1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K/A
(AMENDMMNT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) November 8, 1995
(September 27, 1995)
--------------------
LOMAK PETROLEUM, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 0-9592
DELAWARE 34-1312571
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
500 THROCKMORTON STREET 76102
FORT WORTH, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (817) 870-2601
The purpose of this filing is to make the following amendments pursuant to Item
7(a) and 7(b) Financial Statements and Exhibits:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
----------------------------------
(a) Financial Statements of Assets Acquired
---------------------------------------
Report of Independent Public Accountants
Statements of assets (other than productive oil and gas
properties) and liabilities as of December 31, 1993 and
1994 and June 30, 1995
Statements of revenues and direct operating expenses for the
years ended December 31, 1993 and 1994 and the six months
ended June 30, 1995
Notes to statements of assets (other than productive oil and
gas properties) and liabilities and statements of revenues
and direct operating expenses
(b) Pro Forma Financial Information
-------------------------------
Pro forma combined statement of income for the year ended
December 31, 1994
Pro forma combined statement of income for the six months
ended June 30, 1995
Pro forma combined balance sheet at June 30, 1995
Notes to pro forma combined financial statements
2
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.
LOMAK PETROLEUM, INC.
By /s/ Thomas W. Stoelk
--------------------------------
Thomas W. Stoelk
Chief Financial Officer
November 8, 1995
2
3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
THE STOCKHOLDERS OF TRANSFUEL, INC.
We have audited the accompanying statements of assets (other than
productive oil and gas properties) and liabilities of Transfuel Interests, as
of December 31, 1993 and 1994 acquired pursuant to the purchase by Lomak
Petroleum, Inc. ("Lomak"), effective October 1, 1995, as described in Note 1
and the related statements of revenues and direct operating expenses for each
of the two years in the period ended December 31, 1994. The statements of
assets (other than productive oil and gas properties) and liabilities and
statements of revenues and direct operating expenses are the responsibility of
Lomak's management. Our responsibility is to express an opinion on the
statements of assets (other than productive oil and gas properties) and
liabilities and statements of revenues and direct operating expenses based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of assets (other than
productive oil and gas properties) and liabilities and 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 assets (other than productive oil and gas
properties) and liabilities and 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
statements of assets (other than productive oil and gas properties) and
liabilities and statements of revenues and direct operating expenses
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the statements of assets (other than productive oil
and gas properties) and liabilities and statements of revenues and direct
operating expenses referred to above present fairly, in all material respects,
the assets (other than productive oil and gas properties) and liabilities of
the Transfuel Interests as of December 31, 1993 and 1994 acquired pursuant to
the purchase by Lomak Petroleum, Inc., effective October 1, 1995, as described
in Note 1, and the related revenues and direct operating expenses for each of
the two years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Houston, Texas
October 13, 1995
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4
TRANSFUEL INTERESTS
STATEMENTS OF ASSETS (OTHER THAN PRODUCTIVE
OIL AND GAS PROPERTIES) AND LIABILITIES (NOTE 1)
December 31, December 31, June 30,
1993 1994 1995
------------- ------------- -------------
(unaudited)
Assets (other than productive oil and gas properties)
Accounts receivable $ 1,718,889 $ 1,154,960 $ 880,196
Accounts payable and accrued liabilities (244,041) (179,553) (138,407)
------------- ------------- -------------
Excess of assets (other than productive oil and gas
properties) acquired over liabilities assumed $ 1,474,848 $ 975,407 $ 741,789
============= ============= =============
See accompanying notes.
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5
TRANSFUEL INTERESTS
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (NOTE 1)
Year ended Year ended Six months
December 31, December 31, ended June 30,
1993 1994 1995
(unaudited)
-------------- -------------- --------------
Revenues, net $ 12,249,285 $ 10,597,532 $ 4,617,448
Direct operating expenses (4,191,890) (3,821,024) (1,797,885)
-------------- -------------- --------------
Excess of revenues over direct operating expenses $ 8,057,395 $ 6,776,508 $ 2,819,563
============== ============== ==============
See accompanying notes.
