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UNITED STATES
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): NOVEMBER 12, 1996
ENERGY VENTURES, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-7265 04-2515019
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
5 POST OAK PARK, SUITE 1760,
HOUSTON, TEXAS 77027-3415
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 297-8400
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Exhibit Index Appears on Page 10
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 12, 1996, Energy Ventures, Inc., a Delaware corporation
(the "Company"), completed the sale of its Mallard Bay rig contracting division
("Mallard") to Parker Drilling Company, a Delaware corporation ("Parker"),
pursuant to the Stock Purchase Agreement (the "Agreement") dated as of
September 14, 1996. Under the terms of the Agreement, the Company received
total consideration of approximately $306 million cash and shares of Parker's
Series D Convertible Preferred Stock (the "Series D Preferred Stock")
convertible into 3,056,600 shares of Parker's common stock, $0.16 2/3 par value
("Parker Common Stock"), if Parker's stockholders approve an increase in the
authorized number of shares of Parker Common Stock to allow for the conversion
of the Series D Convertible Preferred Stock. If the authorized number of
shares of Parker Common Stock is not increased by January 31, 1997, Parker is
required to redeem the shares of Series D Preferred Stock issued to the Company
for $25 million, plus accrued and unpaid interest thereon.
The disposition of Mallard was structured as a sale of stock of
Mallard Bay Drilling, Inc. ("Mallard Bay"). The assets used by Mallard that
were not previously held by Mallard Bay were transferred to Mallard Bay prior
to the closing of the Agreement. The principle followed in fixing the purchase
price for Mallard under the Agreement was based on negotiations between the
parties. It is currently anticipated that Bernard J. Duroc-Danner, President
and Chief Executive Officer of the Company, may be appointed to the Board of
Directors of Parker.
A copy of the press release announcing the closing of the Agreement is
filed as Exhibit 99.1 and is hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
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PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company's unaudited pro forma condensed consolidated balance sheet as
of September 30, 1996, gives effect to the disposition of the Company's Mallard
division to Parker for approximately $306 million cash and shares of Series D
Preferred Stock convertible into 3,056,600 shares of Parker common stock and
the following unaudited pro forma condensed consolidated statements of income
for the year ended December 31, 1995, and the nine months ended September 30,
1996, gives effect to: (i) the Company's acquisition on June 30, 1995, of
Prideco, Inc. ("Prideco"), for consideration of approximately 2.25 million
shares of Common Stock, (ii) the acquisition of Tubular Corporation of America
("TCA") for 500,000 shares of Common Stock, $14.35 million cash and a note for
$650,000, (iii) the disposition of Mallard, and (iv) the 1996 equity offering
of 3.45 million shares of the Company's Common Stock. The unaudited pro forma
condensed consolidated statements of income assume that the Prideco and TCA
acquisitions, the Mallard disposition and the 1996 equity offering occurred as
of January 1, 1995, and the unaudited pro forma condensed consolidated balance
sheet assumes that the Mallard disposition occurred as of September 30, 1996.
The Prideco and TCA acquisitions were accounted for using the purchase method
of accounting, and the Mallard disposition has been accounted for as a
discontinued operation. The unaudited pro forma condensed consolidated
statements of income are based upon estimates and assumptions related to the
accounting for the TCA acquisition and the Mallard disposition.
The accounting for the TCA acquisition is subject to subsequent
determination and more detailed analyses, appraisals and evaluations of the
specific assets and liabilities. The final allocation of the purchase price of
the acquisition may be revised when additional information concerning asset
and liability valuation is obtained.
With respect to the Mallard disposition, the Company was required under
the terms of the Stock Purchase Agreement with Parker to effect various
transfers of assets to Mallard and to make various capital additions to Mallard
prior to the closing. The Company was also obligated under the Stock Purchase
Agreement to transfer certain assets to Mallard and to release, assume or
satisfy certain liabilities with respect to Mallard. In addition, the purchase
price with respect to the disposition of Mallard is subject to adjustment based
on various changes in the assets of Mallard from July 31, 1996, through the
date of closing. While the Company has made various assumptions with respect to
taxes, expenses, and other liabilities to be paid and accrued by the Company in
connection with the disposition of Mallard that it believes to be reasonable,
it is anticipated that the actual gain and net proceeds to the Company after
giving effect to the payment of taxes, expenses and charges will vary from
those set forth in the pro forma financial statements.
