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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number: 000-21843
TITAN EXPLORATION, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2671582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 WEST TEXAS, SUITE 500
MIDLAND, TEXAS 79701
(Address of principal executive offices) (Zip Code)
(915) 682-6612
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of August 8, 1997, 33,943,543 shares of common stock, par value $.01
per share, of Titan Exploration, Inc. were outstanding.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Forward Looking Information and Risk Factors.................................................................... 1
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996............................ 2
Consolidated Statements of Operations for the three and six months ended
June 30, 1997 and 1996.................................................................... 3
Consolidated Statements of Cash Flows for the three and six months ended
June 30, 1997 and 1996.................................................................... 4
Notes to Consolidated Financial Statements....................................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 6
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders............................................. 11
Item 6. Exhibits and Reports on Form 8-K................................................................ 12
Signatures....................................................................................... 13
</TABLE>
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TITAN EXPLORATION, INC.
FORWARD LOOKING INFORMATION AND RISK FACTORS
Titan Exploration, Inc. (the "Company") or its representatives may make
forward looking statements, oral or written, including statements in this
report's Management's Discussion and Analysis of Financial Condition and
Results of Operations, press releases and filings with the Securities and
Exchange Commission, regarding estimated future net revenues from oil and
natural gas reserves and the present value thereof, planned capital
expenditures (including the amount and nature thereof), increases in oil and
gas production, the number of wells the Company anticipates drilling through
1998 and the Company's financial position, business strategy and other plans
and objectives for future operations. Although the Company believes that the
expectations reflected in these forward looking statements are reasonable,
there can be no assurance that the actual results or developments anticipated
by the Company will be realized or, even if substantially realized, that they
will have the expected effects on its business or operations. Among the factors
that could cause actual results to differ materially from the Company's
expectations are general economic conditions, inherent uncertainties in
interpreting engineering data, operating hazards, delays or cancellations of
drilling operations for a variety of reasons, competition, fluctuations in oil
and gas prices, government regulations and other factors set forth in the
Company's Annual Report on Form 10-K. All subsequent oral and written forward
looking statements attributable to the Company or persons acting on its behalf
are expressly qualified in their entirety by these factors. The Company assumes
no obligation to update any of these statements.
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ITEM 1. FINANCIAL STATEMENTS
TITAN EXPLORATION, INC.
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
ASSETS JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 655 $ 6,290
Accounts receivable:
Oil and gas 7,390 8,533
Other 1,830 931
Prepaid expenses and other current assets 485 266
---------- ----------
Total current assets 10,360 16,020
---------- ----------
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts method of accounting:
Proved properties 215,979 194,699
Unproved properties 10,638 987
Accumulated depletion, depreciation, and amortization (15,545) (5,624)
---------- ----------
211,072 190,062
Other property and equipment, net 832 277
---------- ----------
211,904 190,339
Other assets, net of accumulated amortization of $329 in 1997 and $203 in 1996 694 820
---------- ----------
$ 222,958 $ 207,179
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities:
Trade $ 6,876 $ 7,112
Other 4,587 784
---------- ----------
Total current liabilities 11,463 7,896
---------- ----------
Long-term debt 10,000 6,500
Other liabilities 1,785 1,772
Deferred income tax payable 5,980 3,825
Stockholders' equity:
Preferred Stock, $.01 par value, 10,000 shares authorized; none issued and
outstanding -- --
Common Stock, $.01 par value, 60,000 shares authorized; 33,942 shares issued
and outstanding at June 30, 1997 339 339
Additional paid-in capital 203,426 203,411
Deferred compensation (12,634) (15,161)
Retained earnings (deficit) 2,599 (1,403)
---------- ----------
Total stockholders' equity 193,730 187,186
---------- ----------
$ 222,958 $ 207,179
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
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TITAN EXPLORATION, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 16,166 $ 3,431 $ 34,168 $ 6,655
Other 37 55 71 135
---------- ---------- ---------- ----------
Total revenues 16,203 3,486 34,239 6,790
---------- ---------- ---------- ----------
Expenses:
Oil and gas production 5,007 1,477 11,968 2,991
General and administrative 1,260 543 2,343 958
Amortization of stock option awards 1,264 192 2,527 384
Exploration and abandonment 352 67 756 81
Depletion, depreciation and amortization 5,460 946 10,099 1,760
---------- ---------- ---------- ----------
Total expenses 13,343 3,225 27,693 6,174
---------- ---------- ---------- ----------
Operating income 2,860 261 6,546 616
---------- ---------- ---------- ----------
Other income (expense):
Interest income 38 111 97 245
Interest expense (244) (371) (486) (711)
---------- ---------- ---------- ----------
Net income before income taxes 2,654 1 6,157 150
Income tax expense 929 -- 2,155 --
---------- ---------- ---------- ----------
Net income $ 1,725 $ 1 $ 4,002 $ 150
========== ========== ========== ==========
Net income per share $ .05 $ - $ .11 $ .01
========== ========== ========== ==========
Weighted average common shares outstanding 35,466 21,772 35,566 21,772
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
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TITAN EXPLORATION, INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,725 $ 1 $ 4,002 $ 150
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depletion, depreciation and amortization 5,460 946 10,099 1,760
Amortization of stock option awards 1,264 192 2,527 384
Dry holes and abandonments -- 8 -- 18
Deferred income taxes 929 -- 2,155 --
Changes in assets and liabilities:
Accounts receivable (804) (562) 244 (904)
Prepaid expenses and other current (62) 125 (219) 48
assets
Accounts payable and accrued liabilities 1,134 1,536 3,580 594
-------- -------- -------- --------
Total adjustments 7,921 2,245 18,386 1,900
-------- -------- -------- --------
Net cash provided by operating activities 9,646 2,246 22,388 2,050
-------- -------- -------- --------
Cash flows from investing activities:
Redemption of short-term investment -- 5,000 -- 5,000
Additions to oil and gas properties (16,218) (2,144) (30,931) (4,285)
Other (467) (12) (592) (41)
-------- -------- -------- --------
Net cash provided by (used in)
investing activities (16,685) 2,844 (31,523) 674
-------- -------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 9,500 -- 9,500 --
Repayments of long-term debt (6,000) -- (6,000) --
-------- -------- -------- --------
Net cash provided by financing activities 3,500 -- 3,500 --
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents (3,539) 5,090 (5,635) 2,724
Cash and cash equivalents, beginning of period 4,194 3,847 6,290 6,213
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 655 $ 8,937 $ 655 $ 8,937
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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TITAN EXPLORATION, INC.
Notes to Consolidated Financial Statements
June 30, 1997 and 1996
(Unaudited)
(1) BASIS OF PRESENTATION
In the opinion of management, the unaudited consolidated financial
statements of Titan Exploration, Inc. (the "Company") as of June 30, 1997 and
for the three and six months ended June 30, 1997 and 1996 include all
adjustments and accruals, consisting only of normal recurring accrual
adjustments, which are necessary for a fair presentation of the results for the
interim period. These interim results are not necessarily indicative of results
for a full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in this Form 10-Q pursuant to the
rules and regulations of the Securities and Exchange Commission. These
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto included in the
Company's 1996 Form 10-K.
The Company's predecessor was classified as a partnership for federal
income tax purposes. Therefore, no income taxes were paid or accrued prior to
its conversion from a limited partnership to a corporation on September 30,
1996.
(2) LONG-TERM DEBT
On October 31, 1996, the Company entered into a credit agreement (the
"Credit Agreement") with Chase Securities, Inc. which established a four year
revolving credit facility, up to the maximum amount of $250 million with an
initial borrowing base of $165 million. All outstanding amounts are due and
payable in full on January 1, 2001. The borrowing base is subject to
redetermination annually by the lenders based on certain proved oil and gas
reserves and other assets of the Company. Proceeds of the credit facility were
utilized to fund the 1996 Acquisition, development of oil and gas reserves and
for general corporate requirements.
In June 1997, the borrowing base was redetermined by the lenders and reset
at $165 million.
Effective April 16, 1997, the Company entered into a credit agreement (the
"Unsecured Credit Agreement") with Texas Commerce Bank National Association
(the "Bank"), an affiliate of Chase Securities, Inc., which established a one
year revolving credit facility, up to the maximum amount of $5 million. All
outstanding amounts are due and payable in full on or before March 6, 1998.
