U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
-------------------------------
Date of Report (Date of earliest event reported):
May 8, 1998
VECTOR ENERGY CORPORATION
fka Sunburst Acquisitions II, Inc.
Texas
(State or other jurisdiction of incorporation or organization)
0-22661
(Commission File No.)
applied for
(I.R.S. Employer Identification No.)
5599 San Felipe, Suite 620
Houston, Texas
(Address of principal executive offices)
77056
(zip code)
Registrant's telephone number, including area code: (713) 850-9993
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The following financial
statements are filed herewith:
Independent Auditors' Report F-1
Statements of Revenue and Direct Expenses of the
Assets Acquired from Lisbon Development Company
L.L.C., Taurus Operating, Inc. and Vector Energy
Corporation for the years ended December 31, 1997
and 1996 and for the three months ended March 31,
1998 (unaudited) F-2
Notes to Statements of Revenue and Direct Expenses
of the Assets Acquired from Lisbon Development
Company L.L.C., Taurus Operating, Inc. and Vector
Energy Corporation F-3 to F-6
(b) EXHIBITS
Exhibit 2.01 Asset Purchase Agreement between Registrant and
Vector *
Exhibit 2.02 Lisbon Agreement *
Exhibit 2.03 Taurus Agreement *
* Previously Filed
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Independent Auditors' Report
To the Board of Directors
Vector Energy Corporation
(fka Sunburst Acquisitions II, Inc.)
Houston, TX
We have audited the accompanying statements of revenue and direct expenses of
the assets acquired by Vector Energy Corporation (fka Sunburst Acquisitions II,
Inc.) from Lisbon Development Company, LLC, Taurus Operating, Inc. and Vector
Energy Corporation for the years ended December 31, 1997 and 1996. This
financial statement is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining on a test basis
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the results of operations for the assets acquired
by Vector Energy Corporation (fka Sunburst Acquisitions II, Inc.) from
Lisbon Development Company, LLC, Taurus Operating Inc., and Vector Energy
Corporation for the years ended December 31, 1997 and 1996, in conformity
with generally accepted accounting principles.
/s/ Comiskey & Company
PROFESSIONAL CORPORATION
Denver, Colorado
June 29, 1998
Comiskey & Company P.C. 789 Sherman Street Suite 440 Denver, CO 80203
(303) 830-2255 Fax (303) 830-0876 Email [email protected]
F-1
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Vector Energy Corporation
(fka Sunburst Acquisitions II, Inc.)
Statements of Revenue and Direct Expenses of the
Assets Acquired from Lisbon Development Company LLC,
Taurus Operating, Inc. and Vector Energy Corporation
for the years ended December 31, 1997 and 1996 and
for the three months ended March 31, 1998
March 31, 1998 December 31,
(Unaudited) 1997 1996
Revenues
Oil Revenues $ 78,539 $ 379,279 $ 206,863
Gas Revenues 159,567 1,012,220 96,053
Plant Production Revenues 13,593 126,516 577
-------- --------- --------
Total Revenues 251,699 1,518,015 303,493
Direct Operating Expenses
Lease Operating Expense 152,770 497,035 91,603
Production Taxes 14,405 77,839 47,376
Transportation, Treatment, Marketing 4,963 38,807 5,517
Other Direct Expenses 3,000 36,198 -
------- ------- --------
Total Direct Operating Expenses 175,138 649,879 144,496
------- ------- --------
Excess of Revenue over
Direct Expenses $ 76,561 $ 868,136 $ 158,997
======== ======== ========
The accompanying notes are an integral part of the financial statement.
F-2
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Vector Energy Corporation
(fka Sunburst Acquisitions II, Inc.)
Notes to Statements of Revenue and Direct Expenses
of the Assets Acquired from Lisbon Development Company LLC.,
Taurus Operating, Inc. and Vector Energy Corporation
For the year ended December 31, 1997 and 1996
Note 1 - Summary of Significant Accounting Policies
Effective as of May 8, 1998, Sunburst Acquisitions II, Inc. ("the Company")
acquired various working and royalty interests in oil and gas properties
pursuant to an asset purchase agreement with Vector Energy Corporation, a
privately held Texas corporation ("old Vector"). The transaction consisted
of a transfer by old Vector of substantially all of its oil and gas holdings,
as well as the rights to two purchase contracts with Lisbon Development Company
LLC ("Lisbon") and Taurus Operating Inc. ("Taurus"), which assigned rights were
exercised as part of the transaction.
On June 19, 1998, the Company received approval by its shareholders to merge
its operations into Vector Energy Corporation, a newly formed Texas corporation
wholly owned by the Company, whereby Vector Energy Corporation became the
surviving corporation.
The accompanying financial statement includes the revenues and direct expenses
of the following acquired properties:
From Vector Energy Corporation (Old Vector)
Nonoperated working interests and royalties in approximately 80 producing oil
and gas wells located primarily in Oklahoma and Kansas.
From Lisbon Development Company LLC:
Working interests in a total of 13 oil and gas wells located in Gregg and
Harrison Counties, Texas, and Bossier, Claiborne, Lincoln and Webster Parishes,
Louisiana.
