<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. .....)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ARCH PETROLEUM INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ARCH PETROLEUM INC.
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[Logo of Arch Petroleum Inc. Appears Here]
April 6, 1995
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Arch Petroleum Inc. The meeting will be held on the 11th Floor of the Fort
Worth Club Building, 777 Taylor Street, Fort Worth, Texas at 4:00 p.m. on
Thursday, May 4, 1995.
The Notice of Meeting and Proxy Statement on the following pages cover the
formal requirements for the business of the meeting. WHETHER OR NOT YOU FIND IT
POSSIBLE TO ATTEND THE MEETING PERSONALLY, WE HOPE YOU WILL HAVE YOUR STOCK
REPRESENTED BY SIGNING YOUR PROXY EXACTLY AS YOUR NAME APPEARS THEREON AND
RETURNING IT PROMPTLY.
We will have a social period after the meeting, beginning at 4:30 p.m. to
provide an opportunity for stockholders to talk informally with our Officers and
Directors.
Sincerely yours,
Larry Kalas
Chief Executive Officer
<PAGE>
ARCH PETROLEUM INC.
777 Taylor Street, Suite II-A
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING THURSDAY, MAY 4, 1995
4:00 P.M.
TO THE STOCKHOLDERS OF ARCH PETROLEUM INC.:
Notice is hereby given that the annual meeting of the stockholders of Arch
Petroleum Inc., a Delaware corporation, will be held at 4:00 p.m., Thursday, May
4, 1995, on the 11th floor of the Fort Worth Club Building, 777 Taylor Street,
Fort Worth, Texas, for the following purposes:
1. To elect a board of six (6) directors to serve until the next Annual
Meeting of Stockholders when their respective successors shall be
elected and qualified.
2. To transact such other business as may properly be brought before the
meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on March 8, 1995, are
entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
Stockholders are invited to attend the meeting. Whether or not you expect
to attend, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend the meeting, you may vote your
shares in person, after revoking your proxy.
If your shares are held of record by a broker, bank or other nominee and
you wish to attend the meeting, you should obtain a letter from the broker, bank
or other nominee confirming your beneficial ownership of the shares and bring it
to the meeting. In order to vote your shares at the meeting, you must obtain
from the record holder a proxy issued in your name.
Regardless of how many shares you own, your vote is very important. Please
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
BY ORDER OF THE BOARD OF DIRECTORS
Randall W. Scroggins
Secretary
Fort Worth, Texas
April 6, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SOLICITATION OF PROXIES................................... 1
THE MEETING............................................... 1
ELECTION OF DIRECTORS..................................... 2
OUTSTANDING VOTING SECURITIES OF THE COMPANY AND CERTAIN
STOCKHOLDERS....................................... 4
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS.......... 6
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............ 9
INCORPORATION OF FINANCIAL INFORMATION BY REFERENCE....... 9
OTHER MATTERS............................................. 10
</TABLE>
<PAGE>
ARCH PETROLEUM INC.
777 TAYLOR STREET, PENTHOUSE SUITE II-A
FORT WORTH, TEXAS 76102
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1995
SOLICITATION OF PROXIES
This Proxy Statement is furnished by Arch Petroleum Inc., a Delaware
corporation (the "Company"), to the holders of outstanding shares of the Common
Stock, par value $0.01 per share, of the Company (the "Common Stock") in
connection with the solicitation of proxies by the Company for use at the annual
meeting of stockholders (the "Meeting") to be held on May 4, 1995, and at any
and all adjournments or postponements thereof. This Proxy Statement and the
enclosed proxy card are first being mailed to stockholders on or about April 6,
1995.
THE MEETING
RECORD DATE, QUORUM AND VOTING
The Board of Directors (the "Board") has established the close of business
on March 8, 1995 as the record date (the "Record Date") for determining
stockholders entitled to notice of and to vote at the Meeting or any
adjournments or postponements thereof. At the close of business on such record
date, there were an aggregate of 17,186,404 shares of Common Stock and shares
of Convertible Preferred Stock representing an aggregate of 7,272,730 shares of
Common Stock (on an as converted basis) issued and outstanding. Each holder of
Common Stock will be entitled to one vote for each share of Common stock held by
him at the close of business on such Record Date and each holder of Convertible
Preferred Stock will be entitled to one vote for each share of Common Stock into
which such holder's Convertible Preferred Stock may be converted at the close of
business on such Record Date. The holders of issued and outstanding shares
having a majority of the votes entitled to be cast at the Meeting must be
represented in person or by proxy in order to constitute a quorum.
