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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): June 5, 1997
TERRITORIAL RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-9617 84-0821158
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
734 7th Ave. S.W., Suite 1345, Calgary, Alberta, Canada T2P 3P8
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(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (403) 233-7914
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
None.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 5, 1997, Territorial Resources, Inc. ("Territorial" or the
"Company") completed the sale to SOCO International plc ("SOCO International")
of 72 shares (the "72 SOTAMO Shares") of common stock of SOCO Tamtsag Mongolia,
Inc., a Delaware close corporation ("SOTAMO"). The sale was consummated
pursuant to a Shareholders' Exchange Agreement between Territorial and SOCO
International.
In exchange for the sale of the 72 SOTAMO Shares, Territorial received
approximately (US)$926,000 in cash and 873,250 ordinary shares of SOCO
International. SOCO International, a corporation organized under the laws of
England, recently completed an initial public offering and listing of its shares
for trading on the London Stock Exchange. The 873,250 shares represent
approximately 1.77% of the outstanding shares of SOCO International, based on
information provided to Territorial by SOCO International. Based on the initial
offering price of SOCO International shares in the public offering, the total
proceeds received by Territorial in connection with the sale of its interests in
SOTAMO were equal to approximately (US)$4.6 million.
SOTAMO holds varying interests in four oil and gas exploration areas
located in the Tamtsag Basin in northeastern Mongolia. Following completion of
the transaction, Territorial continues to hold five percent (5%) of the
outstanding shares of common stock of SOTAMO in addition to its other interests
in the Tamtsag Basin. The following table sets forth Territorial's net
effective interest in each Contact Area located in the Tamtsag Basin following
completion of the sale of the 72 SOTAMO Shares to SOCO International:
PROPERTY
(CONTRACT SOTAMO TERRITORIAL GROSS NET
AREA) INTEREST INTEREST ACRES ACRES
XIX 100% 4.0% 2,586,000 129,300
XX 80% 19.0% 2,649,000 503,310
XXI 85% 4.25% 2,750,000 116,875
XXII 100% 5.0% 2,817,000 140,850
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10,802,000 890,335
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Territorial intends to use the proceeds of the sale of the 72 SOTAMO Shares
to fund its working capital and other commitments. Territorial is required to
fund its pro rata share of SOTAMO expenditures as they are incurred in order
that minimum work commitments can be met, thus maintaining the various contract
obligations of SOTAMO in good standing. For the fiscal year ending March 31,
1998, SOTAMO has budgeted expenditures which exceed the minimum work
commitments, and Territorial's pro rata share of the aggregate amount of such
budgeted expenditures for such period is approximately (US) $650,000. Such
amount includes Territorial's working capital commitments currently anticipated
to be incurred by it as the operator of Contract Area XX during such period.
Actual commitments required to be paid by Territorial may vary significantly
from such amount in the event additional costs and expenses are incurred in
connection the performance by SOTAMO, Territorial or its other partners in
SOTAMO of their respective obligations and the exercise by them of their
respective rights under various contracts.
Edward T. Story, Jr., the President and Chief Executive Officer of SOCO
International, is a former Director of Territorial and currently holds
approximately 4.9% of the issued and outstanding shares of common stock, no par
value, of Territorial. In addition, Jimmy M. McCarroll, a Director of
Territorial, has served as a consultant to SOCO International and/or its
affiliates in connection with certain of its international oil and gas projects.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
None
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
ITEM 5. OTHER EVENTS
The Company changed the address of its principal executive offices to 734
7th Ave. S.W., Suite 1345, Calgary, Alberta, Canada T2P 3P8. It's telephone
number at such address is (403) 233-7914.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
None
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
None
(b) Pro forma financial information.
None
(c) Exhibits.
10.1 Shareholders' Exchange Agreement between Territorial
Resources, Inc. and SOCO International plc, dated 6 May 1997.
10.2 Letter agreement between Territorial Resources, Inc. and
SOCO International plc, dated 8 May 1997.
ITEM 8. CHANGE IN FISCAL YEAR.
None
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
None
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 hereunto duly authorized.
TERRITORIAL RESOURCES, INC.
Date: June 17, 1997 By: /s/ Daniel A. Mercier
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Chairman of the Board and
Chief Executive Officer
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EXHIBIT 10.1
SHAREHOLDERS' EXCHANGE AGREEMENT
SOCO INTERNATIONAL PLC
(Registered in England under No. 3300821)
Territorial Resources
6 May 1997
Dear Sirs:
We are writing this letter further to Ed Story's letters to you of 21 January
1997 and 14 February 1997 relating to the acquisition by us of interests in the
various SOCO companies and the subsequent listing on the London Stock Exchange
of this company. This letter deals with the agreement to acquire the various
interests in the SOCO companies as a first step to achieving that listing. It
does not attempt to deal with the listing itself which will be the subject of
further agreements which, amongst other things, will involve the issue of new
shares for cash by SOCO International PLC ("SOCO International") and the
consequential dilution of your shareholdings.
Subject only to the satisfaction of the Conditions (as defined below) you hereby
agree to transfer to us 72 shares (the "Shares") in SOCO Tamtsag Mongolia, Inc.
("SOTAMO") in consideration for the allotment by us of such number of ordinary
shares (credited as fully paid) as shall be equal to 3.492% of the issued share
capital of SOCO International. This percentage is calculated after the
allotment of shares as consideration for the acquisition of interests in SOTAMO
(via certain holding companies or otherwise), SOCO Perm Russia, Inc., SOCO
Thailand, Inc., Cairn Energy Onshore Limited, Command Petroleum (Tunisia) Pty
Limited and Command Petroleum (Overseas) Limited, but before the issue of shares
for cash as part of the listing process.