Proceeds of the credit facility are utilized to fund short-term needs (less
than thirty days). Commercial paper and money market loans are classified as
long-term debt as the Company intends to refinance them on a long-term basis
either through continued short-term borrowing or available credit facilities.
(3) STOCKHOLDERS' EQUITY
In May 1997, the Company announced a plan to repurchase up to $25 million
of the Company's common stock. The repurchases will be made periodically,
depending on market conditions, and will be funded with cash flow from
operations and, as necessary, borrowings under the Credit Agreement. At June
30, 1997, the Company had not repurchased any shares of its common stock.
(4) EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("FAS") No. 128, Earnings per
Share. FAS No. 128 establishes standards for computing and presenting earnings
per share and is effective for periods ending after December 15, 1997. The
impact of the adoption of FAS No. 128 on the Company's earnings per share is
expected to be immaterial.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Titan Exploration, Inc. is an independent energy company engaged in the
exploration, development and acquisition of oil and gas properties. The
Company's strategy is to grow reserves, production and net income per share
through (i) the acquisition of producing properties that provide development
and exploratory drilling potential, (ii) the exploitation and development of
its reserve base, (iii) the exploration for oil and gas reserves, and (iv) the
implementation of a low operating and overhead structure. The Company has grown
rapidly through the acquisition and exploitation of oil and gas properties,
consummating the acquisition of a concentrated group of Permian Basin producing
oil and gas properties from a large independent company for approximately $40.6
million (the "1995 Acquisition") and additional Permian Basin producing
properties from a major integrated company for approximately $135.7 million
(the "1996 Acquisition").
The Company's growth resulting from acquisitions has impacted its reported
financial results in a number of ways. Acquired properties frequently may not
have received focused attention prior to sale. After acquisition, certain of
these properties require maintenance, workovers, recompletions and other
remedial activity not constituting capital expenditures, which initially
increase lease operating expenses. The Company may dispose of certain of the
properties if it determines they are outside the Company's strategic focus. The
increased production and revenue resulting from the rapid growth of the Company
has required it to recruit and develop operating, accounting and administrative
personnel compatible with its increased size. As a result, the Company
anticipates a corresponding increase in its general and administrative expense.
As of August 8, 1997, the Company has 43 full time employees and 9 contract
personnel. The Company believes that with its current inventory of drilling
locations and the anticipated additional staff, it will be well positioned to
follow a balanced program of exploration and exploitation activities to
complement its acquisition efforts.
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OPERATING DATA
The following table sets forth the Company's historical operating data
for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Production:
Oil (MBbls) 464 125 895 256
Gas (MMcf) 5,564 844 10,299 1,698
Total (MBOE) 1,391 266 2,611 539
Average Sales Prices Per Unit (1):
Oil (per Bbl) $ 17.51 $ 17.63 $ 19.29 $ 17.16
Gas (per Mcf) 1.45 1.45 1.64 1.33
BOE 11.62 12.90 13.08 12.35
Expenses Per BOE:
Production costs, including production taxes (2) $ 3.60 $ 5.55 $ 4.58 $ 5.55
General and administrative . 91 2.04 .90 1.78
Depletion, depreciation and amortization 3.93 3.56 3.87 3.27
</TABLE>
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(1) Reflects results of hedging activities in 1996.
(2) These costs include approximately $.42 and $1.07 per BOE of production
costs primarily attributable to necessary rework operations on the 1995
Acquisition properties and the 1996 Acquisition properties for the
three months and six months ended June 30, 1997, respectively.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1996
Oil and Gas Revenues. Revenues from oil and gas operations totaled $16.2
million for the three months ended June 30, 1997 compared to $3.4 million for
the three months ended June 30, 1996. The increase is primarily attributable to
the 1996 Acquisition and continued exploitation of the Company's proved
properties. Of total oil and gas revenues for the three months ended June 30,
1997, revenues of $11.3 million (70%) are attributable to the properties
acquired in the 1996 Acquisition. Hedging activities during the three months
ended June 30, 1996 reduced oil revenues approximately $398,000 ($3.18 per Bbl)
and gas revenues approximately $170,000 ($.20 per Mcf). There were no hedging
activities during the three months ended June 30, 1997.
Production Costs. Oil and gas production costs, including production taxes,
were $5.0 million ($3.60 per BOE) for the three months ended June 30, 1997
compared to $1.5 million ($5.55 per BOE) for the three months ended June 30,
1996. The increase in the absolute amount of production costs was primarily
attributable to production costs associated with the properties acquired in the
1996 Acquisition which totaled $3.1 million ($3.26 per BOE) for the three
months
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ended June 30, 1997. Production costs for the three months ended June 30, 1997
included $591,000 ($.42 per BOE) of rework expenses attributable to the 1996
Acquisition properties and the 1995 Acquisition properties.
Depletion, Depreciation and Amortization Expense. Depletion, depreciation and
amortization expense was $5.5 million ($3.93 per BOE) for the three months
ended June 30, 1997 compared to $946,000 ($3.56 per BOE) for the three months
ended June 30, 1996. The increase per BOE is due to higher amortization rates
on the properties acquired in the 1996 Acquisition compared to the Company's
other properties.
General and Administrative Expense. General and administrative expense was $1.3
million ($.91 per BOE) for the three months ended June 30, 1997 compared to
$543,000 ($2.04 per BOE) for the three months ended June 30, 1996. The increase
in the absolute amount is due to the additional general and administrative
expenses which are necessary to administer the properties acquired in the 1996
Acquisition. The 55% decrease in general and administrative expenses per BOE
for 1997 as compared to 1996 is due to the spreading of the Company's general
and administrative expenses over a larger production base and to the Company's
efforts to maintain a low overhead structure.
Interest Expense. Interest expense was $244,000 for the three months ended June
30, 1997 compared to $371,000 for the three months ended June 30, 1996. The 34%
decrease is primarily due to the application of proceeds from the initial
offering of common stock to the indebtedness incurred by the Company to fund
the 1995 Acquisition and 1996 Acquisition.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1996
Oil and Gas Revenues. Revenues from oil and gas operations totaled $34.2
million for the six months ended June 30, 1997 compared to $6.7 million for the
six months ended June 30, 1996. The increase is primarily attributable to the
1996 Acquisition, the increase in the average price received for both oil and
gas, and continued exploitation of the Company's proved properties. Of total
oil and gas revenues for the six months ended June 30, 1997, revenues of $24.2
million (71%) are attributable to the properties acquired in the 1996
Acquisition. The average oil price received increased 12% from $17.16 to $19.29
per Bbl and the average gas price received increased 23% from $1.33 to $1.64
per Mcf for the six months ended June 30, 1996 compared to the six months ended
June 30, 1997. Hedging activities during the six months ended June 30, 1996
reduced oil revenues approximately $577,000 ($2.25 per Bbl) and gas revenues
approximately $339,000 ($.20 per Mcf). There were no hedging activities during
the six months ended June 30, 1997.
Production Costs. Oil and gas production costs, including production taxes,
were $12.0 million ($4.58 per BOE) for the six months ended June 30, 1997
compared to $3.0 million ($5.55 per BOE) for the six months ended June 30,
1996. The increase in the absolute amount of production costs was primarily
attributable to production costs associated with the properties acquired in the
1996 Acquisition which totaled $7.6 million ($4.20 per BOE) for the six months
ended June 30, 1997. Production costs for the six months ended June 30, 1997
included $2.8 million ($1.07 per BOE) of rework expenses attributable to the
1996 Acquisition properties and the 1995 Acquisition properties.
Depletion, Depreciation and Amortization Expense. Depletion, depreciation and
amortization expense was $10.1 million ($3.87 per BOE) for the six months ended
June 30, 1997 compared to $1.8 million ($3.27 per BOE) for the six months ended
June 30, 1996. The increase per BOE is due to higher amortization rates on the
properties acquired in the 1996 Acquisition compared to the Company's other
properties.
