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): January 31, 2003
VENUS EXPLORATION, INC.
(Exact name of registrant specified in its charter)
Delaware
(State of incorporation)
0-14334 13-3299127
(Commission File Number) (IRS Employer Identification No.)
1250 N.E. LOOP 410
SUITE 205
SAN ANTONIO, TEXAS 78209
(Address of Registrant's principal executive offices)
Registrant's telephone number, including area code: (210) 930-4900
Not Applicable
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 31, 2003, Venus Exploration, Inc. (the "Company") completed the sale
of its interest in certain leases, lands and wells in the Constitution Field in
Jefferson County, Texas. The purchaser was Samson Lone Star Limited Partnership
("Samson"). The properties sold included interests in four wells, together with
certain oil, gas and mineral leases and other agreements relating to properties
located in the Constitution Field. The purchase price of $2,115,000 was based on
arm's length negotiations between the parties, taking into account a number of
considerations, including the location of the properties, the prices be paid for
production from those wells, the production rates and the costs of production.
After certain adjustments required pursuant to the Purchase and Sale Agreement
dated January 15, 2003, by and between the Company and Samson, the Company
received net sales proceeds of approximately $1,658,000.
The sale to Samson was closed pursuant to an order of the United States
Bankruptcy Court for the Eastern District of Texas, Beaumont Division. Pursuant
to the bankruptcy court's order, except for approximately $146,000 which was
applied by the Company to the payment of ad valorem taxes, all of the proceeds
from the sale to Samson have been placed in escrow pending further authorization
of the bankruptcy court.
ITEM 5. OTHER EVENTS
On November 21, 2002, the Company closed on the sale of a development drilling
project in the Hansford Field, Hansford County, Texas, under which the Company
retained a 5% carried working interest on the first three wells to be drilled,
which interest increases to a 15% working interest after payout of all costs of
the first three new wells to be drilled. The initial well under this drilling
program was drilled to a total depth of 7,840 feet on February 3, 2003, where
production casing was run to attempt completion in at least 3 different
prospective gas reservoirs which are possibly gas productive according to
evaluation of electric logs and other open hole data. The Company received net
cash proceeds of approximately $400,000 in connection with the Hansford Field
sale.
John Y. Ames, President, Chief Operating Officer and a Director of the Company,
resigned effective January 31, 2002, from his positions as the Company's
President and Chief Operating Officer; however, Mr. Ames continues to serve as a
Director of the Company and to perform certain services as a consultant to the
Company.
Effective December 23, 2002, the Board of Directors appointed Will C.
Jones, IV to serve as Director of the Company. Mr. Jones is the son-in-law of
Chairman, Chief Executive Officer and Director Eugene L. Ames, Jr., and the
brother-in-law of Director John Y. Ames. He is currently a shareholder of Earl &
Brown, P.C. Mr. Jones and Earl & Brown, P.C. provide legal counsel to the
Company. In 2002, the Company paid Earl & Brown, P.C. in excess of $60,000 for
such services.
A hearing in the United States Bankruptcy Court for the Eastern District of
Texas, Beaumont Division, originally scheduled for January 21, 2003, to consider
the involuntary Chapter 11 bankruptcy petition filed against the Company by
certain of its creditors on October 8, 2002, has been rescheduled for February
27, 2003. The Company has filed a motion to dismiss and answer in the case, and
is continuing to negotiate with its creditors in an effort to reach an out of
court settlement and dismissal of the bankruptcy.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
a. Financial Statement of Business Acquired
None.
b. Pro Forma Financial Information
As discussed in Item 2 above, on January 31, 2003, the Company
completed the sale of certain oil and gas properties in the
Constitution Field in Jefferson County, Texas, to Samson Lone Star
Limited Partnership. As discussed in Item 5 above, on November 21,
2002, the Company completed a sale of a development drilling project in
the Hansford Field, Hansford County, Texas. The Unaudited Pro Forma
September 30, 2002 Consolidated Balance Sheet is presented assuming the
sales of the properties occurred on September 30, 2002. The Unaudited
Pro Forma Consolidated Statements of Operations for the nine months
ended September 30, 2002 is presented as if the sales of the properties
occurred on January 1, 2002. The Unaudited Pro Forma Consolidated
Financial Statements may not necessarily be indicative of the results
which would actually have occurred if the sales of the properties had
been in effect as of the date or for the periods indicated.
