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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
THE EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
500 NORTH LOOP 1604 EAST, SUITE 250, SAN ANTONIO, TEXAS 78232
(Address of principal executive offices)
(210) 496-5300
(Registrant's telephone number, including area code)
COLORADO 0-9120 84-0793089
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
Date of Report (Date of Earliest Event Required to be Reported):
FEBRUARY 20, 1997
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Purchase of Williston Basin Leases
Under the terms of that certain agreement dated January 21, 1997 between The
Exploration Company ("TXCO") and Retamco Operating, Inc. and TransEuro Capital,
Inc., TXCO has purchased as of February 20, 1997, an interest ranging from 75%
to 100% in a minimum of 221,329.68 net acres in the Williston Basin in the
states of North Dakota, South Dakota and Montana. The oil and gas leases
generally have an 80% net revenue interest and have 3-5 year primary terms with
no additional rental payments. Under the terms of the agreement, TXCO is
purchasing the following interests:
<TABLE>
<CAPTION>
Purchased Total Net Acres
Area Interest Net Acres Purchased
---- --------- --------- -----------
<S> <C> <C> <C>
Red River Prospect 75% 131,860 98,895
Lodgepole Prospect 80% 28,258 22,606
Williston Basin Prospect 100% 99,829 99,829
</TABLE>
Per the agreement, TXCO paid $22,000,000 cash and 1,000,000 shares of common
stock that will be restricted as to transfer under Rule 144 of the Securities
Act of 1933, as amended ("the Act"), for the oil and gas leases. Additionally,
a 7.2% net profits interest to Gose Family Trusts, an affiliate of Retamco
Operating, Inc., burdens the leases and has been assumed by TXCO. Retamco
Operating, Inc. is a private corporation whose officers include Thomas H. Gose
and Stephen M. Gose, Jr., both of whom are directors of TXCO. The prices paid
for the leases were based upon comparable prices paid for other acreage blocks
in the area in private sales and/or public auctions.
In order to finance the purchase, as of February 20, 1997, TXCO sold a 42.5%
net profits interest in wells to be drilled on the oil and gas leases for
$17,000,000 cash and a $4,000,000 five-year debenture convertible to TXCO's
common stock at $5.00 per share to a large Swiss pension fund.
ITEM 5. OTHER EVENTS
TXCO has also raised an additional $14,000,000 cash for common stock privately
placed abroad pursuant to Regulation S promulgated under the Act. A total of
2,800,000 shares were sold at a price of $5.00 per share to 14 Non-U.S. persons
in Australia, Switzerland and Singapore under the meaning of Rule 902 of
Regulation S. No single investor's purchase aggregates to 5% or more of the
outstanding stock of TXCO except for the following: (1) Trianon Opus One, Inc.
purchased 1,100,000 shares representing approximately 7.5% of TXCO outstanding
common stock and, (2) Finanzverwaltung des Kanton St. Gallen's purchase of
600,000 additional shares increases its interest to approximately 7.5% also.
TXCO had an outstanding convertible debenture dated August 2, 1994, to W.A. Oil
& Gas Loan Trust in the amount of $1,331,212. Effective February 11, 1997, TXCO
received notice that the entire amount was to be converted to 532,488 shares of
TXCO's common stock pursuant to terms of the debenture agreement. These shares
will bear a legend and be restricted as to further transfer under Rule 144 of
the Act.
TXCO had an outstanding convertible debenture dated May 31, 1994, to D.B. Co.,
a Texas limited partnership, in the amount of $500,000. Effective January 16,
1997, TXCO received notice that the entire amount was to be converted to
166,666 shares of TXCO's common stock pursuant to terms of the debenture
agreement. These shares will bear a legend and be restricted as to further
transfer under Rule 144 of the Act.
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Commissions related to the above transactions totaled $700,000 in cash and
$900,000 in restricted stock of the Company (180,000 shares valued at $5.00 per
share). Deferred loan costs of $200,000 have been capitalized as additional
interest costs to be amortized straight line over the five year life of the
$4,000,000 convertible debenture.
The cumulative effect of the transactions reported in this 8-K is that as of
February 20, 1997, TXCO has issued an additional 4,679,154 shares of its common
stock thereby increasing its issued and outstanding shares total to 14,739,198
shares. TXCO's unaudited balance sheet net equity is anticipated to increase by
approximately $11,163,212.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following balance sheets present the Company's historical November 30, 1996
financial position, the adjustments to be recorded pursuant to the described
transactions, and a "pro-forma" balance sheet as if the transactions were all
consummated effective that date. The transactions reported would have no impact
on TXCO's Statement of Operations for the quarter ended November 30, 1996.
Additionally, TXCO's net loss per share for the quarter then ended would not
change.
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ASSETS 11/30/96 ADJUSTMENTS 11/30/96
------------ ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 659,768 $ 12,300,000 $ 12,959,768
Accounts receivable-net 171,437 171,437
------------ ------------ ------------
Total Current Assets 831,205 12,300,000 13,131,205
PROPERTY & EQUIPMENT
Oil & gas properties - net of
impairment 7,208,233 832,000 8,040,233
Mineral properties - net of
impairment 306,564 306,564
Other equipment 143,491 143,491
Less accumulated depreciation,
depletion and amortization (485,431) (485,431)
------------ ------------ ------------
Total Property & Equipment 7,172,857 832,000 8,004,857
OTHER ASSETS
Net assets of ExproFuels, Inc. 279,051 279,051
Other assets 158,099 200,000 358,099
------------ ------------ ------------
Total Other Assets 437,150 200,000 637,150
TOTAL ASSETS $ 8,441,212 $ 13,332,000 $ 21,773,212
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</TABLE>
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BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
LIABILITIES & SHAREHOLDERS' EQUITY 11/30/96 ADJUSTMENTS 11/30/96
------------ ------------ ------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 344,218 $ $ 344,218
Accrued payroll and taxes 22,499 22,499
Current portion of long-term debt 1,362,500 (1,362,500) -0-
Current portion of capital lease
obligations 27,560 27,560
Total Current Liabilities 1,756,777 (1,362,500) 394,277
------------ ------------ ------------
LONG TERM LIABILITIES
Long-term debt, net of current
portion 468,712 3,531,288 4,000,000
Long-term capital lease obligations,
net of current portion 31,884 31,884
------------ ------------ ------------
Total Long-term Liabilities 500,596 3,531,288 4,031,884
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per
share; authorized 200,000,000
shares; issued and outstanding,
9,900,044 shares (historical) and
14,579,198 shares (after pro forma
adjustments) 99,000 46,792 145,792
Additional paid-in capital 24,331,034 11,116,420 35,447,454
Accumulated deficit (18,246,195) (18,246,195)
------------ ------------ ------------
Total Stockholders' Equity 6,183,839 11,163,212 17,347,051
------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 8,441,212 $ 13,332,000 $ 21,773,212
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</TABLE>
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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 thereunto duly authorized.
THE EXPLORATION COMPANY
(Registrant)
/s/ James E. Sigmon
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James E. Sigmon
President
Date: February 20, 1997
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