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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
DECEMBER 12, 1997
TITAN EXPLORATION, INC.
(Exact name of registrant as specified in is charter)
Delaware 000-21843 75-2671582
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
500 West Texas, Suite 500, Midland, Texas 79701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(915) 682-6612
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Item 2. Acquisition or Disposition of Assets.
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(a) ACQUISITION OF OFFSHORE ENERGY DEVELOPMENT CORPORATION
On December 12, 1997, Titan Offshore, Inc. ("Titan Offshore"), a Delaware
corporation and a wholly-owned subsidiary of Titan Exploration, Inc. ("Titan"),
a Delaware corporation, merged (the "OEDC Merger") with and into Offshore Energy
Development Corporation ("OEDC"), a Delaware corporation, pursuant to the terms
of the Amended and Restated Agreement and Plan of Merger dated November 6, 1997
(the "OEDC Merger Agreement") among Titan, Titan Offshore and OEDC. The OEDC
Merger was consummated by filing with the Secretary of State of Delaware on
December 12, 1997 a certificate of merger under the General Corporation Law of
the State of Delaware, which certificate of merger specified that the effective
time of the merger was 11:59 p.m., Eastern Time.
Pursuant to the OEDC Merger Agreement and as a result of the OEDC Merger:
(i) the separate corporate existence of Titan Offshore ceased, and all of the
properties, rights, privileges, powers and franchises of Titan Offshore vested
in OEDC, which is the surviving corporation in the OEDC Merger, and all of the
debts, liabilities and duties of Titan Offshore attached to OEDC; and (ii) each
share of Common Stock of OEDC, par value $.01 per share ("OEDC Common Stock"),
outstanding immediately prior to the effective time of the OEDC Merger was
converted into the right to receive 0.630 shares of Common Stock of Titan, par
value $.01 per share ("Titan Common Stock"). The exchange ratio was determined
pursuant to arms'-length negotiations between Titan and OEDC.
Pursuant to the OEDC Merger Agreement, Titan will issue in exchange for
shares of OEDC Common Stock up to approximately 5,482,187 shares of Titan Common
Stock (plus cash in lieu of fractional shares).
As of September 30, 1997, Natural Gas Partners, L.P. ("NGP") owned
4,767,407 shares (14.0%) of the outstanding Titan Common Stock and 2,209,460
shares (25.4%) of the outstanding OEDC Common Stock. R. Gamble Baldwin, a
director of OEDC, is the general partner of G.F.W. Energy, L.P. ("GFW"), the
general partner of NGP. David R. Albin, a director of Titan and OEDC, and
Kenneth A. Hersh, a director of Titan, own limited partnership interests in GFW.
Messrs. Albin, Baldwin and Hersh are three of the four managing members of the
general partner of Natural Gas Partners II, L.P. ("NGP II") and also own limited
partnership interests in NGP II's general partner. As of September 30, 1997,
NGP II owned 5,000,777 shares (14.7%) of the outstanding Titan Common Stock. In
addition to the shares of Titan Common Stock and OEDC Common Stock owned by NGP,
as of September 30, 1997, Mr. Baldwin directly owned 9,100 shares and 35,041 of
Titan Common Stock and OEDC Common Stock, respectively. Messrs. Albin and
Hersh, who disclaim beneficial ownership of Titan Common Stock owned by NGP II,
beneficially owned 115,772 shares and 67,381 shares, respectively, of Titan
Common Stock and 52,596 shares and 49,012 shares, respectively, of OEDC Common
Stock. Although OEDC
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informed Messrs. Albin and Baldwin from time to time on a limited basis of the
general status of negotiations with Titan and, likewise, Titan informed Mr.
Hersh of the general status of negotiations with OEDC, none of these individuals
participated in such negotiations or the deliberations of the Board of either
company in reviewing and approving the OEDC Merger.