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6
TRANSFUEL INTERESTS
NOTES TO STATEMENTS OF ASSETS
(OTHER THAN PRODUCTIVE OIL AND GAS PROPERTIES)
AND LIABILITIES AND STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES
(1) GENERAL:
ORGANIZATION
The accompanying statements present the assets (other than productive
oil and gas properties) and liabilities and revenues and direct operating
expenses of certain working and other interests in oil and gas properties (the
"Transfuel Interests") purchased by Lomak Petroleum, Inc. ("Lomak") in
September 1995. Such financial statements were derived from the historical
records of the predecessor owner and represent Lomak's interest.
The Transfuel Interests consist of ownership in approximately 1,800
gross producing oil and gas wells, 1,100 miles of gas gathering lines and
175,000 net acres of undeveloped leases and associated real estate and
equipment. Over 90% of the Transfuel Interests are located in Appalachia.
BASIS OF PRESENTATION
Full historical statements, including general and administrative
expenses and interest expense, have not been presented as such a presentation
would not be meaningful. The Transfuel Interests acquired represent developed
producing properties.
Transfuel Interests is not a taxpaying entity. Accordingly, no
provision for income taxes has been reflected in the statements of revenues and
direct operating expenses.
REVENUE RECOGNITION
Revenues are recognized when oil and gas production is sold. Direct
operating expenses are accrued when services are provided.
(2) SALES TO MAJOR CUSTOMERS:
For the years ended December 31, 1993 and 1994, three purchasers
accounted for 44.7%, 9.5% and 6.9% and 32.8%, 15.7% and 11.5%, respectively, of
oil and gas sales. For the six months ended June 30, 1995, three purchasers
accounted for 38.8%, 12.4% and 10.2% of oil and gas sales.
(3) OIL AND GAS RESERVES INFORMATION (UNAUDITED):
The estimates of the Transfuel Interests in proved oil and gas
reserves, which are located entirely in the United States, are based on
evaluations by an independent petroleum engineer. Reserves at December 31,
1993 and 1994, were estimated in accordance with guidelines established by the
Securities and Exchange Commission which require that reserve reports be
prepared under existing economic and operating conditions with no provision for
price escalations except by contractual arrangements.
Lomak's management emphasizes that reserve estimates are inherently
imprecise. Accordingly, the estimates are expected to change as future
information becomes available.
6
7
TRANSFUEL INTERESTS
NOTES TO STATEMENTS OF ASSETS
(OTHER THAN PRODUCTIVE OIL AND GAS PROPERTIES)
AND LIABILITIES AND STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES
The following unaudited table sets forth the estimated proved oil and
gas reserve quantities of the Transfuel Interests at December 31, 1993 and
1994:
Crude Oil Natural Gas
(bbls) (mcfs)
PROVED RESERVES ------------- -------------
Balance, December 31, 1992 690,577 45,165,675
Production (80,644) (4,542,237)
------------- -------------
Balance, December 31, 1993 609,933 40,623,438
Production (81,729) (4,019,366)
------------- -------------
Balance, December 31, 1994 528,204 36,604,072
============= =============
PROVED DEVELOPED RESERVES
Balance, December 31, 1993 609,933 38,464,235
============= =============
Balance, December 31, 1994 528,204 34,444,869
============= =============
The "Standardized Measure of Discounted Future Net Cash Flows Relating
to Proved Oil and Gas Reserves" (Standardized Measure) is a disclosure
requirement under Statement of Financial Accounting Standards No. 69. The
Standardized Measure does not purport to present the fair market value of
proved oil and gas reserves. This would require consideration of expected
future economic and operating conditions, which are not taken into account in
calculating the Standardized Measure.
Future cash inflows were estimated by applying year end prices,
adjusted for fixed and determinable escalations to the estimated future
production less estimated future production costs based on year end costs and
future development costs. Future net cash inflows were discounted using a 10%
annual discount rate to arrive at the Standardized Measure.