The following unaudited pro forma condensed consolidated financial
statements should be read in conjunction with (i) the Consolidated Financial
Statements of the Company and the related notes thereto, (ii) the historical
financial statements of TCA for the year ended December 31, 1995, and the
quarter ended March 31, 1996, and the related notes thereto, included in the
Company's Current Report on Form 8-K dated June 24, 1996 and (iii) the audited
consolidated financial statements of Prideco for the fiscal year ended June 30,
1995, and related notes filed with the Company's Current Report on Form 8-K/A
dated August 17, 1995, as amended by Amendment No. 2 to the Form 8-K/A dated May
7, 1996.
The historical results of Prideco contained in the unaudited pro forma
condensed consolidated statement of income for the twelve-month period ended
December 31, 1995 reflect only the results of operations for the six-month
period ended June 30, 1995, the date on which the Company acquired Prideco.
The pro forma information is not necessarily indicative of the results
that might have occurred had the transactions taken place at the beginning of
the periods specified and is not intended to be a projection of future results.
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PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 1996
(In thousands)
<TABLE>
<CAPTION> Pro Forma
Energy Adjustment
Ventures, Inc. ----------------
Historical Mallard Pro Forma
Consolidated Disposition (a) Consolidated
---------------- ---------------- --------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 11,555 $ 304,368 $ 315,923
Accounts Receivable, Net 122,182 (25,971) 96,211
Inventories 163,248 (10,224) 153,024
Prepaid Expenses and Other 16,542 (12,826) 3,716
----------- ----------- ----------
Total Current Assets 313,527 255,347 568,874
----------- ----------- ----------
Property, Plant and Equipment, Net 287,704 (145,464) 142,240
Excess of Cost Over Fair Value of Net
Tangible Assets of Businesses
Acquired, Net 72,168 (1,578) 70,590
Other Assets 22,070 12,036 34,106
----------- ----------- ----------
$ 695,469 $ 120,341 $ 815,810
=========== =========== =========
LIABILITIES & STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Short-Term Borrowings, Primarily
Under Revolving Lines of Credit $ 24,258 $ -- $ 24,258
Current Maturities of Long-Term Debt 4,596 (2,266) 2,330
Accounts Payable 73,997 (1,346) 72,651
Other Accrued Liabilities 60,131 63,132 (b) 123,263
----------- ----------- ----------
Total Current Liabilities 162,982 59,520 222,502
----------- ----------- ----------
Long-Term Debt 126,472 (1,000) 125,472
----------- ----------- ----------
Deferred Income Taxes, Net 28,476 (23,124) 5,352
Other Liabilities 4,859 15,445 (b) 20,304
----------- ----------- ----------
Stockholders' investment:
Common Stock 22,940 -- 22,940
Capital in Excess of Par 281,317 -- 281,317
Retained Earnings 79,336 69,500 (c) 148,836
Cumulative Foreign Currency
Translation Adjustment (8,537) -- (8,537)
Treasury Stock, at Cost (2,376) -- (2,376)
----------- ----------- ----------
Total Stockholders'
Investment 372,680 69,500 442,180
----------- ----------- ----------
$ 695,469 $ 120,341 $ 815,810
=========== =========== =========
</TABLE>
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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31,1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Prideco
Historical
Energy for the Pro Forma
Ventures, Six Months Adjustments
Inc. Ended ----------------------------------------------------
Historical June 30, TCA Mallard 1996 Equity Pro Forma
Consolidated 1995 Historical Prideco TCA Disposition(d) Offering Consolidated
------------ ---------- ---------- ---------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 351,587 $ 29,548 $ 49,233 $ -- $ -- $ (79,912) $ -- $ 350,456
--------- -------- -------- ---------------------------------------------------- ---------
Costs and expenses
Cost of Sales 262,293 25,301 43,552 650 (e) 1,159 (e) (57,063) -- 275,892
Selling general and
administrative
attributable
to segments 51,731 1,981 1,938 257 (f) 395 (f) (8,374) -- 47,928
Corporate, general and
administrative 5,123 -- -- -- -- -- -- 5,123
--------- -------- -------- ---------------------------------------------------- ---------
319,147 27,282 45,490 907 1,554 (65,437) -- 328,943
--------- -------- -------- ---------------------------------------------------- ---------
Operating income 32,440 2,266 3,743 (907) (1,554) (14,475) -- 21,513
