FORM 8
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934
ISRAMCO, INC.
Amendment No. 2
The undersigned registrant hereby amends Form 8-K filed for the month of
February 1997 and dated February 14, 1997 on Form 8 as set forth in the pages
attached hereto:
To provide a Statement of Revenues and Direct Operating Expenses of the
Snyder Oil Corporation Property for the year ended December 31, 1996 and Pro
Forma Condensed Consolidatd Balance Sheet and Statement of Operations for
Isramco, Inc. and its Subsidiaries.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
ISRAMCO, INC.
(Registrant)
By: /S/ HAIM TSUFF
-----------------------------
HAIM TSUFF
Chairman of the Board
Date: May 13, 1997
JAY PETROLEUM, L.L.C.
(A Limited Liability Company)
Houston, Texas
FINANCIAL REPORT
December 31, 1996
TABLE OF CONTENTS
Page Number
-----------
Independent Auditors' Report 1
Statement of Revenues and Direct Operating Expenses 2
Notes to Financial Statements 3
Pro Forma Condensed Consolidated Balance Sheet 5
Pro Forma Condensed Consolidated Statement of Operations 6
JAY PETROLEUM, L.L.C.
Houston, Texas
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES OF
THE SNYDER OIL CORPORATION PROPERTY
For the Year Ended December 31, 1996
Independent Auditors' Report
Members
Jay Petroleum, L.L.C.
Houston, Texas
We have audited the accompanying Statement of Revenues and Direct Operating
Expenses of the Snyder Oil Corporation Property of Jay Petroleum, L.L.C. (a
limited liability company) for the year ended December 31, 1996. This financial
statement is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and direct operating expenses of the Snyder
Oil Corporation Property of Jay Petroleum, L.L.C. for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
WEINSTEIN SPIRA & COMPANY, P.C.
Houston, Texas
April 18, 1997
-1-
JAY PETROLEUM, L.L.C.
(A Limited Liability Company)
SNYDER OIL CORPORATION PROPERTY
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
For the Year Ended December 31, 1996
Revenues:
Oil $ 529,783
Gas 917,197
----------
1,446,980
Direct Operating Expenses:
Lease operating $ 346,460
Depletion, depreciation and amortization 326,112
Workover 114,108 786,680
----------- ---------
Revenues in Excess of Direct Operating Expenses $ 660,300
=========
-2-
JAY PETROLEUM, L.L.C.
(A Limited Liability Company)
SNYDER OIL CORPORATION PROPERTY
NOTES TO FINANCIAL STATEMENT
December 31, 1996
Note 1 - Significant Accounting Policies
Jay Petroleum, L.L.C. (the Company) maintains its accounts on the accrual basis
of accounting in accordance with generally accepted accounting principles.
Accounting principles followed by the Company and the methods of applying those
principles which materially affect the results of operations are summarized
below:
Oil and Gas Property
The Company follows the successful efforts method of accounting for oil and
gas property acquisition, exploration, development and production
activities.
Oil and gas property acquisition costs, exploration well costs and
development costs are capitalized as incurred. Net capitalized costs of
unproved property and exploration well costs are reclassified as proved
property and well costs when related proved reserves are found. If an
exploration well is unsuccessful in finding proved reserves, the
capitalized well costs, including geological and geophysical costs, are
charged to exploration expense as incurred. Costs to operate and maintain
wells and field equipment are expensed as incurred.
Depletion and depreciation of proved properties are computed on an
individual field basis using the unit-of-production method based upon
proved oil and gas reserves attributable to the field.
Capitalized costs of unproved properties are periodically assessed for
impairment. Impairment provisions are charged to exploration expense. Net
capitalized costs of proved properties are periodically assessed for
impairment, generally by field, pursuant to Statement of Financial
Accounting Standards No. 121. The Company records impairment to the extent
that the carrying value of the property exceeds the fair value of the
property.
Revenue Recognition
Revenues from the sale of oil and gas production are recognized when title
passes, net of royalties.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
-3-
JAY PETROLEUM, L.L.C.