OEDC is an energy company that focuses on the acquisition, exploration,
development and production of natural gas and on natural gas gathering and
marketing activities. Pursuant to the OEDC Merger, Titan acquired proved
reserves as of December 31, 1996 of 5.5 million barrels of oil equivalent.
For additional information regarding the OEDC Merger, see the sections
captioned: (i) "The Merger -- Effects of the Merger," (ii) "The Merger --
Interests of Certain Persons in the Merger," and (iii) "Certain Provisions of
the Merger Agreement -- Conversion of Shares; Procedure for Exchange of
Certificates; Fractional Shares," which appear on pages 25-26, 37-38, and 43-44,
respectively, of the Joint Proxy Statement/Prospectus of Titan dated November
14, 1997 (the "Joint Proxy Statement/Prospectus"), and which sections are
incorporated herein by reference.
(b) ACQUISITION OF PROPERTIES FROM PIONEER NATURAL RESOURCES COMPANY
On December 16, 1997, Titan completed the acquisition (the "Pioneer
Acquisition") of certain oil and gas producing properties from Pioneer Natural
Resources USA, Inc., a wholly-owned subsidiary of Pioneer Natural Resources
Company ("Pioneer"). The properties, 87% of which were operated by Pioneer, are
located in 46 fields in the Permian Basin of West Texas and Southeastern New
Mexico and currently produce approximately 2,500 barrels of oil equivalent per
day. Of the reserves, 81% are oil. Pursuant to the terms and conditions of the
acquisition agreement, Titan will pay approximately $54.4 million for the
properties. Titan was one of several companies submitting bids for the
properties. As of September 30, 1997, NGP II owned an approximate 6.0% limited
partnership interest in DNR-MESA Holdings, L.P. ("DNR"), a Texas limited
partnership that currently owns approximately 15.3% of the outstanding common
stock of Pioneer. Natural Gas Partners III, L.P., a fund that is under common
management with NGP II and in which Messrs. Albin, Baldwin and Hersh own
indirect partnership interests, also owns an approximate 8% limited partnership
in DNR. Mr. Hersh, a director of Titan, is also a director of Pioneer and
currently owns 4,480 shares of the Common Stock of Pioneer. Mr. Hersh did not
participate in any of the negotiations of the terms of the Acquisition Agreement
between Titan and Pioneer or in any of the deliberations of the Boards of either
Titan or Pioneer concerning the acquisition.
Item 5. Other Events.
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On December 12, 1997, Titan Bayou Bengal Holdings, Inc. ("Titan Sub"), a
Delaware corporation and a wholly-owned subsidiary of Titan, merged (the
"Carrollton Merger") with and
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into Carrollton Resources, L.L.C. ("Carrollton"), a Louisiana limited liability
company, pursuant to the terms of the Agreement and Plan of Merger dated
November 4, 1997 (the "Carrollton Merger Agreement") among Titan, Titan Sub and
Carrollton. The Carrollton Merger was consummated by filing with the Secretary
of State of Louisiana on December 12, 1997 a certificate of merger under the
Louisiana Limited Liability Company Act, which certificate of merger specified
that the effective time of the merger was 11:59 p.m., local time.
Pursuant to the Carrollton Merger Agreement and as a result of the
Carrollton Merger: (i) the separate corporate existence of Titan Sub ceased, and
all of the properties, rights, privileges, powers and franchises of Titan Sub
vested in Carrollton, which is the surviving entity in the Merger, and all of
the debts, liabilities and duties of Titan Sub attached to Carrollton; and (ii)
each membership unit of Carrollton ("Carrollton Units"), outstanding immediately
prior to the effective time of the Carrollton Merger was converted into the
right to receive .54997910 shares of Titan Common Stock. The exchange ratio was
determined pursuant to arms'-length negotiations between Titan and Carrollton.
Pursuant to the Carrollton Merger Agreement, Titan will issue in exchange
for Carrollton Membership Units up to approximately 900,000 shares of Titan
Common Stock (plus cash in lieu of fractional shares).
