<PAGE> 1
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
BLUE RIDGE ENERGY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
BLUE RIDGE ENERGY, INC.
632 ADAMS STREET, SUITE 710
BOWLING GREEN, KENTUCKY 42101
---------------
PROXY STATEMENT
---------------
THE ANNUAL MEETING
This Proxy Statement is furnished to stockholders of Blue Ridge Energy,
Inc. (the "Company") in connection with the solicitation of proxies by and on
behalf of the Board of Directors of the Company for use at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Central Daylight Time, on August 8, 2000,
at 632 Adams Street, Suite 710, Bowling Green, Kentucky 42101 and at any
adjournment or adjournments thereof (the "Annual Meeting"). Commencing on or
about July 24, 2000, this Proxy Statement and the enclosed proxy card are being
mailed to stockholders of record of the Company. The Company will bear the costs
of this solicitation, which, in addition to mail, may include personal
interviews, telephone calls, or telegrams by directors, officers and regular
employees of the Company and its affiliates.
VOTING.
The stock transfer book will not be closed but only record holders of
outstanding shares of the Company's Common Stock, par value $.005 per share (the
"Common Stock"), at the close of business on the record date, June 30, 2000, are
entitled to notice of and to vote at the Annual Meeting. As of such record date,
5,809,794 shares of Common Stock were entitled to be voted. The holders of
Common Stock are entitled to cast one vote for each share of Common Stock owned
of record. Cumulative voting is not permitted with respect to any proposal to be
acted upon at the Annual Meeting.
The presence in person or by proxy of the holders of shares of Common
Stock entitled to cast a majority of the votes entitled to be cast at the
Meeting shall constitute a quorum. If a quorum should not be present, the Annual
Meeting may be adjourned from time to time until a quorum is obtained.
Stockholders are urged to sign the accompanying proxy card and return it
promptly.
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on the record date to vote in the election of
directors and the proposals described in the Proxy Statement. The proxy card
provides space for a stockholder to vote in favor of or to withhold voting for
any or all nominees for the Board of Directors, to vote for or against any
proposal to be considered at the Annual Meeting or to abstain from voting for
any proposal if the stockholder chooses to do so.
<PAGE> 3
To ensure representation at the Annual Meeting, each holder of
outstanding shares of Common Stock entitled to be voted at the Annual Meeting is
requested to complete, date, sign and return to the Company the enclosed proxy
card, which requires no postage if mailed in the United States. Stockholders are
urged to sign the accompanying proxy card and return it promptly. Banking
institutions, brokerage firms, custodians, trustees, nominees, and fiduciaries
who are record holders of Common Stock entitled to be voted at the Annual
Meeting are requested to forward all proxy cards, this Proxy Statement, and the
accompanying materials to the beneficial owners of such shares and to seek
authority to execute proxies with respect to such shares. Upon request, the
Company will reimburse such record holders for their reasonable out-of-pocket
forwarding expenses. The costs of this solicitation will be borne by the
Company, including the costs of assembling and mailing the enclosed proxy card
and this Proxy Statement.
If properly executed and received by the Company before the Annual
Meeting, or any adjournment or adjournments thereof, any proxy representing
shares of Common Stock entitled to be voted at the Annual Meeting and specifying
how it is to be voted will be voted accordingly. Shares as to which authority to
vote has been withheld with respect to the election of any nominee for director
will not be counted as a vote for such nominee and neither an abstention nor a
broker non vote will be counted as a vote for a proposal. Any properly executed
proxy received that does not specify how it is to be voted on a proposal for
which a specification may be made will be voted FOR such proposal at the Annual
Meeting and any adjournment or adjournments thereof.
Each stockholder returning a proxy card to the Company has the right to
revoke it, at any time before it is voted, by submitting a later dated proxy in
proper form, by notifying the Secretary of the Company in writing (signed and
dated by the stockholder) of such revocation, or by appearing at the Annual
Meeting, requesting the return of the proxy, and voting the shares in person.
When a signed proxy card is returned with choices specified with
respect to voting matters, the shares represented are voted by Proxies
designated on the proxy card in accordance with the stockholder's instructions.
