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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): JUNE 26, 1998
BAYARD DRILLING TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13553 73-1508021
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4005 NORTHWEST EXPRESSWAY, SUITE 550E
OKLAHOMA CITY, OKLAHOMA 73116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405) 840-9550
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 30, 1998, Bayard Drilling Technologies, Inc.
("Bayard") issued a press release (the "Press Release")
announcing that (i) it had completed the purchase of the
contract drilling assets of TransTexas Gas Corporation
("TransTexas") for $75 million, (ii) it and TransTexas entered
into a 30-month drilling alliance agreement (the "Drilling
Alliance Agreement") under which TransTexas will utilize up to
15 Bayard rigs to meet its land drilling needs in South Texas
and the Gulf Coast regions and (iii) it financed the
acquisition of the TransTexas assets with a private placement
of $100 million of its 11% Senior Notes due 2005 under Rule
144A of the Securities Act of 1933, as amended. For additional
information, reference is made to the Press Release and the
Drilling Alliance Agreement, copies of which are attached as
exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit 10.30 - Drilling Alliance Agreement dated as of
June 26, 1998 by and among Bayard
Drilling, L.P. and TransTexas Gas
Corporation.
Exhibit 99.2 - Press release of Registrant dated
June 30, 1998.
-2-
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BAYARD DRILLING TECHNOLOGIES, INC.
Date: July 8, 1998 By: /s/ James E. Brown
---------------------------------
James E. Brown
President
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INDEX TO EXHIBITS
Exhibit No. Description
Exhibit 10.30 - Drilling Alliance Agreement dated as of
June 26, 1998 by and among Bayard
Drilling, L.P. and TransTexas Gas
Corporation.
Exhibit 99.2 - Press release of Registrant dated
June 30, 1998.
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EXHIBIT 10.30
DRILLING ALLIANCE AGREEMENT
This DRILLING ALLIANCE AGREEMENT, entered into as of June 26,
1998 (the "Agreement"), by and among Bayard Drilling, L.P., a Delaware limited
partnership ("Bayard"), and TransTexas Gas Corporation, a Delaware corporation
("TransTexas").
W I T N E S S E T H:
WHEREAS, as of May 26, 1998, Bayard and TransTexas entered
into that certain Asset Purchase Agreement (the "Purchase Agreement"), pursuant
to which TransTexas is selling certain oil and gas well drilling assets to
Bayard, including, but not limited to, the drilling rigs set forth on Schedule
1.1(a) thereto (the "TransTexas Rigs");
WHEREAS, the Purchase Agreement contemplates, among other
things, that the parties hereto will enter into this Agreement in order to set
forth the terms of an alliance between parties pursuant to which (i) TransTexas
will agree to obtain certain oil and gas well drilling services from Bayard and
(ii) Bayard will agree to make available the Alliance Rigs for the purpose of
providing such services to TransTexas;
WHEREAS, Bayard and TransTexas recognize the mutual benefits
to be derived by such an alliance and further desire to set forth the terms and
conditions of such arrangements herein;
WHEREAS, on the date hereof, TransTexas is implementing the
Security Arrangement (as defined in the Purchase Agreement) in order to secure
the due and punctual payment by TransTexas of all amounts owing to Bayard
pursuant to the Drilling Contracts (as hereinafter defined); and
WHEREAS, capitalized terms used herein without definition
shall have the respective meanings set forth in Section 9;
NOW, THEREFORE, in consideration of the premises, the terms
and provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Term. The term of this Agreement (the "Term") shall
commence on the date hereof and end on December 31, 2000, unless the Term is
extended by mutual agreement of the parties or this Agreement is terminated as
of an earlier date in accordance with Section 7.
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SECTION 2. Drilling Alliance.
(a) Subject to Section 3, if TransTexas or any of its
Affiliates propose to conduct (either directly or indirectly through any
contractor or other third party) any Alliance Drilling Activities during the
Term, TransTexas shall conduct such activities solely by engaging Bayard to make
available one or more Alliance Rigs and provide Related Drilling Services to
TransTexas upon the terms and conditions set forth in this Agreement and in any
Drilling Contracts that may be entered into by the parties as provided herein.
