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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARCH 17, 1999 (NOVEMBER 2, 1998)
(date of report) (date of earliest event reported)
RIO GRANDE, INC.
(exact name of registrant as specified in its charter)
DELAWARE
(state or other jurisdiction of incorporation)
1-8287 74-1973357
(Commission File No.) (IRS Employer Identification No.)
10101 REUNION PLACE
SUITE 210
SAN ANTONIO, TEXAS 78216-4156
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (210) 308-8000
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This Current Report on Form 8-K updates and amends Item 3 and Item 7 of that
certain Form 8-K dated November 12, 1998.
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
EXCO Resources, Inc. ("EXCO") acquired ownership of 100% of the outstanding
voting capital stock of Rio Grande, Inc. pursuant to a bankruptcy proceeding as
described in Item 3.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On November 2, 1998, EXCO acquired from Comerica Bank-Texas ("Comerica") a
Promissory Note ("Note") dated January 15, 1997, which was executed by Rio
Grande, Inc. ("RGI") and Rio Grande Drilling Company as co-makers in favor of
Comerica. EXCO paid approximately $6.4 million for the purchase price of the
Note with available cash on hand. The Note, in the original face amount of
$50,000,000, had a principal amount outstanding of $13,127,666 and related
accrued interest payable of $486,227 on November 2, 1998. Repayment of the Note
was secured by a first lien deed of trust, mortgage and security interest in
substantially all of RGI's and certain of its subsidiaries' and/or affiliates'
assets, primarily oil and gas leasehold interests and tangible well equipment
(the "Collateral Properties"). The sum of the outstanding principal and accrued
interest on the Note was significantly in excess of what RGI believed to be the
current market value of the Collateral Properties. Pursuant to an agreement
between Comerica and EXCO relating to the purchase by EXCO of the Note, EXCO
acquired all of Comerica's rights pursuant to the Note and the related Loan
Agreement and associated collateral documents. In connection with EXCO's
purchase of the Note, Comerica agreed to dismiss litigation it had initiated
against RGI and its directors seeking to collect amounts due under the Note.
Contemporaneously with EXCO's purchase of the Note, the Company, EXCO and Koch
Exploration Company ("Koch"), the holder of the Company's preferred stock,
entered into a Voting Agreement (the "Agreement") providing for a Financial
Restructuring (as defined in the Agreement) with regards to the Note, the
Preferred Stock Interests (as defined in the Agreement) of Koch and other claims
against RGI. The proposed Financial Restructuring provided that RGI and certain
of its subsidiaries and/or affiliates would commence cases under Chapter 11 of
the Bankruptcy Code and would seek to obtain court approval of a joint plan of
reorganization pursuant to the terms of the Financial Restructuring (the
"Proposed Plan"). The description of the Agreement set forth herein is expressly
qualified by and made subject to the terms of the Agreement, a copy of which was
previously filed. The Proposed Plan provided for distributions to claimants in a
manner substantially similar to the Plan (as hereinafter defined) ultimately
confirmed by the bankruptcy court.
In accordance with the Agreement, RGI filed a voluntary petition on November 12,
1998 under Chapter 11 of the Bankruptcy Act, Case No. 98-55619-C in the United
States Bankruptcy Court, Western District of Texas, San Antonio Division, Judge
Leif M. Clark presiding (the "Court"). RGI, as Debtor in Possession, operated
and managed its affairs during the bankruptcy proceedings. The case was
consolidated and jointly administered with the Chapter 11 cases simultaneously
filed by the following affiliates of RGI (collectively with RGI, the "RGI
Group"): Rio Grande Drilling Company ("Drilling"), a Texas corporation and
wholly-owned subsidiary of Rio Grande, Inc.; Rio Grande Desert Oil Company
("Desert"), a Nevada corporation and wholly-owned subsidiary of Drilling; Rio
Grande Offshore, Ltd. ("Offshore"), a Texas limited partnership, the sole
general partner of which was Drilling and the sole limited partner of which was
Desert; and Rio Grande GulfMex, Ltd. ("Gulfmex"), a Texas limited partnership,
the sole general partner of which was Offshore, which owns an 80% interest in
Gulfmex. The case was styled
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"In re: Rio Grande, Inc., Rio Grande Drilling Company, Rio Grande Desert Oil
Company, Rio Grande Offshore, Ltd., and Rio Grande Gulfmex, Ltd.," (Case Nos.