The obligations set out in this letter are conditional upon:
(a) the admission to listing on the London Stock Exchange of all the issued
share capital of SOCO International by not later than 9:00 am on 2 June
1997;
(b) waiver of any pre-emption rights over shares in SOTAMO by those in whom
such rights are vested;
(c) the receipt by us of any necessary approvals or consents to the transfer of
the Shares; and
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(d) completion in escrow of the acquisition by us of all the issued share
capital of Cairn Energy Onshore Limited;
(collectively called "the Conditions").
Completion of the transfer of the Shares will take place on such date as we may
specify. We will be permitted to specify that completion may take place in
escrow, the escrow being released on satisfaction of the Conditions (or in the
case of (b), (c) and (d), the Conditions having been waived by us). At
completion you will take all necessary steps to transfer the Shares to us
including but not limited to the execution of all necessary documents (in
particular such documents as are required to give effect to this letter).
You agree that forthwith upon completion having taken place and the Conditions
having been satisfied (or in the case of (b), (c) and (d), having been waived by
us), the agreement governing your rights and obligations in respect of SOTAMO
("the Agreement") will be cancelled so far as you are concerned in respect of
the Shares and will be of no further force and effect in that respect save in
respect of any prior breach of the Agreement. However, in respect of any shares
in SOTAMO which are not transferred by you or by other investors in SOTAMO, the
Agreement will continue in full force and effect.
In accepting this offer you agree with and confirm to us that:
(i) you are not in breach of any of the terms of the Agreement and you hereby
waive any breaches by all of the other parties to the Agreement and any
rights of pre-emption that you may have in relation to the exchange of
shares by such parties on similar terms to this letter;
(ii) you have, and will continue to have until transfer of the Shares under
this letter, absolute title to the Shares which are free of any charges,
mortgages, liens or any other encumbrances of any nature whatsoever;
(iii) you have no claims against SOTAMO or any of its assets. In particular, but
without limitation, if you have made any loans or advances to SOTAMO, you
hereby attribute and assign to SOTAMO, subject only to satisfaction of the
Conditions, all amounts owing (whether of principal or interest) by virtue
of such loans or advances;
(iv) you have no knowledge of any matters in relation to SOTAMO which would
have a material adverse effect on its value;
(v) you have not entered into any commitments in any way on behalf of or in
relation to SOTAMO or its assets other than commitments to be discharged
solely by you or solely for your account; and
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(vi) there are no restrictions imposed on you which affect your ability to
enter this letter including without limitation any applicable securities
laws (other than the securities laws of England) and you have made all
necessary notifications and filings in relation hereto.
As the listing is taking place in England, this agreement and all negotiations
preceding it will be construed in accordance with the provisions of English law
and you hereby submit to the exclusive jurisdiction of the Supreme Court of
Judicature of England in relation to any claim arising out or in connection with
this agreement and you hereby irrevocably appoint Ed Story as your agent to
accept service in connection with any such proceedings.
Please sign and return the enclosed copy of this letter to indicate your
agreement to its terms. Such agreement will also give rise to a commitment on
your part to send us all documents of title in relation to the Shares upon
request by us but such documents will be held by our solicitors Ashurst Morris
Crisp to your order pending completion of this agreement but subject to the
terms of this agreement.
Yours Faithfully
For and on behalf of
SOCO International PLC
We hereby accept the terms of this letter
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For and on behalf of Territorial Resources
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EXHIBIT 10.2
SOCO INTERNATIONAL PLC
(Registered in England under No. 3300821)
Territorial Resources
8 May 1997
Dear Sirs:
We refer to the Shareholders' Exchange Agreement between Territorial Resources
and SOCO International plc (the "Company") dated 6 May 1997 (the "Agreement"), a
copy of which is attached hereto. The Agreement envisages that you will dispose
of part of your interest in SOCO Tamtsag Mongolia, Inc. in return for the issue
of shares of the Company representing 3.492% of the Company's share capital (pre
new money) as calculated in accordance with the provisions of the Agreement (the
"Consideration Shares").
We have subsequently agreed that instead of you receiving only the Consideration
Shares, you will instead receive a mix of cash and shares in the Company. The
cash element of the consideration shall be such sum as is equal to 20% of the
Consideration Shares at the Placing Price (as defined in the Placing Agreement
to be entered into between, inter alia, the Company and Swiss Bank Corporation
on or about 14 May 1997) whilst the balance shall be such number of shares as,
when aggregated with the cash element, equates in value to 3.492% of the Company
(pre new money). Save as amended by this letter, the Agreement continues in
full force and effect.
Please sign and return the enclosed copy of this letter to confirm you agreement
to its terms. Could you please also return details of your bank account into
which the cash consideration should be paid together with your share
certificate(s) in SOCO Tamtsag Mongolia, Inc. to our solicitors, Ashurst Morris
Crisp (for the attention of Steven Fox). The share certificates will be held in
escrow, to your order, pending completion of the Agreement, which is expected to
become effective on 29 May 1997.
Yours faithfully
/s/
For and on behalf of
SOCO International PLC
We hereby accept the terms of the Agreement as revised by the terms of this
letter.
/a/
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For and on behalf of Territorial Resources