--------- -------- -------- ---------------------------------------------------- ---------
Other income (expense):
Interest expense (16,723) (700) (742) 685 (g) 742 (g) 436 283 (h) (16,019)
Interest income 118 -- 3 -- -- (97) -- 24
Other income
(expense), net 556 (1,502) (433) 1,417 (i) -- 107 -- 145
--------- -------- -------- ---------------------------------------------------- ---------
(16,049) (2,202) (1,172) 2,102 742 446 283 (15,850)
--------- -------- -------- ---------------------------------------------------- ---------
Income (loss) before
income taxes 16,391 64 2,571 1,195 (812) (14,029) 283 5,663
(Provision) benefit for
income taxes (5,080) (378) (30) (418)(j) 284 (j) 5,320 (99)(j) (401)
--------- -------- -------- ---------------------------------------------------- ---------
Income (loss) from
continuing operations $ 11,311 $ (314) $ 2,541 $ 777 $ (528) $ (8,709) $ 184 $ 5,262
========= ======== ======== ==================================================== =========
Earnings per share from
continuing operations $ 0.77 $ 0.27
========= =========
Weighted average shares
outstanding 14,724 19,786
========= =========
</TABLE>
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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1996
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Energy TCA Historical Adjustments
Ventures, Inc for the Six --------------------------------------------
Historical Months Ended Mallard 1996 Equity Pro Forma
Consolidated June 30, 1996 TCA Disposition (d) Offering Consolidated
-------------- -------------- -------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 390,560 $ 28,260 $ -- $ (66,921) $ -- $ 351,899
---------- --------- ------------------------------------------- ---------
Costs and expenses:
Costs of Sales 297,672 24,381 579 (e) (48,441) -- 274,191
Selling, general and
administrative
attributable to segments 45,393 1,006 197 (f) (8,768) -- 37,828
Corporate, general
and administrative 4,665 -- -- -- -- 4,665
---------- --------- ------------------------------------------- ---------
347,730 25,387 776 (57,209) -- 316,684
---------- --------- ------------------------------------------- ---------
Operating income 42,830 2,873 (776) (9,712) -- 35,215
---------- --------- ------------------------------------------- ---------
Other income (expense):
Interest expense (12,653) (602) 602 (g) 388 1,090 (h) (11,175)
Interest income 321 -- -- (92) -- 229
Other income (expense), net 117 (742) 875 (k) (108) -- 142
---------- --------- ------------------------------------------- ---------
(12,215) (1,344) 1,477 188 1,090 (10,804)
---------- --------- ------------------------------------------- ---------
Income (loss) before
income taxes 30,615 1,529 701 (9,524) 1,090 24,411
(Provision) benefit
for income taxes (10,715) (34) (245)(j) 3,799 (7)(j) (7,202)
---------- --------- ------------------------------------------- ---------
Income (loss) from
continuing operations $ 19,900 $ 1,495 $ 456 $ (5,725) $ 1,083 $ 17,209
========== ========= =========================================== =========
Earnings per share from
continuing operations $ 1.02 $ 0.76
Weighted average shares ========== =========
outstanding 19,528 22,566
========== =========
</TABLE>
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GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma condensed consolidated financial statements. The pro forma
adjustments are based on estimates made by the Company's management using
information currently available. For purposes of preparing these unaudited pro
forma condensed consolidated financial statements, certain assumptions for the
Mallard disposition have been made in determining the one-time gain after
taxes, expenses and charges related to the disposition. As a result, the pro
forma adjustments discussed below are subject to change pending the completion
of the Mallard disposition.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying unaudited pro forma condensed
consolidated balance sheet as of September 30, 1996, are described below:
(a) To reflect the sale of Mallard for $306.9 million cash, net of
$7.8 million payment to Parker for capital additions as required
under the Stock Purchase Agreement, and the Parker Series D
Preferred Stock having an estimated value of $20 million and to
eliminate the assets and liabilities included in the combined
balance sheet of the Mallard business as of September 30, 1996.