From Taurus Operating, Inc.
Westbrook field located in Mitchell County, Texas.
The Old Vector and Taurus properties were acquired through the issuance of
common stock of the company. The Lisbon properties were acquired through the
issuance of newly designated Class AA Preferred stock, and the assumption of
approximately $6.1 million in secured bank debt and certain trade payables.
The accompanying statement presents the revenues and the associated direct
expenses of these properties, as incurred by the various owners during the
years December 31, 1997 and 1996 and for the three month period (unaudited)
ended March 31, 1998. This statement does not include depreciation,
amortization, or depletion, or any allocation of corporate overhead costs
or any other indirect expenses including interest or income taxes.
This financial statement should be read in conjunction with Form 8K filed
by the Company on May 27, 1998.
F-3
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Vector Energy Corporation
(fka Sunburst Acquisitions II, Inc.)
Notes to Statements of Revenue and Direct Expenses
of the Assets Acquired from Lisbon Development Company LLC.,
Taurus Operating, Inc. and Vector Energy Corporation
For the year ended December 31, 1997 and 1996
Note 2: Unaudited Oil and Gas Reserve Quantities
This section provides information required by Statement of Financial
Accounting Standards No. 69, "Disclosures about Oil and Gas Producing
Activities."
The following unaudited reserve estimates presented as of December 31,
1997 and 1996 were prepared by T.J. Smith & Company, Inc., an independent
engineering company, with respect to the Lisbon Properties, by Eram Ali,
an independent petroleum engineer, with respect to the Westbrook property, and
internally by the Company with respect to the Old Vector properties. There
are many uncertainties inherent in estimated proved reserve quantities and
in projecting future production rates and the timing of development
expenditures. In addition, reserve estimates of new discoveries that have
little production history are more imprecise than those of properties with
more production history. Accordingly these estimates are expected to change
as future information becomes available.
Proved oil and gas reserves are the estimated quantities of crude oil,
condensate, natural gas, and natural gas liquids which geological and
engineering data demonstrate with reasonable certainty to be recoverable
in future years from known reservoirs under existing economic and operating
conditions.
Proved developed oil and gas reserves are those reserves expected to be
recovered through existing wells with existing equipment and operating
methods.
Unaudited net quantities of proved and proved developed reserves of crude
oil (including condensate) and natural gas, all of which are located within
he continental United States, are summarized below:
Changes in Proved Reserves:
(BBLS) (MCF)
(In thousands)
Estimated quantity, December 31, 1995 39 -
Production - (40)
Acquisitions 369 -
Discoveries 33 1,814
----- ------
Estimated quantity, December 31, 1996 441 1,774
Production (11) (391)
Acquisitions - -
Discoveries 172 11,214
----- ------
Estimated quantity, December 31, 1997 602 12,597
===== ======
F-4
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Vector Energy Corporation
(fka Sunburst Acquisitions II, Inc.)
Notes to Statements of Revenue and Direct Expenses
of the Assets Acquired from Lisbon Development Company LLC.,
Taurus Operating, Inc. and Vector Energy Corporation
For the year ended December 31, 1997 and 1996
Proved reserves at year end:
Developed Undeveloped Total
Oil (BBLS) (in thousands)
December 31, 1996 242 199 441
December 31, 1997 345 257 602
Gas (MCF) (in thousands)
December 31, 1996 1,774 0 1,774
December 31, 1997 7,450 5,147 12,597
The following table presents a standardized measure of the discounted
future net cash flows attributable to the Company's proved oil and gas
reserves. Future cash inflows were computed by applying year-end prices
of oil and gas to the estimated future production of proved oil and gas
reserves. The future production and development costs represent the
estimated future expenditures (based on current costs) to be incurred in
developing and producing the proved reserves, assuming continuation of
existing economic conditions.
A discount factor of 10% was used to reflect the timing of future net
cash flows. The standardized measure of discounted future net cash flows
is not intended to represent the replacement cost or fair market value of
the Company's oil and gas properties.
As of December 31,
1997 1996
(in thousands)
Future cash inflows $ 39,079 $ 12,046
Future production costs (11,828) (3,302)
Future development costs (7,714) (3,522)
------- -------
Future net cash flows 19,537 5,221
10% annual discount for estimating
timing of cash flows (9,200) (2,960)
------- -------
Standardized measure of discounted
future net cash flows $ 10,337 $ 2,261
======= =======
F-5
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Vector Energy Corporation
(fka Sunburst Acquisitions II, Inc.)
Notes to Statements of Revenue and Direct Expenses
of the Assets Acquired from Lisbon Development Company LLC.,
Taurus Operating, Inc. and Vector Energy Corporation
For the year ended December 31, 1997 and 1996
Year ended December 31,
1997 1996
(in thousands)
Standardized measure of discounted
future net cash flows, beginning
of year $ 2,261 $ 253
Changes due to operations:
Production (1,517) (304)
Production costs 650 145
Development costs 6,948 983
Acquisitions and discoveries 1,918 1,168
Other (149) (9)
Accretion of discount 226 25
------- -------
Standardized measure of discounted future
net cash flows, end of year $ 10,337 $ 2,261
======= =======
F-6
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