Shares represented by the enclosed proxy card will be voted in accordance
with the directions indicated thereon, or, if no direction is indicated, in
accordance with the recommendations of the Board contained in this Proxy
Statement as to all shares represented by that proxy card. Any stockholder
executing and delivering the enclosed proxy card may revoke such action prior to
the Meeting by duly executing a later-dated proxy or an instrument expressly
revoking the proxy, or by declaring its revocation at the Meeting. The persons
named as proxies in the proxy card were selected by the Board and are currently
directors of the Company.
Management knows of no matters to be presented for action at the Meeting
other than those specified in this Proxy Statement and the accompanying Notice
of Annual Meeting. Should any other matter properly come before the Meeting,
proxies will be voted upon these other matters in accordance with the best
judgement of the persons voting such proxies.
The Company will bear all costs related to the solicitation of proxies
pursuant to this statement.
1
<PAGE>
ELECTION OF DIRECTORS
Directors of the Company may be elected by vote of the holders of a
majority of the outstanding Common Stock who are represented at the meeting in
person or by proxy, as long as a quorum is present. A stockholder's abstention
from voting or a non-vote by such stockholder's broker will therefore be counted
in determining whether such a majority vote was cast only if such stockholder is
so represented (either in person or by proxy) at the Meeting. Abstentions or
broker non-votes by or on behalf of stockholders not so represented will be
disregarded. Each director nominee so elected will hold office until such
nominee's successor has been elected and qualified. The proxies given to the
persons named in the enclosed proxy card will be voted for the election of the
nominees listed below. In case of the inability of any of the nominees to
serve, such proxies will be voted for the balance of those named and for
substitute nominees, but the Board now knows of no reason to anticipate that any
substitutions will occur. Directors elected at the Meeting cannot be removed
prior to the next annual meeting except by a majority vote of the stockholders
at any meeting at which a quorum of stockholders is present.
The Board of Directors unanimously recommends a vote FOR the nominees
listed below.
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operations. During 1994, the Board held two
meetings.
The Board of Directors has an Audit Committee including the two non-
employee directors, Messrs. Harris, Hill, and Mr. Kalas. This committee will be
responsible for matters relating to accounting policies and practices, financial
reporting and internal controls. Each year it will recommend to the Board the
appointment of a firm of independent accountants to audit the financial
statements of the Company. The Committee will review with representatives of
the independent accountants the scope of the audit of the Company's financial
statements, results of that audit and any recommendations with respect to
internal controls and financial matters. In fulfilling its responsibility, it
will periodically meet with and receive reports from the Company's management.
The Company has no standing nominating committee of the Board or committees
serving similar functions.
Each member of the Board of Directors attended 100% of all meetings of the
Board.
The names of the Board's director nominees, the year that each nominee first
became a Director and certain other information about each nominee are set forth
below:
<TABLE>
<CAPTION>
FIRST
NAME, AGE AND PRINCIPAL OCCUPATION ELECTED
BUSINESS ADDRESS DURING THE LAST FIVE YEARS DIRECTOR
- - ---------------- -------------------------- --------
<S> <C> <C>
Johnny Vinson (63) Chairman of the Board of the Company; served as July 1986
Arch Petroleum Inc. President of the Company from November 1987 to June 1988;
777 Taylor Street, Chairman of the Board of Threshold Development Company
Suite II ("TDC") since 1975. TDC is an oil and gas exploration
Fort Worth, TX 76102 company which owned 17.76% of Arch's common stock at
Record Date.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FIRST
NAME, AGE AND PRINCIPAL OCCUPATION ELECTED
BUSINESS ADDRESS DURING THE LAST FIVE YEARS DIRECTOR
- - ---------------- -------------------------- --------
<S> <C> <C>
Larry Kalas (45) Director, President and Chief Executive Officer of the June 1988
Arch Petroleum Inc. Company; served as Vice President-Administration of the
777 Taylor Street, Company from July 1986 to June 1988 when he was
Suite II named President and CEO.
Fort Worth, TX 76102
Randall W. Scroggins (44) Director, Vice President and Secretary of the Company; July 1986
Arch Petroleum Inc. served as Vice President since April 1990 and Secretary
777 Taylor Street, Suite II since July 1986; Director of TDC since 1975; He is the
Fort Worth, TX 76102 son-in-law of Johnny Vinson.
