<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) March 14, 1997
(February 26, 1997)
LOMAK PETROLEUM, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 0-9592
DELAWARE 34-1312571
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
500 THROCKMORTON STREET 76102
FORT WORTH, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (817) 870-2601
<PAGE> 2
ITEM 5. ACQUISITION OR DISPOSITION OF ASSETS.
-------------------------------------
The Company acquired oil and gas properties and equipment located in
West Texas, South Texas and the Gulf of Mexico (the "Cometra Properties") from
Cometra Energy, L.P., Cometra Production Company, L.P. and Rockland, L.P.
(collectively "Cometra") for a purchase price of $385 million (the "Cometra
Acquisition"). The Cometra Acquisition increased the Company's proved reserves
at December 31, 1996 by 68% to 644 Bcfe and increased its Present Value by 98%
to $974 million. The Cometra Properties, located primarily in the Company's core
operating areas, include 515 producing wells, 401 proven development projects
and substantial additional development and exploration potential on
approximately 150,000 gross acres (90,000 net acres). In addition, the Cometra
Properties include 265 miles of gas pipelines, a 25,000 Mcf/d gas processing
plant and an above-market gas contract with a major Texas gas utility covering
approximately 30% of the December 1996 production from the Cometra Properties.
The purchase price for the Cometra Acquisition was approximately $385
million, consisting of $355 million in cash and 1,410,106 shares of the
Company's Common Stock. The Company financed the cash portion of the purchase
price with $221 million of borrowings under a recently expanded bank credit
facility (the "Credit Agreement") and the issuance to Cometra of a $134 million
non-interest bearing promissory note due March 31, 1997, which is secured by a
bank letter of credit. The promissory note will be repaid at maturity through
borrowings under the Credit Agreement. The Credit Agreement permits the Company
to obtain revolving credit loans and issue letters of credit from time to time
in an aggregate amount not to exceed $400 million initially. Availability under
the credit agreement will be reduced to $325 million on August 13, 1997, unless
otherwise agreed to by the lenders.
The foregoing description of the above described transaction is
qualified in its entirety by reference to the Purchase and Sale Agreements,
which are being filed herewith as Exhibits 1and 2 and are fully incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
----------------------------------
(a) Financial Statements of Assets Acquired
---------------------------------------
Report of Independent Public Accountants
Statements of revenues and direct operating expenses for the
years ended December 31, 1994, 1995 and 1996
Notes to statements of revenues and direct operating expenses
(b) Pro Forma Financial Information
-------------------------------
Pro forma combined statement of income for the year ended
December 31, 1996
Pro forma combined balance sheet at December 31, 1996
Notes to pro forma combined financial statements
(c) Exhibits
--------
*1. Purchase and Sale Agreement between Cometra Energy, L.P.
and Cometra Production Company, L.P., as seller, and Lomak
Petroleum, Inc., as buyer, dated as of December 31, 1996,
including First Amendment to Purchase and Sale Agreement,
dated January 10, 1997.
*2. Purchase and Sale Agreement between Rockland L.P., as
seller, and Lomak Petroleum, Inc., as buyer, dated as
of December 31 1996.
----------------
* Previously filed as exhibit in Form S-3, Registration No.
333-20257, dated January 23, 1997.
2
<PAGE> 3
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.
LOMAK PETROLEUM, INC.
By /s/ Thomas W. Stoelk
------------------------------
Thomas W. Stoelk
Chief Financial Officer
March 14, 1997
3
<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
THE BOARD OF DIRECTORS AND STOCKHOLDERS
LOMAK PETROLEUM, INC.:
We have audited the accompanying statements of revenues and direct
operating expenses of the American Cometra Interests, as described in Note 1,
for the years ended December 31, 1994, 1995 and 1996. These financial statements
are the responsibility of management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statements of revenues and direct operating expenses
reflect the revenues and direct operating expenses attributable to the American
Cometra Interests, as described in Note 1, and are not intended to be a complete
presentation of the revenues and expenses of the American Cometra Interests.