General and Administrative Expense. General and administrative expense was $2.3
million ($.90 per BOE) for the six months ended June 30, 1997 compared to
$958,000 ($1.78 per BOE) for the six months ended June 30, 1996. The increase
in the absolute amount is due to the additional general and administrative
expenses which are necessary to administer the properties acquired in the 1996
Acquisition. The 49% decrease in general and administrative expenses per BOE
for 1997 as compared to 1996 is due to the spreading of the Company's general
and administrative expenses over a larger production base and to the Company's
efforts to maintain a low overhead structure.
Interest Expense. Interest expense was $486,000 for the six months ended June
30, 1997 compared to $711,000 for the six months ended June 30, 1996. The 32%
decrease is primarily due to the application of proceeds from the initial
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offering of common stock to the indebtedness incurred by the Company to fund
the 1995 Acquisition and 1996 Acquisition.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of capital have been its initial
capitalization, private equity sales, bank financing, cash flow from operations
and the Company's initial public offering. The 1995 Acquisition was funded with
cash from the Company's initial capitalization, additional private equity sales
and bank financing. The 1996 Acquisition was principally funded with bank
financing, which was repaid with the proceeds from the Company's initial public
offering.
The Company requires capital primarily for the exploration, development
and acquisition of oil and gas properties, the repayment of indebtedness and
general working capital needs.
Capital Expenditures. The Company's capital expenditure budget for 1997 is
approximately $52.2 million which includes approximately $27.4 million for the
drilling and recompletion of approximately 26 oil and gas wells and 45 workover
projects on its proved properties. The remaining amounts represent expenditures
for geological and geophysical costs, drilling costs and lease acquisition
costs on the Company's unproved properties.
Cash expenditures for additions to oil and gas properties were $30.9
million for the six months ended June 30, 1997. This includes $8.8 million for
the acquisition of oil and gas leases and $22.1 million for development and
exploratory drilling.
Capital Resources. The Company's primary capital resources are net cash
provided by operating activities and $155 million availability under the
Company's credit facilities.
Net Cash Provided by Operating Activities. Net cash provided by operating
activities, before changes in operating assets and liabilities, was $18.7
million for the six months ended June 30, 1997 compared to $2.3 million for the
six months ended June 30, 1996. The increase was primarily attributable to the
cash flow generated by the 1996 Acquisition and from continued exploitation of
the Company's proved properties.
Credit Agreement. The Credit Agreement established a four year revolving credit
facility, up to the maximum amount of $250 million, subject to a borrowing base
to be determined annually by the lenders based on certain proved oil and gas
reserves and other assets of the Company. Initially, the borrowing base was
established at $165 million. To the extent that the borrowing base is less than
the aggregate principal amount of all outstanding loans and letters of credit
under the Credit Agreement, such deficiency must be cured by the Company
ratably within 180 days, by either prepaying a portion of the outstanding
amounts under the Credit Agreement or pledging additional collateral to the
lenders. A portion of the credit facility is available for the issuance of up
to $15.0 million of letters of credit, of which $250,000 was outstanding at
June 30, 1997.
In June 1997, the borrowing base was redetermined by the lenders and reset
at $165 million. The Company's outstanding long-term debt under the Credit
Agreement was $10 million at June 30, 1997.
All outstanding amounts under the Credit Agreement are due and payable in
full on January 1, 2001.
At the Company's option, borrowings under the Credit Agreement bear
interest at either the "Base Rate" (i.e., the higher of the applicable prime
commercial lending rate, or the federal funds rate plus .5% per annum) or the
Eurodollar rate, plus 1% to 1.50% per annum, depending on the level of the
Company's aggregate outstanding borrowings. In addition, the Company is
committed to pay quarterly in arrears a fee of .30% to .375% of the unused
borrowing base.
The Credit Agreement contains certain covenants and restrictions that are
customary in the oil and gas industry. In addition, the line of credit is
secured by substantially all of the Company's oil and gas properties.
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Liquidity and Working Capital. At June 30, 1997, the Company had $655,000 of
cash and cash equivalents as compared to $6.3 million at December 31, 1996. The
Company's ratio of current assets to current liabilities was .90 at June 30,
1997 compared to 2.03 at December 31, 1996. Due principally to a reduction in
cash as a result of an intentional change in the way the Company manages its
operating accounts, the Company's working capital decreased $9.2 million from
$8.1 million at December 31, 1996 to a deficit of $1.1 million at June 30,
1997. The timing of short-term receipts and disbursements can cause working
capital fluctuations. Due to its efforts to keep interest expense levels low,
the Company has chosen not to borrow under its Credit Agreement the cash
necessary to maintain a positive working capital position. The Company expects
working capital to increase during the remainder of 1997 due to an anticipated
lower level of capital expenditures during the remainder of 1997.
Unsecured Credit Agreement. Effective April 16, 1997, the Company entered into
a credit agreement (the "Unsecured Credit Agreement") with Texas Commerce Bank
National Association (the "Bank"), an affiliate of Chase Securities, Inc.,
which establishes a one year revolving credit facility, up to the maximum of $5
million. While all outstanding amounts are due and payable in full on or before
March 6, 1998, the Company considers amounts outstanding pursuant to the
Unsecured Credit Agreement as long-term as all amounts are repaid from
available funds under the Credit Agreement. Proceeds of the Unsecured Credit
Agreement are utilized to fund short-term needs (less than thirty days).
The interest rate of each loan under the Unsecured Credit Agreement is at
a rate determined by agreement between the Company and the Bank. The rate shall
not exceed the maximum interest rate permitted under applicable laws. Interest
rates generally are comparable with Eurodollar rates plus 1% per annum.
ACCOUNTING STANDARD ON EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("FAS") No. 128, Earnings per
Share. FAS No. 128 establishes standards for computing and presenting earnings
per share and is effective for periods ending after December 15, 1997. The
impact of the adoption of FAS No. 128 on the Company's earnings per share is
expected to be immaterial.
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the Company was held at 10:00
a.m., local time, on Wednesday, May 28, 1997.
(b) Proxies were solicited by the Board of Directors of the Company
pursuant to Regulation 14A under the Securities Exchange Act of 1934.
There were no solicitations in opposition to the Board of Directors'
nominees as listed in the proxy statement and all of such nominees were
duly elected.
(c) Out of a total of 33,941,513 shares of common stock of the Company
outstanding and entitled to vote, 31,123,647 shares were present in
person or by proxy, representing approximately 91.7%. The only matters
voted on by the stockholders, as fully described in the definitive proxy
materials for the annual meeting, were the election of directors of the
Company and the approval of the selection of independent auditors for
the Company for 1997. The results were as follows:
1. To elect a Board of Directors to hold office until the next
annual meeting of stockholders and until their successors are
elected and qualified.
<TABLE>
<CAPTION>
Number of Shares Voting
------------------------------------------------------------
For Against Withholding
Election as Election as Authority to Vote for
Nominees Director Director Election as Director
-------- ----------- ----------- ---------------------
<S> <C> <C> <C>
Jack Hightower 31,123,647 - -
George G. Staley 31,123,647 - -
David R. Albin 31,123,647 - -
Kenneth A. Hersh 31,123,647 - -
William J. Vaughn, Jr. 31,123,647 - -
</TABLE>
2. To approve the selection, by the Board of Directors, of the
firm of KPMG Peat Marwick, LLP as independent auditors for the
Company for 1997.
For 31,123,647
Against -
Abstain -
(d) Inapplicable.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.13.1 First Amendment to Amended and Restated Credit
Agreement, dated May 12, 1997, among Titan Resources, L.P.,
The Chase Manhattan Bank, as Administrative Agent, and
Financial Institutions now or hereafter parties hereto.
10.13.2 Form of Guaranty Agreement among The Chase Manhattan
Bank, as Administrative Agent, Financial Institutions
now or hereafter parties hereto and Titan Exploration,
Inc., Titan Resources I, Inc. and Titan Resources Holdings,
Inc.
10.25 Master Promissory Note, dated March 6, 1997, between Titan
Resources, L.P. and Texas Commerce Bank National
Association.
27 Financial Data Schedule.
(b) Reports Submitted on Form 8-K:
None.
-12-
<PAGE> 15
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.
TITAN EXPLORATION, INC.