7
8
TRANSFUEL INTERESTS
STATEMENTS OF ASSETS
(OTHER THAN PRODUCTIVE OIL AND GAS PROPERTIES)
AND LIABILITIES AND STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES
The standardized measure of discounted future net cash flows relating
to proved oil and gas properties is as follows:
As of As of
December 31, December 31,
1993 1994
-------------- --------------
Future cash inflows $ 100,812,232 $ 90,214,700
Future costs:
Production (45,230,916) (41,409,892)
Development (2,011,820) (2,011,820)
-------------- --------------
Future net cash flows 53,569,496 46,792,988
Income taxes - -
-------------- --------------
Undiscounted future net cash flows 53,569,496 46,792,988
10% discount factor (21,274,497) (18,044,997)
-------------- --------------
Standardized measure $ 32,294,999 $ 28,747,991
============== ==============
Changes in standardized measure of discounted future net cash flows
from proved reserve quantities are as follows:
Year ended Year ended
December 31, December 31,
1993 1994
--------------- ----------------
Standardized measure, beginning of year $ 36,683,995 $ 32,294,999
Production (8,057,395) (6,776,508)
Accretion of discount 3,668,399 3,229,500
--------------- ----------------
Standardized measure, end of year $ 32,294,999 $ 28,747,991
=============== ================
8
9
PRO FORMA COMBINED FINANCIAL STATEMENTS
WITH RESPECT TO THE TRANSACTIONS
The accompanying unaudited pro forma combined statement of income
gives effect to (i) the purchase by the Company of 100% of the equity of
Gillring Oil Company ("Gillring"), accounted for as a purchase, (ii) the
purchase by the Company of 100% of the equity of Red Eagle Resources
Corporation ("Red Eagle"), accounted for as a purchase, (iii) the purchase by
the Company of certain oil and gas properties from a subsidiary of Parker &
Parsley Petroleum Co. and (iv) the purchase by the Company of certain oil and
gas properties from Transfuel, Inc. ("Transfuel"). The unaudited pro forma
combined financial statements also give effect to the private offering of $25
million of convertible exchangeable preferred stock (the "Offering") and the
application of the estimated net proceeds therefrom. The unaudited pro forma
combined statement of income for the year ended December 31, 1994 was prepared
as if all transactions had occurred on January 1, 1994. The unaudited pro
forma combined statement of income for the six months ended June 30, 1995 was
prepared as if all transactions had occurred on January 1, 1995. The
accompanying unaudited pro forma combined balance sheet of the Company as of
June 30, 1995 has been prepared as if the Parker & Parsley and Transfuel
acquisitions, the Offering and the application of the net proceeds therefrom
had occurred as of that date. The historical information provided in the
statements of income for the year ended December 31, 1994 and for the six
months ended June 30, 1995, represents the following periods for the various
acquisitions: (i) Gillring represents the period from January 1, 1994 through
January 31, 1994, (ii) Red Eagle represents the period from January 1, 1994
through December 31, 1994, (iii) Parker & Parsley represents the periods from
January 1, 1994 through December 31, 1994 and from January 1, 1995 through June
30, 1995 and (iv) Transfuel represents the periods from January 1, 1994 through
December 31, 1994 and from January 1, 1995 through June 30, 1995.
This information is not necessarily indicative of future combined
operations and it should be read in conjunction with the separate historical
statements and related notes of the respective entities appearing elsewhere in
this filing or incorporated by reference herein.
9
10
LOMAK PETROLEUM, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
Parker &
Lomak Gillring Red Eagle Parsley Transfuel
---------- --------- --------- ------- --------- Pro Forma
Adjustments for the
Gillring acquisition,
Red Eagle merger,
Historical Historical Historical Historical Historical Parker & Parsley and
Year Ended Month Ended Year Ended Year Ended Year Ended Transfuel
December 31, January 31, December 31, December 31, December 31, acquisitions and the Pro Forma
1994 1994 1994 1994 1994 Offering (Note 1) Combined
------------ ---------- ----------- ---------- ----------- ----------------- ------------
Revenues
Oil and gas production $24,460,945 $540,019 $4,236,396 $5,975,137 $10,597,532 $ - $45,810,029
Field services 7,667,135 - 6,634,668 - - - 14,301,803