The Proxies are Edward L. Stillie, President and Chief Executive Officer of the
Company, and Robert D. Burr, Chairman of the Board of the Company, each of whose
names are listed on the proxy card. A stockholder wishing to name another person
as his or her proxy may do so by crossing out the names of the two designated
Proxies and inserting the name(s) of such other person(s) to act as his or her
proxy(ies). In that case, it will be necessary for the stockholder to sign the
proxy card and deliver it to the person(s) named as his or her proxy and for the
person(s) so named to be present and to vote at the Annual Meeting. Proxy cards
so marked should not be mailed to the Company.
PROPOSAL N0. 1
TO ELECT SIX DIRECTORS TO SERVE FOR TERMS OF ONE YEAR.
The affirmative vote of the holders of a majority of the combined
voting power of all of the issued and outstanding shares of Common Stock voted
at the Annual Meeting, voting together as a single class, is required to elect
each director.
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<PAGE> 4
In accordance with the Company's Bylaws, the Board of Directors has
fixed the number of directors at six. The terms of all of the directors, Robert
D. Burr, Edward L. Stillie, James T. Cook, Jr., Gregory B. Shea, Russell L.
Vera, and Harry J. Peters, expire in 2000 and their successors will be elected
at the Annual Meeting.
The Board of Directors has nominated Robert D. Burr, Edward L. Stillie,
James T. Cook, Jr., Gregory B. Shea, Russell L. Vera, and Harry J. Peters for
election as directors at the Annual Meeting to serve for a term of one year.
Gregory B. Shea and Russell L. Vera are both son-in-laws of Robert D.
Burr and James T. Cook, Jr. is the brother-in-law of Robert D. Burr. Each of the
nominees has consented to being named as a nominee and to serve as a director if
elected. However, if for any reason any nominee for director is not a candidate
at the election, the enclosed proxy will be voted for the election of a
substitute nominee at the discretion of the person or persons voting the
enclosed proxy. The Board of Directors has no reason to believe that any nominee
named herein will be unable to serve.
Information regarding the nominees and the directors of the Company,
who are also all of the Executive Officers of the Company, whose terms expire in
2000 is provided below.
NOMINEES FOR ELECTION AS DIRECTORS.
<TABLE>
<CAPTION>
Term of Office Director
to Expire in 2001 Age Principal Occupation Since
----------------- --- -------------------- --------
<S> <C> <C> <C>
Robert D. Burr 54 Chairman of the Board 1996
Edward L. Stillie 55 Director, President & Chief Executive Officer 2000
James T. Cook, Jr. 47 Director, Senior Vice President-Finance,
Secretary and Treasurer 1996
Harry J. Peters 57 Director 2000
Gregory B. Shea 38 Director, Senior Vice President-Operations 1999
Russell L. Vera 38 Director, Senior Vice President-Exploration 2000
and Development
</TABLE>
ROBERT D. BURR, age 54, Bowling Green, Kentucky, has been Chairman of
the Board, President and Chief Executive Officer of the Company since May, 1996.
He served as President and Chief Executive Officer until March 1, 2000. Mr. Burr
has also been the Chairman of the Board, President and Chief Executive Officer
of Blue Ridge Group, since August 1993. Mr. Burr is a native of Port Arthur,
Texas and attended McNeese State College, Lake Charles, Louisiana. He has been
active for over 25 years in the oil and gas business with a myriad of companies.
EDWARD L. STILLIE, age 55, Bowling Green, Kentucky, joined the Company
on March 1. 2000 as President and Chief Executive Officer. Mr. Stillie became a
Director on April 1, 2000. For the past 20 years he has been a senior executive
with several nationally prominent companies. Most recently, he was National
Marketing Director and Senior Vice President for Houston-based Swift Energy
Company from October 30, 1994 to March 1, 2000. He holds a Bachelor of Science
Degree in Business and Public Administration from the University of Maryland and
a Masters Degree in Business Administration from the University of Central
Michigan.