By:/s/ Jack Hightower
------------------------------------------
Jack Hightower
President and Chief Executive Officer
By:/s/ William K. White
------------------------------------------
William K. White
Vice President and Chief Financial Officer
Date: August 11, 1997
-13-
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
EXHIBITS DESCRIPTION
- -------- -----------
<S> <C>
10.13.1 First Amendment to Amended and Restated Credit Agreement, dated
May 12, 1997, among Titan Resources, L.P., The Chase Manhattan
Bank, as Administrative Agent, and Financial Institutions now or
hereafter parties hereto.
10.13.2 Form of Guaranty Agreement among The Chase Manhattan Bank, as
Administrative Agent, Financial Institutions now or hereafter
parties hereto and Titan Exploration, Inc., Titan Resources I, Inc.
and Titan Resources Holdings, Inc.
10.25 Master Promissory Note, dated March 6, 1997, between Titan
Resources, L.P. and Texas Commerce Bank National Association.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10.13.1
FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
BY AND AMONG
TITAN RESOURCES, L.P.,
as Company,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Documentation Agent
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Syndication Agent,
and
THE LENDERS SIGNATORY HERETO
May 12, 1997
<PAGE> 2
FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this "First
Amendment") dated effective as of the 12th day of May, 1997 (the "Effective
Date"), is by and among TITAN RESOURCES, L.P., a Texas limited partnership (the
("Company"); THE CHASE MANHATTAN BANK, individually, as the Issuing Bank and as
Administrative Agent (in such capacity, the "Administrative Agent"); FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, individually and as Documentation Agent
(in such capacity, the "Documentation Agent"); MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, individually and as Syndication Agent (in such capacity, the
"Syndication Agent"); and each of the lenders that is a signatory hereto or
which becomes a signatory hereto and to the Credit Agreement (hereinafter
defined) as provided in Section 8.07 of the Credit Agreement (individually,
together with its successors and assigns, "Lender" and collectively,
"Lenders").
WITNESSETH:
WHEREAS, the Company, the Administrative Agent, the Documentation Agent, the
Syndication Agent and Lenders are parties to that certain Amended and Restated
Credit Agreement dated as of October 31, 1996 (the "Credit Agreement"),
pursuant to which Lenders agreed to make loans to and extensions of credit on
behalf of the Company; and
WHEREAS, the Company, the Administrative Agent, the Documentation Agent, the
Syndication Agent and Lenders desire to amend the Credit Agreement in the
particulars hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01 Terms Defined Above. As used in this First Amendment, each of the
terms "Administrative Agent," "Company," "Credit Agreement," "Documentation
Agent," "First Amendment," "Lender," "Lenders" and "Syndication Agent" shall
have the meaning assigned to such term hereinabove.
Section 1.02 Terms Defined in Credit Agreement. Each term defined in the Credit
Agreement and used herein without definition shall have the meaning assigned to
such term in the Credit Agreement, unless expressly provided to the contrary.
Section 1.03 Other Definitional Provisions.
(a) The words "hereby," "herein," "hereinafter", "hereof," "hereto" and
"hereunder" when used in this First Amendment shall refer to this First
Amendment as a whole and not to any particular Article, Section, subsection or
provision of this First Amendment.
(b) Section, subsection and Exhibit references herein are to such Sections,
subsections and Exhibits to this First Amendment unless otherwise specified.
ARTICLE II. AMENDMENTS TO CREDIT AGREEMENT
The Company, the Administrative Agent, the Documentation Agent, the Syndication
Agent and Lenders agree that the Credit Agreement is hereby amended, effective
as of the Effective Date, in the following particulars.
Section 2.01 Amendments and Supplements to Definitions.
1
<PAGE> 3
(a) The term "Agreement," as defined in the Credit Agreement, is hereby amended
to mean the Credit Agreement, as amended and supplemented by this First
Amendment and as the same may from time to time be further amended or
supplemented.
(b) The term "Guarantors," as defined in the Credit Agreement, is hereby
amended in its entirety to read as follows:
"Guarantors" means (a) the Parent, ((b)) the General Partner, (C)
Titan Resources Holdings, Inc., a Nevada corporation, and (d) those
Subsidiaries of the Company designated as Guarantors on Exhibit B and
any other Subsidiary of the Company, designated as a Guarantor by (i)
the Company with the approval of the Administrative Agent, or (ii) the
Majority Lenders, in each case pursuant to Section 5.01(j).
Section 2.02 Amendment to Section 5.03(d) - Distribution, Etc. Section 5.03(d)
of the Credit Agreement is hereby amended in its entirety to read as follows:
"(d) Distribution, etc. Make any distribution of profits or purchase,
redeem or otherwise acquire for value any of the partnership interests
in the Company now or hereafter outstanding, return any capital to its
Partners, or make any distribution of its assets to its Partners as
such; provided, however, so long as no Default or Event of Default has
occurred and is continuing hereunder or would occur as a consequence
thereof, the Company may make (i) distributions to its Partners for
the payment of cash taxes due and payable by the Partners as a result
of their partnership interests in the Company, (ii) distributions to
the Parent which will be used by the Parent from time to time to
purchase up to and including $25,000,000 in the aggregate of its
issued and outstanding common stock; provided, however, no such
distribution shall be made unless twenty-five percent (25%) of the
Maximum Available Amount shall remain available under this Agreement
after giving effect to the latest borrowings hereunder made in
connection with the acquisition of the Parent's common stock, and
(iii) other distributions to its Partners not to exceed $2,500,000 in
the aggregate in any calendar year, less the aggregate principal
amount of Indebtedness permitted by Section 5.03(a)(v) which is
incurred and outstanding in the same calendar year."
Section 2.03 Amendment to Section 5 03(j) - Proceeds of Loan. Section 5.03(j)
is hereby amended by deleting clause (iii) from the first sentence thereof and
substituting in its place a new clause (iii) and a new clause (iv) which shall
read in their entirety, as follows:
"(iii) for general corporate purposes (not including dividends or
distributions to its Partners) and (iv) to pay dividends or make
distributions to its Parent for the purpose of enabling its Parent to
repurchase from time to time its issued and outstanding common stock;
provided, however, no borrowings may be made on the Loan in connection
with any repurchase of the Parent's common stock, unless twenty-five
percent (25%) of the Maximum Available Amount shall remain available
under this Agreement after giving effect to the latest borrowings
hereunder made in connection with the acquisition of the Parent's
common stock."
ARTICLE III. MISCELLANEOUS
Section 3.01 Adoption. Ratification and Confirmation of Credit Agreement. Each
of the Company, the Administrative Agent, the Documentation Agent, the
Syndication Agent and Lenders does hereby adopt, ratify and confirm the Credit
Agreement, as amended hereby, and acknowledges and agrees that the Credit
Agreement, as amended hereby, is and remains in full force and effect.
Section 3.02 Successors and Assigns. This First Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns permitted pursuant to the Credit Agreement.
Section 3.03 Counterparts. This First Amendment may be executed by one or more
of the parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument and shall be enforceable as of the Effective Date upon the execution
of one or more counterparts hereof by the Company, the Administrative Agent,
the Documentation Agent, the Syndication Agent
2
<PAGE> 4
and Lenders. In this regard, each of the parties hereto acknowledges that a
counterpart of this First Amendment containing a set of counterpart execution
pages reflecting the execution of each party hereto shall be sufficient to
reflect the execution of this First Amendment by each necessary party hereto
and shall constitute one instrument.
Section 3.04 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative. Definitions of terms
defined in the singular or plural shall be equally applicable to the plural or
singular, as the case may be, unless otherwise indicated.
Section 3.05 Entire Agreement. This First Amendment constitutes the entire
agreement among the parties hereto with respect to the subject hereof. All
prior understandings, statements and agreements, whether written or oral,
relating to the subject hereof are superseded by this First Amendment.
Section 3.06 Invalidity. In the event that any one or more of the provisions
contained in this First Amendment shall for any reason be held invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this First Amendment.
Section 3.07 Titles of Articles. Sections and Subsections. All titles or
headings to Articles, Sections, subsections or other divisions of this First
Amendment or the exhibits hereto, if any, are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect
to the other content of such Articles, Sections, subsections, other divisions
or exhibits, such other content being controlling as the agreement among the
parties hereto.