In our opinion, the financial statements referred to above present
fairly, the revenues and direct operating expenses of the American Cometra
Interests, as described in Note 1, for the years ended December 31, 1994, 1995
and 1996, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
February 7, 1997
4
<PAGE> 5
THE AMERICAN COMETRA INTERESTS
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996
------------------- ------------------- -------------------
<S> <C> <C> <C>
Revenues:
Oil and gas production $ 46,808,830 $ 43,513,982 $ 60,751,200
Marketing and gas plant operating activities (net) 3,370,500 5,276,900 7,273,100
------------ ------------ ------------
Total Revenues 50,179,330 48,790,882 68,024,300
Direct operating expenses (14,447,533) (12,727,532) (14,375,900)
------------ ------------ ------------
Excess of revenues over operating expenses $ 35,731,797 $ 36,063,350 $ 53,648,400
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
THE AMERICAN COMETRA INTERESTS
NOTES TO STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES
(1) GENERAL:
Organization
The accompanying statements present the revenues and direct operating
expenses of certain working and other interests in oil and gas properties and
the Sterling gas plant and related pipeline owned by American Cometra, Inc. (the
"American Cometra Interests") which were purchased by Lomak Petroleum, Inc.
("Lomak"). Such financial statements were derived from the historical records of
the predecessor owner and represent Lomak's interest.
Basis of Presentation
The historical financial statements reflecting financial position,
results of operations and cash flows required by generally accepted accounting
principles are not presented, as such information is neither readily available
on an individual property basis nor meaningful for the American Cometra
Interests. During the periods presented, the American Cometra Interests were not
accounted for as a separate entity. These statements do not include
depreciation, depletion and amortization, general and administrative, interest,
federal income tax expenses, or federal income tax credits allowed under Section
29 of the Internal Revenue Code. Accordingly, the accompanying financial
statements are not intended to be a complete presentation of the results of
operations of the American Cometra Interests in conformity with generally
accepted accounting principles.
Revenue Recognition
Revenues are recognized when oil and gas production is sold. Direct
operating expenses are accrued when services are provided. Netted against
marketing and gas plant operating activities is $9,758,300, $7,700,000 and
$11,478,400 for the years ended December 31, 1994, 1995 and 1996, respectively,
relating to costs associated with those activities.
Use of Estimates
Management has made a number of estimates and assumptions relating to
the reporting of revenues and direct operating expenses to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(2) SALES TO MAJOR CUSTOMERS:
For the year ended December 31, 1994, 1995 and 1996 four purchasers
accounted for 33%, 54% and 74% of total revenues, respectively.
(3) SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED):
COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1994 1995 1996
------------------ ------------------ -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Exploration $ 14,154 $ 3,986 $ 1,124
Development 11,753 12,759 14,976
</TABLE>
6
<PAGE> 7
THE AMERICAN COMETRA INTERESTS
NOTES TO STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES -- (CONTINUED)
(3) SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED): CONTINUED:
OIL AND GAS RESERVE INFORMATION
The estimates of the American Cometra Interests in proved oil and gas
reserves, which are located entirely in the United States, are based on
evaluations by an independent petroleum engineer, Netherland, Sewell &
Associates as of December 31, 1996. These reserves were estimated in accordance
with guidelines established by the Securities and Exchange Commission which
require that reserve reports be prepared under existing economic and operating
conditions with no provision for price escalations except by contractual
arrangements. Reserves as of December 31, 1994 and 1995 were derived from the
December 31, 1996 reserve estimates after considering historical production and
drilling activities.
Lomak's management emphasizes that reserve estimates are inherently
imprecise. Accordingly, the estimates are expected to change as future
information becomes available.
The following unaudited table sets forth the estimated proved oil and
gas reserve quantities of the American Cometra Interests at December 31, 1994,
1995 and 1996:
<TABLE>
<CAPTION>
CRUDE OIL NATURAL GAS
(BBLS) (MCFS)
---------- -----------
(in thousands)
PROVED RESERVES:
<S> <C> <C>
Balance, December 31, 1993 10,107 194,508
Production (404) (14,372)
Purchases -- 1,294
Extensions, discoveries, renewals 505 12,683
Sales -- --
------ -------
Balance, December 31, 1994 10,208 194,113
Production (626) (15,212)
Purchases 93 1,502
Extensions, discoveries, renewals 24 9,210
Sales (14) --
------ -------
Balance, December 31, 1995 9,685 189,613
Production (803) (16,124)
Extensions, discoveries, renewals 848 28,516
====== =======
Balance, December 31, 1996 9,730 202,005
====== =======
PROVED DEVELOPED RESERVES:
Balance, December 31, 1994 5,062 97,269
====== =======
Balance, December 31, 1995 4,550 93,398
====== =======
Balance, December 31, 1996 4,595 103,749
====== =======
</TABLE>
The "Standardized Measure of Discounted Future Net Cash Flows Relating
to Proved Oil and Gas Reserves" (Standardized Measure) is a disclosure
requirement under Statement of Financial Accounting Standards No. 69. The
Standardized Measure does not purport to present the fair market value of proved
oil and gas reserves.