2
<PAGE> 5
JAMES T. COOK, Jr., age 47, Bowling Green, Kentucky, has been Sr. Vice
President, Finance, Secretary and Treasurer and a Director of the Company since
May 1996. He is an accountant by training, and a graduate of Stephen F. Austin
State University, Nacogdoches, Texas. From 1983 to 1989, he was Vice President,
Finance and Treasurer of the Shanley Corp., Dallas, Texas, a publicly owned oil
and gas exploration company. From 1990 through 1994, he served in various
financial capacities for a group of Florida based companies with interests in
Caribbean resorts, stores, and manufacturer of bath products. Since June 1,
1995, he has been a Director and the Sr. Vice-President-Finance and Chief
Financial Officer of Blue Ridge Group. In 1997, Mr. Cook became the
brother-in-law of Mr. Burr.
HARRY J. PETERS, age 57, Bowling Green, Kentucky. Mr. Peters joined the
Company as Sr. Vice President-Sales and Marketing from April 2000 to July, 2000
and has served as a Director since April 4, 2000. A native of New York, he has
over 30 years of experience in sales and marketing, both domestic and
international. Over the years, he has developed close working relationships with
investment bankers, institutional investors, and securities dealers while
directing market financing of reserve purchases, and raising drilling risk
capital and venture capital for wells in Texas, Kentucky, Oklahoma, Louisiana,
Colorado, West Virginia and Utah. Mr. Peters has been a Director and Sr. Vice
President-Sales and Marketing of Blue Ridge Group since April of 1999. He is a
graduate of St. Michaels College in Santa Fe, New Mexico.
GREGORY B. SHEA, age 38, Bowling Green, Kentucky, has been a Director
and Senior Vice President-Operations of the Company since August, 1999. Since
that time, Mr. Shea has managed Blue Ridge Group's Kentucky drilling and field
operations. Mr. Shea has been President of Blue Ridge Builders, Inc., a
residential/commercial builder in Bowling Green, Kentucky and a majority-owned
subsidiary of Blue Ridge Group since November, 1994 and he was elected a
Director of Blue Ridge Group in February, 1995. He is a native of Plano, Texas.
Between 1981 and 1986, he attended the University of North Texas. Mr. Shea is a
son-in-law of Mr. Burr.
RUSSELL L. VERA, age 38, Bowling Green, Kentucky, became a Director and
Sr. Vice President-Exploration and Development of the Company on April 4, 2000.
A native of Gonzales, Texas, Mr. Vera attended the University of Houston for
four years a graphic arts major. He served as President of Fortune Exploration,
Inc., Irving, Texas, an independent oil and gas producer, from 1989 until 1992,
and President of Oak Ridge Exploration, Inc., Shreveport, Louisiana, in 1992. He
has served as President of Fortune Exploration of Kentucky, Inc. from 1992 until
the present. Mr. Vera is a son-in-law of Mr. Burr.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the SEC. Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company or written representations that no other reports were required, the
Company believes that during the 1999 fiscal
3
<PAGE> 6
year, all filing requirements applicable to its officers, directors and greater
than 10% beneficial owners have been complied with.
EXECUTIVE COMPENSATION
The following compensation was paid directly to the executives of the
Company during the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards All Other
Payouts Compensation
Name and Other Annual Restricted Securities LTIP ($)
Principal Position Year Salary Bonus Compensation Stock Awards Underlying Payouts
($) ($) ($) ($) Options/SAR's ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert D. Burr 1999 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
1998 $ 0 $25,000 $ 0 $ 0 0 $ 0 $ 0
1997 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
James T. Cook, Jr. 1999 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
1998 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
1997 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
Gregory B. Shea 1999 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
1998 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
1997 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
</TABLE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth each stockholder who is known to the Company
to be the beneficial owner of more than 5% of the common stock of the Company at
December 31, 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of Class of Beneficial Owner of Beneficial Owner Percent of Class
-------------- ------------------- ------------------- ----------------
<S> <C> <C> <C>
Indirect Ownership:
Common stock Robert D. Burr 1,872,235 (1) 19.1%
632 Adams Street-Suite 710
Bowling Green, KY 42101
Common stock Russell L. Vera 1,872,235 (2) 19.1%
632 Adams Street-Suite 110
Bowling Green, KY 42101
Direct Ownership:
Common stock Blue Ridge Group, Inc. 7,126,893 (3) 72.7%
632 Adams Street Suite 700
Bowling Green KY 42101
</TABLE>
4
<PAGE> 7
(1) Mr. Burr's beneficial ownership is attributable to his ownership of 26.27%
of Blue Ridge Group which owns 72.7% of the Company. Included in this table are
warrants held by Blue Ridge Group to purchase 4,000,000 shares of the Company at
$0.05 per share. Said warrants expire March 31, 2003.