Section 3.08 Governing Law. This First Amendment shall be deemed to be a
contract made under and shall be governed by and construed in accordance with
the internal laws of the State of New York.
THIS FIRST AMENDMENT, THE CREDIT AGREEMENT, AS SUPPLEMENTED AND AMENDED HEREBY,
THE NOTES, AND THE OTHER SECURITY INSTRUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the Effective Date.
BORROWER: TITAN RESOURCES, L.P., a Texas limited
partnership
By: Titan Resources I, Inc., its General Partner
By: /s/ Jack Hightower
-----------------------------------
Name: Jack Hightower
Title: President
AGENT AND LENDERS: THE CHASE MANHATTAN BANK, Individually
as Issuing Bank and as Administrative Agent
By: /s/ Mary Jo Woodford
-----------------------------------
Name: Mary Jo Woodford
Title: Vice President
3
<PAGE> 5
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, Individually and as Documentation
Agent
By:/s/ Michael J. Kolosowsky
-----------------------------------
Name: Michael J. Kolosowsky
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, Individually and as Syndication Agent
By:/s/ John Kowalczuk
-----------------------------------
Name: John Kowalczuk
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By:/s/ Pascal Poupelle
-----------------------------------
Name: Pascal Poupelle
Title: Executive Vice President
BANK ONE, TEXAS, N.A..
By:/s/ Wm. Mark Cramer
-----------------------------------
Name: Wm. Mark Cramer
Title: Vice President
BANQUE PARIBAS
By:/s/ Brian Malone
-----------------------------------
Name: Brian Malone
Title: Vice President
By:/s/ Marian Livingston
-----------------------------------
Name: Marian Livingston
Title: Vice President
UNION BANK OF CALIFORNIA, N.A..
By:/s/ Katie Murray
-----------------------------------
Name: Katie Murray
Title: Vice President
4
<PAGE> 6
By:/s/ Tony R. Werber
-----------------------------------
Name: Tony R. Werber
Title: Vice President
5
<PAGE> 1
EXHIBIT 10.13.2
GUARANTY AGREEMENT
by
[See Annex A]
in favor of
THE CHASE MANHATTAN BANK, as Administrative Agent
[See Annex A]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1
General Terms
Section 1.1 Terms Defined Above.................................................................... 1
Section 1.2 Certain Definitions ................................................................... 1
Section 1.3 Credit Agreement Definitions........................................................... 2
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed ................................................................ 2
Section 2.2 Nature of Guaranty .................................................................... 2
Section 2.3 Administrative Agent's Rights ......................................................... 2
Section 2.4 Guarantor's Waivers ................................................................... 2
Section 2.5 Maturity of Liabilities: Payment....................................................... 4
Section 2.6 Administrative Agent's Expenses........................................................ 4
Section 2.7 Liability.............................................................................. 4
Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations................................................................ 4
ARTICLE 3
Representations and Warranties
Section 3.1 By Guarantor .......................................................................... 7
Section 3.2 No Representation by Lenders........................................................... 8
ARTICLE 4
Subordination of Indebtedness
Section 4.1 Subordination of All Guarantor Claims.................................................. 8
Section 4.2 Claims in Bankruptcy................................................................... 8
Section 4.3 Payments Held in Trust ................................................................ 8
Section 4.4 Liens Subordinate...................................................................... 9
Section 4.5 Notation of Records.................................................................... 9
ARTICLE 5
Security
Section 5.1 Grant of Security Interest............................................................. 9
Section 5.2 Financing Statements .................................................................. 9
Section 5.3 Remedies............................................................................... 9
Section 5.4 Rights ................................................................................ 10
ARTICLE 6
Miscellaneous
Section 6.1 Successors and Assigns ................................................................ 10
Section 6.2 Notices ............................................................................... 10
Section 6.3 Business and Financial Information .................................................... 10
Section 6.4 Construction .......................................................................... 10
Section 6.5 Invalidity ............................................................................ 10
Section 6.6 Entire Agreement ...................................................................... 10
</TABLE>
<PAGE> 3
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by [See Annex A], (hereinafter called "Guarantor),
is in favor of THE CHASE MANHATTAN BANK, as Administrative Agent (the
"Administrative Agent) for the lenders (the "Lenders") that are or become
parties to the Credit Agreement defined below.
WITNESSETH:
WHEREAS, on October 31, 1996, Titan Resources, L.P., a Texas limited
partnership (hereinafter called "Company"), the Administrative Agent, First
Union National Bank of North Carolina, as Documentation Agent, Morgan Guaranty
Trust Company of New York, as Syndication Agent, and the Lenders have entered
into that certain Amended and Restated Credit Agreement (as amended by First
Amendment to Amended and Restated Credit Agreement dated of even date herewith,
and as the same may be further amended from time to time, the "Credit
Agreement"); and
WHEREAS, one of the terms and conditions stated in the Credit Agreement
for the making of the loans described therein is the execution and delivery to
the Administrative Agent for the benefit of the Lenders of this Guaranty
Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions of
the Credit Agreement, (ii) to induce the Lenders, at any time or from time to
time, to loan moneys, with or without security to or for the account of Company
in accordance with the terms of the Credit Agreement, (iii) at the special
insistence and request of the Lenders, and (iv) for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor hereby agrees as follows:
ARTICLE 1
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement, the
terms "Company, "Guarantor", "Credit Agreement" and "Lenders" shall have the
meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Collateral" shall have the meaning indicated in Section 5.1 hereof.
"Guarantor Claims" shall have the meaning indicated in Section 4.1 hereof.
"Guaranty Agreement" shall mean this Guaranty Agreement, as the same may
from time to time be amended or supplemented.
"Liabilities" shall mean (a) any and all indebtedness, obligations and
liabilities of the Company pursuant to the Credit Agreement, including
without limitation, the unpaid principal of and interest on the Notes,
including without limitation, interest accruing subsequent to the filing
of a petition or other action concerning bankruptcy or other similar
proceeding, and performance of all Letter of Credit Agreements executed
from time to time by the Company under or pursuant to the Credit Agreement
and all reimbursement obligations for drawn or undrawn portions under any
Letter of Credit now outstanding or hereafter issued under or pursuant to
the Credit Agreement; (b) any additional loans made by the Lenders to the
Company; (c) payment of and performance of any and all present or future
obligations of the Company to any Lender or any Affiliate of such Lender
under any Hedge Agreement between the Company and any Lender or any
Affiliate of such Lender; (d) any and all other indebtedness, obligations
and liabilities of any kind of the Company to the Lenders, now or
hereafter existing, arising directly between the Company and the Lenders
or acquired outright, as a participation, conditionally or as collateral
security from another by the Lenders, absolute or contingent, joint and/or
several, secured or unsecured,
1
<PAGE> 4
due or not due, arising by operation of law or otherwise, or direct or
indirect, including indebtedness, obligations and liabilities to the
Lenders of the Company as a member of any partnership, syndicate,
association or other group, and whether incurred by the Company as
principal, surety, endorser, guarantor, accommodation party or otherwise;
and (e) all renewals, rearrangements, increases, extensions for any
period, amendments or supplement in whole or in part of the Notes or any
documents evidencing the above.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined herein,
all terms beginning with a capital letter which are defined in the Credit
Agreement shall have the same meanings herein as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably and
unconditionally guarantees the prompt payment of the Liabilities when due,
whether at maturity or otherwise.
Section 2.2 Nature of Guaranty. This Guaranty Agreement is an absolute,
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Liabilities or any extension of credit already
or hereafter contracted by or extended to Company need be given to Guarantor.
