<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 18, 2000
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PETSEC ENERGY INC.
(Exact name of registrant as specified in its charter)
NEVADA 333-31625* 84-1157209
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
143 RIDGEWAY DRIVE, SUITE 113
LAFAYETTE, LOUISIANA 70503
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (337) 989-1942
*Petsec Energy Inc. (the "Company") is a wholly owned operating subsidiary of
Petsec Energy Ltd ("PEL"), a listed Australian public company registered with
the Commission as a result of its public offering in July 1996 of American
Depositary Receipts ("ADRs") which are traded on the over-the-counter bulletin
board (OTC BB symbol: PSJEY).
<PAGE> 2
Item 3. Bankruptcy or Receivership.
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On April 13, 2000, the Company filed a voluntary petition seeking
relief under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Western District of Louisiana, Opelousas
Division. The Court assumed jurisdiction on that day. The case name is In Re
Petsec Energy Inc., and the docket number is 00BK-50741. Subject to the
supervision of the Court, the Company remains in possession of the Company's
assets and will manage the business for the benefit of the Company's creditors
and equity holders in accordance with Sections 1107 and 1108 of the United
States Bankruptcy Code.
PEL issued a statement to the Australian Stock Exchange that was
released to the press announcing the bankruptcy court filing, a copy of which
is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
Item 5. Other Events.
- ---------------------
The Company has announced that it did not make the $4.75 million
interest payment due on December 15, 1999 under its 9 1/2% senior subordinated
notes due June 2007 (the "9 1/2% Notes") and that it is negotiating with an
informal subcommittee (the "Subcommittee") of the holders of the 9 1/2% Notes
to reach a solution to its financial situation. While negotiations are
continuing and no agreement has yet been reached, the Subcommittee has told the
Company that it desires that either the Company or its assets be sold, and the
sale proceeds be distributed to the Company's creditors, including the holders
of the 9 1/2% Notes. The Subcommittee has discussed with the Company carving
out a portion of the proceeds that otherwise would be distributed to the
holders of the 9 1/2% Notes and paying this sum to the Company's employees and
the equity owner of the Company. Specifically, the Subcommittee in its latest
proposal dated April 6, 2000 offered to distribute to Petsec (USA) Inc., as the
sole shareholder of the Company, and the Company's Lafayette-based management
proceeds on the following basis:
<TABLE>
<CAPTION>
Senior Management
Bondholders' Recovery PUSA Carve-Out Amounts Carve-Out Amounts
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $60 Million 3.375% of Bondholders' Recovery 1.375% of Recovery
("Recovery")
$60 to less than $70 Million Above, plus 6.375% of Recovery from Above, plus 1.375% of Recovery from
$60 to $70 Million $60 to $70 Million
$70 to less than $80 Million Above, plus 9.375% of Recovery from Above, plus 1.375% of Recovery from
$70 to $80 Million $70 to $80 Million
$80 to less than $90 Million Above, plus 12.375% of Recovery from Above, plus 1.375% of Recovery from
$80 to $90 Million $80 to $90 Million
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
$90 to less than $100 Million Above, plus 15.375% of Recovery Above, plus 1.375% of Recovery from
from $90 to $100 Million $90 to $100 Million
$100 Million to 100% Above, plus 18.375% of Recovery from Above, plus 1.375% from $100 million
Bondholder Recovery $100 million to 100% Bondholder to 100% Bondholder Recovery
Recovery
- -----------------------------------------------------------------------------------------------------------
</TABLE>
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Under the proposal, these distributions could increase or decrease by as much
as twenty (20%) percent based on the timing of the sale transactions. In
addition, the Subcommittee proposed to pay the five Lafayette-based senior
managers of the Company a severance benefit in the aggregate amount of
$491,303, and other employees of the Company a severance benefit equal in
amount to three month of salary plus three weeks of salary for each year of
service with the Company. The Subcommittee's proposal also addressed issues
such as the appropriate roles of financial advisors to the Subcommittee and the
Company, documentation needed to evidence agreement to the proposal and a sale
process, and the appropriate parties to such documentation. The proposal
advanced by the Subcommittee expired without being accepted by the Company.
