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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
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DATE OF EARLIEST EVENT REPORTED: JULY 21, 1997
MONTEREY RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 1-12311 76-0511993
(STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
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5201 TRUXTUN AVENUE, SUITE 100
BAKERSFIELD, CALIFORNIA 93309
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 322-3992
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Monterey Acquisition Corporation, a Delaware corporation wholly owned by
Monterey Resources, a Delaware corporation (the "Company"), successfully
completed a tender offer to purchase all the outstanding shares of common stock
of McFarland Energy ("McFarland"), a Delaware corporation. As of 12:00
midnight EDT, on Monday, July 21, 1997, the deadline for tendering shares, an
aggregate of 5,548,846 shares of common stock of McFarland were validly
tendered. The tendered shares represent approximately 96.9% of the total
outstanding shares of common stock of McFarland. Accordingly, the minimum
share condition, which required that the tendered shares constitute not less
than a majority of the shares of McFarland on a fully diluted basis, was
satisfied.
As of 12:00 midnight EDT, on Monday, July 21, 1997, the tender offer expired
and was terminated and the tendered shares were accepted by Monterey
Acquisition Corporation for payment of $18.55 per share, net to the seller in
cash, without interest thereon. Total consideration for the shares acquired in
the tender offer was $102,931,093. Following the acceptance of the tendered
shares, approximately 178,576 of the outstanding shares were owned by persons
other than the Company and Monterey Acquisition Corporation.
The Company then effected a short-form merger of Monterey Acquisition
Corporation with and into McFarland in accordance with Section 253 of the
Delaware General Corporation Law. Pursuant to that short-form merger, shares
not purchased in the tender offer were converted into the right to receive
$18.55 in cash, without interest thereon. The short-form merger was completed
on July 24, 1997. Holders of shares of common stock that were not tendered
prior to the expiration of the tender offer were notified that the merger
occurred and of their rights to exercise appraisal rights if such holders
follow the procedures under Delaware law.
The Company funded the acquisition of McFarland with cash on hand and
borrowings of $100 million under its $200 million credit facility with a group
of banks lead by the Chase Manhattan Bank, N.A.
McFarland was principally engaged in the production of oil and natural gas and
oil and gas development and exploration primarily in California. McFarland had
operations located in the Midway-Sunset field in California where the Company
also has significant production. The assets and operations acquired from
McFarland will continue to be operated by Monterey substantially as they have
been in the past.
ITEM 5. OTHER EVENTS
Set forth below is the text of a press release that was jointly issued by the
Company and Texaco, Inc. on August 18, 1997 relating to the execution by such
parties of a definitive merger agreement relating to a business combination of
the Company with Texaco.
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"Texaco, Inc. (NYSE: TX) and the Company announced today that they have signed
an agreement to merge in a transaction valued at $1.4 billion. Texaco
estimates that it will be able to add 385 million barrels of proved reserves to
its U. S. asset base through this combination. Additional probable reserves
also have been identified for future development.
Under the terms of the agreement, Texaco will exchange its common stock for all
outstanding shares of Monterey, which will be valued at $21 per share. Texaco
also will assume Monterey's existing debt of approximately $285 million.
Monterey's Board of Directors has agreed to recommend the merger to its
shareholders.
Monterey Resources, Inc. is an independent oil and gas producer, with primary
holdings in the Midway-Sunset, Kern River, South Belridge and Coalinga fields
in California's San Joaquin Valley.
When approved, the transaction will immediately increase Texaco's California
production by 54,000 barrels per day, to 180,000 barrels per day, with the
potential for additional increases in the next few years.
Commenting on the combination, Texaco Chairman and Chief Executive Officer
Peter I. Bejur said, "Gaining Monterey's valuable reserves and talented
employees will further enhance Texaco's leadership position in the area of
enhanced oil recovery and give us a clear competitive advantage in a region in
which we already have significant production and reserves. The combination
will enable us to capitalize on our heavy oil expertise to maximize the
potential of these fields. It will have a significant positive benefit for the
shareholders and employees of both companies."
Monterey Chairman and Chief Executive Officer R. Graham Whaling said, "This
strategic merger of Monterey Resources into Texaco will be a tremendous benefit
to our shareholders and our employees. We look forward to molding our
petroleum assets and our capable people into Texaco."
Claire S. Farley, Vice President of Texaco and President, North America
Production, said of the transaction, "Texaco intends to increase proved
reserves in these fields through expanded capital investment and application
of enhanced oil recovery techniques. Texaco is recognized as having a core
competency in finding and producing heavy oil and these new assets are well
matched with our knowledge and expertise."
David B. Kilpatrick, President of Monterey Resources added, "Monterey's asset
base is a natural complement to the assets of Texaco in California. The merger
recognizes the value of our assets and the contributions of the employees that
developed those assets into a strong and profitable company. As employees of
Texaco, we will continue to manage those properties to further the growth of
that fine company."
The merger, which is expected to be completed within 90 days, is subject to the
approval of shareholders of Monterey and regulatory agencies."
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The financial statements and proforma financial information required
pursuant to item 7 with respect to the acquisition of McFarland described in
item 2 above will be filed by amendment hereto within the time required.
This filing contains projections and other forward-looking statements within
the meaning of Section 21E of the Securities and Exchange Act of 1934. These
projections and statements reflect the company's current views with respect to
future events and financial performance. No assurances can be given, however,
that these events will occur or that these projections will be achieved and
actual results could differ materially from those projected as a result of
certain factors. A discussion of these factors is included in the company's
periodic reports filed with the Securities and Exchange Commission.
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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 thereunto duly authorized.
MONTEREY RESOURCES, INC.
By: /s/ TERRY L. ANDERSON
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Terry L. Anderson
Vice President, General Counsel and
Secretary
Date: August 21, 1997
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