This Guaranty Agreement may not be revoked by Guarantor and shall continue to
be effective with respect to debt under the Liabilities arising or created
after any attempted revocation by Guarantor and shall remain in full force and
effect until the Liabilities are paid in full and the Commitments are
terminated, notwithstanding that from time to time prior thereto no Liabilities
may be outstanding. Company and the Lenders may modify, alter, rearrange,
extend for any period and/or renew from time to time, the Liabilities, and the
Lenders may waive any Default or Events of Default without notice to the
Guarantor and in such event Guarantor will remain fully bound hereunder on the
Liabilities. This Guaranty Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the Liabilities
is rescinded or must otherwise be returned by any of the Lenders upon the
insolvency, bankruptcy or reorganization of Company or otherwise, all as though
such payment had not been made. This Guaranty Agreement may be enforced by the
Administrative Agent and any subsequent holder of any of the Liabilities and
shall not be discharged by the assignment or negotiation of all or part of the
Liabilities. Guarantor hereby expressly waives presentment, demand, notice of
nonpayment, protest and notice of protest and dishonor, notice of Default or
Event of Default, notice of intent to accelerate the maturity and notice of
acceleration of the maturity and any other notice in connection with the
Liabilities, and also notice of acceptance of this Guaranty Agreement,
acceptance on the part of the Lenders being conclusively presumed by the
Lenders' request for this Guaranty Agreement and delivery of the same to the
Administrative Agent.
Section 2.3 Administrative Agent's Rights. Guarantor authorizes the
Administrative Agent, without notice or demand and without affecting
Guarantor's liability hereunder, to take and hold security for the payment of
this Guaranty Agreement and/or the Liabilities, and exchange, enforce, waive
and release any such security; and to apply such security and direct the order
or manner of sale thereof as the Administrative Agent in its discretion may
determine; and to obtain a guaranty of the Liabilities from any one or more
Persons and at any time or times to enforce, waive, rearrange, modify, limit or
release any of such other Persons from their obligations under such guaranties.
Section 2.4 Guarantor's Waivers.
(a) General. Guarantor waives any right to require any of the Lenders
to (i) proceed against Company or any other person liable on the
Liabilities, (ii) enforce any of their rights against any other guarantor
of the Liabilities (iii) proceed or enforce any of their rights against or
exhaust any security given to secure the Liabilities (iv) have Company
joined with Guarantor in any suit arising out of this Guaranty Agreement
and/or the Liabilities, or (v) pursue any other remedy in the Lenders'
powers whatsoever. The Lenders shall not be required to mitigate damages
or take any action to reduce, collect or enforce the Liabilities.
Guarantor waives any defense arising by reason of any disability, lack of
corporate authority or power, or other defense of Company or any other
guarantor of the Liabilities, and shall remain liable hereon
2
<PAGE> 5
regardless of whether Company or any other guarantor be found not liable
thereon for any reason. Whether and when to exercise any of the remedies
of the Lenders under any of the Financing Documents shall be in the sole
and absolute discretion of the Administrative Agent, and no delay by the
Administrative Agent in enforcing any remedy, including delay in
conducting a foreclosure sale, shall be a defense to the Guarantor's
liability under this Guaranty Agreement. To the extent allowed by
applicable law, the Guarantor hereby waives any good faith duty on the
part of the Administrative Agent in exercising any remedies provided in
the Financing Documents.
(b) Subrogation. Until the Liabilities have been paid in full, the
Guarantor waives all rights of subrogation or reimbursement against the
Company, whether arising by contract or operation of law (including,
without limitation, any such right arising under any federal or state
bankruptcy or insolvency laws) and waives any right to enforce any remedy
which the Lenders now have or may hereafter have against the Company, and
waives any benefit or any right to participate in any security now or
hereafter held by the Administrative Agent or any Lender. The Guarantor
further agrees for the benefit of each of its creditors (including,
without limitation, the Lenders) that any such payment by the Guarantor
shall constitute a contribution of capital by the Guarantor to the
Company.
Section 2.5 Maturity of Liabilities: Payment. Guarantor agrees that if the
maturity of any of the Liabilities is accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor. Guarantor will, forthwith upon
notice from the Administrative Agent, pay to the Administrative Agent the
amount due and unpaid by Company and guaranteed hereby. The failure of the
Administrative Agent to give this notice shall not in any way release Guarantor
hereunder.
Section 2.6 Administrative Agent's Expenses. If Guarantor fails to pay the
Liabilities after notice from the Administrative Agent of Company's failure to
pay any Liabilities at maturity, and if the Administrative Agent obtains the
services of an attorney for collection of amounts owing by Guarantor hereunder,
or obtaining advice of counsel in respect of any of their rights under this
Guaranty Agreement, or if suit is filed to enforce this Guaranty Agreement, or
if proceedings are had in any bankruptcy, probate, receivership or other
judicial proceedings for the establishment or collection of any amount owing by
Guarantor hereunder, or if any amount owing by Guarantor hereunder is collected
through such proceedings, Guarantor agrees to pay to the Administrative Agent
the Administrative Agent's reasonable attorneys' fees.
Section 2.7 Liability. It is expressly agreed that the liability of the
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
following to the fullest extent permitted by law, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:
(a) Modifications, etc. Any renewal, extension, modification,
increase, decrease, alteration or rearrangement of all or any part of the
Liabilities, or of the Notes, or the Credit Agreement or any instrument
executed in connection therewith, or any contract or understanding between
Company and any of the Lenders, or any other Person, pertaining to the
Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by any of the Lenders to Company
or Guarantor or any Person liable on the Liabilities;
(c) Condition of Company or Guarantor. The insolvency, bankruptcy
arrangement, adjustment, composition, liquidation, disability,
dissolution, death or lack of power of Company or Guarantor or any other
Person at any time liable for the payment of all or part of the
Liabilities; or any dissolution of Company or Guarantor, or any sale,
lease or transfer of any or all of the assets of Company or Guarantor, or
any changes in the shareholders, partners, or members of Company or
Guarantor; or any reorganization of Company or Guarantor;
3
<PAGE> 6
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any document or
agreement executed in connection with the Liabilities, for any reason
whatsoever, including without limitation the fact that the Liabilities, or
any part thereof, exceed the amount permitted by law, the act of creating
the Liabilities or any part thereof is ultra vires, the officers or
representatives executing the documents or otherwise creating the
Liabilities acted in excess of their authority, the Liabilities violate
applicable usury laws, the Company has valid defenses, claims or offsets
(whether at law, in equity or by agreement) which render the Liabilities
wholly or partially uncollectible from Company, the creation, performance
or repayment of the Liabilities (or the execution, delivery and
performance of any document or instrument representing part of the
Liabilities or executed in connection with the Liabilities, or given to
secure the repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or the Credit Agreement or other
documents or instruments pertaining to the Liabilities have been forged or
otherwise are irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the liability
of Company on the Liabilities or any part thereof, of any co-guarantors,
or any other Person now or hereafter liable, whether directly or
indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Liabilities or any part thereof, it
being recognized, acknowledged and agreed by Guarantor that Guarantor may
be required to pay the Liabilities in full without assistance or support
of any other Person, and Guarantor has not been induced to enter into this
Guaranty Agreement on the basis of a contemplation, belief, understanding
or agreement that other parties other than the Company will be liable to
perform the Liabilities, or the Lenders will look to other parties to
perform the Liabilities.
(f) Other Security. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part
of the Liabilities;
(g) Release of Collateral. etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment)
of any collateral, property or security, at any time existing in
connection with, or assuring or securing payment of, all or any part of
the Liabilities;
(h) Care and Diligence. The failure of the Lenders or any other
Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or any
part of such collateral, property or security;
(i) Status of Liens. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted
as security for the repayment of the Liabilities shall not be properly
perfected or created, or shall prove to be unenforceable or subordinate to
any other security interest or lien, it being recognized and agreed by
Guarantor that Guarantor is not entering into this Guaranty Agreement in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Liabilities;
(j) Payments Rescinded. Any payment by Company to the Lenders is held
to constitute a preference under the bankruptcy laws, or for any reason
the Lenders are required to refund such payment or pay such amount to
Company or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or omitted
to be taken with respect to the Credit Agreement, the Liabilities, or the
security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be
required to pay the Liabilities pursuant to the terms hereof; it being the
unambiguous and unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Liabilities when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether contemplated
or uncontemplated, and whether or not otherwise or particularly described
herein, except for the full and final payment and satisfaction of the
Liabilities.
4
<PAGE> 7
ARTICLE 3
Representations and Warranties
Section 3.1 Guarantor. In order to induce the Lenders to accept this
Guaranty Agreement, Guarantor represents and warrants to the Lenders (which
representations and warranties will survive the creation of the Liabilities and
any extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this
Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, Guarantor.