NGP-Louisiana Partners, L.P. ("NGP-Louisiana"), an affiliate of NGP, owns
39.7207% of Carrollton's outstanding membership units. NGP is the sole limited
partner of NGP-Louisiana, and owns a 95.07% economic interest in NGP-Louisiana.
The corporation serves as the general partner and owns the remaining 4.93% of
NGP-Louisiana. Messrs. Albin, Baldwin and Hersh collectively own a majority of
the common stock of the corporate general partner. These individuals were only
informed from time to time on a limited basis of the general status of
negotiations between Titan and Carrollton and did not participate in
negotiations of the terms of the acquisition agreement or in the deliberations
concerning the agreement of the Titan Board or the Carrollton management
committee.
Carrollton is an energy company that focuses on the exploration,
development and acquisition of onshore oil and gas properties located primarily
in the Gulf Coast region. Pursuant to the Carrollton Merger, Titan acquired
proved reserves as of June 30, 1997 of 2.8 million barrels of oil equivalent.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statements of Businesses Acquired.
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The financial statements relating to the OEDC Merger required by this
item of Form 8-K have been previously reported (within the meaning thereof as
defined in Rule 12b-2)
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by Titan in the Joint Proxy Statement/Prospectus and are accordingly not
included herein in reliance on General Instruction B.3 to Form 8-K.
It is impracticable to provide at this time the financial statements
relating to the Pioneer Acquisition required by this item of Form 8-K. Pursuant
to Rule 7(a)(4) of Form 8-K, such financial statements will be filed as soon as
they are available and on or before March 1, 1998.
(b) Pro Forma Financial Information.
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The pro forma financial information relating to the OEDC Merger
required by this item of Form 8-K has been previously reported (within the
meaning thereof as defined in Rule 12b-2) by Titan in the Joint Proxy
Statement/Prospectus and is accordingly not included herein in reliance on
General Instruction B.3 to Form 8-K.
It is impracticable to provide at this time the pro forma financial
information relating to the Pioneer Acquisition required by this item of Form 8-
K. Pursuant to Rule 7(b)(4) of Form 8-K, such financial statements will be
filed as soon as they are available and on or before March 1, 1998.
(c) Exhibits.
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Exhibit 2.1 - Amended and Restated Agreement and Plan of Merger
dated November 6, 1997 among Titan, Titan Offshore
and OEDC (filed as Appendix I to the Joint Proxy
Statement/Prospectus and incorporated herein by
reference).
Exhibit 2.2 - Agreement and Plan of Merger dated November 4, 1997
among Titan, Titan Sub and Carrollton (filed as
Exhibit 2.3 to Titan's Registration Statement on
Form S-4, Registration No. 333-40215, and
incorporated herein by reference).
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Exhibit 99.1 - Sections captioned (i) "The Merger -- Effects of the
Merger," (ii) "The Merger -- Interests of Certain
Persons in the Merger," and (iii) "Certain
Provisions of the Merger Agreement -- Conversion of
Shares; Procedure for Exchange of Certificates;
Fractional Shares," which appear on pages 25-26, 37-
38, and 43-44, respectively, of the Joint Proxy
Statement/Prospectus.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 23, 1997 TITAN EXPLORATION, INC.
By: /s/ Jack Hightower
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Jack Hightower, President and
Chief Executive Officer
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INDEX TO EXHIBITS
Exhibit
Number Exhibit
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2.1 - Amended and Restated Agreement and Plan of Merger dated
November 6, 1997 among Titan, Titan Offshore and OEDC
(filed as Appendix I to the Joint Proxy
Statement/Prospectus and incorporated herein by
reference).
2.2 - Agreement and Plan of Merger dated November 4, 1997
among Titan, Titan Sub and Carrollton (filed as Exhibit
2.3 to Titan's Registration Statement on Form S-4,
Registration No. 333-40215, and incorporated herein by
reference).