7
<PAGE> 8
THE AMERICAN COMETRA INTERESTS
NOTES TO STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES -- (CONTINUED)
(3) SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED): CONTINUED:
OIL AND GAS RESERVE INFORMATION , CONTINUED:
This would require consideration of expected future economic and operating
conditions, which are not taken into account in calculating the Standardized
Measure.
Future net cash flows for the period presented were derived from the
December 31, 1996 reserve estimate after considering historical production and
drilling activities. December 31, 1996 prices in the reserve estimates were
adjusted for fixed and determinable escalations to the estimated future
production less estimated future production costs based on period-end costs and
future development costs. Future net cash inflows were discounted using a 10%
annual discount rate to arrive at the Standardized Measure. Future income tax
estimates are not included, as the historical tax basis of the properties is not
relevant.
The standardized measure of discounted future net cash flows relating
to proved oil and gas properties is as follows:
<TABLE>
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996
------------ -------------- ------------
(in thousands)
<S> <C> <C> <C>
Future cash inflows $ 1,207,887 $ 1,179,424 $ 1,156,858
Future costs:
Production (243,413) (232,040) (219,098)
Development (99,353) (92,534) (88,350)
----------- ----------- -----------
Future net cash flows 865,121 854,850 849,410
Income taxes -- -- --
----------- ----------- -----------
Undiscounted future net cash flows 865,121 854,850 849,410
10% discount factor (444,749) (408,382) (367,919)
----------- ----------- -----------
Standardized measure $ 420,372 $ 446,468 $ 481,491
=========== =========== ===========
</TABLE>
8
<PAGE> 9
THE AMERICAN COMETRA INTERESTS
NOTES TO STATEMENTS OF REVENUES
AND DIRECT OPERATING EXPENSES -- (CONTINUED)
(3) SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED): CONTINUED:
OIL AND GAS RESERVE INFORMATION , CONTINUED:
Changes in standardized measure of discounted future net cash flows
from proved reserve quantities are as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Standardized measure, beginning of year $ 395,914 $ 420,372 $ 446,468
Purchases 627 1,228 --
Extensions, discoveries, additions 17,730 15,051 38,185
Production (33,490) (32,141) (47,809)
Sales -- (79) --
Accretion of discount 39,591 42,037 44,647
--------- --------- ---------
Standardized measure, end of year $ 420,372 $ 446,468 $ 481,491
========= ========= =========
</TABLE>
9
<PAGE> 10
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited pro forma consolidated financial statements
give effect to: (i) the purchase by the Company of certain oil and gas
properties from Bannon Energy Incorporated (the "Bannon Acquisition") in April
1996 for $37 million, (ii) the Cometra Acquisition, (iii) the private placements
of 600,000 shares of Common Stock and $55 million of 6% Convertible Subordinated
Debentures (collectively referred to as the "Private Placements"), (iv) the
application of the estimated net proceeds from the Private Placements and (v)
the conversion of the Company's 7 1/2% Convertible Exchangeable Preferred Stock
into Common Stock. The unaudited pro forma consolidated balance sheet as of
December 31, 1996 was prepared as if the Transactions had occurred as of that
date. The accompanying unaudited pro forma consolidated balance sheet of the
Company as of December 31, 1996 has been prepared as if the Transactions had
occurred as of that date. The historical information provided under the heading
"Bannon Acquisition" in the statement of income for the year ended December 31,
1996, includes results for the properties acquired in the Bannon Acquisition for
the period from January 1, 1996 until its purchase on March 31, 1996. The
historical information provided in the statement of income of the Company for
the year ended December 31, 1996 includes results for the properties acquired in
the Bannon Acquisition for the period from April 1, 1996 through December 31,
1996.
This information is not necessarily indicative of future consolidated
results of operations and it should be read in conjunction with the separate
historical statements and related notes of the respective entities appearing
elsewhere in this Registration Statement or incorporated by reference herein.