Now that the Company has filed for protection under Chapter 11 of
the United States Bankruptcy Code, the Company plans to discuss with all of the
holders of 9 1/2% Notes the proposal that has been discussed with the
Subcommittee in an effort to reach a consensual solution to the Company's
financial problems. The Company intends to explore other alternatives available
to it concurrently with its efforts to reach a consensual solution with the
holders of the 9 1/2% Notes. Such alternatives, including a consensual deal
with the noteholders if one can be agreed to, will be in the context of a
Chapter 11 bankruptcy proceeding.
During the course of the negotiations with the Subcommittee, certain
information regarding the Company has been disclosed to the Subcommittee under
confidentiality agreements. In order to facilitate discussions with all of the
holders of the 9 1/2% Notes, the Company desires to make a public disclosure of
all material information provided to the Subcommittee that has not been made
public previously. This information pertains to Ryder Scott Company L.P.,
Petroleum Consultants valuations, January 2000 month-end financial results, and
a cash flow projection for the remainder of 2000.
RYDER SCOTT VALUATIONS
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In November 1999, the Company engaged Ryder Scott Company L.P., Petroleum
Consultants to prepare preliminary estimates of the estimated net proved,
probable and possible reserves as of December 31, 1999. Estimated future net
reserves were run using two different pricing scenarios. The preliminary
estimates run under the two pricing scenarios were provided to the Subcommittee
and are summarized below:
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<TABLE>
<CAPTION>
PRELIMINARY ESTIMATE AS OF DECEMBER 31, 1999
---------------------------------------------
PROVED PROBABLE POSSIBLE
<S> <C> <C> <C>
TOTAL NET RESERVES:
Gas (MMcf) 55,728 37,940 17,726
Oil (MBbls) 4,362 2,234 1,553
Total (MMcfe) 81,900 51,344 27,044
NET DEVELOPED RESERVES:
Gas (MMcf) 20,923 14,162 6,536
Oil (MBbls) 2,009 957 663
Total (MMcfe) 32,977 19,904 10,514
Estimated future net revenues before income $125,535 $119,844 $62,798
taxes (in thousands) (2)
Present value of estimated future net revenues $ 94,260 $77,305 $31,299
before income taxes (in thousands) (1)(2)
Estimated future net revenues before income $111,200 $110,305 $57,822
taxes (in thousands) (3)
Present value of estimated future net revenues $83,558 $71,165 $28,869
before income taxes (in thousands) (1)(3)
</TABLE>
(1) The present value of estimated future net revenues attributable to the
Company's reserves was prepared using constant prices, including the
effects of hedging, as of the calculation date, discounted at 10% per
annum on a pre-tax basis.
(2) The present value and estimated future net revenues as of December 31,
1999 were calculated using an average oil price of $18.37 per barrel
before hedging and an average gas price of $2.57 per Mcf before hedging.
(3) The present value and estimated future net revenues as of December 31,
1999 were calculated using an average oil price of $17.27 per barrel
before hedging and an average gas price of $2.38 per Mcf before hedging.
The Company also provided estimates of proved, probable and possible reserves
as of December 31, 1999. The calculations of estimated proved reserves made as
of December 31, 1999 have been made in accordance with SEC guidelines.
<TABLE>
<CAPTION>
SEC CASE AS OF DECEMBER 31, 1999
--------------------------------
PROVED (3) PROBABLE POSSIBLE
<S> <C> <C> <C>
TOTAL NET RESERVES:
Gas (MMcf) 56,783 37,016 17,428
Oil (MBbls) 4,469 2,336 1,587
Total (MMcfe) 83,597 51,032 26,950
NET DEVELOPED RESERVES:
Gas (MMcf) 21,950 12,850 6,209
Oil (MBbls) 2,089 1,053 678
Total (MMcfe) 34,484 19,168 10,277
Estimated future net revenues before income $150,828 $128,806 $70,600
taxes (in thousands)
Present value of estimated future net revenues $113,139 $82,681 $34,988
before income taxes (in thousands) (1)(2)
</TABLE>
(1) The present value of estimated future net revenues attributable to the
Company's reserves was prepared using constant prices, including the
effects of hedging, as of the calculation date, discounted at 10% per
annum on a pre-tax basis.
