1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K/A
(AMENDMENT 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) May 31, 1996
(April 19, 1996)
---------------
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, 1995 and
March 31, 1996 (unaudited)
Statements of revenues and direct operating expenses for the
year ended December 31, 1995 and the three months ended
March 31, 1996 (unaudited)
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, 1995
Pro forma combined statement of income for the three months
ended March 31, 1996
Pro forma combined balance sheet at March 31, 1996
Notes to pro forma combined financial statements
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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
May 31, 1996
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
THE BOARD OF DIRECTORS AND STOCKHOLDERS
LOMAK PETROLEUM, INC.:
We have audited the accompanying statement of assets (other than productive oil
and gas properties) and liabilities of the Bannon Interests as of December 31,
1995 acquired pursuant to the purchase by Lomak Petroleum, Inc. ("Lomak"), on
April 4, 1996, as described in Note 1 and the related statement of revenues and
direct operating expenses for the year ended December 31, 1995. These financial
statements are the responsibility of Lomak's management. Our responsibility is
to express an opinion on these financial statements 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 statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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.
The accompanying statements were prepared as described in Note 1 for the
purpose of complying with certain rules and regulations of the Securities and
Exchange Commission ("SEC") for inclusion in certain SEC regulatory reports and
filings and are not intended to be a complete financial presentation.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets (other than productive oil and gas
properties) and liabilities of the Bannon Interests as of December 31, 1995
acquired pursuant to the purchase by Lomak as of April 4, 1996, as described in
Note 1, and the related revenues and direct operating expenses for the year
ended December 31, 1995, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Houston, Texas
May 23, 1996
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THE BANNON INTERESTS
STATEMENTS OF ASSETS (OTHER THAN
PRODUCTIVE OIL AND GAS PROPERTIES) AND
LIABILITIES (NOTE 1)
December 31, March 31,
1995 1996
----------------- -----------------
(unaudited)
Assets (other than productive oil and gas properties)
Accounts receivable $ 589,000 $ 551,000
Accounts payable and accrued liabilities (149,000) (105,000)
------------- -------------
Excess of assets (other than productive oil and gas
properties) acquired over liabilities assumed $ 440,000 $ 446,000
============= =============
See accompanying notes.
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THE BANNON INTERESTS
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (NOTE 1)
Year ended Three months ended
December 31, March 31,
1995 1996
-------------------- --------------------
(unaudited)
Revenues $ 7,246,000 $ 1,703,000
Direct operating expenses (3,177,000) (562,000)
---------------- ----------------
Excess of revenues over direct operating expenses $ 4,069,000 $ 1,141,000
---------------- ----------------
See accompanying notes.
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THE BANNON 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
"Bannon Interests") purchased by Lomak Petroleum, Inc. ("Lomak") on April 4,
1996. Such financial statements were derived from the historical records of the
predecessor owner and represent Lomak's interest.
The Bannon Interests contain approximately 270 producing wells and 108
proven recompletion and development drilling opportunities. Also included are
17,300 net acres located in east and south Texas.
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 Bannon Interests acquired represent developed
producing properties, as well as undeveloped properties. Historical depletion
has not been included as the basis in the properties will be adjusted in the
purchase price allocation. Therefore historical depletion will no longer be
relevant. Income tax expense has not been presented as it has not historically
been allocated to the property level.
REVENUE RECOGNITION
Revenues are recognized when oil and gas production is sold. Included
in revenues is $628,000, which represents processing and gathering fees. Direct
operating expenses are accrued when services are provided. Included in direct
operating expenses is $595,000 of costs associated with processing and
gathering.
USE OF ESTIMATES
Management has made a number of estimates and assumptions relating to
the reporting of assets, liabilities, revenues and direct operating expenses to
prepare these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.
(2) SALES TO MAJOR CUSTOMERS:
For the year ended December 31, 1995, five purchasers accounted for
20%, 14%, 13%, 13% and 10% of oil and gas sales. For the three months ended
March 31, 1996, four purchasers accounted for 30%, 16%, 15% and 13% of oil and
gas sales.
