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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) August 25, 1998
RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-9592 34-1312571
(State or other jurisdiction (Commission File Number) (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
LOMAK PETROLEUM, INC.
(Former name or former address, if changed since last report)
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The purpose of this report is to make the following amendments pursuant to Item
5 Other Events and Item 7(b) Financial Statements and Exhibits:
ITEM 5. OTHER EVENTS.
On November 9, 1998, Range Resources Corporation announced today it
expects to record a non-cash impairment charge in the third quarter of
approximately $98 million. The charge reflects a reduction in the book value of
Range's oil and gas properties by $98 million, partially offset by a related
$34 million reduction of deferred income taxes. The pretax charge is roughly $8
million lower than that previously disclosed. The Company expects to report its
third quarter results on November 12.
A majority of the impairment is attributable to properties added in the
Domain merger. Under the purchase accounting used in the merger, Range
recorded Domain's oil and gas properties at a value $75 million above their
historical book value. Accounting rules require that the new book values be
reviewed for impairment using current oil and gas prices and costs. The
impairment reduces the book value of the properties to their estimated fair
value under these parameters. This charge may not be reversed in future
periods, even if higher oil and gas prices increase future net revenues. Given
the volatile nature of oil and gas prices, there can be no assurance as to
their future levels. The remainder of the charge reduces the carrying value of
the Range's unproved properties. This charge reflects the reduced estimate of
the value of unproved properties in the current low commodity price
environment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
Pro Forma combined balance sheet at June 30, 1998
Pro Forma combined statement of operations for the six months ended
June 30, 1998
Pro Forma combined statement of operations for the twelve months ended
December 31, 1997
Notes to pro forma combined financial statements
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UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
On August 25, 1998, the stockholders of Lomak Petroleum, Inc., a
Delaware corporation ("Lomak"), approved the issuance of common stock, par value
$.01 per share, of Lomak ("Lomak Common Stock") pursuant to the Agreement and
Plan of Merger dated as of May 12, 1998, as amended (the "Merger Agreement"),
among Lomak DEC Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Lomak ("Merger Sub"), and Domain Energy Corporation, a Delaware
corporation ("Domain"). Pursuant to the Merger Agreement, Merger Sub was merged
with and into Domain (the "Merger"), with Domain surviving and changing its name
to "Range Energy Corporation." As a result of the Merger, Domain became a
wholly-owned subsidiary of Lomak. The Lomak stockholders also approved a
proposal to change the company name (the "Name Change") to Range Resources
Corporation ("Range"). The transaction was accounted for under the purchase
method of accounting.
The accompanying unaudited pro forma condensed financial statements
give effect to the Merger and the Name Change. In addition to the Merger, the
accompanying unaudited pro forma combined statements of operations give effect
to the following Lomak transactions which have occurred: (i) the sale of
approximately 4 million shares of Lomak Common Stock and the application of the
net proceeds therefrom (the "Common Offering"), (ii) the sale of $125 million of
Lomak 8.75% Senior Subordinated Notes and the application of the net proceeds
therefrom (the "Notes Offering"), (iii) the sale of $120 million of Lomak 5 3/4%
Trust Convertible Preferred Securities and the application of the net proceeds
therefrom (the "TCP Offering"), (iv) the purchase by Lomak of the Meadville
Properties (the "Meadville Acquisition"), (v) the purchase by Lomak of the
Powell Ranch Properties (the "Powell Ranch Acquisition"); and the following
Domain transactions which have occurred: (i) the disposition of Domain's
interest in certain natural gas properties located in Michigan (the "Michigan
Disposition"), (ii) the sale of approximately 6.3 million shares of Domain
Common Stock and the application of the net proceeds therefrom (the "Domain
Stock Offering"), (iii), the sale of approximately 643,037 shares of Domain
Common Stock to First Reserve Fund VII, Limited Partnership and the application
of the net proceeds therefrom (the "FRLP Stock Sale") and (iv) the purchase of
certain net profits overriding royalty interests owned by three institutional
investors (the "NPI Acquisition") (collectively the "Transactions"). The
unaudited pro forma combined statements of operations for the year ended
December 31, 1997 and the six months ended June 30, 1998 were prepared as if the
Transactions and the Merger had occurred on January 1, 1997. The accompanying
unaudited pro forma combined balance sheet of Range as of June 30, 1998 has been
prepared as if the Merger had occurred as of that date.