Richard O. Harris (66) Retired banker and oil and gas entrepreneur; Until 1990, June 1992
807 Indiana Senior Vice-President of First National Bank of
Wichita Falls, TX 76301 Amarillo, Texas.
C. Randall Hill (36) Attorney and oil and gas entrepreneur; Chairman of the Board December 1992
Lobo Resources, Inc. and Chief Executive Officer of Lobo Resources, Inc.
200 N. Loraine Ste.1245 (an oil and gas exploration and production company); prior to
Midland, Texas 79701 October 1992, practiced law with the firm of Weil,
Gotshal & Manges in Dallas, Texas.
John F. Gilsenan (48) Attorney; Second Vice-President of the Travelers (since October 1994
The Travelers Companies 1986) responsible for private and public investments in
One Tower Square, #9 Plaza regulated industries, energy, project finance and
Hartford, CT 06183 chemical sectors. Joined the Travelers in 1973.
</TABLE>
COMPLIANCE WITH SECTION 16 (A) OF THE SECURITIES EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers,
Inc. ("NASD"). Officers, directors and greater than ten percent shareowners are
required by SEC regulation to furnish the Company with copies of all Forms 3, 4
and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Form 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater than ten percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal
1994.
3
<PAGE>
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND CERTAIN SHAREHOLDERS
The following table provides information as to the beneficial ownership of
the Company's Common Stock as of the Record Date by each director, named
executive officer, all directors and executive officers as a group, and each
other person who is known to the Company to beneficially owns 5% or more of the
outstanding Common Stock as of the Record Date. The percent of class figures
are calculated on the basis of the amount of outstanding securities plus
securities deemed outstanding pursuant to Rule 13D-3(d)(1) under the Exchange
Act (Item 403, Regulation S-K). These rules provide that each person listed in
this table be shown at their maximum voting power as if that person had
exercised and converted all their possible securities and no other person listed
in this table had maximized their position.
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature of Percent
of Class of Beneficial Owner Beneficial Ownership (1) of Class
-------- ------------------- ------------------------ ---------
<S> <C> <C> <C>
Directors and Executive Officers
- - --------------------------------
Common Stock Johnny Vinson (2)....................... 3,852,425 22.42%
Common Stock Larry Kalas............................. 566,786 3.30%
Common Stock Randall W. Scroggins (2)................ 3,461,875 20.14%
Common Stock Fred Cantu (3).......................... 121,581 *
Common Stock Richard O. Harris (4)................... 27,333 *
Common Stock C. Randall Hill (5)..................... 13,333 *
Common Stock All Directors and Officers
of the Company as a Group
(6 persons) (2)(3)(4)(5)................ 4,991,458 28.96%
Holders of More Than 5% of any Class of Voting Securities:
- - ----------------------------------------------------------
Common Stock Threshold Development Company........... 3,051,875 17.76%
777 Taylor Street
Penthouse Suite II-D
Fort Worth, Texas 76102
Common Stock Amon G. Carter Foundation............... 900,000 5.24%
500 West 7th Street, Suite 1212
Fort Worth, Texas 76102
Attention: Pat Harris
Common Stock The Travelers Indemnity Company (6), (8) 5,454,547 24.09%
One Tower Square, #9 Plaza
Hartford, Connecticut 06183-2030
Attention: Allen Cantrell
Common Stock CIGNA Investments, Inc. (7), (8)........ 3,636,362 17.46%
900 Cottage Grove Rd.
Hartford, Connecticut 06152-2307
Attention: James W. Spann
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature of Percent
of Class of Beneficial Owner Beneficial Ownership (1) of Class
-------- ------------------- ------------------------ ---------
<S> <C> <C> <C>
Holders of More Than 5% of any Class of Voting Securities (cont.):
- - ------------------------------------------------------------------
Convertible The Travelers Indemnity Company.. 436,364 60.00%
Preferred Stock One Tower Square, #9 Plaza
Hartford, Connecticut 06183-2030
Attention: Allen Cantrell
Convertible CIGNA Investments, Inc. (9)...... 290,909 40.00%
Preferred Stock 900 Cottage Grove Rd.
Hartford, Connecticut 06152-2307
Attention: James W. Spann
</TABLE>
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Unless and to the extent otherwise indicated below, the figures presented
in this column represent shares of stock owned directly of record by the
indicated holders.
(2) Includes 3,051,875 shares of Common Stock owned directly of record by
Threshold Development Company ("TDC"). Messrs. Vinson and Scroggins, by
virtue of their ownership of shares of TDC and their positions as officers
or directors of TDC, share the power to vote or direct the voting and to
dispose of or direct the disposition of such shares of Common Stock held of
record by TDC, and are therefore deemed to beneficially own those shares.