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THE BANNON INTERESTS
NOTES TO STATEMENTS OF ASSETS
(OTHER THAN PRODUCTIVE OIL AND GAS PROPERTIES)
AND LIABILITIES AND STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES
(3) OIL AND GAS RESERVES INFORMATION (UNAUDITED):
The estimates of the Bannon Interests in proved oil and gas reserves,
which are located entirely in the United States, are based on evaluations by an
independent petroleum engineer, Huddleston & Co., Inc. Reserves at December 31,
1995 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.
The following unaudited table sets forth the estimated proved oil and
gas reserve quantities of the Bannon Interests at December 31, 1995:
Crude Oil Natural Gas
(Bbls) (Mcfs)
------------------ ----------------
PROVED RESERVES
Balance, December 31, 1994 1,910,000 79,947,000
Purchases of reserves in place 382,000 16,676,000
Revisions of previous estimates 154,000 (5,557,000)
Production (74,000) (4,009,000)
------------------ ----------------
Balance, December 31, 1995 2,372,000 87,057,000
================== ================
PROVED DEVELOPED RESERVES
Balance, December 31, 1995 848,000 43,567,000
================== ================
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. Income taxes were
calculated without consideration of any remaining historical cost basis of the
Bannon Interests.
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THE BANNON 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
December 31,
1995
-------------------
Future cash inflows $ 190,089,000
Future costs:
Production (46,180,000)
Development (19,797,000)
-------------------
Future net cash flows 124,112,000
Income taxes (43,439,000)
-------------------
Undiscounted future net cash flows 80,673,000
10% discount factor (39,738,000)
-------------------
Standardized measure $ 40,935,000
===================
Changes in standardized measure of discounted future net cash flows
from proved reserve quantities are as follows:
Year ended
December 31,
1995
-----------------
Standardized measure, beginning of year $ 28,523,000
Sales, net of production costs (4,036,000)
Purchases of reserves in place 14,898,000
Net change in prices and production costs (159,000)
Net change in income taxes (6,683,000)
Development costs incurred during the period 2,207,000
Changes in estimated future development costs 3,143,000
Revisions of quantity estimates (2,997,000)
Accretion of discount 2,852,000
Changes in production rates and other 3,187,000
-----------------
Standardized measure, end of year $ 40,935,000
=================
During 1995, $302,000 of exploration costs were incurred.
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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 certain oil and gas
properties from a subsidiary of Parker & Parsley Petroleum Co., (ii) the
purchase by the Company of certain oil and gas properties from Transfuel, Inc.
("Transfuel") and (iii) the purchase by the Company of certain oil and gas
properties from Bannon Energy Incorporated ("Bannon") (collectively referred to
as the "Acquisitions"). The unaudited pro forma combined financial statements
also give effect to the private placement of Convertible Exchangeable Preferred
Stock and Common Stock (the "Private Placements") and the application of the
estimated net proceeds therefrom. The unaudited pro forma combined statement of
income for the year ended December 31, 1995 was prepared as if all transactions
had occurred on January 1, 1995. The unaudited pro forma combined statement of
income for the three months ended March 31, 1996 was prepared as if all
transactions had occurred on January 1, 1996. The accompanying unaudited pro
forma combined balance sheet of the Company as of March 31, 1996 has been
prepared as if all transactions had occurred as of that date. The historical
information provided in the statements of income for the year ended December
31, 1995 and for the three months ended March 31, 1996, represents the
following periods for the various acquisitions: (i) Parker & Parsley represents
the period from January 1, 1995 through July 31, 1995, (ii) Transfuel
represents the period from January 1, 1995 through September 30, 1995, (iii)
Bannon represents the periods from January 1, 1995 through December 31, 1995
and from January 1, 1996 through March 31, 1996.
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.