This information is not necessarily indicative of future consolidated
results of 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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RANGE RESOURCES CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Historical Merger Post-Merger
--------------------------- Pro Forma Pro Forma
Lomak Domain Adjustments Range
------------- ------------- --------------- -----------------
Assets
Current assets
Cash and equivalents................................... $13,526 $ 4,702 $ 18,228
Accounts receivable.................................... 25,923 9,107 (1,747) (a) 33,283
IPF Program notes receivable, current portion.......... - 5,815 5,815
Marketable securities.................................. 4,051 - 4,051
Inventory and other.................................... 1,919 3,161 (445) (a) 4,635
------------- ------------- -----------------
Total current assets............................. 45,419 22,785 66,012
------------- ------------- -----------------
IPF Program notes receivable, net......................... - 60,582 (1,586) (a) 58,996
Oil and gas properties.................................... 874,752 188,244 30,121 (a) 1,093,117
Accumulated depletion and amortization................. (180,315) (26,857) (29,005) (a,b) (236,177)
------------- ------------- -----------------
694,437 161,387 856,940
------------- ------------- -----------------
Gas transportation and field services assets.............. 86,626 - 86,626
Accumulated depreciation............................... (12,392) - (12,392)
------------- ------------- -----------------
74,234 - 74,234
Other assets.............................................. 8,894 3,938 (2,740) (a) 10,092
------------- ------------- -----------------
$ 822,984 $ 248,692 $1,066,274
============= ============= =================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable........................................ $ 24,253 $ 14,390 15 (a) $ 38,658
Accrued liabilities..................................... 24,068 770 4,305 (a) 29,143
Current portion of debt................................. 26 - 26
------------- ------------- -----------------
Total current liabilities........................ 48,347 15,160 67,827
------------- ------------- -----------------
Senior debt............................................... 252,200 94,361 45,143 (a) 391,704
Senior subordinated notes................................. 125,000 - 125,000
Convertible subordinated debentures....................... 55,000 - 55,000
------------- ------------- -----------------
432,200 94,361 571,704
------------- ------------- -----------------
Deferred income taxes..................................... 26,690 2,312 6,998 (a,b) 36,000
Company-obligated preferred securities of
subsidiary trust ....................................... 120,000 - 120,000
Stockholders' equity
$2.03 convertible preferred stock, $1 par value......... 1,150 - 1,150
Common stock, $.01 par value............................ 212 151 (15) (a) 348
Capital in excess of par value.......................... 219,033 129,178 (18,252) (a) 329,959
Treasury stock.......................................... - (10) 10 (a) -
Retained earnings (deficit)............................. (23,069) 7,540 (43,606) (a,b) (59,135)
Unrealized gain (loss) on marketable securities......... (1,579) - (1,579)
------------- ------------- -----------------
Total stockholders' equity....................... 195,747 136,859 270,743
------------- ------------- -----------------
$ 822,984 $ 248,692 $1,066,274
============= ============= =================
See notes to pro forma combined financial statements
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RANGE RESOURCES CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
HISTORICAL PRE-MERGER MERGER POST-MERGER
----------------------------- PRO FORMA PRO FORMA PRO FORMA
LOMAK DOMAIN ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
------------- ------------- ----------- ----------- ---------------
Revenues
Oil and gas sales................. $ 63,280 $ 27,707 $ 1,806 (c) $92,793
Transportation, marketing and
processing.................... 5,452 - 5,452
IPF income, net................... - 4,375 4,375
Interest and other................ 1,639 688 (2,898) (e) (571)
------------- ------------- ---------------
70,371 32,770 102,049
------------- ------------- ---------------
Expenses