(b) Corporate Existence. Guarantor is a corporation duly organized,
legally existing and in good standing under the laws of the State of
Delaware and is duly qualified as a foreign corporation in all
jurisdictions wherein the property owned or the business transacted by it
makes such qualification necessary.
(c) Corporate Power and Authorization. Guarantor is duly authorized
and empowered to execute, deliver and perform this Guaranty Agreement and
all corporate action on Guarantor's part requisite for the due execution,
delivery and performance of this Guaranty Agreement has been duly and
effectively taken.
(d) Binding Obligations. This Guaranty Agreement constitutes valid
and binding obligations of Guarantor, enforceable in accordance with its
terms (except that enforcement may be subject to any applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement
of creditors' rights).
(e) No Legal Bar or Resultant Lien. This Guaranty Agreement will not
violate any provisions of Guarantor's articles or certificate of
incorporation, bylaws, or any contract, agreement, law, regulation, order,
injunction, judgment, decree or writ to which Guarantor is subject, or
result in the creation or imposition of any Lien upon any Properties of
Guarantor.
(f) No Consent. Guarantor's execution, delivery and performance of
this Guaranty Agreement does not require the consent or approval of any
other Person, including without limitation any regulatory authority or
governmental body of the United States or any state thereof or any
political subdivision of the United States or any state thereof.
(g) Solvency. The Guarantor hereby represents that (i) it is not
insolvent as of the date hereof and will not be rendered insolvent as a
result of this Guaranty Agreement, (ii) it is not engaged in business or a
transaction, or about to engage in a business or a transaction, for which
any property or assets remaining with such Guarantor is unreasonably small
capital, and (iii) it does not intend to incur, or believe it will incur,
debts that will be beyond its ability to pay as such debts mature.
Section 3.2 No Representation by Lenders. Neither the Lenders nor any
other Person has made any representation, warranty or statement to the
Guarantor in order to induce the Guarantor to execute this Guaranty Agreement.
ARTICLE 4
Subordination of Indebtedness
Section 4.1 Subordination of All Guarantor Claims. As used herein, the
term "Guarantor Claims" shall mean all debts and liabilities of Company to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Company thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may
hereafter be acquired by Guarantor. The Guarantor Claims shall include without
limitation all rights and claims of Guarantor
5
<PAGE> 8
against Company arising as a result of subrogation or otherwise as a result of
Guarantor's payment of all or a portion of the Liabilities. During the
continuance of any Default, Guarantor shall not receive or collect, directly or
indirectly, from Company or any other party any amount upon the Guarantor
Claims.
Section 4.2 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Company as debtor, the Lenders shall have the right to
prove their claim in any proceeding, so as to establish their rights hereunder
and receive directly from the receiver, trustee or other court custodian,
dividends and payments which would otherwise be payable upon Guarantor Claims.
Guarantor hereby assigns such dividends and payments to the Lenders. Should the
Administrative Agent or any Lender receive, for application upon the
Liabilities, any such dividend or payment which is otherwise payable to
Guarantor, and which, as between Company and Guarantor, shall constitute a
credit upon the Guarantor Claims, then upon payment in full of the Liabilities,
Guarantor shall become subrogated to the rights of the Lenders to the extent
that such payments to the Lenders on the Guarantor Claims have contributed
toward the liquidation of the Liabilities, and such subrogation shall be with
respect to that portion of the Liabilities which would have been unpaid if the
Administrative Agent or a Lender had not received dividends or payments upon
the Guarantor Claims.
Section 4.3 Payments Held in Trust. In the event that notwithstanding
Sections 4.1 and 4.2 above, Guarantor should receive any funds, payments,
claims or distributions which is prohibited by such Sections, Guarantor agrees
to hold in trust for the Lenders an amount equal to the amount of all funds,
payments, claims or distributions so received, and agrees that it shall have
absolutely no dominion over the amount of such funds, payments, claims or
distributions except to pay them promptly to the Administrative Agent, and
Guarantor covenants promptly to pay the same to the Administrative Agent.
Section 4.4 Liens Subordinate. Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon Company's assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Company's assets securing payment of the Liabilities,
regardless of whether such encumbrances in favor of Guarantor, the
Administrative Agent or the Lenders presently exist or are hereafter created or
attach. Without the prior written consent of the Lenders, Guarantor shall not
(a) exercise or enforce any creditor's right it may have against the Company,
or (b) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceeding judicial or otherwise, including without limitation the
commencement of or joinder in any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any lien, mortgages, deeds
of trust, security interest, collateral rights, judgments or other encumbrances
on assets of Company held by Guarantor.
Section 4.5 Notation of Records. All promissory notes, or other
instruments evidencing the Guarantor Claims accepted by or held by Guarantor
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty Agreement.
ARTICLE 5
Security
Section 5.1 Grant of Security Interest. As security for Guarantor's
obligations hereunder, Guarantor hereby grants to the Administrative Agent for
the benefit of the Lenders a security interest in, a general lien upon and/or
right of set-off against all of Guarantor's right, title and interest in and to
the following (herein referred to as the "Collateral"): the balance of every
deposit account, now or hereafter existing, of Guarantor with any Lender and
any other claim of Guarantor against the Lenders, now or hereafter existing,
and all money, instruments, securities, documents, chattel paper, credits,
claims, demands and any other property, rights and interest of Guarantor, which
at any time shall come into the possession or custody or under the control of
the Lenders or any of its agents or affiliates, for any purpose, and shall
include the Collateral in transit to or set apart for them.
Section 5.2 Financing Statements. The right is expressly granted to the
Administrative Agent, at its discretion, to file one or more financing
statements or a copy of this Guaranty Agreement under the Uniform Commercial
Code naming Guarantor as Debtor and the Administrative Agent as Secured Party
and indicating therein the types or describing the items of Collateral.
6
<PAGE> 9
Section 5.3 Remedies. In the event of default under this Guaranty
Agreement, the Administrative Agent may sell or cause to be sold, in one or
more sales or parcels, at such price as the Administrative Agent may deem best,
and for cash or on credit or for future delivery, without assumption of any
credit risk, all or any of the Collateral at any broker's board or at public or
private sale, without demand or performance or notice of intention to sell or
of time or place of sale (except such notice as is required by applicable
statute and cannot be waived), and any Lender or anyone else may be the
purchaser of any or all of the Collateral so sold and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
equity of redemption of Guarantor, any such demand, notice or right and equity
being hereby expressly waived and released.
Section 5.4 Rights. The grant of the above security interest and lien
shall not in anywise limit or be construed as limiting the Lenders to collect
payment of Guarantor's obligations hereunder only out of the Collateral, but it
is expressly understood and provided that all such obligations shall constitute
the absolute and unconditional obligations of Guarantor. The Lenders shall not
be required to take any steps necessary to preserve any rights against prior
parties to any of the Collateral.
ARTICLE 6
Miscellaneous
Section 6.1 Successors and Assigns. This Guaranty Agreement is and shall
be in every particular available to the successors and assigns of the Lenders
and is and shall always be fully binding upon the legal representatives, heirs,
successors and assigns of Guarantor, notwithstanding that some or all of the
moneys, the repayment of which this Guaranty Agreement applies, may be actually
advanced after any bankruptcy, receivership, reorganization, death, disability
or other event affecting Guarantor.
Section 6.2 Notices. Any notice or demand to Guarantor under or in
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in accordance with
Section 8.01 of the Credit Agreement, addressed to Guarantor at the address on
the signature page hereof or at such other address provided to the
Administrative Agent in writing.
Section 6.3 Business and Financial Information. The Guarantor will
promptly furnish to the Administrative Agent and the Lenders from time to time
upon request such information regarding the business and affairs and financial
condition of the Guarantor and its subsidiaries as the Administrative Agent and
the Lenders may reasonably request.
Section 6.4 Construction. This Guaranty Agreement is a contract made under
and shall be construed in accordance with and governed by the laws of the State
of New York.
Section 6.5 Invalidity. In the event that any one or more of the
provisions contained in this Guaranty Agreement shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Guaranty
Agreement.
Section 6.6 Entire Agreement. THIS WRITTEN GUARANTY AGREEMENT EMBODIES
THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDERS AND THE GUARANTOR
AND SUPERSEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
WITNESS THE EXECUTION HEREOF, as of the (See Annex A).