(2) Mr. Vera's beneficial ownership is attributable to his ownership of 26.27%
of Blue Ridge Group which owns 72.7% of the Company. Included in this table are
warrants held by Blue Ridge Group to purchase 4,000,000 shares of the Company.
Said warrants expire March 31, 2003.
(3) Blue Ridge Group's beneficial ownership is attributable to its direct
ownership of 3,126,893 shares of common stock and warrants to purchase 4,000,000
shares at $0.05. Said warrants expire March 31, 2003.
(4) Mr. Burr and Mr. Vera (Mr. Burr's son-in-law) have disclaimed beneficial
interest in each others respective shares.
The table below sets forth the beneficial stock ownership of all directors and
officers of the Company as of December 31, 1999.
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of Class of Beneficial Owner of Beneficial Owner Percent of Class
-------------- ------------------- ------------------- ----------------
<S> <C> <C> <C>
Common stock Robert D. Burr, President 1,872,235 (1) 19.1%
Common stock All Directors and Officers 1,872,235 19.1%
as a group (6 persons)
</TABLE>
(1) Mr. Burr's beneficial ownership is attributable to his ownership of 26.27%
of Blue Ridge Group which in turn owns 72.7% of the Company. Included in this
table are warrants held by Blue Ridge Group to purchase and additional 4,000,000
shares of the Company at $0.05 a share. Said warrants expire on March 31, 2003.
MEETINGS AND COMPENSATION.
BOARD OF DIRECTORS. During the year ended December 31, 1999, the Board of
Directors of the Company met on six occasions, either in person or
telephonically. The Company does not have any Director Committees such as an
Audit Committee, Compensation Committee, etc. Each of the Company's directors
attended at least 75% of the meetings of the Board of Directors.
During 1999, the Company's Directors, Messrs Burr, Cook and Shea
received no compensation for their services to the Company;
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS.
On March 1, 2000, the Company executed a five-year employment agreement
with Mr. Stillie, its President and Chief Executive Officer. Mr. Stillie's
primary duties will be (i) the raising of capital and (ii) serving in a
management capacity for the Company. The agreement provides for such
compensation as the Board of Directors deems appropriate and a graduated stock
bonus plan to award Mr. Stillie up to 20,000 shares of the Company's common
stock, per year, based upon the amount of capital raised by Mr. Stillie.
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<PAGE> 8
The agreement may be terminated by either party upon 60 days written
notice. Such termination by the Company shall require the affirmative vote of a
majority of the members of the Board of Directors then in office who have been
or will have been directors for the two year period ending on the date notice of
the meeting or written consent to take such action is first provided. In the
case of termination by the Company, Mr. Stillie shall continue to receive his
salary and insurance benefits for six months from the day he last worked on the
Company's behalf. Mr. Stillie shall not receive such compensation if the Company
terminates his employment for cause.
In the event Mr. Stillie's employment is terminated (either by the
Company or by his resignation) after, by, on account of, or in connection with,
a "Change of Control" as defined by the agreement; the Company (i) shall pay Mr.
Stillie a lump sum equal to twelve month's salary plus an additional two week's
salary for every year of service to the Company, (ii) continue at the company's
expense such medical and dental coverage as then in effect for the remainder of
the term of the agreement, and (iii) pay one year's premium on the group life
insurance policies carried on Mr. Stillie's life. In the event of termination
due to Mr. Stillie's death or permanent disability, the Company shall pay to Mr.
Stillie or his estate any compensation or bonuses payable under the terms of
this agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Blue Ridge Group owns approximately 53.9% of the Common Stock of the
Company as of December 31, 1999. The Company has entered into several
transactions with Blue Ridge Group as follows:
STOCK TRANSACTIONS
In March 1996, Blue Ridge Group acquired 1,000,000 shares of the
Company's common stock from the Company for $0.10 a share, or $100,000. In June
1996, after a five to one share reverse stock split Blue Ridge Group acquired
another 1,000,000 shares of common stock from the Company for $0.05 per share,
or $50,000 and warrants to purchase an additional 2,000,000 shares of common
stock at $0.05 per share. During February 1998, the Company granted warrants to
Blue Ridge Group to purchase an additional 5,000,000 shares of restricted common
stock at $0.05 per share.