98-55619-C, 98-55620-C, 98-55621-K, 98-55622-C and 98-55623-C, respectively,
jointly administered (under Case No. 98-55619-C)).
On January 25, 1999, that certain First Amended Disclosure Statement to First
Amended Joint Plan of Reorganization, Dated January 25, 1999, was filed and
approved by the Court. That certain First Amended Joint Chapter 11 Plan of
Reorganization, dated January 25, 1999 as modified March 4, 1999, (the "Plan"),
filed herewith as Exhibit 2.1, was filed with the Court and confirmed pursuant
to that certain Confirmation Order entered March 5, 1999 (the "Confirmation
Order"), filed herewith as Exhibit 2.2. The Findings of Fact and Conclusions of
Law accompanying the Confirmation Order (which set forth, among other things,
the March 4, 1999 modifications to the Plan) are filed herewith as Exhibit 2.3.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Plan.
The Plan provided for certain class ("Class") definitions for each group of
creditors or parties that may have had claims against a member of the RGI
Group. The Class definitions were:
Class 1 The Allowed Secured Claim in respect of the Note.
Class 2 Any Allowed Secured Claims against any of the RGI Group
other than the Allowed Secured Claim in Class 1.
Class 3 Any Allowed Claims against any of the RGI Group that are
unsecured claims entitled to priority pursuant to the
Bankruptcy Code, other than Priority Claims specified in
sections 507(a)(1), 507(a)(2) and 507(a)(8) of the
Bankruptcy Code.
Class 4 Any Allowed, Nonpriority Unsecured Claims against any of
the RGI Group not classified elsewhere including any
Deficiency Claim under the Note.
Class 5 Allowed Preferred Stock Interests in RGI, and all rights to
dividends and any other rights associated therewith, held
by Koch Exploration Company.
Class 6 Allowed Limited Partnership Interest in Gulfmex.
Class 7 Allowed RGI Common Stock interest, and any options,
warrants, or other rights or Claims in respect of such
Common Stock, and all other equity interest of the RGI
Group, excluding those equity interest classified in
Classes 5 and 6.
Class 8 Intercompany claims.
The Plan provided for treatment of the Classes in the following manner:
Administrative and Priority Tax Claims were unclassified under the Bankruptcy
Code and were paid in full. Class 1 claims were allowed in full and were
satisfied by delivery of all the Reorganized RGI Common Stock. Classes 2, 3 and
4 claims were paid in full and the legal rights of the claimants were
unaltered. Class 5 claims were canceled in exchange for a 30-day option to
acquire up to 24.5% of the working interest owned by the RGI Group in the
Righthand Creek Properties for $698,250. The Class 6 legal interests remain
outstanding, unaltered. The Classes 7 and 8 claims were extinguished in full.
2
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The Plan provided for its implementation through (1) merging of Drilling,
Offshore and Desert with and into RGI, (2) paying cash to unclassified claims
and classes 2, 3 and 4, (3) restating and amending the Reorganized RGI charter
to comply with section 1123(a)(6) of the Bankruptcy Code by, inter alia,
providing for restrictions on issuance of non-voting equity securities and (4)
canceling all shares of Common Stock and Preferred Stock and reissuing
Reorganized RGI Common Stock to Class 1.
The Plan also provided for limitation of liability on Exculpated Persons with
respect to good faith attempts to implement and consummate the Plan.
The Plan provided for the assumption of generally all executory contracts and
unexpired leases but for the rejection of any pre-petition employment agreements
effective upon the last day of the calendar month in which substantial
confirmation of the Plan occurred.
The Plan was confirmed by the Court on March 4, 1999 and consummation of the
Plan began on March 16, 1999. Substantial consummation of the Plan occurred on
March 17, 1999, with the completion of a series of mergers which effected the
merger of Desert, Offshore and Drilling into RGI pursuant to the terms of the
Plan.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Not applicable
(b) Pro Forma Financial Information.
Not applicable
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(c) Exhibits.