7
<PAGE> 10
[See Annex A.]
By: /s/ Jack Hightower
-------------------------------------
Name: Jack Hightower
Title: President
Address: 500 West Texas, Suite 500
Midland, Texas 79710
Telephone No.: 915/682-6612
Telecopier No.: 915/687-3863
ANNEX A
<TABLE>
<CAPTION>
Name of Guarantor Date Executed
- ----------------- -------------
<S> <C>
Titan Exploration, Inc. October 31,1997
Titan Resources I, Inc. October 31, 1997
Titan Resources Holding, Inc. May 12, 1997
</TABLE>
8
<PAGE> 1
EXHIBIT 10.25
MASTER
PROMISSORY NOTE
$5,000,000.00 (this "Note") MARCH 6, 1997
FOR VALUE RECEIVED, the undersigned, TITAN RESOURCES, L.P., a Texas
limited partnership ("Company") promises to pay to the order of TEXAS COMMERCE
BANK NATIONAL ASSOCIATION ("BANK"), on or before March 6, 1998 ("Final Maturity
Date") at its offices located at 712 Main Street, Houston, Texas 77002 in
lawful money of the United States of America and in immediately available
funds, the principal amount of each loan (a "Loan") shown in Bank's records to
have been made by Bank and on the relevant maturity date as set forth in Bank's
records. Each Loan shall also have its own date of maturity agreed by Company
and Bank which will occur prior to the Final Maturity Date. The rate of
interest on each Loan evidenced hereby from time to time shall be the interest
rate which shall be determined for each Loan by agreement between Company and
Bank but, in no event, shall exceed the maximum interest rate permitted under
applicable law ("Highest Lawful Rate"). If Texas law determines the Highest
Lawful Rate, Bank has elected the "indicated" (weekly) ceiling as defined in
the Texas Credit Code or any successor statue. All past due amounts shall bear
interest at a per annum interest rate equal to the Prime Rate plus one percent
(1%) "Prime Rate" means the rate determined from time to time by Bank as its
prime rate. The Prime Rate shall change automatically from time to time without
notice to Borrower or any other person. THE PRIME RATE IS A REFERENCE RATE AND
MAY NOT BE BANK'S LOWEST RATE.
Interest on each Loan shall be: (i) computed on the unpaid principal
amount of the Loan outstanding from the date of advance until paid; (ii)
payable at maturity and thereafter on demand; and (iii) shall be calculated on
the basis of a year of 360 days for the actual days elapsed.
The total amount of interest (as defined under applicable law) contracted
for, charged or collected under this Note will never exceed the Highest Lawful
Rate. If Bank contracts for, charges or receives any excess interest, it will
be deemed a mistake. Bank will automatically reform the contract or charge to
conform to applicable law, and if excess interest has been received, Bank will
either refund the excess or credit the excess on the unpaid principal amount of
this Note. All amounts constituting interest will be spread throughout the full
term of this Note in determining whether interest exceeds lawful amounts.
Each of the following is an event of default ("Events of Default"):
(a) Company shall fail to pay any amount of principal of or interest on
this Note when due;
(b) Company shall fail to pay when due any amount of principal or
interest with respect to any obligation to Bank (other than this
Note); or
(c) Company shall fail to pay any amount relating to any other
indebtedness for borrowed money or other pecuniary obligation
(including any contingent such obligation) or an event or condition
shall occur or exist which gives the holder of any such indebtedness
or obligation the right or option to accelerate the maturity thereof.
(d) Company shall commence any bankruptcy, reorganization or similar case
or proceeding relating to it or its property under the law of any
jurisdiction, or a trustee or receiver shall be appointed for itself
or any substantial part of its property;
(e) any involuntary bankruptcy, reorganization or similar case or
proceeding under the law of any jurisdiction shall have been
commenced against Company or any substantial part of its property and
such case or proceeding shall not have been dismissed within 60 days,
or Company shall have consented to such case or proceeding; or
(f) Company shall admit in writing its inability to pay its debts as they
become due.
Upon the happening of any Event of Default specified in paragraphs (d),
(e) or (f) above, automatically the Loans evidenced by this Note (with accrued
interest thereon) shall immediately become due and payable, and upon the
happening of an Event of Default specified in paragraphs (a), (b) or ( c )
above, Bank may, by notice to Company, Declare the Loans evidenced by this Note
(with accrued interest thereon) to be due and payable, whereupon the same shall
immediately become due and payable. Except as expressly provided above,
presentment, demand, protest, notice of intent to accelerate, acceleration and
all other notices of any kind are hereby expressly waived.
The Company hereby agrees to pay on demand, in addition to unpaid
principal and interest, all Bank's costs and expenses incurred in attempting or
effecting collection hereunder, including the reasonable fees and expenses of
counsel (which may include, to the extent permitted by applicable law,
allocated costs of in-house counsel), whether or not suit is instituted.
This Note is executed and delivered by Company to evidence Loans which may
be made by Bank to Company not to exceed $5,000,000.00. COMPANY UNDERSTANDS
THAT BANK HAS NO OBLIGATION TO MAKE ANY LOAN TO COMPANY UNDER THIS NOTE.
All Loans evidenced by this Note are and will be for business and
commercial purposes and no Loan will be used for the purpose of purchasing or
carrying any margin stock as that term is defined in Regulation U of the Board
of Governors of the Federal Reserve System (the "Board").
Chapter 15 of the Texas Credit Code does not apply to this Note or to any
Loan evidenced by this Note. This Note shall be governed by the laws of the
State of Texas and the laws of the United States as applicable.
Bank shall, and is hereby authorized by Company, to record in its records
the date, amount, interest rate and due date of each Loan as well as the date
and amount of each payment by the undersigned in respect thereof. Payments may
be applied to accrued interest or principal in whatever order Bank chooses.
Loans evidenced by this Note may not be prepaid. In the event any such
prepayment occurs, Company shall indemnify Bank against any loss, liability,
damage, cost or expense which Bank may sustain or incur as a consequence
thereof, including without limitation any loss, liability, damage, cost or
expense sustained or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain such Loan or any part thereof. Bank
shall provide to Company a written statement explaining the amount of any such
loss or expense, which statement shall be conclusive absent manifest error.
No waiver of any default shall be deemed to be a waiver of any other
default. No failure to exercise or delay in exercising any right or power under
this Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power preclude any further or other exercise
thereof or the exercise of any other right or power. No amendment, modification
or waiver of this Note shall be effective unless the same is in writing and
signed by the person against whom such amendment, modification or waiver is
sought to be enforced. No notice to or demand on any person shall entitle any
person to any other or further notice or demand in similar or other
circumstances.
This Note shall be binding upon the successors and assigns of Company and
inure to the benefit of Bank, its successors, endorsees and assigns
(furthermore, Bank may assign or pledge this Note or any interest therein to
any Federal Reserve Bank). If any term or provision of this Note shall be held
invalid, illegal or unenforceable the validity of all other terms and
provisions will not be affected.
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
TITAN RESOURCES, L.P., a Texas limited
partnership
By: TITAN RESOURCES I INC., its General
Partner
By: /s/ Jack Hightower
------------------------------------
Name: Jack Hightower
Title: President
(The Bank's signature is provided as
its acknowledgment of the above as
the final written agreement between the parties.)
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ Sandra Aultman
------------------------------------
Name: Sandra Aultman
Title: Vice President
1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 655
<SECURITIES> 0
<RECEIVABLES> 9,220
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,360
<PP&E> 227,449
<DEPRECIATION> 15,545
<TOTAL-ASSETS> 222,958
<CURRENT-LIABILITIES> 11,463
<BONDS> 0
0
0
<COMMON> 339
<OTHER-SE> 193,391
<TOTAL-LIABILITY-AND-EQUITY> 222,958
<SALES> 34,239
<TOTAL-REVENUES> 34,239
<CGS> 0
<TOTAL-COSTS> 27,693
<OTHER-EXPENSES> (97)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 486
<INCOME-PRETAX> 6,157
<INCOME-TAX> 2,155
<INCOME-CONTINUING> 4,002
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,002
<EPS-PRIMARY> .11
<EPS-DILUTED> .00
</TABLE>