(b) Subject to Section 3, Bayard shall make the Alliance Rigs
available to TransTexas and provide Related Drilling Services to TransTexas,
upon the terms and conditions set forth in this Agreement and in any Drilling
Contracts that may be entered into by the parties as provided herein.
SECTION 3. Requests for Drilling Services. As promptly as
practicable after TransTexas determines that it or any of its Affiliates
proposes to conduct any Alliance Drilling Activities, TransTexas shall deliver a
written notice (a "Drilling Notice") to Bayard identifying (i) the applicable
well site or sites at which such activities will be conducted (the "Well
Sites"), (ii) the type of rig required by TransTexas at the Well Site
(classified on the basis set forth in Exhibit B hereto) and (iii) the date upon
which preparation of the Well Sites will be completed and a rig or rigs will be
required by TransTexas to commence drilling activities thereon (the
"Commencement Date"), which date shall be no less than 20 days (or, if the
Drilling Notice contains an Accelerated Drilling Request, five business days)
after the date upon which such notice is delivered to Bayard. Within five days
(or, if the Drilling Notice contains an Accelerated Drilling Request, two
business days) after receipt of a Drilling Notice, Bayard shall deliver a
written notice (a "Response Notice") which identifies the Alliance Rig proposed
to be made available to TransTexas and encloses a copy of the Drilling Contract
to be entered into by the parties with respect to the Well Sites as contemplated
by Section 4. Notwithstanding the foregoing, if TransTexas delivers a Drilling
Notice to Bayard which contains an Accelerated Drilling Request, Bayard shall be
entitled to state in the Response Notice that it is not able to provide an
Alliance Rig to TransTexas at one or more Well Sites by the requested
Commencement Date and, upon receipt of such notice by TransTexas, (i) Bayard
shall have no obligation to provide Alliance Rigs or Related Drilling Services
to TransTexas in order to drill for oil or gas at such Well Sites and (ii)
TransTexas shall be entitled to obtain drilling rigs and Related Drilling
Services from a third party other than Bayard in order to drill for oil and gas
at such Well Sites. In addition, if TransTexas delivers a Drilling Notice to
Bayard which requests a type of rig which is not then available within a radius
of 125 miles from the Well Site, (i) Bayard shall have no obligation to provide
Alliance Rigs or Related Drilling Services to TransTexas at such Well Site,
unless TransTexas agrees in writing to pay the moving dayrates and actual
trucking costs related to the transportation of the rig to the Well Site in
accordance with Exhibit B hereto, and (ii) if Bayard notifies TransTexas that it
elects not to provide Alliance Rigs and Related Drilling Services to TransTexas
at such Well Site, TransTexas shall be entitled to obtain drilling rigs and
related drilling services from a third party other than Bayard in order to drill
for oil and gas at such Well Site.
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SECTION 4. Drilling Contracts; Dayrates.
(a) Prior to the applicable Commencement Date, TransTexas and
Bayard shall enter into a drilling contract (each, a "Drilling Contract") for
each Alliance Rig to be made available by Bayard to TransTexas hereunder, which
contract shall be in the form attached as Exhibit A hereto and shall incorporate
the applicable contract drilling rates (the "Dayrates") set forth in Exhibit B
hereto; provided, however, that the Dayrates contained in each Drilling Contract
shall be subject to revision (i) on a quarterly basis to reflect any actual
increases or decreases in Labor Costs experienced by Bayard after the date
hereof in the area in which the applicable Well Sites are located (it being
understood that Bayard shall provide to TransTexas such information as
TransTexas shall reasonably request in order to substantiate any actual increase
in such Labor Costs) and (ii) on September 30, 1999, by mutual agreement of the
parties (or, if applicable, by decision of an arbitrator) as set forth in
paragraph (b) below.