In June 1997, Blue Ridge Group exercised warrants to purchase 200,000
restricted shares of the Company's common stock.
In June 1998, Blue Ridge Group exercised warrants to purchase 2,800,000
restricted shares of the Company's common stock. At December 31, 1999, Blue
Ridge Group owned warrants to purchase an additional 4,000,000 shares of common
stock at $0.05 per share.
In October, 1996, the Smackover/Woodbine I Joint Venture sponsored by
the Company, and the West Currie Joint Venture sponsored by an affiliate, agreed
to purchase 117,500 shares of the Company Series B Preferred Stock at $3.00 per
share. As of December 31, 1998, 117,500 shares of Series B Preferred Stock had
been issued under this arrangement. These Series B Preferred shares were
exchanged for 235,000 shares of the Company Common shares during 1998.
6
<PAGE> 9
Under a previous arrangement with one of the Company's partnerships
(the Home Stake Joint Venture), the Company had agreed to provide certain
workover funds and had the rights to 100% of the partnership's revenues from the
well until the workover funds had been recovered. Thereafter, the Home Stake
Joint Venture would revert to its original working interest position. During
1999, the Company issued 250,000 shares of its common stock in exchange for the
partnership's reversionary interest in the well.
LOANS FROM BLUE RIDGE GROUP
During 1996, Blue Ridge Group loaned $126,000 to the Company for the
purchase of a working interest in a gas well in Vermillion Parish, Louisiana.
This loan was repaid during the first quarter of 1997.
During 1997, the Company purchased for $250,000 the JW Harris #1C oil
well, Frio County, Texas from two shareholders of Blue Ridge Group. The
shareholders were the Longhorn Trust and the Argyle Trust, which were Trusts
established under Kentucky law for the benefit of the families of Robert Burr
and Russell Vera, respectively. Russell Vera is a son-in-law of Robert Burr.
Subsequent to this purchase, the well's performance deteriorated significantly
and the selling parties agreed to buy the well back from the Company for the
original purchase price of $250,000. This $250,000 was paid in March, 1998.
During 1998, the Company agreed to participate with Blue Ridge Group in
the acquisition and development of oil and gas properties in the Appalachian
Basin of Kentucky. The Company advanced $1,300,000, bearing interest at 12% per
annum, to Blue Ridge Group related to these acquisitions.
During the years ended 1998 and 1999, the Company earned interest
income under this arrangement of $73,400 and $27,153, respectively. During 1999,
Blue Ridge Group reduced this obligation through the sale of a drilling rig and
ancillary equipment to the Company and performance of services in the drilling
and completion of various oil and gas wells under the terms of turnkey drilling
contracts. As of December 31, 1999, the balance had been reduced to $627,304.
Blue Ridge Group reduced this obligation to $-0- in 2000 through the performance
of additional services under the terms of turnkey drilling contracts and cash
payments.
CONTRACTUAL AGREEMENTS
Since June of 1996, the Company has entered into turnkey drilling
contracts with Blue Ridge Group and other affiliates for the acquisition,
drilling, completing and equipping of oil and gas wells for the Company and the
nine (9) oil and gas drilling partnerships that the Company has sponsored. A
summary of the amounts involved in these contracts is as follows:
Year Ended December 31, 1996 $ 1,308,070
Year Ended December 31, 1997 $ 2,227,560
Year Ended December 31, 1998 $ 1,428,382
Year Ended December 31, 1999 $ 3,616,100
7
<PAGE> 10
The terms of the contracts or transactions that the Company entered
into with Blue Ridge Group were on terms that were no more favorable than those
obtained from unaffiliated parties.
Blue Ridge Group provides various management, administrative,
accounting and geological services for the Company at a rate of $20,000 per
month which has been determined on a proportional basis because specific
identification of expenses is not practical. Management believes that this cost
allocation method of expenses is reasonable.