Number Document
2.1 First Amended Joint Chapter 11 Plan of Reorganization
of Rio Grande, Inc., Rio Grande Drilling Company, Rio
Grande Desert Oil Company, Rio Grande Offshore, Ltd.,
and Rio Grande GulfMex, Ltd., dated January 25, 1999
and modified March 4, 1999.
2.2 Confirmation Order for the Plan of Reorganization,
dated March 4, 1999.
2.3 Findings of Fact and Conclusions of Law regarding
Confirmation Order (which set forth the March 4, 1999
modifications to the Plan).
99.1 Voting Agreement dated October 30, 1998 between Rio
Grande, Inc., Rio Grande Drilling Company, Rio Grande
Offshore, Ltd., Rio Grande Desert Oil Company and Rio
Grande GulfMex, Ltd. and EXCO Resources, Inc.
previously filed as an Exhibit to RGI's Form 8-K
dated November 12, 1998.
99.2 Monthly Operating Report for January 1999 as filed
with the United States Bankruptcy Court.
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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.
RIO GRANDE, INC.
By: /s/ T.W. EUBANK
-------------------------------------
T.W. Eubank, President
Dated: March 23, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 First Amended Joint Chapter 11 Plan of Reorganization of Rio
Grande, Inc., Rio Grande Drilling Company, Rio Grande Desert
Oil Company, Rio Grande Offshore, Ltd., and Rio Grande
GulfMex, Ltd., dated January 25, 1999 and modified March 4,
1999.
2.2 Confirmation Order for the Plan of Reorganization, dated
March 4, 1999.
2.3 Findings of Fact and Conclusions of Law regarding
Confirmation Order (which set forth the March 4, 1999
modifications to the Plan).
99.1 Voting Agreement dated October 30, 1998 between Rio Grande,
Inc., Rio Grande Drilling Company, Rio Grande Offshore, Ltd.,
Rio Grande Desert Oil Company and Rio Grande GulfMex, Ltd.
and EXCO Resources, Inc. previously filed as an Exhibit to
RGI's Form 8-K dated November 12, 1998.
99.2 Monthly Operating Report for January 1999 as filed with the
United States Bankruptcy Court.
</TABLE>
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EXHIBIT 2.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
IN RE: )
)
RIO GRANDE, INC., ) CASE NO. 98-55619-C
RIO GRANDE DRILLING COMPANY, ) CASE NO. 98-55620-C
RIO GRANDE DESERT OIL COMPANY ) CASE NO. 98-55621-K
RIO GRANDE OFFSHORE, LTD., AND ) CASE NO. 98-55622-C
RIO GRANDE GULFMEX, LTD. ) CASE NO. 98-55623-C
)
) (CHAPTER 11)
DEBTORS. ) (Jointly Administered)
FIRST AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF
RIO GRANDE, INC., RIO GRANDE DRILLING COMPANY, RIO GRANDE DESERT
OIL COMPANY, RIO GRANDE OFFSHORE, LTD.
AND RIO GRANDE GULFMEX, LTD.