(b) At any time during the ten-day period commencing August
31, 1999, either Bayard or TransTexas, by delivering a written notice (a "Rate
Revision Notice") to the other, may request a revision to the Dayrates. If any
such request is made, Bayard and TransTexas shall negotiate in good faith for a
period of 20 days after the delivery of the Rate Revision Notice with a view
toward establishing new contract drilling rates (the "Revised Dayrates"). If the
parties are unable to agree on Revised Dayrates during such period, it is
expressly understood and agreed that (i) the Dayrates then in effect shall
continue in force unless and until modified in accordance with this paragraph
(b) (provided, however, that, if and to the extent that the Dayrates are
subsequently modified in accordance with this paragraph (b), such modification
shall be retroactive to the date of delivery of the applicable Rate Revision
Notice) and (ii) either Bayard or TransTexas shall have the right to submit to
an arbitrator the issue of whether and to what extent the Dayrates then in
effect should be modified so as to ensure that the Drilling Contracts continue
to reflect commercially reasonable contract drilling arrangements. The selection
of such an arbitrator and the conduct of any arbitration proceedings shall be
governed by the arbitration provisions set forth in Section 9.7 of the Purchase
Agreement; provided, however, that the parties shall use commercially reasonable
efforts to cause the arbitrator to render a decision with 40 days after the
arbitrator has been selected.
(c) TransTexas shall pay for all services rendered by Bayard
under each Drilling Contract in accordance with the provisions of Section 5
thereof. The parties hereto agree that, notwithstanding any contrary usage or
custom in the oil and gas drilling industry, (i) payments made by TransTexas
later than 30 days after receipt of the invoice shall be subject to the interest
penalty set forth in Section 5.2 of the applicable Drilling Contract and (ii) if
TransTexas fails to make any payment as and when required to be made under any
Drilling Contract (subject to the provisions that permit TransTexas to withhold
payment of a disputed item under certain circumstances) and Bayard is not able
to obtain prompt and punctual payment through the Security Arrangement, Bayard
may immediately discontinue providing drilling services to TransTexas under such
Drilling Contract.
SECTION 5. Farm-outs. If TransTexas proposes to farm-out its
interest in any significant oil and gas properties (the "Farm-out Properties")
under circumstances in which
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TransTexas has the ability to control or influence the selection by the proposed
operator of the drilling contractor, TransTexas shall use commercially
reasonable efforts to cause such operator to negotiate with Bayard with a view
to retaining Bayard as drilling contractor to drill for oil and gas and provide
related services on the Farm-out Properties; provided, however, that (i)
TransTexas shall have no obligation to cause the proposed operator to retain
Bayard and (ii) the terms of any drilling contract or similar arrangement
between Bayard and the proposed operator shall be as negotiated by them and may
differ from the terms set forth in this Agreement.
SECTION 6. Right to Engage in Other Activities. The parties
hereto and their respective Affiliates shall be free to conduct any drilling
activities and enter into any agreements in connection therewith which are not
in conflict with the provisions of this Agreement or the Purchase Agreement.
Without limiting the generality of the foregoing, nothing contained in this
Agreement shall be construed to restrict or impair in any manner the right of
Bayard or any of its respective Affiliates to provide oil and gas well drilling
services to any person or entity (whether or not such person or entity is a
competitor of TransTexas).
SECTION 7. Disputes. Any dispute under this Agreement or any
Drilling Contract shall be governed by the arbitration provisions set forth in
Section 9.7 of the Purchase Agreement.
SECTION 8. Termination. This Agreement may be terminated as
follows:
(a) by Bayard if, TransTexas fails to make any payment as and
when required to be made under any Drilling Contract (subject to the provisions
that permit TransTexas to withhold payment of a disputed item under certain
circumstances) and Bayard is not able to obtain prompt and punctual payment as
and when due through the Security Arrangement.
(b) by either party after giving at least 30 days' prior
written notice to the other party identifying specifically the basis for such
notice, if the other party breaches its obligations under this Agreement in any
material respect or breaches its obligations under any Drilling Contracts in a
manner that has a material adverse effect on the performance by the other party
under this Agreement and the Drilling Contracts, taken as a whole (other than
the failure to make any payment as and when required to be made under the
provisions of any Drilling Contract), unless the breaching party has within such
30-day period either (x) cured such breach (if such breach is curable) or (y)
made substantial progress to cure such breach (if such breach is curable) and
implemented a plan that results in a cure of such breach within 60 days of such
notice; or
(c) by either party if the other party shall commence a
voluntary case under any applicable bankruptcy, insolvency, reorganization or
other similar law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or other similar official) of
itself or for any substantial part of its property or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any action in furtherance of any of the
foregoing.