The Company also reimburses Blue Ridge Group for marketing costs paid
on its behalf which amounted to $176,540 in 1999. As of December 31, 1999 and
1998, approximately $-0- was due and payable to Blue Ridge Group under this
arrangement.
In March 1999, the Company purchased ancillary equipment to be used in
association with drilling rig #4 from Blue Ridge Group at a price of $415,000.
In April 1999, the Company purchased drilling rig #2 with associated ancillary
equipment from Blue Ridge Group at a price of $750,000.
During 1999 and 1998, the Company had no significant customers or
suppliers, other than its major stockholder, (Blue Ridge Group) who could
individually have a significant adverse effect on the Company's operations.
The Company has an affiliated broker dealer, Ridgemont Securities,
Inc., that raises the majority of the Company's funds through private placement
offerings for oil and gas wells and the issuance of preferred stock for which
the Company pays Ridgemont Securities various fees and commissions. The fees and
expenses paid to Ridgemont Securities, Inc. by the Company and the oil and gas
partnerships during 1999 and 1998 are as follows:
1999 1998
---------- --------
Commissions $1,088,138 $546,713
Due Diligence Fees 43,493 49,938
Promotional Services 200,000 --
Reimbursed Expenses 80,780 101,511
---------- --------
Total $1,412,411 $698,162
========== ========
The Company contracts with Blue Ridge Group to manage and operate the
two drilling rigs it owns. Blue Ridge Group also manages two other rigs owned by
other affiliates of Blue Ridge Group.
Blue Ridge Group collects all drilling revenues and pays all expenses
related to the drilling operations and accounts to the Company on a periodic
basis for the net profits from operations for the two rigs owned by the Company.
The Company reported revenues of $792,439 and costs of $709,308 from the
operation of the drilling rigs for the year ended December 31, 1999.
8
<PAGE> 11
During 1999, the Company made the following property acquisitions from
partnerships they had previously syndicated:
In 1999, the Company acquired a 100% working interest in the Keegan
Gibson #1 oil well in Smith County, Texas in exchange for issuing warrants to
purchase 335,725 shares of the Company Common stock at $3.00 per share. The
warrants are exercisable during the period March 27, 2000 and March 27, 2005.
This Property acquisition was recorded at the Company's cost basis in the
partnership including accounts receivable, which management believes
approximates the fair market value of the property. No basis was attributed to
the warrants issued.
The Company acquired in 1999, a 100.0% working interest in two gas
wells in Sherman County, Texas in exchange for warrants to purchase 521,208
shares of the Company Common stock at $3.00 per share. The transaction was
recorded at the Company's cost basis in the partnership which approximates fair
value. The Company did not allocate any cost basis to the common stock warrants.
During November, 1999, the Company acquired a 30% working interest in
nine gas wells in Harlan County, Kentucky owned by two of its oil and gas
partnerships in exchange for the Company's 53.4% working interest in a gas well
in Wharton County, Texas, the Company's 12.5% working interest in five
development wells in Mingo and Wyoming Counties of West Virginia, and 968,300
warrants to purchase the Company's Common stock at $3.00 per share. The
transaction was recorded, in accordance with FASB 123, at the estimated fair
value of the assets received being $338,400, as this was considered a more
reliable measurement.
During 1999 and 1998, the Company had no significant customers or
suppliers, other than its major stockholder, (Blue Ridge Group) who could
individually have a significant adverse effect on the Company's operations.
The terms of the contracts or transactions that the Company entered
into with Blue Ridge Group were on terms that were no more favorable than those
obtained from unaffiliated parties.
INDEPENDENT PUBLIC ACCOUNTANTS
Looney, Samson & Associates, P.L.L.C. ("LSA") is engaged as the
Company's independent public accountant to audit its financial statements. LSA
has audited the financial statements of the Company since fiscal 1996.
Stockholder ratification of the appointment of auditors is not required. It is
not anticipated that LSA will be represented at the Annual Meeting.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder of the Company intends to present at
the 2001 Annual Meeting of Stockholders must be received by the Secretary at the
Company's principal executive offices, at 632 Adams Street, Suite 710, Bowling
Green, Kentucky 42101, by March 1, 2001 in order to be considered by the Board
of Directors for inclusion in the Board of Directors' proxy solicitation
materials for that meeting.