Direct operating.................. 16,043 8,729 272 (c) 25,044
Transportation, marketing and
processing.................... 2,088 - 2,088
Exploration....................... 2,431 - 5,346 (e) 7,777
General and administrative........ 3,936 3,184 (480) (e,g) 6,640
Stock compensation................ - 369 (369) (e) -
Interest.......................... 18,108 1,639 927 (c) 2,501 (d,e) 23,175
Depletion, depreciation and
amortization.................... 24,764 11,824 1,022 (c) 609 (e,f) 38,219
Minority interest................. - - (35) (e) (35)
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67,370 25,745 102,908
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Income (loss) before income taxes.. 3,001 7,025 (859)
Income taxes
Current........................... 135 70 (10) (c) 195
Deferred.......................... 1,051 2,578 (146) (c) (3,784) (e,h) (301)
------------- ------------- ---------------
Income (loss) from continuing
operations $ 1,815 $ 4,377 $ (753)
============= ============= ===============
Income (loss) from continuing
operations applicable to common
shares........................... $ 648 $ 4,377 $ (1,920)
============= ============= ===============
Net income (loss) per common share:
Basic............................. $ 0.03 $ 0.29 $ (0.06)
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Diluted........................... $ 0.03 $ 0.28 $ (0.06)
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Weighted average shares outstanding 21,136 15,108 (1,478) 34,766
============= ============= ===============
Weighted average shares outstanding
diluted........................... 21,579 15,817 (1,203) 36,193
============= ============= ===============
See notes to pro forma combined financial statements
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RANGE RESOURCES CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
HISTORICAL PRE-MERGER MERGER POST-MERGER
----------------------------- PRO FORMA PRO FORMA PRO FORMA
LOMAK DOMAIN ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
------------- ------------- ----------- ----------- ----------------
Revenues
Oil and gas sales................. $ 130,017 $ 47,251 $ 16,826 (i,j) $194,094
Transportation, marketing and
processing.................... 11,727 - 1,427 (i) 13,154
IPF income, net................... - 4,779 4,779
Interest and other................ 7,594 238 796 (j) 882 (l) 9,510
------------- ------------- ----------------
149,338 52,268 221,537
------------- ------------- ----------------
Expenses
Direct operating.................. 31,481 16,341 2,806 (i,j) 50,628
Transportation, marketing and
processing.................... 3,921 - 769 (i) 4,690
Exploration....................... 2,527 - 12,100 (l) 14,627
General and administrative........ 5,290 4,237 262 (j) (960) (l,n) 8,829
Stock compensation................ - 4,587 (4,587) (l) -
Interest.......................... 27,175 3,774 6,059 (i,j) 3,156 (k,l) 40,164
Depletion, depreciation and
amortization.................... 55,407 16,072 5,930 (i,j) 3,739 (l,m) 81,148
Provision for impairment.......... 58,700 - 58,700
Minority interest................. - - (42) (l) (42)
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184,501 45,011 258,744
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Income (loss) before income taxes.. (35,163) 7,257 (37,207)
Income taxes
Current........................... 684 735 77 (j) (792) (o) 704
Deferred.......................... (12,515) 3,359 (472) (i,j) (3,395) (l,o) (13,023)
------------- ------------- ----------------
Income (loss) from continuing
operations $ (23,332) $ 3,163 $ (24,888)
============= ============= ===============
Income (loss) from continuing
operations applicable to common
shares........................... $ (25,666) $ 3,163 $ (27,222)
============= ============= ===============
Net income (loss) per common share:
Basic............................. $ (1.31) $ 0.27 $ (.80)
============= ============= ===============
Diluted........................... $ (1.31) $ 0.26 $ (.80)
============= ============= ===============
Weighted average shares outstanding 19,641 11,578 756 2,052 34,027
============= ============= ===============
Weighted average shares outstanding
diluted........................... 19,641 12,126 756 2,487 35,010
============= ============= ===============
See notes to pro forma combined financial statements
