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 31, 1997
PRIMA ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-9408 84-1097578
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or file number) Identification No.)
organization)
1801 Broadway, Suite 500, Denver CO 80202
(Address of principal executive offices) (Zip Code)
(303) 297-2100
(registrant's telephone number, including area code)
No Change
(Former name or former address, if changed from last report.)
<PAGE>
Item 5. Other Events
On December 31, 1997, Prima Energy Corporation ("Prima") reached an
agreement with Colorado Power Partners ("CPP") to terminate a long term
contract to supply natural gas to CPP's cogeneration facility located in
Brush, Colorado. Closing of the transaction, which is subject to execution
of mutually acceptable closing documents, is targeted for January 31, 1998.
The agreement provides for Prima to receive $3,850,000 at closing and for
Prima to continue to supply the natural gas required by the cogeneration
facility through October 31, 1998. The price for gas delivered from January
1, 1998 through March 31, 1998 is $2.72 per MMBtu. The price for natural gas
deliveries from April 1998 through October 1998 is tied to a spot price
related index. The parties have committed to negotiating a new fuel supply
agreement for the period from November 1, 1998 to October 31, 2005.
The contract settlement income of $3,850,000 before income taxes and
approximately $2,500,000 after income taxes, or approximately $.42 per share,
will be reported in the first quarter of 1998, subject to closing of the
transaction.
Prima began deliveries of natural gas to the cogeneration facility in
1990 under a fifteen year contract which was to expire in 2005. Over the
past three years, Prima's deliveries under the contract have averaged
1,200,000 MMBtu per year. The initial base price of $2.15 per MMBtu in 1990
has escalated annually at the higher of 3% or a sharing of the indexed energy
payment rate received by the operator of the facility, to a current price of
$2.72 per MMBtu. Prima dedicated a substantial portion of its natural gas
reserves in the Wattenberg Field in northeast Colorado to this contract,
which will be released upon termination of the contract. Over the last three
years, Prima's gross margin from supplying natural gas under this contract
has averaged approximately $700,000 per year. Early termination of the
contract enables Prima to monetize the value of the contract and have the
funds available to invest in new opportunities.
Item 7. Exhibits
The following exhibit is filed herewith pursuant to the provisions of
Item 601 of Regulation S-K.
Exhibit
Table No. Document Exhibit No.
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99 Prima Energy Corporation Press 98-99.1
Release dated January 8, 1998<PAGE>
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.
PRIMA ENERGY CORPORATION
(Registrant)
Date January 8, 1998 By /s/ Richard H. Lewis
--------------- -------------------------
Richard H. Lewis,
President and
Principal Financial Officer
January 8, 1998
Denver, Colorado
FOR IMMEDIATE RELEASE
---------------------
Prima Energy Corporation Announces
Agreement to Terminate Long Term
Natural Gas Supply Contract for $3.85 Million
Prima Energy Corporation ("Prima"), a Denver based independent oil and
gas company, today announced it has reached an agreement to terminate a long
term natural gas supply contract with its cogeneration customer located in
Brush, Colorado. Closing of the transaction, which is subject to execution
of mutually acceptable closing documents, is targeted for January 31, 1998.
The agreement provides for Prima to receive $3,850,000 at closing and for
Prima to continue to supply the natural gas required by the cogeneration
facility through October 31, 1998. The price for gas delivered from January
1, 1998 through March 31, 1998 is $2.72 per MMBtu. The price for natural gas
deliveries from April 1998 through October 1998 is tied to a spot price
related index. The parties have committed to negotiating a new fuel supply
agreement for the period from November 1, 1998 to October 31, 2005.
The contract settlement income of $3,850,000 before income taxes and
approximately $2,500,000 after income taxes, or approximately $.42 per share,
will be reported in the first quarter of 1998, subject to closing of the
transaction.
Prima began deliveries of natural gas to the cogeneration facility in
1990 under a fifteen year contract which was to expire in 2005. Over the
past three years, Prima's deliveries under the contract have averaged
1,200,000 MMBtu per year. The initial base price of $2.15 per MMBtu in 1990
has escalated annually at the higher of 3% or a sharing of the indexed energy
payment rate received by the operator of the facility, to a current price of
$2.72 per MMBtu. Prima dedicated a substantial portion of its natural gas
reserves in the Wattenberg Field in northeast Colorado to this contract,
which will be released upon termination of the contract. Over the last three
years, Prima's gross margin from supplying natural gas under this contract
has averaged approximately $700,000 per year. Early termination of the
contract enables Prima to monetize the value of the contract and have the
funds available to invest in new opportunities.
NASDAQ Symbol: PENG
Contacts: Richard H. Lewis, President
John H. Carpenter, Vice President of Marketing
Sandra J. Irlando, Vice President of Accounting
