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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 14, 1995
TOM BROWN, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other
jurisdiction of incorporation)
0-3880 95-1949781
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(Commission file (IRS employer
number) identification
number)
508 West Wall, Suite 500, Midland, Texas 79701
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(Address of principal executive offices) (Zip code)
(915) 682-9715
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(Registrant's telephone number including area code)
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 14, 1995, Tom Brown, Inc. and KN Energy, Inc. jointly
issued the following press release:
KN ENERGY AND TOM BROWN, INC. ANNOUNCE NEW JOINT TRANSACTIONS
LAKEWOOD, CO / MIDLAND, TX - KN Energy, Inc. (NYSE - KNE) and Tom Brown, Inc.
(NASDAQ - TMBR) today jointly announced the execution of a letter of intent
providing for the merger of KN Energy's wholly-owned gas and oil subsidiary, KN
Production Company (KNPC), into Tom Brown and the formation of a new gas
services company.
The merger will be structured as an exchange of 0.9 million shares of Tom Brown
common stock and 1.0 million shares of new convertible preferred stock of Tom
Brown for all of the common shares of KNPC. The transaction will be treated as
a tax-free reorganization and will be accounted for under the purchase method.
Upon closing, Tom Brown's Board of Directors will be increased from seven to
nine members, with two directors designated by KN Energy.
The new company will be created to provide gathering, processing, marketing,
storage and field services to Rocky Mountain gas and oil producers and others.
It will also pursue the construction or acquisition of gathering, processing
and storage assets in areas of the Rocky Mountain region where KNPC or Tom
Brown currently own reserves. These areas will include portions of the Wind
River Basin in central Wyoming and gas producing areas in western Colorado and
southwestern Wyoming. The new company will be jointly owned by KN Energy (55
percent) and Tom Brown (45 percent). KN Energy will serve as operator of the
new venture, and the two companies will have equal representation on the
managing operating committee.
Under the new venture, Tom Brown will dedicate significant amounts of its Rocky
Mountain gas production to the new company for gathering, processing and
marketing. KN Energy will contribute substantial gas marketing contracts and
storage assets in western Colorado. The combined reserves initially dedicated
to this new company for marketing are approximately 180 billion cubic feet
equivalent (Bcfe).
At July 1, 1995, KNPC had proved reserves of approximately 45 Bcfe of gas
equivalent located primarily in the Piceance Basin of western Colorado and in
the Moxa Arch area of southwestern Wyoming. KNPC's proved reserves are about
90 percent gas and are 80 percent developed. KNPC also holds approximately
170,000 net undeveloped leasehold and mineral acres on which it has identified
an inventory of low-risk drilling prospects.
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"This is a significant strategic alliance for KN in the Rocky Mountain region
with a premier low-cost producer," said Larry D. Hall, President and Chief
Executive Officer of KN Energy. "This alliance advances KN Energy's strategy
by leveraging our existing reserves into greater opportunity through additional
gathering, processing, marketing, field services and storage." Hall added:
"As a result of the formation of this new company, KN Energy will immediately
gain access to almost 180 Bcfe in reserves and 648,000 acres of undeveloped
acreage. The combination of a producer and an integrated gas company as
owners, puts us in a unique position to provide gas services immediately to a
broader range of markets all along the gas value chain in an increasingly
competitive marketplace."
"It is an exciting opportunity to join with the innovative and exceptional
leadership of KN Energy in a joint venture that will benefit both companies,"
said Don Evans, Chairman and Chief Executive Officer of Tom Brown, Inc. "KNPC
provides us with steady cash flow and development drilling opportunities
adjacent to existing producing fields. These properties complement our Wind
River Basin activity and maintain our primary objective of staying focused in
the Rocky Mountain region."
The convertible preferred stock will have a liquidation value of $25.00 per
share and a coupon of 7.0%, and each preferred share will be convertible into
1.6660 shares of common stock of Tom Brown. KN Energy will have customary
registration rights for the shares it receives.
Consummation of the merger and the formation of the new company are expected to
be contemporaneous and are conditioned on the execution of definitive
documentation, certain regulatory approvals and other customary terms and
conditions. Closing is anticipated to occur within the next sixty days.
KN Energy is a natural gas services company and has operations in eight states.
The services provided include gas gathering, processing, marketing, storage,
transportation and retail gas distribution services. KN Energy has annual
sales exceeding $1 billion and assets of approximately $1.2 billion.
Tom Brown, Inc. is an independent energy company engaged in the domestic
exploration for, and the acquisition, development, production and sale of,
natural gas and crude oil. As of December 31, 1994, the Company's natural gas
reserves were approximately 180 Bcf and its oil reserves were approximately 4.5
MMBbls. Tom Brown, Inc. recently announced it intends to acquire substantially
all the assets of Presidio Oil Co.
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Release Date: Immediate Release - December 14, 1995
Contacts: KN Energy, Inc. - Karla Kimrey - (303) 763-3489
Tom Brown, Inc. - Donald L. Evans - (915) 682-9715
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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 thereunto duly authorized.
Dated: December 19, 1995
TOM BROWN, INC.
By: /s/ R. KIM HARRIS
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R. Kim Harris, Controller and
Principal Financial Officer
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