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RANGE RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
NOTE (1) BASIS OF PRESENTATION
On August 25, 1998, the stockholders of Lomak voted to approve the
merger agreement with Domain (the "Merger Agreement"). Pursuant to the Merger
Agreement each share of common stock, par value $.01 per share, of Domain
outstanding at the effective time of the Merger was converted into 1.2083 shares
of Lomak common stock (the "Exchange Ratio"). The Lomak stockholders also
approved a proposal to change the company name to Range Resources Corporation
("Range"). The accompanying pro forma condensed financial statements give effect
to the Merger which was accounted for using the purchase method of accounting
NOTE (2) MERGER PRO FORMA ADJUSTMENTS - AS OF JUNE 30, 1998
The accompanying unaudited pro forma combined balance sheet as of June
30, 1998 has been prepared as if the Merger had occurred on June 30, 1998 and
reflects the following adjustments:
(a) To adjust assets and liabilities under the purchase method of accounting
based on the purchase price. Such purchase price has been allocated to the
consolidated assets and liabilities of Domain based on preliminary
estimates of fair values, with the remainder allocated between proved and
unproved properties based on their relative fair values. The purchase price
allocated to proved properties was further allocated based on the relative
fair values of individual producing fields. This allocation was then
reviewed for indications of impairment by comparing the allocated cost to
the estimated undiscounted future net cash flows on a field-by-field basis.
Those oil and gas properties having a carrying value in excess of the
estimated undiscounted future net cash flows were deemed impaired pursuant
to SFAS 121. The purchase price allocated to unproved oil and gas
properties was adjusted to the lower of cost (allocated purchase price) or
market. The combined impairment resulted in a pretax charge of $55.9
million ($36.3 million after tax). No goodwill will be recorded in
connection with the Merger. The information presented herein may differ
from the actual purchase price allocation. The purchase price is determined
as follows (in thousands):
Cash consideration for FRLP shares of Domain Common Stock (3,250,000 shares)..................... $ 43,875
Estimated fair value (at $7.7208 per share) of 13,630,251 shares of Range Common Stock
issued at the exchange rate of 1.2083 shares of Range Common Stock for each share of Domain
Common Stock................................................................................ 105,236
Estimated fair value of options to purchase 983,296 shares of Range Common Stock................. 7,592
Estimated proceeds from options to purchase 983,296 shares of Range Common Stock................. (1,766)
Cash consideration for market purchases of Domain Common Stock (577,200 shares).................. 6,625
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$ 161,562
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The preliminary allocation of the purchase price included in the pro forma
balance sheet is summarized as follows (in thousands):
Working capital assumed.......................................................................... $ 8,782
IPF Program notes receivable, noncurrent......................................................... 66,966
Oil and gas properties:
Proved...................................................................................... 213,740
Unproved.................................................................................... 7,500
Other....................................................................................... 2,046
Other assets..................................................................................... 600
Accrued liabilities.............................................................................. (4,305)
Bank debt........................................................................................ (104,661)
Deferred income taxes............................................................................ (29,106)
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$ 161,562
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(b) To record the estimated impairment charge resulting from the allocation
of the purchase price to proved and unproved oil and gas properties as
described in Note (2) (a) above.