January 25, 1999
San Antonio, Texas
COX & SMITH INCORPORATED
Deborah D. Williamson
112 East Pecan Street, Suite 1800
San Antonio, Texas 78205
(210) 554-5500
ATTORNEYS FOR DEBTORS
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I Definitions and Interpretation................................................... 1
ARTICLE II Provisions For Payment of Administrative
and Priority Tax Claims.......................................................... 8
2.1 Allowed Administrative Claims.................................................... 8
2.2 Priority Tax Claims.............................................................. 8
ARTICLE III Classification of Claims......................................................... 8
3.1 Class 1.......................................................................... 8
3.2 Class 2.......................................................................... 9
3.3 Class 3.......................................................................... 9
3.4 Class 4.......................................................................... 9
3.5 Class 5.......................................................................... 9
3.6 Class 6.......................................................................... 9
3.7 Class 7.......................................................................... 9
3.8 Class 8.......................................................................... 9
ARTICLE IV Identification of Impaired Classes of Claims and Equity Interests................ 9
4.1 Unimpaired Classes of Claims..................................................... 9
4.2 Impaired Classes of Claims and Equity Interests.................................. 9
4.3 Impairment Controversies......................................................... 9
ARTICLE V Provisions for Treatment of Classified Claims and Interests...................... 10
5.1 Class 1 - EXCO Secured Claims.................................................... 10
5.2 Class 2 - Other Secured Claims................................................... 10
5.3 Class 3 - Priority Non-Tax Claims................................................ 10
5.4 Class 4 - Other Unsecured Claims................................................. 10
5.5 Class 5 - Claims and Interests of Koch Exploration Company....................... 10
5.6 Class 6 - Allowed Limited Partnership Interests in GulfMex....................... 11
5.7 Class 7 - Common Stock........................................................... 11
5.8 Class 8 - Intercompany Claims.................................................... 11
ARTICLE VI Acceptance or Rejection of Plan.................................................. 12
6.1 Classes Entitled to Vote......................................................... 12
6.2 Class Acceptance Requirement..................................................... 12
ARTICLE VII Means for Implementation of Plan of Reorganization............................... 12
7.1 Merger........................................................................... 12
7.2 Cash Payments on the Effective Date.............................................. 12
7.3 Restated Charter................................................................. 12
7.4 Common Stock and Preferred Stock................................................. 12
7.5 Corporate Governance............................................................. 12
7.6 Record Date...................................................................... 13
7.7 Means of Cash Payment............................................................ 13
7.8 Delivery of Distributions........................................................ 13
</TABLE>
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<TABLE>
<S> <C> <C>
7.9 Time Bar to Cash Payments........................................................ 14
7.10 Vesting of Assets................................................................ 14
7.11 Effectuating Documents........................................................... 14
7.12 Avoidance Actions................................................................ 14
7.13 Effect of Confirmation: Discharge................................................ 15
7.14 Exemption from Securities Laws................................................... 15
ARTICLE VIII Conditions to Consummation of Plan............................................... 15
8.1 Conditions to Confirmation....................................................... 15
8.2 Conditions to Occurrence of Effective Date....................................... 15
8.3 Waiver of Conditions............................................................. 16
8.4 Effect of Nonoccurrence of Conditions to the Effective Date...................... 16
ARTICLE IX Treatment of Executory Contracts and Unexpired Leases............................ 16
9.1 Assumed if Not Rejected.......................................................... 16
9.2 Employee Agreements.............................................................. 16
9.3. Rejection of Specified Contracts and Leases...................................... 17
9.4 Assumption of Contracts and Leases .............................................. 17
9.5 Bar to Rejection Damages......................................................... 17
9.6 Bar to "Cure" Claims............................................................. 17
ARTICLE X Procedures for Resolving and Treating Contested Claims........................... 17
10.1 Objection Deadline............................................................... 17
10.2 Prosecution of Objections........................................................ 18
10.3 No Distributions Pending Allowance............................................... 18
10.4 Time for Filing Administrative Claims............................................ 18
10.5 Time for Filing of Reimbursement Claims.......................................... 18
ARTICLE XI Miscellaneous Provisions......................................................... 18
11.1 Limitations of Liability/Releases................................................ 18
11.2 Compliance with Tax Requirements................................................. 19
11.3 Compliance with All Applicable Laws.............................................. 20
11.4 Setoffs.......................................................................... 20
11.5 Maintenance of Causes of Action.................................................. 20
11.6 Request for Cramdown under Section 1129(b) of the Bankruptcy Code................ 20
ARTICLE XII Consummation of Plan............................................................. 20
12.1 Retention of Jurisdiction........................................................ 20
12.2 Substantial Consummation ........................................................ 21
12.3 Modification of Plan............................................................. 21
12.4 Inconsistencies.................................................................. 22
12.5 U.S. Trustee Fees................................................................ 22
</TABLE>
EXHIBITS
1. Voting Agreement
2. Employment Agreement for Guy Bob Buschman
3. Employment Agreement for Gary Scheele
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FIRST AMENDED JOINT CHAPTER 11 PLAN OF
RIO GRANDE, INC., RIO GRANDE DRILLING COMPANY, RIO GRANDE DESERT
OIL COMPANY, RIO GRANDE OFFSHORE, LTD.,
AND RIO GRANDE GULFMEX, LTD.