(2) The present value as of December 31, 1999 was calculated using an average
oil price of $25.61 per barrel before hedging and an average gas price
of $2.43 per Mcf before hedging.
(3) This information pertaining to proved reserves was previously disclosed
in the Company's 1999 Form 10-K.
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The foregoing tables set forth estimated net proved oil and gas
reserves of the Company, the estimated future net revenues before income taxes
and the present value of estimated future net revenues before income taxes
related to such reserves as of December 31, 1999, based upon reports by Ryder
Scott Company L.P., Petroleum Consultants. All of the calculations of estimated
net proved, probable and possible reserves reported above give no effect to
federal or state income taxes otherwise attributable to estimated future net
revenues from the sale of oil and gas. The present value of estimated future
net revenues has been calculated using a discount factor of 10% per annum.
Ryder Scott Company L.P., Petroleum Consultants, in its report to
the Company dated as of December 31, 1999, defines proved, probable and
possible reserves as follows.
"Proved reserves" of crude oil, condensate, natural gas, and natural
gas liquids are estimated quantities that geological and engineering data
demonstrate with reasonable certainly to be recoverable in the future from
known reservoirs under existing operation conditions, i.e., prices and costs as
of the date the estimate is made. Prices include consideration of changes in
existing prices provided only by contractual arrangements, but not on
escalation based on future conditions.
Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation test. In certain
instances, proved reserves are assigned on the basis of a combination of core
analysis and electrical and other type logs which indicate the reservoirs are
analogous to reservoirs in the same field which are producing or have
demonstrated the ability to produce on a formation test. The area of a
reservoir considered proved includes (1) that portion delineated by drilling
and defined by fluid contacts, if any, and (2) the adjoining portions not yet
drilled that can be reasonably judged as economically productive on the basis
of available geological and engineering date. In the absence of data on fluid
contacts, the lowest known structural occurrence of hydrocarbons controls the
lower proved limit of the reservoir.
Reserves that can be produced economically through the application
of improved recovery techniques are included in the proved classification when
these qualifications are met: (1) successful testing by a pilot project or the
operation of an installed program in the reservoir provides support for the
engineering analysis on which the project or program was based, and (2) it is
reasonably certain the project will proceed. Improved recovery includes all
methods for supplementing natural reservoir forces and energy, or otherwise
increasing ultimate recovery from a reservoir, including (1) pressure
maintenance, (2) cycling, and (3) secondary recovery in its original sense.
Improved recovery also includes the enhanced recovery methods of thermal,
chemical flooding, and the use of miscible and immiscible displacement fluids.
<PAGE> 6
Proved natural gas reserves are comprised of non-associated,
associated and dissolved gas. An appropriate reduction in gas reserves has been
made for the expected removal of natural gas liquids, for lease and plant fuel,
and for the exclusion of non-hydrocarbon gases if they occur in significant
quantities and are removed prior to sale. Estimates of proved reserves do not
include crude oil, natural gas, or natural gas liquids being held underground
or surface storage.
Proved reserves are estimates of hydrocarbons to be recovered from a
given date forward. They may be revised as hydrocarbons are produced and
additional data become available.
"Unproved reserves" are based on geologic and/or engineering data
similar to that used in estimates of proved reserves; but technical,
contractual, economic, or regulatory uncertainties preclude such reserves being
classified as proved. Unproved reserves may be further classified as probable
reserves and possible reserves.
Unproved reserves may be estimated assuming future economic
conditions different from those prevailing at the time of the estimate. The
effect of possible future improvements in economic conditions and technological
developments can be expressed by allocating appropriate quantities of reserves
to the probable and possible classifications.
"Probable reserves" are those unproved reserves which analysis of
geological and engineering data suggests are more likely than not to be
recoverable. In this context, when probabilistic methods are used, there should
be at least a 50 percent probability that the quantities actually recovered
will equal or exceed the sum of estimated proved plus probable reserves.