NOTE (3) PRE-MERGER PRO FORMA ADJUSTMENTS FOR THE POWELL RANCH ACQUISITION --
FOR THE SIX MONTHS ENDED JUNE 30, 1998
The accompanying unaudited pro forma combined statement of operations
for the six months ended June 30, 1998 has been prepared as if the Powell Ranch
Acquisition had occurred on January 1, 1997:
(c) To record the Powell Ranch Acquisition. The adjustment reflects the
following activities: (i) estimated adjustment to oil and gas revenues
and direct operating expenses to reflect activity from January 1, 1997
to date of acquisition, (ii) estimated adjustment to depletion,
depreciation and amortization attributable to the purchase price, (iii)
estimated adjustment to interest expense for the incremental interest
for additional borrowings made to fund the Powell Ranch Acquisition and
(iv) adjustment to the provision for income taxes resulting from the
change in taxable income.
NOTE (4) MERGER PRO FORMA ADJUSTMENTS - FOR THE SIX MONTHS ENDED JUNE 30, 1998
The accompanying unaudited pro forma combined statement of operations
for the six months ended June 30, 1998 has been prepared as if the Merger had
occurred on January 1, 1997 and reflects the following adjustments:
(d) To adjust interest expense for the Merger and the borrowings of Domain
under the existing Lomak credit facility. A 1/8% per annum increase in
the interest rate would decrease Range's income before taxes by
$27,000.
(e) To record the adjustment for the change in accounting methods for the
Domain operations from full cost method of accounting to successful
efforts method of accounting.
(f) To record the estimated adjustment to depletion, depreciation and
amortization expense attributable to the allocation of the purchase
price using the successful efforts method of accounting. Such
adjustment assumes the recognition at closing of an estimated
impairment charge totaling $55.9 million ($36.3 million after tax) (see
Note 2(a) above). The one time non-recurring charge is not reflected in
the unaudited pro forma statement of operations as presented herein.
(g) To adjust general and administrative expenses for certain cost
reductions realized from the combining of operations (i.e., NYSE fees,
duplication of investor relations functions, printing costs, etc.)
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(h) To adjust the provision for income taxes for the change in taxable
income resulting from the Merger.
NOTE (5) PRE-MERGER PRO FORMA ADJUSTMENTS FOR THE TRANSACTIONS -- FOR THE YEAR
ENDED DECEMBER 31, 1997
The accompanying unaudited pro forma combined statement of operations
for the year ended December 31, 1997 has been prepared as if the Transactions
had occurred on January 1, 1997 and reflects the following adjustments:
(i) To record the pre-Merger pro forma activities for Lomak.
(j) To record the pre-Merger pro forma adjustments for Domain.
NOTE (6) MERGER PRO FORMA ADJUSTMENTS - FOR THE YEAR ENDED DECEMBER 31, 1997
The accompanying unaudited pro forma combined statement of operations
for the year ended December 31, 1997 has been prepared as if the Merger had
occurred on January 1, 1997 and reflects the following adjustments:
(k) To adjust interest expense for the Merger and the borrowings of Domain
under the existing Lomak credit facility. A 1/8% per annum increase in
the interest rate would decrease Range's income before taxes by
$140,000.
(l) To record the adjustment for the change in accounting methods for the
Domain operations from full cost method of accounting to successful
efforts method of accounting.
(m) To record the estimated adjustment to depletion, depreciation and
amortization expense attributable to the allocation of the purchase
price using the successful efforts method of accounting. Such
adjustment assumes the recognition at closing of an estimated
impairment charge totaling $55.9 million ($36.3 million after tax) (see
Note 2(a) above). The one time non-recurring charge is not reflected in
the unaudited pro forma statement of operations as presented herein.
(n) To adjust general and administrative expenses for certain cost
reductions realized from the combining of operations (i.e., NYSE fees,
duplication of investor relations functions, printing costs, etc.).
(o) To adjust the provision for income taxes for the change in taxable
income resulting from the Merger and the effect on deferred taxes
recorded at January 1, 1997 had the transaction taken place at that
time.
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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.
RANGE RESOURCES CORPORATION
By /s/ Thomas W. Stoelk
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Thomas W. Stoelk
Senior Vice President
Finance & Administration
November 9, 1998
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