Rio Grande, Inc., Rio Grande Drilling Company, Rio Grande Desert Oil
Company, Rio Grande Offshore, Ltd., and Rio Grande GulfMex, Ltd. propose the
following plan of reorganization.
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 "Administrative Claim" shall mean a Claim or portion of a Claim
that is a cost or expense of administration of the Chapter 11 Case allowed under
section 503(b) or 507(b) of the Bankruptcy Code that is entitled to priority
under section 507(a)(1) of the Bankruptcy Code, including, without limitation,
(a) any actual and necessary costs and expenses of preserving the estate of the
Debtors, (b) any actual and necessary costs and expenses of operating the
business of the Debtors, (c) any indebtedness or obligations incurred or assumed
by the Debtors, in accordance with section 364, in connection with the conduct
of their business or for the acquisition or lease of property or the rendition
of services, (d) any allowances of compensation and reimbursement of expenses to
the extent allowed by Final Order under section 330 of the Bankruptcy Code,
whether arising before or after the Effective Date, and (e) any fees or charges
assessed against the estate of the Debtors under section 1930, chapter 123,
title 28, United States Code.
1.2 "Allowed" when used with respect to a Claim shall mean (a) a claim
against the Debtors, proof of which was filed on or before the date designated
by the Bankruptcy Court as the last date for filing that category of proof of
claim (or late-filed with leave of Court), as to which no Objection has been
interposed; or (b) if no proof of claim was filed, a Claim that has been or
hereafter is listed by the Debtors as liquidated in amount and not disputed or
contingent, as to which no Objection has been interposed; or (c) a Claim as to
which any Objection has been interposed, to the extent the Objection has been
overruled by a Final Order no longer subject to being modified or reversed on
reconsideration or appeal.
1.3 "Avoidance Action" shall mean a cause of action assertable by the
Debtors or their successors pursuant to sections 542, 543, 544, 545, 547, 548,
549, 550, or 553 of the Bankruptcy Code.
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1.4 "Bankruptcy Code" shall mean Title II of the Bankruptcy Reform Act
of 1978, as amended, and codified at title 11 of the United States Code, as
applicable to the Chapter 11 Cases and as in effect as of the date hereof or as
hereafter amended.
1.5 "Bankruptcy Court" shall mean the Bankruptcy Court unit of the
United States District Court for the Western District of Texas, San Antonio
Division, or such other court having jurisdiction over all or any part of the
Chapter 11 Cases.
1.6 "Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy
Procedure, as promulgated by the United States Supreme Court pursuant to 28
U.S.C. Section 2075 and, to the extent not inconsistent therewith, the local
rules of the Bankruptcy Court, as amended from time to time.
1.7 "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which commercial banks in the City of San Antonio, State of Texas,
are required or authorized to close.
1.8 "Cash" shall mean and include United States currency on hand,
United States currency on deposit in any bank account, and cash equivalents,
including but not limited to any check or other similar negotiable instrument
denominated in United States currency, shares in any money market or similar
fund that are actively traded on any established securities market located
within the United States, commercial paper having a maturity of 90 days or less
and denominated in United States currency, and any obligation of the United
States of America (or any agency or instrumentality thereof) denominated in
United States currency.
1.9 "Chapter 11 Cases" shall mean the cases commenced by the Debtors
under the Bankruptcy Code by voluntary chapter 11 petitions filed on the
Petition Date.
1.10 "Claim" shall mean any right to payment from one or more of the
Debtors, whether or not the right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, contested, uncontested,
legal, equitable, secured, or unsecured; or any right to an equitable remedy for
breach of performance if the breach gives rise to a right of payment from one or
more of the Debtors, whether or not the right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, contested, uncontested,
secured, or unsecured, or any Derivative Claim.
1.11 "Class" shall mean a category or group of holders of Claims or
Equity Interests as designated pursuant to Article III of this Plan.
1.12 "Comerica" shall mean Comerica Bank - Texas.
1.13 "Common Stock" shall mean the shares of common stock, $0.01 par
value per share, issued by RGI.