Gas marketing and transportation 2,194,892 - 993,902 - - - 3,188,794
Interest and other 470,562 28,484 693,624 - - (28,484) (e) 1,164,186
------------ ---------- ----------- ---------- ----------- ----------------- ------------
34,793,534 568,503 12,558,590 5,975,137 10,597,532 (28,484) 64,464,812
------------ ---------- ----------- ---------- ----------- ----------------- ------------
Expenses
Oil and gas production 10,018,941 222,198 2,481,906 2,928,350 3,821,024 (1,474,500) (c) 17,997,919
Field services 5,777,690 - 2,503,305 - - - 8,280,995
Gas marketing and transportation 490,097 - - - - - 490,097
Exploration 359,315 8,975 473,916 - - - 842,206
General and administrative 2,477,680 67,780 3,786,925 - - (3,064,400) (c) 3,267,985
Interest 2,807,216 21,488 144,900 - - 1,529,976 (a) 4,503,580
Depletion, depreciation and
amortization 10,104,987 - 2,106,549 - - 5,909,294 (b) 18,120,830
Lease impairments - - 1,097,000 - - (1,097,000) (g) -
Commodity trading losses - - 2,136,122 - - (2,136,122) (f) -
------------ ---------- ----------- ---------- ----------- ----------------- ------------
32,035,926 320,441 14,730,623 2,928,350 3,821,024 (332,752) 53,503,612
------------ ---------- ----------- ---------- ----------- ----------------- ------------
Income (loss) before income taxes 2,757,608 248,062 (2,172,033) 3,046,787 6,776,508 304,268 10,961,200
Income taxes
Current (20,531) - (86,976) - - (369,493) (d) (477,000)
Deferred (118,523) - 475,180 - - (2,992,657) (d) (2,636,000)
------------ ---------- ----------- ---------- ----------- ----------------- ------------
Income (loss) from continuing
operations $2,618,554 $248,062 ($1,783,829) $3,046,787 $6,776,508 ($3,057,882) $7,848,200
============ ========== =========== ========== =========== ================= ============
Income from continuing
operations applicable to common
shares $2,243,554 $5,598,200
============ ============
Net income per common share $0.25 $0.46
============ =============
Weighted average shares
outstanding 9,050,558 2,861,374 3,032,920 12,083,478
============ ============
See notes to pro forma combined financial statements.
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11
LOMAK PETROLEUM, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
Parker &
Lomak Parsley Transfuel
----------- ----------- ------------
Pro Forma
Adjustments for
the Parker &
Historical Historical Historical Parsley
Six Six Six and Transfuel
Months Ended Months Ended Months Ended acquisitions and the
June 30, June 30, June 30, Offering Pro Forma
1995 1995 1995 (Note 2) Combined
----------- ----------- ---------- -------------------- -----------
Revenues
Oil and gas production $15,333,138 $2,894,682 $4,617,448 - $22,845,268
Field services 4,893,388 - - - 4,893,388
Gas marketing and
transportation 1,514,513 - - - 1,514,513
Interest and other 751,004 - - - 751,004
----------- ----------- ---------- -------------------- -----------
22,492,043 2,894,682 4,617,448 - 30,004,173
----------- ----------- ---------- -------------------- -----------
Expenses
Oil and gas production 6,438,378 1,269,707 1,797,883 (866,600)(k) 8,639,368
Field services 2,876,328 - - - 2,876,328
Gas marketing and
transportation 389,754 - - - 389,754
Exploration 275,448 - - - 275,448
General and administrative 1,518,844 - - (12,181)(j) 1,506,663
Interest 2,398,489 - - 627,961(h) 3,026,450
Depletion, depreciation and
amortization 6,104,474 - - 2,509,659(i) 8,614,133
----------- ----------- ---------- -------------------- -----------
20,001,715 1,269,707 1,797,883 2,258,839 25,328,144
----------- ----------- ---------- -------------------- -----------
Income (loss) before income taxes 2,490,328 1,624,975 2,819,565 (2,258,839) 4,676,029
Income taxes
Current (47,513) - - (247,487)(l) (295,000)
Deferred (622,028) - - (714,972)(l) (1,337,000)
----------- ----------- ---------- -------------------- -----------
Income (loss) from continuing
operations $1,820,787 $1,624,975 $2,819,565 ($3,221,298) $3,044,029
=========== =========== ========== ==================== ===========
Income from continuing operations
applicable to common shares $1,633,287 $1,919,029
=========== ===========
Net income per common share $0.14 $0.16
=========== ===========
Weighted average shares
outstanding 11,314,495 821,575 12,136,070
=========== ===========
See notes to pro forma combined financial statements.
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LOMAK PETROLEUM, INC.