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Upon the termination of this Agreement under this section, no party shall have
any further liability hereunder, except (i) with respect to liability for
failure to pay any amount owing under this Agreement or any Drilling Contract,
(ii) with respect to any willful breach of this Agreement and (iii) Section 6
shall survive such termination and shall remain in full force and effect.
SECTION 9. Definitions. As used herein, the terms set forth
below have the following respective meanings:
"Accelerated Drilling Request" means a request made in good
faith by TransTexas in a Drilling Notice to the effect that it will be necessary
under the circumstances that the Commencement Date for drilling activities at a
Well Site be less than 20 days after the date of such notice, which request
shall be accompanied by a reasonably detailed statement of the reasons therefor.
"Affiliate" has the meaning set forth in the Purchase
Agreement.
"Alliance Drilling Activities" means any Covered Drilling
Activities, but only to the extent that such activities may be conducted by
Bayard utilizing the Alliance Rigs.
"Alliance Rigs" means any 15 Rigs designated from time to time
by Bayard in consultation with TransTexas or any reasonably equivalent drilling
rigs owned by Bayard which are available to provide drilling services to
TransTexas.
"Covered Drilling Activities" means any land drilling
activities (other than Non-Operator Drilling Activities) which are conducted,
directly or indirectly, by or on behalf of TransTexas (whether acting alone or
through any of its Affiliates, as a member of a partnership or a joint venture
or an investor in, or a holder of securities of, any corporation or other entity
or otherwise) in connection with the exploration for or development of oil and
gas reserves in the States of Alabama, Louisiana, Mississippi, New Mexico,
Oklahoma and Texas.
"Labor Costs" means actual compensation paid to employees
(including overtime) and all related costs, including, but not limited to,
workers compensation, taxes, and benefits costs and expenses.
"Non-Operator Drilling Activities" means any land drilling
activities conducted with respect to properties in which TransTexas or one of
its affiliates holds an interest but as to which it is not the operator under
the applicable operating agreement (or, solely in Louisiana, the designated
operator under applicable law); provided, however, that TransTexas shall act in
good faith by not causing or arranging for a third party to be designated as
operator with respect to any properties in which it has a significant interest
in a manner that contravenes the purpose and intent of this Agreement.
"Related Drilling Services" means the drilling services set
forth in the applicable Drilling Contract.
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SECTION 10. Amendment. Except as otherwise expressly provided
herein, the provisions of this Agreement shall not be amended or waived except
upon the written agreement of all parties hereto.
SECTION 11. No Assignment; Binding Effect. This Agreement may
not be assigned by either party without the written consent of the other party;
provided, however, that in the case of an assignment of this Agreement as a part
of a business combination involving the sale or assignment by a party of all or
substantially all its assets, such consent shall not be unreasonably withheld.
Any purported or attempted assignment in violation of this Section 11 shall be
null and void. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns (it
being understood and agreed that, except as expressly provided herein, nothing
contained in this Agreement is intended to confer upon any other person any
rights, benefits or remedies of any kind or character whatsoever).
SECTION 12. Severability. Whenever possible, each provision of
this Agreement shall be interpreted so as to be effective and valid under
applicable law. If any provision of this Agreement is held to be prohibited by
or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
SECTION 13. Headings. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of and shall not affect the interpretation of this Agreement.
SECTION 14. Notices. Any notices required or permitted to be
sent hereunder shall be delivered by hand, by telex or telecopier, or by
certified or registered mail, postage prepaid and return receipt requested, or
delivered by overnight courier service to the following addresses, or such other
address as any party hereto designates by written notice to the other parties.
Notices shall be deemed to have been given upon delivery, if delivered by hand,
three days after mailing, if mailed, one business day after delivery to the
courier, if delivered by overnight courier service, and upon receipt of a
confirmation of receipt generated by the recipient's facsimile or telex
equipment, if delivered by facsimile or telex:
If to Bayard, to:
Bayard Drilling, L.P.
