison
common stock.
On June 20, 1997, Middle Bay and Shore entered into a Merger Agreement
whereby Shore was merged into Middle Bay effective June 30, 1997. The merger was
accounted for using the purchase method of accounting. In completing the merger
Middle Bay issued 1,883,333 shares of Middle Bay common stock, 266,667 shares of
Middle Bay Series B convertible preferred stock and paid $200,000 in cash in
exchange for all of the issued and outstanding Shore common stock. Middle Bay
also paid Shore's indebtedness to its shareholders of $2,333,303 and assumed
bank debt of Shore amounting to $2,105,000.
The mergers were accounted for as purchases of Bison and Shore by Middle
Bay and as a result of the purchase method of accounting, Middle Bay's cost of
acquiring Bison and Shore were allocated to assets and liabilities acquired
based on estimated fair values.
Middle Bay incurred approximately $35,000 and $38,000 in legal and
accounting expenses related to the Bison and Shore mergers, respectively, which
were included as a cost of the merger.
The accompanying Pro Forma Combined Condensed Statements of Operations for
the year ended December 31, 1997 and for the three months ended March 31, 1998
have been prepared as if the Bison and Shore mergers had occurred on January 1,
1997 and reflect the following adjustments:
(1) To adjust depletion, depreciation and amortization expense to reflect
Middle Bay's purchase price allocated to property and equipment using the unit
of production method utilized by Middle Bay.
(2) To record the preferred stock dividends paid on the preferred stock
issued for the cash portion of the Bison purchase price and issuded in the Shore
purchase price.
(3) To record the reduction in interest expense on the debt retired.
(4) To adjust the provision for income taxes for the change in financial
taxable income as a result of the mergers.
(5) To reflect the impact on the weighted average common shares outstanding
for the issuance of 2,488,889 shares of Middle Bay common stock in conjunction
with the Bison and Shore mergers.
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(6) To remove management income for accounting and administrative functions
performed by Bison for other entities. Subsequent to the merger, Bison no longer
performed such functions.
(7) To remove equity in net earnings of equity investees that were not
purchased.
(8) To reflect the issuance of 388,884 shares of Series A Preferred Stock,
266,667 Shares of Series B Preferred Stock and, 2,488,889 shares of Middle Bay
common stock in conjunction with the Bison and Shore mergers. Pro Forma basic
net income (loss) per common share information is computed by dividing net
income (loss), adjusted for the preferred stock dividend requirement of $93,332
for the six months ended June 30, 1997 by the Pro Forma weighted average common
shares outstanding. Shares issuable upon exercise of options and upon conversion
of preferred stock are included in the computations of the pro forma dilutive
income per common and common equivalent shares if the effect is dilutive.
Note B - Pro Forma Adjustments for Purchase of Enex
Middle Bay Oil Company, Inc, acquired on March 27, 1998, 1,064,432 shares
of the common stock of Enex Resources Corporation, a Delaware corporation, for
$15,966,480 or $15 per share pursuant to Middle Bay's tender offer (the "tender
offer") which began on February 19, 1998. The Enex shares acquired by Middle Bay
represent 79.2% of the total outstanding Enex common shares. Enex is the general
partner of Enex Consolidated Partners, L.P., a New Jersey Limited Partnership
whose principal business is oil and gas production. Enex's general partner
interest is 4.1%. Enex also owns an approximate 55% interest in the partnership
as a limited partner.
The cost of allocating the purchase of Enex was allocated using the
purchase method of accounting based upon the fair value of the consolidating
assets and liabilities of Enex with the remaining purchase price allocated to
oil and gas properties. The allocation of the purchase price is summarized as
follows: (in thousands)
Working capital........................... $ 4,812
Oil and gas properties.................. 18,821
Minority Interest.......................... (7,667)
--------
$ 15,966
The total cost of the purchase was $15.966 million. The cash portion of the
cost was $1.5 million with the remaining $14.466 million derived from Middle
Bay's line of credit, which has a stated interest rate of LIBOR plus 2%.
The accompanying Pro Forma Combined Condensed Statements of Operations for
the year ended December 31, 1997 and for the three months ended March 31, 1998
have been prepared as if the Enex purchase had occurred on January 1, 1997 and
reflect the following adjustments:
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(9) To adjust depletion, depreciation, and amortization to reflect Middle
Bay's purchase price allocated to property and equipment using the production
method utilized by Middle Bay.
(10) To recognize the additional interest expense resulting from a $15.012
million loan against Middle Bay's line of credit at LIBOR plus 2%.
(11) To adjust the provision for income taxes for the change in Middle
Bay's financial taxable income as a result of the acquisition of Enex.
(12) To recognize the portion of Enex's income/loss attributable to the
minority interest shareholders in Enex.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MIDDLE BAY OIL COMPANY, INC.
(Registrant)
November 12, 1998 By: /s/ Frank C. Turner II
Frank C. Turner II
Vice President and
Chief Financial Officer