In general, probable reserves may include (1) reserves anticipated
to be proved by normal step-out drilling where sub-surface control is
inadequate to classify these reserves as proved, (2) reserves in formations
that appear to be productive based on well log characteristics but lack core
data or definitive tests and which are not analogous to producing or proved
reserves in the area, (3) incremental reserves attributable to infill drilling
that could have been classified as proved if closer statutory spacing had been
approved at the time of the estimate, (4) reserves attributable to improved
recovery methods that have been established by repeated commercially successful
applications when (a) a project or pilot is planned but not in operation and
(b) rock, fluid, and reservoir characteristics appear favorable for commercial
application, (5) reserves in an area of the formation that appears to be
separated from the proved area by faulting and the geologic interpretation
indicates the subject area is structurally higher than the proved area, (6)
reserves attributable to a future workover, treatment, re-treatment, change of
equipment, or other mechanical procedures, where such procedure has not been
proved successful in wells which exhibit similar behavior in analogous
reservoirs, and (7) incremental reserves in proved reservoirs where an
alternative interpretation of performance or volumetric data indicates more
reserves than can be classified as proved.
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"Possible reserves" are those unproved reserves which analysis of
geological and engineering data suggests are less likely to be recoverable than
probable reserves. In this context, when probabilistic methods are used, there
should be at least a 10 percent probability that the quantities actually
recovered will equal or exceed the sum of estimated proved plus probable plus
possible reserves.
In general, possible reserves may include (1) reserves which, based
on geological interpretations, could possibly exist beyond areas classified as
probable, (2) reserves in formation that appear to be petroleum bearing based
on log and core analysis but may not be productive at commercial rates, (3)
incremental reserves attributed to infill drilling that are subject to
technical uncertainty, (4) reserves attributed to improved recovery methods
when (a) a project or pilot is planned but not in operations and (b) rock,
fluid, and reservoir characteristics are such that a reasonable doubt exists
that the project will be commercial, and (5) reserves in an area of the
formation that appears to be separated from the proved area by faulting and
geological interpretation indicates the subject area is structurally lower than
the proved area.
JANUARY 2000 MONTH END FINANCIAL RESULTS
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The Company provided the Subcommittee with unaudited financial
statements including an income statement and capital expenditure summary for
the month ending on January 31, 2000 and a balance sheet as of January 31,
2000. The financial statements showed the Company generated revenues of $2.3
million from net production of 52,338 barrels of oil and 483,000 mcf of gas.
Lease operating expenses were $573,000 ($0.72/mcfe), general and administrative
expenses totaled $632,000 ($0.79/mcfe), and depletion, depreciation and
amortization charges were $1.37 million ($1.72/mcfe). The Company recorded a
net loss after tax of $1.47 million for the month. Capital expenditures for the
month were $1.7 million.
At January 31, 2000, the Company's total assets were $98.4 million
and total liabilities were $165.8 million, with negative shareholder equity of
$67.4 million.
CASH FLOW PROJECTION
- --------------------
The Company provided the Subcommittee with a cash flow projection
for the period February 18, 2000 through December 31, 2000. This projection
assumed that no interest or principal payments would be made on the Company's
indebtedness owed on the 9 1/2% Notes or on the Company's subordinated debt
owed to its parent, Petsec (USA) Inc. The projection also assumed that the
Company would sell its interests in seven particular offshore leases on terms
and for the consideration that were actually consummated in a transaction that
closed on April 11, 2000. (See discussion below that describes that
transaction.) The cash flow projection showed that the Company would have
<PAGE> 8
adequate liquidity to operate its business. The projection anticipated that
cash would be available from the sale of hydrocarbons owned by the Company and
from the Company's credit facility with Foothill Capital Corporation. The cash
flow projection assumed that $2.6 million would be spent on capital projects in
2000 to participate in four workover operations on existing wells. The effect
of these workover operations on production rates is assumed in the Ryder Scott
valuations. The cash flow projection is based on assumed production in 2000 of
573,000 barrels of oil and 7.1 BCF of gas.