4005 N.W. Expressway, Suite 550E
P.O. Box 268867
Oklahoma City, Oklahoma 73126-8867
Attention: Manager
Fax No. (405) 840-9553
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If to TransTexas, to:
TransTexas Gas Corporation
1300 North Sam Houston Parkway
Suite 310
Houston, Texas 77032
Attention: President
Fax No. (281) 986-8865
With a copy to:
Drilling Manager
Fax No. (281) 986-8877
SECTION 15. Governing Law. This Agreement shall be governed in
accordance with the laws of the State of Texas, without giving effect to the
choice of law principles thereof.
SECTION 16. Relationship of the Parties. In providing drilling
services hereunder, Bayard is acting only as an independent contractor. This
Agreement establishes and shall only be construed as establishing a contract
between two unrelated business entities and does not and shall not be deemed to
create a partnership, joint venture, agency or any other type of joint
relationship.
SECTION 17. Entire Agreement. This Agreement, together with
the agreements or instruments governing the Security Arrangement and any
Drilling Contracts entered into hereunder, constitutes the entire agreement of
the parties with respect to the subject matter hereof, and supersedes all prior
agreements and understandings, written or oral, regarding the subject matter
hereof. Notwithstanding any thing to the contrary set forth herein, any dispute
by the parties under the Purchase Agreement shall not affect the status of this
Agreement or any Drilling Contracts or the availability of any rights or
remedies hereunder or thereunder, and no offset of any amounts due under the
Purchase Agreement shall affect amount paid pursuant to this Agreement or any
Drilling Contracts.
SECTION 18. Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and all of which together shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
TRANSTEXAS GAS CORPORATION
By: /s/ Arnold H. Brackenridge
----------------------------------------
Name: Arnold H. Brackenridge
--------------------------------------
Title: President
-------------------------------------
BAYARD DRILLING, L.P.
By: Bayard Drilling, L.L.C.,
general partner
By: /s/ James E. Brown
----------------------------------------
Manager
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EXHIBIT 99.2
PRESS RELEASE
BAYARD DRILLING TECHNOLOGIES ANNOUNCES
ACQUISITION OF DRILLING ASSETS IN SOUTH TEXAS
OKLAHOMA CITY, OKLAHOMA, JUNE 30, 1998: Bayard Drilling Technologies,
Inc. (AMEX: BDI) announced today that it has completed the purchase of the
contract drilling assets of TransTexas Gas Corporation for $75 million. Bayard
and TransTexas entered into a 30-month drilling alliance agreement under which
TransTexas will utilize up to 15 Bayard rigs to meet its land drilling needs in
South Texas and the Gulf Coast regions. Bayard agreed to make such rigs
available for use by TransTexas at pre-agreed terms. Currently, eight of the
rigs are on location and drilling for TransTexas. In addition, the Company
anticipates that TransTexas may utilize one of the Company's deep SCR land rigs
to develop TransTexas' Eagle Bay field in Galveston Bay. TransTexas may also
utilize one or more of the Company's deep SCR rigs in the future on prospects in
south Louisiana.
Bayard financed the acquisition with a private placement of $100
million of senior notes of the Company under Rule 144A. The notes bear interest
at 11% and mature in 2005. The notes have not been registered under the
Securities Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
Bayard Drilling Technologies, Inc. is a leading provider of land
drilling services to major and independent oil and gas companies.
The Company's operating results are substantially affected by industry
conditions such as the levels and volatility of market prices of oil and gas. In
recent months, the market prices of oil and gas have decreased significantly,
which has affected demand for land drilling rigs. These developments have the
potential of adversely affecting the Company's results in future periods. The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
forward-looking statements. Certain information included in this news release
contains statements that are forward-looking in nature including statements
about the Company's expectations regarding actions that may be taken by
TransTexas. Such statements involve important risks and uncertainties that could
significantly affect anticipated results in the future and cause actual results
to differ from those expressed in any such forward-looking statements.
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