(b) To reflect an estimated $70.1 million current tax liability
associated with the gain from the Mallard sale and to reflect an
estimated $18.2 million accrual for transaction costs, transfer of
asset costs and liabilities retained by the Company related to the
Mallard sale.
(c) To reflect an estimated after-tax gain of $69.5 million related to
the Mallard disposition. The amount of gain will be dependent upon
various factors, including costs and expenses relating to the
transfer of assets to Mallard, the amount of transaction costs and
liabilities retained by the Company as part of the Mallard sale and
the amount of US, foreign and local taxes that may be payable in
connection with the disposition. Although the Company believes that
the above estimated after-tax gain reflects a reasonable estimation
of such gain, the actual gain after taxes, expenses and charges
relating to the disposition and the net cash proceeds to the
Company after giving effect to the payment of taxes, expenses and
charges relating to the disposition could change materially from
the estimates contained herein.
The adjustments to the accompanying unaudited pro forma condensed
consolidated statements of income are described below:
(d) To eliminate the operating results for the Mallard business for
the twelve and nine months ended December 31, 1995 and September
30, 1996, respectively.
(e) To adjust the historical amounts for changes in depreciation
expense as a result of the purchase price allocations to property,
plant and equipment of Prideco and TCA.
(f) To record amortization expense relating to the estimated excess of
cost over fair value of net tangible assets acquired in connection
with the acquisition of Prideco and TCA.
(g) To reduce interest expense to reflect the retirement of the debts
outstanding at the date of acquisition, including revolving lines
of credit for Prideco and TCA.
(h) To reduce interest expense of the Company through the assumed
reduction of indebtedness from the application of a portion of the
net proceeds to the Company from the 1996 equity offering and the
net proceeds from the Mallard disposition.
(i) To eliminate expenses incurred by Prideco relating to the
Company's acquisition of Prideco.
(j) To record the income tax provision related to the pro forma
adjustments.
(k) To eliminate expenses incurred by TCA relating to the Company's
acquisition of TCA.
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(c) Exhibits.
2.1 - Stock Purchase Agreement dated as of September 14, 1996,
by and among Parker Drilling Company and Energy Ventures,
Inc. (incorporated by reference to Exhibit 2.1 to Form
8-K, File 0-7265, filed October 3, 1996).
99.1 - Press Release of the Company dated November 12, 1996,
announcing the closing of the Agreement.
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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 hereunto duly authorized.
ENERGY VENTURES, INC.
Dated: November 26, 1996 /s/ FRANCES R. POWELL
----------------------------
Frances R. Powell
Vice President, Accounting
and Controller
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<S> <C>
2.1 Stock Purchase Agreement dated as of September 14, 1996,
by and among Parker Drilling Company and Energy Ventures,
Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K,
File 0-7265, filed October 3, 1996).
99.1 Press Release of the Company dated November 12, 1996,
announcing the closing of the Agreement.
</TABLE>
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
EVI ANNOUNCES THE COMPLETION OF THE SALE OF MALLARD DRILLING
November 12, 1996, Houston, Texas - Energy Ventures, Inc. (NYSE-EVI) today
announced the completion of the previously announced sale of its Mallard
Drilling rig contracting division to Parker Drilling Company for total
consideration of approximately $335 million.
EVI is an international oilfield equipment company with manufacturing
operations in eight countries. The Company manufactures drill pipe, premium
tubulars and production equipment.
Contact:
James G. Kiley
Vice President and
Chief Financial Officer
(713) 297-8400