The Company is evaluating and negotiating a post-petition credit
arrangement with Foothill. The Company has filed a motion with the bankruptcy
court seeking authorization to use certain cash the Company has on hand and
certain other cash the Company expects to generate from the future sale of
hydrocarbons. This cash is security for the existing Foothill credit facility,
and the Company desires to use it to pay certain business expenses pending the
negotiation and court approval of a post-petition credit arrangement with
Foothill.
Sale of Interest in Seven Leases on the Outer Continental Shelf
- ---------------------------------------------------------------
On April 11, 2000, the Company sold to an undisclosed buyer all of
its right, title and interest in seven of its leases for US$8.45 million cash.
The effective date of the transaction was February 1, 2000.
The Company sold all of its working interests, being a 25% working
interest, in the following four mineral leases: OCS-G 15102 covering all of
West Cameron Block 515; OCS-G 15103 covering all of West Cameron Block 516;
OCS-G 21082 covering a portion of Vermilion Block 34; OCS-G 15163 covering all
of Vermilion Block 47. The Company sold all of its working interest, being a
50% working interest, in the following two mineral leases: OCS-G 19841 covering
a portion of West Delta Block 112; and OCS-G 21131 covering all of West Delta
Block 113. The Company also sold its right to acquire a 25% working interest in
a lease covering all of West Cameron Block 526.
PEL issued a press release announcing the sale made by the Company,
a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein
by reference.
Forward Looking Statements
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This 8-K Current Report includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). All statements other
than statements of historical facts included in this 8-K Current Report,
including without limitation statements regarding the projected cash flows,
planned capital expenditures, oil and gas production and reserve adds, the
Company's financial position, business strategy and other plans and objectives
<PAGE> 9
for future operations, are forward-looking statements. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. There are numerous risks and uncertainties that can affect the
outcome of certain events including many factors beyond the control of the
Company including without limitation those described in the Company's latest
Annual Report filed with the Securities and Exchange Commission for the year
ending on December 31, 1999. All written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by such factors.
(b) Exhibits.
99.1 Press Release dated April 12, 2000 of Petsec Energy Ltd
with respect to the sale of working interest in
seven leases by Petsec Energy Inc.
99.2 Press Release dated April 14, 2000 of Petsec Energy
Ltd with respect to the voluntary petition under
Chapter 11 of United States Bankruptcy Code.
<PAGE> 10
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.
PETSEC ENERGY INC.
Date: April 14, 2000 By: /s/ Ross A. Keogh
----------------------------------
Name: Ross A. Keogh
Title: Vice-President and
Chief Financial Officer
<PAGE> 11
EXHIBIT INDEX
Exhibit
Number Description
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99.1 Press Release dated April 12, 2000 of Petsec Energy Ltd
with respect to the sale of working interest in
seven leases by Petsec Energy Inc.
99.2 Press Release dated April 14, 2000 of Petsec Energy
Ltd with respect to the voluntary petition under
Chapter 11 of United States Bankruptcy Code.
<PAGE> 1
EXHIBIT 99.1
PETSEC ENERGY LTD
ACN 000 602 700
12 April 2000
PETSEC ENERGY SELLS INTEREST IN SEVEN LEASES
--------------------------------------------
Sydney, Australia - Petsec Energy Ltd (ASX: PSA and OTC BB: PSJEY) today
announced that its wholly owned subsidiary, Petsec Energy Inc., has sold its
working interests in seven of its leases, effective 1 February 2000. The sale
price was US$8.45 million cash.
Petsec now holds an interest in 41 leases, with production established on 21 of
them.
The Company has sold its 50% working interest in the West Delta 112 & 113
leases, its 25% working interest in the West Cameron 515, 516 and 526 leases
and its 25% working interest in the Vermilion 34 and 47 leases. Net proven
reserves attributable to the West Cameron 515 and 516 leases, as determined by
Ryder Scott Company L.P., Petroleum Consultants at 31 December 1999, were
95,671 barrels of oil and 5.3 billion cubic feet of gas. The Company had not
booked any reserves on the other leases that were sold.
The net proceeds from the sale will be used to reduce the Company's secured
bank debt to approximately US$7.7 million.