99.1 - Sections captioned (i) "The Merger --Effects of the
Merger," (ii) "The Merger -- Interests of Certain
Persons in the Merger," and (iii) "Certain Provisions of
the Merger Agreement --Conversion of Shares; Procedure
for Exchange of Certificates; Fractional Shares," which
appear on pages 25-26, 37-38, and 43-44, respectively,
of the Joint Proxy Statement/Prospectus.
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Exhibit 99.1
THE MERGER
EFFECTS OF THE MERGER
Pursuant to the Merger Agreement, at the Effective Time, Titan Sub will
merge with and into OEDC and each share of capital stock of OEDC issued and
outstanding immediately prior to the Effective Time will be converted into the
right to receive 0.630 of a share of Titan Common Stock.
As a result of the Merger, the separate corporate existence of Titan Sub
will cease and OEDC will be the surviving corporation in the Merger and will
become a wholly-owned subsidiary of Titan.
No fraction of a share of Titan Common Stock will be issued in connection
with the conversion of OEDC Common Stock pursuant to the Merger, and cash will
be paid in lieu of any fractional shares. See "Certain Provisions of the
Merger Agreement--Conversion of Shares; Procedure for Exchange of
Certificates; Fractional Shares."
Assuming no change in the number of shares of OEDC Common Stock outstanding
at the Effective Time from the number outstanding on the record date for the
OEDC Special Meeting, the number of shares of Titan Common Stock subject to
issuance in the Merger in exchange for shares of OEDC Common Stock is
approximately 5,482,187.
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Based on the capitalization of Titan and OEDC as of September 30, 1997,
immediately after the Effective Time, the former holders of OEDC Common Stock
will hold approximately 13.9% of the then outstanding Titan Common Stock.
Titan does not own any shares of OEDC Common Stock.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the respective Boards of Directors
with respect to the Merger, stockholders of Titan and OEDC should be aware
that certain persons may have direct or indirect interests in the Merger
separate from those of the stockholders of Titan and OEDC generally, including
those discussed below.
Interest of NGP; Registration Rights. As of September 30, 1997, NGP owned
4,767,407 shares (14.0%) of the outstanding Titan Common Stock and 2,209,460
shares (25.4%) of the outstanding OEDC Common Stock. R. Gamble Baldwin, a
director of OEDC, is the general partner of G.F.W. Energy, L.P. ("GFW"), the
general partner of NGP. David R. Albin, a director of Titan and OEDC, and
Kenneth A. Hersh, a director of Titan, own limited partnership interests in
GFW. Messrs. Albin, Baldwin and Hersh are three of the four managing members
of the general partner of NGP II and also own limited partnership interests in
NGP II's general partner. As of September 30, 1997, NGP II owned 5,000,777
shares (14.7%) of the outstanding Titan Common Stock. In addition to the
shares of the Titan Common Stock and OEDC Common Stock owned by NGP, Mr.
Baldwin directly owns 9,100 shares and 35,041 shares of Titan and OEDC,
respectively. Messrs. Albin and Hersh, who disclaim beneficial ownership of
Titan Common Stock owned by NGP II, beneficially own 115,772 shares and 67,381
shares, respectively, of Titan Common Stock and 52,596 shares and 49,012
shares, respectively, of OEDC Common Stock. Although OEDC informed Messrs.
Albin and Baldwin from time to time on a limited basis of
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the general status of negotiations with Titan and, likewise, Titan informed
Mr. Hersh of the general status of negotiations with OEDC, none of these
individuals participated in such negotiations or the deliberations of the
board of either company in reviewing and approving the Merger.