(A Limited Liability Company)
SNYDER OIL CORPORATION PROPERTY
NOTES TO FINANCIAL STATEMENT (Continued)
December 31, 1996
Note 2 - Property Acquisition
On December 30, 1996, the Company agreed to purchase certain oil and gas
properties from Snyder Oil Corporation for $3,100,000. The purchase, which
closed on February 13, 1997, had an effective date of July 1, 1996, and a net
purchase price of $2,765,104, including acquisition costs of $211,022. The cost
was allocated to leasehold costs and lease and well equipment based upon the
relative fair market value of the properties. This financial statement reflects
the revenues and direct operating expenses of those properties for the year
ended December 31, 1996. Depreciation and depletion have been calculated on a
pro-forma basis.
-4-
ISRAMCO, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
(in thousands)
The following pro forma condensed consolidated balance sheet gives effect to the
acquisition of 82.9% of Jay Petroleum, L.L.C. ("Jay") by Isramco and Jay's
acquisition of certain oil and gas properties from Snyder Oil Corporation (the
"Snyder Properties") as if such acquisitions had occurred on December 31, 1996.
Assets Isramco Jay Combined Adjustments Eliminations Consolidated
------ ------- --- -------- ----------- ------------ ------------
Current assets $22,815 $ 236 $23,051 $(1,174) (1) $22,423
546 (2)
Oil and gas property
and equipment 163 1,840 2,003 2,765 (2) $ 462 (3) 5,230
Less: accumulated depreciation,
depletion and amortization (98) (81) (179) (179)
Covenant's not to compete 383 383 383
Investment in Jay Petroleum,L.L.C. 1,174 (1) (1,174) (3)
Other assets 36 36 36
------- ------ ------ -------
T O T A L $23,263 $2,031 $25,294 $27,893
======= ====== ======= =======
LIABILITIES AND EQUITY
----------------------
Current liabilities $ 334 $ 141 $ 475 211 (2) $ 686
Long-term debt 1,030 1,030 3,100 (2) 4,130
Minority interest 148 (3) 148
Jay's members' equity 860 860 (860)(3)
Shareholders' equity 22,929 22,929 22,929
------ ------ ------ -------
T O T A L $23,263 $2,031 $25,294 $27,893
======= ====== ======= =======
(1) To record the purchase of 82.9% of Jay for $1,173,900 and to allocate the
purchase to the assets and liabilities acquired in accordance with their
relative fair values.
(2) To record Jay's purchase of the Snyder Properties at a net purchase price
of $2,765,000, including acquisition costs of $211,000, bank financing of
$3,100,000 and receivable from the operator of $546,000.
(3) To eliminate Jay's equity and record the minority interest.
5
ISRAMCO, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31, 1996
(in thousands except for share data)
The following pro forma condensed consolidated statement of income of Isramco,
Inc. gives effect to the acquisition of 82.9% of Jay Petroleum, L.L.C. ("Jay")
and Jay's acquisition of certain oil and gas properties from Snyder Oil
Corporation (the "Snyder Oil Corporation (the "Snyder Properties") as if such
acquisitions had occurred on March 1, 1996.
Consolidating
Isramco Jay Combined Entries Consolidated
------- --- -------- ------------- ------------
Revenue $2,813 $ 784 $3,597 $1,447 (2) $5,044
------ ----- ------ ------ ------
Lease operating expense 34 397 431 346 (2) 777
Interest 2 66 68 68
Depreciation, depletion and
amortization 37 125 162 $ 84 (1) 572
326 (2)
Operator expense 656 656 656
Workover 114 (2) 114
General and administrative 1,254 67 1,321 1,321
----- ----- ------ ------
Total expenses 1,983 655 2,638 3,508
----- ----- ------ ------
Income before tax and
minority interest 830 129 959 1,536
Provision for income tax
Minority interest 135 (3) 135
----- ----- ------ ------
NET INCOME $ 830 $ 129 $ 959 $1,401
====== ===== ====== ======
Earnings per share $ .03 $ .05
====== ======
(1) To record depreciation, depletion and amortization of the excess of
purchase price over book value of the net assets which was allocated to oil
and gas properties.
(2) To record revenues and direct operating expenses of the Synder Properties.
(2) To record the minority interest in Jay's net income including the revenues
in excess of the direct operating expenses of the Synder Properties.
6