10
<PAGE> 11
<TABLE>
<CAPTION>
LOMAK PETROLEUM, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Bannon Cometra Pro Forma Pro Forma
Lomak Acquisition Acquisition Adjustments Lomak
----- ----------- ----------- ----------- -----
<S> <C> <C> <C> <C>
Revenues
Oil and gas sales $ 68,054 $ 1,703 $ 60,751 $ $ 130,508
Field services 14,223 -- -- 14,223
Gas transportation and -- --
marketing 5,575 -- 7,273 11,478 (a) 24,326
Interest and other 3,386 -- -- 3,386
--------- --------- --------- ---------
91,238 1,703 68,024 172,443
--------- --------- --------- ---------
Expenses
Direct operating 24,456 562 14,376 39,394
Field services 10,443 -- -- 10,443
Gas transportation and -- --
marketing 1,674 11,478 (a) 13,152
Exploration 1,460 -- -- 1,460
General and administrative 3,966 -- -- 3,966
Interest 7,487 -- -- 23,991 (b) 31,478
Depletion, depreciation and
amortization 22,303 -- -- 22,086 (c) 44,389
--------- --------- --------- ---------
71,789 562 14,376 144,282
--------- --------- --------- ---------
Income before income taxes 19,449 1,141 53,648 28,161
Income taxes
Current (729) -- -- (115) (d) (844)
Deferred (6,105) -- -- (2,906) (d) (9,011)
--------- --------- --------- ---------
Net Income $ 12,615 $ 1,141 $ 53,648 $ 18,306
========= ========= ========= =========
Net income applicable to
common shares $10,161 $15,972
========= =========
Earnings per common share $ 0.69 $ 0.97
========= =========
Weighted average shares
outstanding 14,812 1,583 16,395
========= =========
</TABLE>
See notes to pro forma combined financial statements
11
<PAGE> 12
<TABLE>
<CAPTION>
LOMAK PETROLEUM, INC.
PRO FORMA COMBINED BALANCE SHEET DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
PRO FORMA PRO FORMA
LOMAK ADJUSTMENTS LOMAK
----- ----------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 8,625 $ $ 8,625
Accounts receivable 18,121 18,121
Marketable securities 7,658 7,658
Inventory and other 799 799
-------- --------
Total current assets 35,203 35,203
-------- --------
Oil and gas properties 282,519 325,000(e) 607,519
Accumulated depletion and amortization (53,102) (53,102)
-------- --------
229,417 554,417
-------- --------
Gas transportation and field service assets 21,139 60,000(e) 81,139
Accumulated depreciation (4,997) (4,997)
-------- --------
16,142 76,142
-------- --------
Other assets 1,785 1,785
-------- --------
$282,547 $667,547
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable $ 14,433 $ $ 14,433
Accrued liabilities 4,603 4,603
Accrued payroll and benefit costs 3,245 3,245
Current portion of debt 26 26
-------- --------
Total current liabilities 22,307 22,307
-------- --------
Revolving credit facility 61,355 355,000(e) 416,355
6% Convertible subordinated debentures 55,000 55,000
Other long-term debt 425 425
-------- --------
116,780 471,780
-------- --------
Deferred income taxes 25,931 25,931
Stockholders' equity
$2.03 Preferred Stock, $1 par value 1,150 1,150
Common Stock, $.01 par value 148 14(e) 162
Capital in excess of par value 110,248 29,986(e) 140,234
Retained earnings 5,291 5,291
Unrealized gain on marketable securities 692 692
-------- --------
Total stockholders' equity 117,529 147,529
-------- --------
========
$282,547 $667,547
======== ========
</TABLE>
12
<PAGE> 13
See notes to pro forma combined financial statements
LOMAK PETROLEUM, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE (1) PRO FORMA ADJUSTMENTS FOR THE TRANSACTIONS FOR THE YEAR ENDED DECEMBER
31, 1996
The accompanying unaudited pro forma consolidated statement of income for
the year ended December 31, 1996 has been prepared as if the Transactions had
occurred on January 1, 1996 and reflects the following adjustments:
(a) To reclassify gas transportation and marketing revenue and expenses to
conform with the accounting presentation followed by the Company.
(b) To adjust interest expense for the estimated amount that would have been
incurred on the incremental borrowings for the Bannon Acquisition and the
Cometra Acquisition and net of proceeds received from the Private Placements. A
1/8% per annum increase in interest rate would decrease the Company's income
before taxes by $392,000.
(c) To record depletion expense for the Bannon Acquisition and the Cometra
Acquisition at a rate of $0.87 per Mcfe, which would have been the rate in
effect for 1996 had such acquisitions taken place at January 1, 1996.
Additionally, to record depreciation expense on the gas processing plant
purchased in the Cometra Acquisition.
(d) To adjust the provision for income taxes for the change in taxable income
resulting from the Bannon Acquisition, the Cometra Acquisition and the Private
Placements and the effect on deferred taxes recorded at January 1, 1996 as if
such transactions had taken place at that time.
NOTE (2) PRO FORMA ADJUSTMENTS FOR THE COMETRA ACQUISITION, AS OF DECEMBER 31,
1996
(e) To record the Cometra Acquisition.