(3) Includes options exercisable for an aggregate of 26,667 shares of Common
Stock.
(4) Includes options exercisable for an aggregate of 10,023 shares of Common
Stock.
(5) Includes options exercisable for an aggregate of 13,333 shares of Common
Stock.
(6) Includes 4,363,640 shares of Common Stock issuable upon conversion of
Convertible Preferred Stock held of record by the Travelers Indemnity
Company ("Travelers"), 109,090 shares of Common Stock issuable upon
conversion of 9.75% Series A Convertible Subordinated Notes due 2004
("Series A Notes") issued to The Travelers Life and Annuity Company
("TLAC") and 981,817 shares of Common Stock issuable upon conversion of
Adjustable Rate Series B Notes due 2004 ("Series B Notes") issued to TLAC.
(7) Includes 1,034,545 shares of Common Stock issuable upon conversion of
Convertible Preferred Stock held of record by Connecticut General Life
Insurance Company ("CGLIC"), 25,855 shares of Common Stock issuable upon
conversion of Series A Notes issued to CGLIC, 232,690 shares of Common
Stock issuable upon conversion of Series B Notes issued to CGLIC, 1,874,545
shares of Common Stock issuable upon conversion of Convertible Preferred
Stock issued to CIGNA Mezzanine Partners III, L.P. ("Mezzanine"), 46,873
shares of Common Stock issuable upon conversion of Series A Notes issued to
Mezzanine and 421, 854 shares of Common Stock issuable upon conversion of
Series B Notes issued to Mezzanine.
(8) The beneficial shares of Travelers, TLAC, CGLIC and Mezzanine arose from a
combined private placement transaction on October 20, 1994. As a group,
the maximum voting power of the collective entities is 34.6%.
5
<PAGE>
(9) Includes 103,454.5 shares of Convertible Preferred Stock held of record by
CGLIC and 187,454.5 shares of Convertible Preferred Stock held of record by
Mezzanine.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
TABLE OF SUMMARY COMPENSATION
The following table sets forth certain information regarding compensation
paid during each of the last three years to the Company's Chief Executive
Officer and each of the Company's other executive officers, based on salary and
bonus (in excess of $100,000) earned during 1994.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------
NAME AND
PRINCIPAL POSITION YEAR SALARY BONUS
- - -------------------------------------------------------------
<S> <C> <C> <C>
Johnny Vinson 1994 $125,000 $ -0-
Chairman of the Board 1993 125,000 -0-
1992 100,000 50,000
Larry Kalas 1994 114,000 -0-
President & Chief 1993 100,000 -0-
Executive Officer 1992 100,000 35,000
</TABLE>
OPTION GRANTS AND OPTION EXERCISES DURING 1994
There were no stock options granted to nor any stock options exercised by any
of the executive officers in 1994.
COMPENSATION OF DIRECTORS
Directors are paid $600 each per directors' meeting attended and $600 per
committee meeting attended as members of the Audit Committee.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors comprises all its
directors and has furnished the following report on executive compensation:
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies
and plans, which are intended to enhance the profitability of the Company,
and thus stockholder value, by aligning closely the financial interests of
its officers and key executives with those of its stockholders. To
implement these goals, annual salaries are based primarily upon a review of
past and present corporate and individual performance, with reference to
salary data in similar-sized corporations so that such salaries are
generally competitive. The Company also relies to a significant degree on
annual discretionary incentive compensation and the award of non-qualified
stock options to attract and retain Company officers and other key
employees of outstanding abilities and to motivate them to perform to the
full extent of their abilities. Both types of incentive compensation are
variable and depend upon corporate and
6
<PAGE>
individual performance so as to encourage a sharp and continuing focus on
building profitability and stockholder value. No specific weighing,
however, is given to Company or individual performance.
The Committee has complete discretion in determining all compensation
amounts (including whether any annual discretionary incentive payments or
stock option awards are made and, if so, the amounts thereof) regardless of
whether corporate or individual performance goals are achieved. The
Committee exercised its complete discretion in setting total compensation
for 1994.
In evaluating corporation performance for purposes of setting the salary
and incentive compensation of the Chief Executive Officer and the Company's
other officers, the Committee has given first consideration to a successful
corporate-wide performance in terms of sales and earnings, and secondarily
has taken particular note of management's success in securing additional
market share during a period of prolonged depression in the oil and gas
industry. The Committee, as a matter of policy generally, and with respect
to 1994 in particular, viewed all the foregoing items as elements of
corporate, and not individual performance. Individual salary and other
compensation decisions for all officers are based primarily on overall
Company performance.