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LOMAK PETROLEUM, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
Parker &
Lomak Parsley Transfuel Bannon
------------ ------------ ------------ ------------
Pro Forma
Historical Historical Adjustments for
Historical Seven Nine Months Historical the
Year Ended Months Ended Year Ended Acquisitions and
December Ended September December Private
31, July 31, 30, 31, Placements Pro Forma
1995 1995 1995 1995 (Note 1) Combined
------------ ------------ ------------ ------------ ------------------ --------------
Revenues
Oil and gas sales $37,417,204 $3,377,129 $6,926,172 $7,246,000 $ - $54,966,505
Field services 10,096,531 - - - - 10,096,531
Gas marketing and transportation 3,284,399 - - - - 3,284,399
Interest and other 1,316,789 - - - - 1,316,789
------------ ------------ ------------- ------------ ------------------ --------------
52,114,923 3,377,129 6,926,172 7,246,000 - 69,664,224
------------ ------------ ------------ ------------ ------------------ --------------
Expenses
Direct operating 14,930,020 1,481,325 2,696,825 3,177,000 (1,300,000) (d) 20,985,170
Field services 6,469,014 - - - - 6,469,014
Gas marketing and transportation 848,644 - - - - 848,644
Exploration 511,535 - - - - 511,535
General and administrative 2,736,546 - - - 137,819 (c,d) 2,874,365
Interest 5,583,528 - - - 2,337,698 (a) 7,921,226
Depletion, depreciation and
amortization 14,863,527 - - - 6,779,832 (b) 21,643,359
------------ ------------ ------------ ------------ ------------------ --------------
45,942,814 1,481,325 2,696,825 3,177,000 7,955,349 61,253,313
------------ ------------ ------------ ------------ ------------------ --------------
Income (loss) before income taxes 6,172,109 1,895,804 4,229,347 4,069,000 (7,955,349) 8,410,911
Income taxes
Current (85,413) - - - (208,969) (e) (294,382)
Deferred (1,696,275) - - - (154,125) (e) (1,850,400)
------------ ------------ ------------ ------------ ------------------ --------------
Income (loss) from continuing
operations $4,390,421 $1,895,804 $4,229,347 $4,069,000 ($8,318,444) $6,266,128
============ ============ ============ ============ ================== ==============
Income from continuing operations
applicable to common shares $3,659,669 $4,465,615
============ ==============
Net income per common share $0.31 $0.36
============ ==============
Weighted average shares outstanding 11,840,804 409,784 12,250,588
============ ==============
See notes to pro forma combined financial statements.
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LOMAK PETROLEUM, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
Lomak Bannon
-------------- --------------
Pro Forma
Adjustments for
the
Historical Historical Acquisitions and
Three Three the
Months Ended Months Ended Private
March 31, March 31, Placements Pro Forma
1996 1996 (Note 2) Combined
-------------- -------------- ------------------ ---------------
Revenues
Oil and gas sales $16,088,249 $1,703,000 $ - $ 17,791,249
Field services 3,299,259 - - 3,299,259
Gas marketing and transportation 1,028,198 - - 1,028,198
Interest and other 97,064 - - 97,064
--------------- -------------- ------------------ ---------------
20,512,770 1,703,000 - 22,215,770
-------------- -------------- ------------------ ---------------
Expenses
Direct operating 5,757,676 562,000 - 6,319,676
Field services 2,528,849 - - 2,528,849
Gas marketing and transportation 290,119 - - 290,119
Exploration 179,822 - - 179,822
General and administrative 918,092 - 37,500 (h) 955,592
Interest 1,554,077 - 581,777 (f) 2,135,854
Depletion, depreciation and 5,278,112 - 601,137 (g) 5,879,249
amortization -------------- -------------- ------------------ ---------------
16,506,747 562,000 1,220,414 18,289,161
-------------- -------------- ------------------ ---------------
Income (loss) before income taxes 4,006,023 1,141,000 (1,220,414) 3,926,609
Income taxes
Current (80,200) - 1,668 (i) (78,532)
Deferred (1,322,500) - 26,719 (i) (1,295,781)
-------------- -------------- ------------------ ---------------
Income (loss) from continuing
operations $2,603,323 $1,141,000 ($1,192,027) $2,552,296
============== ============== ================== ===============
Income from continuing operations
applicable to common shares $1,926,123 $1,875,096
============== ===============
Net income per common share $0.14 $0.14
============== ===============
Weighted average shares outstanding 13,691,375 13,691,375
============== ===============
See notes to pro forma combined financial statements.
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LOMAK PETROLEUM, INC.