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1995
(UNAUDITED)
Parker &
Lomak Parsley Transfuel
------------ ----------- ---------
Pro Forma
Adjustments for
the Parker &
Parsley
and Transfuel
Historical Historical Historical acquisitions and the
as of June 30, as of June 30, as of June 30, Offering Pro Forma
1995 1995 1995 (Note 2) Combined
------------ ------------ ------------ ----------------- ------------
ASSETS
Current assets
Cash and equivalents $5,307,307 $ - $ - $ - $5,307,307
Accounts receivable 8,215,895 823,379 880,196 - 9,919,470
Inventory and other 1,417,251 - - - 1,417,251
------------ ------------ ------------ ----------------- ------------
Total current assets 14,940,453 823,379 880,196 - 16,644,028
------------ ------------ ------------ ----------------- ------------
Oil and gas properties 155,109,796 (577,278) (744,789) 36,227,549 (m,n,o) 190,015,278
Accumulated depletion and amortization (25,866,264) - - - (25,866,264)
------------ ------------ ------------ ----------------- ------------
129,243,532 (577,278) (744,789) 36,227,549 164,149,014
------------ ------------ ------------ ----------------- ------------
Gas transportation and field service
assets 16,294,400 - - 7,096,700 (m,n) 23,391,100
Accumulated depreciation (3,256,841) - - - (3,256,841)
------------ ------------ ------------ ----------------- ------------
13,037,559 - - 7,096,700 20,134,259
------------ ------------ ------------ ----------------- ------------
$157,221,544 $246,101 $135,407 $43,324,249 $200,927,301
============ ============ ============ ================= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $5,940,545 $ - $ - $ - $5,940,545
Accrued liabilities 3,750,285 246,101 135,407 2,029,914 (o) 6,161,707
Current portion of debt 502,519 - - - 502,519
------------ ------------ ------------ ----------------- ------------
Total current liabilities 10,193,349 246,101 135,407 2,029,914 12,604,771
------------ ------------ ------------ ----------------- ------------
Long-term debt 71,131,900 - - 16,528,335 (m,n,p) 87,660,235
Deferred income taxes 17,012,420 - - - 17,012,420
Stockholders' equity
Preferred stock 200,000 - - 1,000,000 (p) 1,200,000
Common stock 119,241 - - 944 (n,p) 120,185
Capital in excess of par value 64,475,994 - - 23,765,056 (n,p) 88,241,050
Retained earnings (deficit) (5,911,360) - - - (5,911,360)
------------ ------------ ------------ ----------------- ------------
Total stockholders' equity 58,883,875 - - 24,766,000 83,649,875
------------ ------------ ------------ ----------------- ------------
$157,221,544 $246,101 $135,407 $43,324,249 $200,927,301
============ ============ ============ ================= ============
See notes to pro forma combined financial statements.
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13
LOMAK PETROLEUM, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE (1) PRO FORMA ADJUSTMENTS FOR THE ACQUISITION OF GILLRING, THE
ACQUISITIONS OF PARKER & PARSLEY'S AND TRANSFUEL'S APPALACHIAN ASSETS, THE
MERGER WITH RED EAGLE AND THE CONVERTIBLE PREFERRED STOCK OFFERING -- THE
TWELVE MONTHS ENDED DECEMBER 31, 1994
In March 1994, the Company completed the acquisition of Gillring Oil
Company ("Gillring") for approximately $11.5 million. Gillring's assets
included approximately $5.4 million of working capital. As a result of the
acquisition, the Company acquired 100% of Gillring's assets including its oil
and natural gas producing properties and its 67% interest in a Texas limited
partnership, Gillring Oil L.P. The transaction was accounted for using the
purchase method of accounting.
In December 1994, Lomak acquired effective control of Red Eagle Resources
Corporation ("Red Eagle") principally through the purchase of two common
stockholders' holdings. On February 15, 1995, the remaining stockholders of
Red Eagle common stock voted to approve the merger of Red Eagle with a wholly
owned subsidiary of the Company. The consideration paid for the acquisition
totaled $11 million in cash and 2,862,000 shares of Lomak common stock.
In June 1995, the Company purchased properties in Pennsylvania and West
Virginia from a subsidiary of Parker & Parsley Petroleum Company for
approximately $20.2 million in cash.
In October 1995, the Company purchased properties in Pennsylvania, New York
and Ohio from Transfuel, Inc. for approximately $20.2 million in cash and
$755,000 of the Company's common stock.