In consideration of NGP's agreement to terminate its rights under (i) the
Registration Rights Agreement among OEDC, NGP and certain other stockholders
of OEDC and (ii) the Registration Rights Agreement among Carrollton, NGP and
certain other stockholders, Titan has agreed with NGP to use its best efforts
to prepare, file and have declared effective within 180 days of consummation
of the Merger a shelf registration statement registering for resale the
1,391,959 shares of Titan Common Stock to be received by NGP in the Merger and
357,486 shares of Titan Common Stock to be received by NGP in the anticipated
acquisition of Carrollton. One half of these shares will remain subject to
lock-up agreements with Titan until one year after consummation of the Merger.
Titan has also agreed to include in the same shelf registration an aggregate
of 86,088 shares of Titan Common Stock that Messrs. Albin, Baldwin and Hersh
will receive in the Merger.
Employment, Stock Options. David B. Strassner, Douglas H. Kiesewetter and R.
Keith Anderson are executive officers and directors of OEDC who have
recommended the Merger to OEDC stockholders. The Merger Agreement provides
that after the Effective Time it is expected that Titan may, in its sole
discretion, offer employment to the employees of OEDC including these three
individuals; provided, however, that Titan shall have no obligations to retain
any of the employees of OEDC. Titan shall provide the retained employees with
the same benefits that accrue to employees of Titan and their OEDC employee
options will vest fully as a result of the Merger.
Voting Agreements. NGP and Messrs. Strassner, Kiesewetter and Anderson have
delivered the Voting Agreements to Titan relating to the 2,209,460 shares,
748,828 shares, 557,806 shares and 308,036 shares of OEDC Common Stock each
owns respectively. Each has agreed, among other things, to vote its or his
shares of OEDC Common Stock (i) in favor of the Merger, (ii) against approval
of any proposition in opposition to the Merger, (iii) against any merger or
other transaction involving OEDC and any party other than as contemplated in
the Merger Agreement and (iv) against any other proposal or action which could
prohibit or discourage the Merger.
Other than upon consummation of the Merger, the Voting Agreements terminate
upon the earlier to occur of (i) the date on which Titan and OEDC mutually
consent to terminate the Voting Agreement and (ii) the termination of the
Merger Agreement pursuant to its terms. See "Certain Provisions of the Merger
Agreement--Termination."
OEDC Employee Stock Options. At the Effective Time, Titan will assume each
OEDC employee option that remains unexercised and substitute shares of Titan
Common Stock as purchasable under each assumed option. By the terms of the
OEDC option plan, the assumed options will be fully vested as a result of the
Merger and will otherwise have the same terms and conditions as the OEDC
employee options. The number of shares of Titan Common Stock purchasable under
an assumed option will be equal to the number of shares of Titan Common Stock
that the holder of the OEDC employee option being assumed would have received
upon consummation of the Merger had such OEDC employee option been fully
vested and exercised in full immediately prior to consummation of the Merger.
The per share exercise price of each assumed option will be an amount equal to
the per share exercise price of the OEDC employee option being assumed divided
by 0.630.
Pursuant to Titan's assumption of the OEDC employee options, Messrs.
Strassner, Kiesewetter and Anderson will have options to purchase 75,600
shares of Titan Common Stock at an exercise price of $19.05 per share. The
other OEDC employees will have options to purchase an aggregate of 231,574
shares of Titan Common Stock, consisting of 113,400 shares at an exercise
price of $19.05 per share and 118,175 shares at an exercise price of $5.73 per
share. See "Certain Provisions of the Merger Agreement--OEDC Options."
Indemnification. Titan has agreed that it will indemnify each person who is,
has been at any time prior to the date of the Merger Agreement, or becomes
prior to the Effective Time, an officer, director or employee of OEDC to the
extent these persons are currently entitled to indemnity from OEDC, subject to
certain exceptions.