Petsec is an independent oil and gas exploration and production company
operating in the shallow waters of the US Gulf of Mexico. The Company's
corporate office is in Sydney, Australia. Field operations are managed in the
US from Lafayette, Louisiana.
For further information please contact:
In Australia: In USA:
Terry Fern, Managing Director Ross Keogh, Chief Financial Officer
Petsec Energy Ltd Petsec Energy Ltd
(61) 2 9247 4605 (phone) (318) 989 1942 (phone)
(61) 2 9251 2410 (fax) (318) 989 7271 (fax)
Level 13, Gold Fields House 143 Ridgeway Drive, Suite 113
1 Alfred Street, Sydney NSW 2000 Lafayette, Louisiana 70503-3402
Company information is available at Petsec's website http://www.petsec.com
1. Information in this report which relates to hydrocarbon reserves is based
on information compiled by a person qualified in accordance with Listing
Rule 5.11 and accurately reflects the information compiled by that
person.
2. Certain statements in this report regarding future expectations and plans
of the Company may be regarded as "forward-looking statements" within the
meaning of Section 27A of the USA Securities Act of 1933 and Section 21E
of the USA Securities Exchange Act of 1934. Although the Company believes
that its expectations and plans are based upon reasonable assumptions, it
can give no assurance that its goals will be met. Actual results may vary
significantly from those anticipated due to many factors, including oil
and gas prices, operating hazards, drilling risks, environmental risks
and uncertainties in interpreting engineering and other data relating to
oil and gas reservoirs, as well as other risks discussed in the Company's
SEC filings.
<PAGE> 1
EXHIBIT 99.2
PETSEC ENERGY LTD
(A.C.N. 000 602 700)
14 April, 2000
The Manager, Companies
Company Announcements
Australian Stock Exchange
Level 4, 20 Brige Street
SYDNEY NSW 2000
Dear Sir/Madam
RE: PETSEC ENERGY INC.
The Company's wholly owned U.S. subsidiary, Petsec Energy Inc. ("PEI") has
filed a voluntary petition in the Federal Court in Opelousas, Louisiana under
Chapter 11 of the U.S. Bankruptcy Code.
The filing will allow PEI to continue its operations under the protection of
the bankruptcy court while it continues discussions with its senior unsecured
noteholders regarding possible solutions to its financial situation. It will
also afford PEI the opportunity to evaluate all other options.
To maintain liquidity through the reorganization process, including payment of
suppliers and trade creditors, PEI is negotiating a commitment for up to US$30
million of post-petition financing from Foothill Capital, PEI's existing
secured lender, subject to court approval.
Petsec Energy Ltd is an independent oil and gas exploration and production
company operating in the shallow waters of the US Gulf of Mexico.
Yours faithfully
GEOFF FULCHER
COMPANY SECRETARY
For further information please contact:
In Australia: In USA:
Terry Fern, Managing Director Ross Keogh, Chief Financial Officer
Petsec Energy Ltd Petsec Energy Ltd
(61) 2 9247 4605 (phone) (318) 989 1942 (phone)
(61) 2 9251 2410 (fax) (318) 989 7271 (fax)
Level 13, Gold Fields House 143 Ridgeway Drive, Suite 113
1 Alfred Street, Sydney NSW 2000 Lafayette, Louisiana 70503-3402
Company information is available at Petsec's website http://www.petsec.com
1. Information in this report which relates to hydrocarbon reserves is based
on information compiled by a person qualified in accordance with Listing
Rule 5.11 and accurately reflects the information compiled by that
person.
2. Certain statements in this report regarding future expectations and plans
of the Company may be regarded as "forward-looking statements" within the
meaning of Section 27A of the USA Securities Act of 1933 and Section 21E
of the USA Securities Exchange Act of 1934. Although the Company believes
that its expectations and plans are based upon reasonable assumptions, it
can give no assurance that its goals will be met. Actual results may vary
significantly from those anticipated due to many factors, including oil
and gas prices, operating hazards, drilling risks, environmental risks
and uncertainties in interpreting engineering and other data relating to
oil and gas reservoirs, as well as other risks discussed in the Company's
SEC filings.