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
Pro Forma
Adjustments for
the
Historical Bannon
March 31, Acquisition Pro Forma
1996 (Note 2) Combined
-------------- ----------------- --------------
ASSETS
Current assets
Cash and equivalents $651,463 $ - $651,463
Accounts receivable 19,234,122 551,000 (j) 19,785,122
Inventory and other 1,289,888 - 1,289,888
-------------- ----------------- --------------
Total current assets 21,175,473 551,000 21,726,473
-------------- ----------------- --------------
Oil and gas properties 229,595,373 35,454,000 (j) 265,049,373
Accumulated depletion and amortization (38,103,804) - (38,103,804)
-------------- ----------------- --------------
191,491,569 35,454,000 226,945,569
-------------- ----------------- --------------
Gas transportation and field service assets 23,744,495 - 23,744,495
Accumulated depreciation (4,204,794) - (4,204,794)
-------------- ----------------- --------------
19,539,701 - 19,539,701
-------------- ----------------- --------------
$232,206,743 $36,005,000 $268,211,743
============== ================= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $9,617,925 $ - $ 9,617,925
Accrued liabilities 5,932,754 105,000 (j) 6,037,754
Accrued payroll and benefit costs 1,346,282 - 1,346,282
Current portion of debt 25,784 - 25,784
-------------- ----------------- --------------
Total current liabilities 16,922,745 105,000 17,027,745
-------------- ----------------- --------------
Long-term debt 95,090,000 35,900,000 (j) 130,990,000
Deferred income taxes 19,048,365 - 19,048,365
Stockholders' equity
7-1/2% Preferred stock, $1 par 200,000 - 200,000
$2.03 Preferred stock, $1 par 1,150,000 - 1,150,000
Common stock, $.01 par 134,022 - 134,022
Capital in excess of par value 101,880,541 - 101,880,541
Retained earnings (deficit) (2,218,930) - (2,218,930)
-------------- ----------------- --------------
Total stockholders' equity 101,145,633 - 101,145,633
-------------- ----------------- --------------
$232,206,743 $36,005,000 $268,211,743
============== ================= ==============
See notes to pro forma combined financial statements.
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LOMAK PETROLEUM, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE (1) PRO FORMA ADJUSTMENTS FOR THE ACQUISITIONS AND THE PRIVATE PLACEMENTS
- -- FOR THE YEAR ENDED DECEMBER 31, 1995
The accompanying unaudited pro forma combined statement of income for the
year ended December 31, 1995 has been prepared as if the Acquisitions and the
Private Placements had occurred on January 1, 1995 and reflects the following
adjustments:
(a) To adjust interest expense for the estimated amounts that would have been
incurred on the incremental borrowings for the Acquisitions and for the
estimated amounts that would have been repaid with the net proceeds from the
Private Placements.
(b) To record depletion expense for the Acquisitions at a rate of $4.31 per
Boe and to adjust the historical depletion rate for Lomak from $4.36 to $4.31
per Boe.
(c) To remove minority interest from January 1995 Red Eagle income statement.
(d) To adjust historical oil and gas production and general and administrative
expenses for cost reductions and increases due to integration of the
Acquisitions.
(e) To adjust the provision for income taxes for the change in taxable income
resulting from the Acquisitions and the effect on deferred taxes recorded at
January 1, 1995 had the acquisitions taken place at that time.
NOTE (2) PRO FORMA ADJUSTMENTS FOR THE BANNON ACQUISITION -- FOR THE THREE
MONTHS ENDED MARCH 31, 1996
The accompanying unaudited pro forma combined statement of income for the
three months ended March 31, 1996 has been prepared as if the Bannon
acquisition had occurred on January 1, 1996 and reflects the following
adjustments:
(f) To adjust interest expense for the estimated amount that would have been
incurred on the incremental borrowings for the Bannon acquisition.
(g) To record depletion expense for the Bannon acquisition at a rate of $4.31
per Boe and to adjust the historical depletion rate for Lomak from $4.36 to
$4.31 per Boe.
(h) To adjust historical general and administrative expenses for cost increases
due to integration of the Bannon acquisition.
(i) To adjust the provision for income taxes for the change in taxable income
resulting from the Bannon acquisition and the effect on deferred taxes recorded
at January 1, 1996 had the acquisitions taken place at that time.
NOTE (3) PRO FORMA ADJUSTMENTS FOR THE BANNON ACQUISITION -- AS OF MARCH 31,
1996
(j) To record the purchase of Bannon's oil and gas properties.
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