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CONVERSION OF SHARES; PROCEDURE FOR EXCHANGE OF CERTIFICATES; FRACTIONAL
SHARES
Subject to the terms and conditions of the Merger Agreement, at the
Effective Time, by virtue of the Merger and without any action on the part of
Titan, OEDC, Titan Sub or their respective stockholders, each share of OEDC
Common Stock issued and outstanding immediately prior to the Effective Time
(the "Shares") will be converted into the right to receive 0.630 of a share of
Titan Common Stock.
As soon as practicable after the Effective Time, each holder of a
certificate that prior thereto represented Shares will be entitled, upon
surrender thereof to Titan or its transfer agent, to receive in exchange
therefor, as applicable a certificate or certificates representing the number
of whole shares of Titan Common Stock into which the shares of OEDC Common
Stock so surrendered shall have been converted in such denominations and
registered in such names as such holder may request. Following the Effective
Time, Titan will cause to be mailed to each holder of certificates that
represented Shares immediately prior to the Effective Time, at such holder's
address as it appears on OEDC's stock transfer records, a letter of
transmittal and other information, advising such holder of the consummation of
the Merger along with instructions to enable such holder to effect the
exchange of stock certificates as contemplated by the Merger Agreement.
Until so surrendered and exchanged, each certificate that prior to the
Effective Time represented Shares shall represent solely the right to receive
Titan Common Stock (and cash in lieu of fractional shares as described below,
if any). Unless and until any such certificates shall be so surrendered and
exchanged, no dividends or other distributions payable to the holders of Titan
Common Stock, as of any time on or after the Effective Time, shall be paid to
the holders of such certificates that prior to the Effective Time represented
Shares; provided, however, that, upon any such surrender and exchange of such
outstanding certificates, there shall be paid to the record holders of the
certificates issued and exchanged therefor the amount, without interest
thereon, of dividends and other distributions, if any, that theretofore were
declared and became payable on or after the Effective Time with respect to the
number of whole shares of Titan Common Stock issued to such holder.
All shares of Titan Common Stock issued upon the surrender for exchange of
certificates that prior to the Effective Time represented Shares in accordance
with the terms of the Merger Agreement (including any cash paid in lieu of
fractional shares, as described below) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Shares. At and after the
Effective Time, there shall be no further registration of transfers on the
stock transfer books of OEDC of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, certificates that
prior to the Effective Time represented Shares are presented to Titan for any
reason, they shall be canceled and exchanged as provided in the Merger
Agreement.
No fractional shares of Titan Common Stock will be issued, and each holder
of OEDC Common Stock who would otherwise be entitled to a fraction of a share
of Titan Common Stock will, upon surrender of the certificates representing
OEDC Common Stock held by such holder to Titan, be paid an amount in cash
equal to the value of such fraction of a share based upon the closing sales
price of Titan Common Stock, as reported on the Nasdaq National Market, on the
last day on which there is a reported trade in the Titan Common Stock prior to
the date on which the Effective Time occurs. No interest will be paid on such
amount. All Shares held by a holder shall be aggregated for purposes of
computing the number of shares of Titan Common Stock to be issued and cash in
lieu of fractional shares.
If any certificate for shares of Titan Common Stock is to be issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it will be a condition of the issuance thereof that the
certificate so surrendered is properly endorsed and otherwise in proper form
for transfer and that the person requesting such exchange has paid to Titan or
its transfer agent any transfer or other taxes required by reason of the
issuance of a certificate for shares of Titan Common Stock in any name other
than that of the registered
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holder of the certificate surrendered, or has established to the satisfaction
of Titan or its transfer agent that such tax has been paid or is not payable.
OEDC STOCKHOLDERS SHOULD NOT FORWARD CERTIFICATES REPRESENTING OEDC COMMON
STOCK TO TITAN OR ITS TRANSFER AGENT UNTIL THEY HAVE RECEIVED INSTRUCTIONS AS
TO THE MANNER OF SURRENDER. OEDC STOCKHOLDERS SHOULD NOT RETURN STOCK
CERTIFICATES WITH THEIR PROXY.