9
<PAGE> 12
ANNUAL REPORT
Please refer to the Company's 1999 Annual Report to Stockholders which
accompanies this Proxy Statement for financial statements, other financial
information, management's discussion and analysis of the financial condition and
results of operations for the Company.
NO OTHER MATTERS
We know of no business other than the matters discussed in this proxy
statement that properly may be, or is likely to be, brought before the meeting.
Blue Ridge Energy, Inc.
By Order of the Board of Directors
/s/ James T. Cook, Jr.
James T. Cook, Jr.
Corporate Secretary
Bowling Green, Kentucky
July 24, 2000
10
<PAGE> 13
BLUE RIDGE ENERGY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
Annual Meeting to be held on
August 8, 2000 at 10:00 a.m. CDT
For stockholders as of Control No.
6/30/00 ____________
The undersigned appoints Edward L. Stillie and Robert D. Burr, or either of
them, as proxies, each with full power of substitution, to attend the Annual
Meeting of Stockholders of the Company set forth above and to vote as specified
in this proxy all shares of Common Stock of the company held of record by the
undersigned on June 30, 2000.
This proxy, when properly executed, will be voted in the manner specified herein
by the undersigned stockholder. If no directions are indicated, this proxy will
be voted for Proposals 1 and 2.
PROPOSALS
1. ELECTION OF DIRECTORS
1. Robert D. Burr
2. Edward L. Stillie
3. James T. Cook, Jr.
4. Harry J. Peters
5. Gregory B. Shea
6. Russell L. Vera
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
[ ] For [ ] Against [ ] Abstain
The Board of Directors recommends a vote for Proposals 1 and 2.
BLUE RIDGE ENERGY, INC.
Annual Meeting to be held on
August 8, 2000 at 10:00 a.m. CDT
Directors
---------
(Mark "X" for only one box)
[ ] For all Nominees
[ ] Withhold all Nominees
[ ] Withhold authority to vote for any individual
Nominee. Write number(s) of Nominees below:
Use numbers only ____________________
________________________________________ _____________
Signature Date
Blue Ridge Energy, Inc.
632 Adams Street, Suite 710
Bowling Green, Kentucky 42101
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Client Label
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<PAGE> 14
VOTING INSTRUCTIONS:
TO OUR CLIENTS:
WE HAVE BEEN REQUESTED TO FORWARD TO YOU THE ENCLOSED PROXY MATERIAL RELATIVE TO
SECURITIES HELD BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. SUCH
SECURITIES CAN BE VOTED ONLY BU US AS THE HOLDER OF RECORD. WE SHALL BE PLEASED
TO VOTE YOUR SECURITIES IN ACCORDANCE WITH YOUR WISHES. IF YOU WILL EXECUTE THE
FORM AND RETURN IT TO US PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE. IT IS
UNDERSTOOD THAT, IF YOU SIGN WITHOUT OTHERWISE MARKING THE FORM, THE SECURITIES
WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS ON ALL MATTERS TO BE
CONSIDERED AT THE MEETING,
FOR THIS MEETING, THE EXTENT OF OUR AUTHORITY TO VOTE YOUR SECURITIES IN THE
ABSENCE OF YOUR INSTRUCTIONS CAN BE DETERMINED BY REFERRING TO THE APPLICABLE
VOTING INSTRUCTION NUMBER INDICATED ON THE FACE OF YOUR FORM.