The Committee has also taken into account, in its review of management
performance and compensation, management's consistent commitment to the
long-term success of the Company through the development of new oil and gas
properties and natural gas pipelines while monitoring improvement in the
Company's financial condition. In addition, in evaluating such commitment,
the Committee has also noted the increasing level of stockholdings of the
Company's officers.
Although, as stated above, the Committee considered corporate
performance as the primary factor in its compensation decisions, the
Committee also considered individual performance. The Committee, however,
does not quantify individual performance nor relate individual performance
to any specific goals or targets. The Committee has complete discretion in
its evaluation of individual performance.
Based on its evaluation of individual performance, the Committee believes
that the Company's officers are dedicated to achieving significant
improvements in long-term financial performance and that the compensation
policies, plans and methods the Company has implemented and administered
have contributed and will continue to contribute to achieving this
management focus. The Committee considered such dedication as an element of
each officer's past and present performance. The Committee believes that
dedication is an intangible element and cannot be measured; therefore, the
Committee does not apply any specific weighing to its views about the
dedication of each officer. The Committee considers total compensation,
base salary, annual incentive, and stock option grant, in establishing each
element of compensation. The Committee does not use any predetermined
formula or assign any specific weight to the various factors considered in
awarding bonuses.
Immediately prior to the end of each year, the Committee considers the
desirability of granting to the Chief Executive Officer and the Company's
other officers, as well as other key executives, awards under the Company's
stock option plan. The Committee believes that its past grants of such
options to purchase common stock of the Company, at the market price in
effect on the day prior to the date of such grant, has successfully focused
the Company's officers and other key executives on building profitability
and stockholder
7
<PAGE>
value. In determining the grants of stock options to the officers,
including the Chief Executive Officer, and to other key executives, the
Committee reviewed the recommended individual awards. The Committee does
not consider the number of options already outstanding in determining
option awards.
The foregoing report has been furnished by the members of the Board of
Directors' Compensation Committee.
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference in any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 1994 with the cumulative total return on the NASDAQ Market
Index and a derived peer group index comprised of companies in the oil and gas
industry. The comparison assumes $100 was invested on December 31, 1989 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG ARCH PETROLEUM INC., THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP
[Graph Appears Here]
<TABLE>
<CAPTION>
December 31 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Arch Petroleum Inc......... 100 152 157 287 304 278
NASDAQ US Index........... 100 85 136 159 181 177
Peer Group................. 100 75 78 111 127 142
</TABLE>
8
<PAGE>
The broad market index selected for comparison is the NASDAQ Stock Market (U.S.
Market Index). The peer group used in the performance graph above consists of
ten companies in the oil and gas industry. This index is based on the
cumulative total return of each company, assuming reinvestment of dividends,
weighted according to the respective issuer's stock market capitalization. The
companies used in the peer group index are as follows:
Barnwell Industries Evergreen Resources
Barrett Resources Corp. MSR Exploration Ltd.
Comstock Resources Inc. Nahama & Weagant Energy Co.
Dorchester Hugoton - LP Prima Energy Corp.
Enex Resources Corp. Wilshire Oil of Texas
The foregoing chart shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company rents, on an as-needed basis, an aircraft from TDC. Charges
for this service are billed to the Company based on time used. Rental charges
amounted to $20,000, $25,000 and $61,000 for the years ended December 31, 1994,
1993 and 1992, respectively.
The Board of Directors of the Company has authorized notes receivable from
key employees and directors for purposes of exercising stock options. The notes
bear interest at the Company's borrowing ("Revolver") interest rate and all of
the notes are secured by the stock certificates that were issued upon exercise
of the stock options by each employee. The balances due to the Company in this
regard, including interest, were $905,000 and $849,000 at December 31, 1994 and
1993, respectively. These amounts are offset against equity on the Company's
consolidated balance sheet.
The Board of Directors of the Company has authorized cash advances to
certain officers in exchange for notes receivable. These notes also bear
interest at the Revolver rate and are secured by stock certificates of the
Company owned by those individuals. The notes, including interest, total
$1,412,000 and $1,304,000 at December 31, 1994 and 1993, respectively. The
Company recognized interest income on its outstanding notes receivable from
officers, directors and key employees of $150,274, $91,005 and $10,823 during
1994, 1993 and 1992, respectively.