VENUS EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As Reported Pro forma Adjustments Pro forma
9/30/02 Hansford Constitution 9/30/02
-------------- ------------- ------------- -------------
ASSETS
Current assets:
Cash and equivalents $ 61,336 $ (10,033) $ $ 51,303
Cash held in escrow 1,512,474 1,512,474
Trade accounts receivable 497,290 497,290
Prepaid expenses and other 172,786 172,786
-------------- ------------- ------------- -------------
Total current assets 731,412 (10,033) 1,512,474 2,233,853
Oil and gas properties and equipment, at cost
under the successful efforts method, net 2,053,080 (207,877) 1,845,203
Oil and gas properties held for sale, net 2,299,085 (2,197,593) 101,492
Other property and equipment, net 104,189 104,189
Deferred financing costs, at cost less
accumulated Amortization 101,643 101,643
Other assets, at cost less accumulated
amortization 15,385 15,385
-------------- ------------- ------------- -------------
TOTAL ASSETS $ 5,304,794 $ (217,910) $ (685,119) $ 4,401,765
============== ============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT) Current liabilities:
Trade accounts payable $ 6,505,443 $ $ (370,441) $ 6,135,002
Other liabilities 335,527 335,527
Current notes payable 2,000,000 (400,000) 1,600,000
-------------- ------------- ------------- -------------
Total current liabilities 8,840,969 (400,000) (370,441) 8,070,528
Other long-term liabilities 11,793 11,793
-------------- ------------- ------------- -------------
Total liabilities 8,852,762 (400,000) (370,441) 8,082,321
Shareholders' equity (deficit):
Preferred stock; par value of $0.01;
5,000,000 shares authorized; none issued
& outstanding
Common stock; par value of $.01; 50,000,000
shares authorized; 12,745,610 issued and
12,448,730 outstanding 124,756 124,756
Additional paid-in capital 18,939,990 18,939,990
Accumulated deficit (22,572,472) 182,090 (314,678) (22,705,060)
Less cost of treasury stock (26,880 shares) (40,242) (40,242)
-------------- ------------- ------------- -------------
Total shareholders'
equity (deficit) (3,547,968) 182,090 (314,678) (3,680,556)
Commitments and contingencies
-------------- ------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 5,304,794 $ (217,910) $ (685,119) $ 4,401,765
============== ============= ============= =============
See accompanying notes to consolidated financial statements.