VOTING INSTRUCTION NUMBER 1 -
---------------------------
WE URGE YOU TO SEND IN YOUR INSTRUCTIONS SO THAT WE MAY VOTE YOUR SECURITIES IN
ACCORDANCE WITH YOUR WISHES. HOWEVER, THE RULES OF THE NEW YORK STOCK EXCHANGE
PROVIDE THAT IF INSTRUCTIONS ARE NOT RECEIVED FROM YOU PRIOR TO THE ISSUANCE OF
THE FIRST VOTE, THE PROXY MAY BE GIVEN AT DISCRETION BY THE HOLDER OF RECORD OF
THE SECURITIES. (ON THE TENTH DAY, IF THE PROXY MATERIAL WAS MAILED AT LEAST 15
DAYS PRIOR TO THE MEETING DATE; ON THE FIFTEENTH DAY IF PROXY MATERIAL WAS
MAILED 25 DAYS OR MORE PRIOR TO THE MEETING DATE). IF YOU ARE UNABLE TO
COMMUNICATE WITH US BY SUCH DATE, WE WILL NEVERTHELESS FOLLOW YOUR INSTRUCTIONS,
EVEN IF OUR DISCRETIONARY VOTE HAS ALREADY BEEN GIVEN. PROVIDED YOUR
INSTRUCTIONS ARE RECEIVED PRIOR TO THE MEETING DATE.
VOTING INSTRUCTION NUMBER 2 -
---------------------------
WE WISH TO CALL YOUR ATTENTION TO THE FACT THAT, UNDER THE RULES OF THE NEW YORK
STOCK EXCHANGE, WE CANNOT VOTE YOUR SECURITIES ON ONE OR MORE OF THE MATTERS TO
BE ACTED UPON AT THE MEETING WITHOUT YOUR SPECIFIC VOTING INSTRUCTIONS.
<PAGE> 15
IF WE DO NOT HEAR FROM YOU PRIOR TO THE ISSUANCE OF THE FIRST VOTE, WE MAY VOTE
YOUR SECURITIES IN OUR DISCRETION TO THE EXTENT PERMITTED BY THE RULES OF THE
EXCHANGE (ON THE TENTH DAY, IF THE PROXY MATERIAL WAS MAILED AT LEAST 15 DAYS
PRIOR TO THE MEETING DATE; ON THE FIFTEENTH DAY IF THE PROXY MATERIAL WAS MAILED
25 DAYS OR MORE PRIOR TO THE MEETING DATE). IF YOU ARE UNABLE TO COMMUNICATE
WITH US BY SUCH DATE, WE WILL NEVERTHELESS FOLLOW YOUR VOTING INSTRUCTIONS, EVEN
IF OUR DISCRETIONARY VOTE HAS ALREADY BEEN GIVEN, PROVIDED YOUR INSTRUCTIONS ARE
RECEIVED PRIOR TO THE MEETING DATE.
VOTING INSTRUCTION NUMBER 3 -
---------------------------
IN ORDER FOR YOUR SECURITIES TO BE REPRESENTED AT THE MEETING, IT WILL BE
NECESSARY FOR US TO HAVE YOUR SPECIFIC VOTING INSTRUCTIONS. PLEASE DATE, SIGN
AND RETURN YOUR VOTING INSTRUCTIONS TO US PROMPTLY IN THE RETURN ENVELOPE
PROVIDED.
VOTING INSTRUCTION NUMBER 4 REMINDER -
------------------------------------
WE HAVE PREVIOUSLY SENT YOU PROXY SOLICITING MATERIAL PERTAINING TO THE MEETING
OF SHAREHOLDERS OF THE COMPANY INDICATED.
ACCORDING TO OUR LATEST RECORDS, WE HAVE NOT AS YET RECEIVED YOUR VOTING
INSTRUCTION ON THE MATTERS TO BE CONSIDERED AT THIS MEETING AND THE COMPANY HAS
REQUESTED US TO COMMUNICATE WITH YOU IN AN ENDEAVOR TO HAVE YOUR SECURITIES
VOTED.
THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SECURITIES CARRIED BY US IN YOUR
ACCOUNT BUT NOT REGISTERED IN YOUR NAME. SUCH SECURITIES CAN BE VOTED ONLY BY US
AS THE HOLDER OF RECORD OF THE SECURITIES. PLEASE DATE, SING AND RETURN YOUR
VOTING INSTRUCTIONS TO US PROMPTLY IN THE RETURN ENVELOPE PROVIDED.
SHOULD YOU WISH TO ATTEND THE MEETING AND VOTE IN PERSON, PLEASE CHECK THE BOX
ON THE FRONT OF THE FORM FOR THIS PURPOSE. A LEGAL PROXY COVERING YOUR
SECURITIES WILL BE ISSUED TO YOU.