INCORPORATION OF FINANCIAL INFORMATION CONTAINED IN
ANNUAL REPORT ON FORM 10-K, QUARTERLY REPORTS
ON FORM 10-Q AND REPORT ON FORM 8-K
The financial statements and schedules (including the notes thereto)
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and Quarterly Reports on Form 10-Q for the three months ended
March 31, 1994, June 30, 1994 and September 30, 1994 and Form 8-K dated October
20, 1994 and all amendments thereto as filed by the Company under the Securities
Exchange Act of 1934, as amended, are incorporated herein by reference. The
Company will provide, without charge, to each person to whom a Proxy Statement
is delivered, upon written or oral request of such person and by first class
mail or other equally prompt means within one business day of receipt of such
request, a copy of any and all of the information that has been incorporated by
reference in this Proxy Statement (not including the exhibits to such
information unless such exhibits are explicitly incorporated by reference into
such information). Requests for such information should be directed to Arch
Petroleum Inc., 777 Taylor Street, Suite II-A, Fort Worth, Texas 76102,
Attention: Secretary of the Company, Telephone Number (817)332-9209.
9
<PAGE>
OTHER MATTERS
THE SOLICITATION
The cost of solicitation of proxies will be borne by the Company. Proxies
may be solicited by mail, advertisement, telephone and in person. Directors and
employees of the Company may, without additional compensation, make
solicitations through personal contact or by telephone or telegraph, and
arrangements may be made with brokerage houses or other custodians, nominees and
fiduciaries to send proxy material to their principals. The Company will
reimburse any such persons for their reasonable expenses.
AUDITORS
Price Waterhouse has been the Company's independent public accountants for
the past eight years. Representatives of Price Waterhouse are expected to be
present at the Meeting and will be available to respond to appropriate
questions. They will have an opportunity to make a statement if they desire to
do so.
ANNUAL REPORT
A copy of the Company's 1994 Annual Report is being mailed to stockholders
contemporaneously with the mailing of this Proxy Statement.
PROPOSALS TO BE PRESENTED AT THE 1996 ANNUAL MEETING OF SHAREHOLDERS
Any qualified stockholder of the Company wishing to present a proposal for
consideration by all stockholders at the annual meeting to be held in 1996, must
notify the Company by November 30, 1995 to have the proposal considered for
inclusion in the Proxy Statement and form of proxy related to that
meeting. Any such notification should be addressed to the Corporate Secretary,
Randall W. Scroggins,
777 Taylor Street, Suite II, Fort Worth, Texas 76102. Any such proposal must
comply in all respects with the rules and regulations of the Securities and
Exchange Commission.
By Order of the Board of Directors
Larry Kalas
Chief Executive Officer
April 6, 1995
10
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ARCH PETROLEUM INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 4, 1995
The undersigned hereby appoints Johnny Vinson and Randall W. Scroggins, or
either of them, proxies of the undersigned, with power of substitution, to vote
all shares of common stock of the Company held by the undersigned which are
entitled to be voted at the Annual Meeting of Shareholders to be held on May 4,
1995 and any adjournment(s) as effectively as the undersigned could do if
personally present:
<TABLE>
<S> <C> <C>
(1) To elect six directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY
except as marked to the contrary below to vote for all nominees listed below
JOHNNY VINSON, RANDALL W. SCROGGINS, LARRY KALAS, RICHARD O. HARRIS, C. RANDALL HILL, JOHN F. GILSENAN
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- - ------------------------------------------------------------------------------------------------------------------------------
(2) In the discretion of the Proxies on any other matters as may properly come before the meeting or any adjournment(s) thereof.
Please date and sign. Return Proxy to: Bank One, Texas, N.A.
c/o Bank One, Indianapolis, N.A.
111 Monument Circle, Suite 1611
Indianapolis, IN 46277
(Continued and to be signed on reverse side)
</TABLE>
<PAGE>
ARCH PETROLEUM INC. ANNUAL MEETING
MAY 4, 1995
The shares represented by this proxy will be voted as directed. WHERE NO
DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR MATTER (1).
Please sign below, date and return promptly.
Dated: , 1995.
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(Signature of Shareholder)
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(Signature if held jointly)
IMPORTANT: Please sign exactly as name(s)
appear(s) to the left. When signing on
behalf of a corporation, partnership,
estate, trust or in other representative
capacity, please sign name and title. For
joint accounts, each joint owner must sign.