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1.14 "Company" shall mean, collectively, Rio Grande, Inc., Rio Grande
Drilling Company, Rio Grande Offshore, Ltd., Rio Grande GulfMex, Ltd., and Rio
Grande Desert Oil Company.
1.15 "Confirmation Date" shall mean the date of entry of the
Confirmation Order.
1.16 "Confirmation Order" shall mean the order of the Bankruptcy Court
confirming this Plan.
1.17 "Contested Claim" shall mean a Claim against one or more of the
Debtors, as to which an Objection to all or any part of the Claim is timely
interposed.
1.18 "Contested Claim Amount" with respect to any Contested Claim,
shall mean the asserted amount of a Claim that is filed on or before the date
designated by the Bankruptcy Court as the last date for filing that category of
proof of Claim, which is a Contested Claim, and which has not been Allowed or
Disallowed before the Effective Date.
1.19 "Creditor" shall mean the holder of a Claim.
1.20 "Creditors Committee" shall mean any Official Committee of
Unsecured Creditors appointed in the Chapter 11 Case pursuant to section 1102 of
the Bankruptcy Code, as reconstituted from time to time pursuant to order of the
Bankruptcy Court or determination of the United States Trustee for the Western
District of Texas.
1.21 "Debtors" shall mean Rio Grande, Inc., Rio Grande Drilling
Company, Rio Grande Desert Oil Company, Rio Grande Offshore, Ltd., and Rio
Grande GulfMex, Ltd.
1.22 "Debtors in Possession" shall mean the Debtors in their capacities
as Debtors-in-possession under section 1101(1) of the Bankruptcy Code.
1.23 "Derivative Claim" shall mean any Claim for damages by Option
Holders or Warrant Holders arising out of cancellation of any right to purchase
Common Stock outstanding prior to the Effective Date. Debtors believe that, due
to the exercise price of such rights to purchase Common Stock, no Option Holder
or Warrant Holder will incur any damages as a result of the cancellation of such
rights to purchase Common Stock outstanding prior to the Effective Date.
1.24 "Desert" shall mean Rio Grande Desert Oil Company.
1.25 "Deficiency Amount" shall mean the amount by which the total
amount of a Secured Claim exceeds the value of the collateral securing the Claim
as of the date the determination is made.
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1.26 "Deficiency Claim under the Note" shall mean the deficiency claim
of EXCO which, for purposes of this Plan only, shall be waived and shall be
deemed to be zero, but may be allowed in an undetermined amount if any party
objects to the Class 1 treatment or secured claim amount.
1.27 "Disallowed," when used with respect to all or any part of a
Claim, shall mean the status of that portion of a Contested Claim as to which a
Final Order of the Bankruptcy Court is entered sustaining the Objection.
1.28 "Disclosure Statement" shall mean the Disclosure Statement filed
under Bankruptcy Code section 1125 in support of this Plan.
1.29 "Effective Date" shall mean the first Business Day after which the
Confirmation Order is a Final Order.
1.30 "Employee Agreement" shall mean an employment contract between the
Debtors and any of their employees as of either the Petition Date or the
Effective Date.
1.31 "Equity Interests" shall mean the Common Stock and any rights
arising out of or related to Common Stock including, without limitation all
issued and outstanding unexercised warrants and options to acquire Common Stock.
1.32 "EXCO" shall mean EXCO Resources, Inc., successor in interest to
Comerica.
1.33 "Final Order" shall mean an order or judgment of the Bankruptcy
Court or any other court or adjudicative body of competent jurisdiction: (1) as
to which the time to appeal or seek rehearing or petition for certiorari shall
have expired and (2) with respect to which there is no stay on its execution or
enforcement in effect.
1.34 "GulfMex" shall mean Rio Grande GulfMex, Ltd.
1.35 "Indemnification Claims" shall mean the Claims of the Debtors'
present and former directors and officers arising out of the Debtors'
Indemnification Obligations.
1.36 "Indemnification Obligations" shall mean the obligations of the
Debtors to indemnify their respective present and former directors and officers
pursuant to any provisions of the Debtors' charter and/or other organizational
documents and/or applicable state law.
1.37 "Koch" shall mean Koch Exploration Company and/or any affiliates
of Koch.