In October 1995, the Company sold in a private offering $25 million of
$2.03 convertible exchangeable preferred stock. The preferred stock is
convertible into the Company's common stock at a conversion price of $9.50 per
share, subject to adjustment in certain events. The preferred stock will be
redeemable, at the option of the Company, at any time on or after November 1,
1998, at redemption prices beginning at 105%. At the option of the Company,
the preferred stock is exchangeable for the Company's 8 1/8% convertible
subordinated notes due 2005. The notes will be subject to the same redemption
and conversion terms as the preferred stock.
The accompanying unaudited pro forma combined statement of income for
the year ended December 31, 1994 has been prepared as if the acquisitions had
occurred on January 1, 1994 and also gives effect as of January 1, 1994 to the
Convertible Preferred Stock Offering and the application of the net proceeds
therefrom. These transactions are reflected as follows:
(a) To increase interest expense for the estimated amounts that would have
been incurred on the incremental borrowings to acquire Gillring, Red Eagle and
Parker & Parsley's and Transfuel's Appalachian assets and reduce interest
expense for the net proceeds from the sale of the convertible preferred stock.
(b) To record depletion expense for the Gillring, Parker & Parsley's and
Transfuel acquisitions at $4.37 and to adjust the historical depletion rate for
Lomak and Red Eagle from $4.41 and $3.08, respectively to $4.37.
(c) To adjust oil and gas production expense and general and administrative
expenses for the reduction in costs after the acquisitions of Gillring, Red
Eagle, Parker & Parsley's and Transfuel's assets.
(d) To adjust the provision for income taxes for the change in taxable income
resulting from the Gillring, Red Eagle, Parker & Parsley and Transfuel
acquisitions and the effect on deferred taxes recorded at January 1, 1994 had
the acquisitions taken place at that time.
(e) To reduce interest income on Gillring for cash balances used to reduce
incremental borrowings.
13
14
LOMAK PETROLEUM, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE (1) PRO FORMA ADJUSTMENTS FOR THE ACQUISITION OF GILLRING, THE
ACQUISITIONS OF PARKER & PARSLEY'S AND TRANSFUEL'S APPALACHIAN ASSETS, THE
MERGER WITH RED EAGLE AND THE CONVERTIBLE PREFERRED STOCK OFFERING -- THE
TWELVE MONTHS ENDED DECEMBER 31, 1994-(CONTINUED)
(f) To eliminate 1994 losses realized by Red Eagle on speculative commodity
trade. Lomak has never and does not anticipate in the future participating in
speculative commodity trading.
(g) To eliminate impairment losses on Red Eagle oil & gas properties.
NOTE (2) PRO FORMA ADJUSTMENTS FOR THE ACQUISITIONS OF PARKER & PARSLEY'S AND
TRANSFUEL'S APPALACHIAN ASSETS AND THE CONVERTIBLE PREFERRED STOCK OFFERING --
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1995
The accompanying unaudited pro forma combined balance sheet has been
prepared as if the Parker & Parsley and Transfuel acquisitions and the Offering
had occurred on June 30, 1995. The accompanying unaudited pro forma combined
statement of income for the six months ended June 30, 1995 has been prepared as
if the acquisitions and the Offering had occurred on January 1, 1995 and
reflects the following adjustments:
(h) To adjust interest expense for the estimated amounts that would have been
incurred on the incremental borrowings to acquire the Parker & Parsley and
Transfuel Appalachian assets.
(i) To record depletion expense for the Parker & Parsley and Transfuel asset
acquisitions at $4.37 and to adjust the historical depletion rate for Lomak
from $4.38 to $4.37.
(j) To remove minority interest from January 1995 Red Eagle income statement.
(k) To reduce oil and gas production and general and administrative expenses
for cost reductions.
(l) To adjust the provision for income taxes for the change in taxable income
resulting from the Gillring, Red Eagle and Parker & Parsley acquisitions and
the effect on deferred taxes recorded at January 1, 1994 had the acquisitions
taken place at that time.
(m) To record the purchase of Parker & Parsley's Appalachian oil & gas
properties, funded through the Company's credit facility.
(n) To record the purchase of Transfuel's Appalachian oil & gas properties,
funded through the Company's credit facility and issuance of common stock.
(o) To record deal costs associated with the purchase of Parker & Parsley's
and Transfuel's Appalachian oil & gas properties.
(p) To record the private placement of $25 million of convertible preferred
stock, net of placement fees and offering costs.
14