VENUS EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
As Reported Pro forma
Nine Nine
Months Months
Ended Pro forma Adjustments Ended
9/30/02 Hansford Constitution 9/30/02
-------------- ------------- ------------- ---------------
Oil and gas revenues $ 1,002,213 $ (36,337) $ $ 965,876
-------------- ------------- ------------- ---------------
Cost of operations:
Production Expense 551,286 (5,413) 545,873
Exploratory expense, w/ dry holes 503,557 503,557
Impairment of oil and gas properties -
Depletion, depreciation, and amortization 120,509 (1,177) 119,332
General and administrative 1,373,297 1,373,297
-------------- ------------- ------------- ---------------
Total expenses 2,548,648 (6,590) 0 2,542,058
Operating loss (1,546,435) (29,747) 0 (1,576,182)
Other income (expense):
Interest expense (366,771) (366,771)
Gain on sale of assets 9,430 182,090 191,520
Interest and other income (expense), net 5,614 5,614
-------------- ------------- ------------- ---------------
(351,727) 182,090 0 (169,637)
Loss from continuing operations before income taxes (1,898,162) 152,343 0 (1,745,819)
Income tax expense
-------------- ------------- ------------- ---------------
Loss from continuing operations (1,898,162) 152,343 0 (1,745,819)
Sale of properties
Income (loss) from discontinued operations
(including net gain on sale of $315,850 and
impairment of $1,424,000) as reported and
gain of $315,850 and impairment of
$1,702,312 in pro forma (912,878) (460,783) (1,373,661)
-------------- ------------- ------------- ---------------
Net gain (loss) $ (2,811,040) $ 152,343 $ (460,783) $ (3,119,480)
============== ============= ============= ===============
Basic and diluted earnings (loss) per share
Income (loss) from continuing operations $ (0.15) $ (0.14)
Income (loss) from discontinued operations (0.07) (0.11)
-------------- ------------- ------------- ---------------
Net loss $ (0.23) $ (0.25)
============== ============= ============= ===============
Common shares and equivalents outstanding,
Basic and diluted 12,448,730 12,448,730
============== ===============
VENUS EXPLORATION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 2002
1. BASIS OF PRESENTATION
The Unaudited Pro Forma September 30, 2002 Consolidated Balance Sheet is
presented assuming the sales of the properties occurred on September 30, 2002.
The Unaudited Pro Forma Consolidated Statements of Operations for the nine
months ended September 30, 2002 is presented as if the sales of the properties
occurred on January 1, 2002. The Unaudited Pro Forma Consolidated Financial
Statements may not necessarily be indicative to the results which would actually
have occurred if the sales of the properties had been in effect as of the date
or for the periods indicated.
2. PRO FORMA ADJUSTMENTS - STATEMENTS OF OPERATIONS
The pro forma adjustments to the Unaudited Pro Forma Consolidated
Statements of Operations reflect the following:
(a) DEPRECIATION, DEPLETION AND AMORTIZATION - The adjustment reflects the
pro forma depreciation, depletion and amortization expense based on the use of
adjusted capitalized costs and proved reserves.
(b) INCOME TAXES - No adjustments to income tax expense or benefit have
been reflected in the unaudited pro forma statements of operations due to the
net operating losses and the uncertainty of realizing deferred tax benefits.
(c) EARNINGS (LOSS) PER SHARE - The weighted average number of shares of
Common Stock outstanding is based on the number of shares outstanding. Options
and warrants outstanding are not reflected in the pro forma earnings (loss) per
share calculations because they would be anti-dilutive.
3. PRO FORMA ADJUSTMENTS - BALANCE SHEET
The pro forma adjustments to the Unaudited Pro Forma Consolidated Balance
Sheet reflect the following:
(a) NET OIL AND GAS PROPERTIES - The adjustment to Net Oil and Gas
Properties reflects the net book value of the properties sold.
(b) TRADE ACCOUNTS PAYABLE - The adjustments to Trade Accounts Payable
reflect payments of accrued revenue payables and trade payables attributable to
the properties sold.
(c) CURRENT MATURITIES OF LONG-TERM DEBT, INCLUDING LONG-TERM DEBT
RECLASSIFIED AS CURRENT - The adjustments to current maturities of long-term
debt, including long-term debt reclassified as current reflect the paydown of
the debt that actually occurred when the properties were sold.
(d) RETAINED EARNINGS (DEFICIT) - The adjustment to Retained Earnings
(Deficit) reflects the effect of the sale of the properties on the accumulated
deficit.
c. Exhibits
2.1 Purchase and Sale Agreement dated January 15, 2003, by and
between Venus Exploration, Inc. and Samson Lone Star Limited
Partnership.
SIGNATURE
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.
Date: February 17, 2003 VENUS EXPLORATION, INC.
BY: /s/ EUGENE L. AMES, JR.
-------------------------
Eugene L. Ames, Jr.
Chief Executive Officer