1.38 "Lien" shall mean any lien, charge, encumbrance, or interest in or
against property to secure payment of a debt or enforcement of an obligation.
4
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1.39 "Note" shall mean that certain secured promissory note dated as of
January 15, 1997, payable to the order of Comerica Bank-Texas in the original
face amount of $50,000,000.00, the principal balance on such Note currently
being $13,127,666.06.
1.40 "Objection" shall mean an objection to the allowance of a Claim
interposed within the applicable period of limitation fixed by this Plan, the
Bankruptcy Code, the Bankruptcy Rules, or the Bankruptcy Court.
1.41 "Offshore" shall mean Rio Grande Offshore, Ltd.
1.42 "Option Holders" shall mean the holder of any right issued by the
Debtors to purchase Common Stock, other than the Warrant Holders.
1.43 "Person" shall mean an individual, corporation, partnership, joint
venture, trust, estate, unincorporated association, unincorporated organization,
governmental entity or unit or political subdivision thereof, or any other
entity.
1.44 "Petition Date" shall mean November 12, 1998.
1.45 "Plan" shall mean this plan of reorganization for the Debtors, as
it may be modified from time to time, and all exhibits and schedules thereto.
1.46 "Plan Ballot Deadline" shall mean the date fixed by the Bankruptcy
Court by which the ballot that accompanies this Plan, validly executed by the
holder of an Allowed Claim, must be received by the Debtors or its solicitation
agent, which date is set forth in the Disclosure Statement.
1.47 "Plan Documents" shall mean the Restated Charter and such other
documents as may be necessary or advisable to effectuate the Plan, which
documents will be filed in the Bankruptcy Court not later than the conclusion of
the hearing on confirmation of this Plan, unless specifically provided otherwise
in this Plan.
1.48 "Plan Proponents" shall mean the Debtors.
1.49 "Preferred Stock" shall mean the shares of preferred stock, $0.01
par value per share, issued by RGI.
1.50 "Preferred Stock Interests" shall mean such interests, rights, and
remedies as arise out of or are related to the Certificate of Designation,
Preferences and Rights of Series A Preferred Stock, Series B Preferred Stock,
and Series C Preferred Stock of RGI dated January 15, 1997 designating the
Preferred Stock issued by RGI to Koch pursuant to the terms of that certain
Preferred Stock Purchase Agreement between Koch and RGI dated January 16, 1997,
including, but not limited
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to, all of the 500,000 shares of Series A Preferred Stock and the 500,000 shares
of Series B Preferred Stock issued by RGI to Koch pursuant to the terms thereof,
and the 17,500 shares of Series C Preferred Stock subsequently issued by RGI to
Koch pursuant to the terms thereof; and any accrued but unpaid dividends
relating to the Series A Preferred Stock, the Series B Preferred Stock, an the
Series C Preferred Stock.
1.51 "Priority Non-Tax Claims" shall mean all the Allowed Claims that
are unsecured claims entitled to priority, other than Priority Tax Claims and
priority claims specified in Sections 507(a)(1), 507(a)(2) and 507(a)(8) of the
Bankruptcy Code.
1.52 "Priority Tax Claim" shall mean a Claim entitled to priority
pursuant to section 507(a)(8) of the Bankruptcy Code.
1.53 "Pro Rata" shall mean the proportion that the amount of a Claim in
a particular Class bears to the aggregate amount of all Claims in the Class.
1.54 "Reorganized Company" shall mean RGI from and after the merger
contemplated by this Plan on the Effective Date, as described in Section 7.1
herein below.
1.55 "Rejected Contracts" shall mean all contracts rejected prior to
entry of the Confirmation Order and the contracts of the Debtors listed in a
pleading to be filed by the Debtors with the Bankruptcy Court on or before ten
(10) calendar days prior to the hearing date for Confirmation of the Plan.
1.56 "Rejected Leases" shall mean all leases rejected prior to entry of
the Confirmation Order and the leases of the Debtors listed in a pleading to be
filed by the Debtors with the Bankruptcy Court on or before ten (10) calendar
days prior to the hearing date for Confirmation of the Plan.
1.57 "Reorganized RGI Common Stock" shall mean the shares of stock of
Reorganized RGI as set forth in the Reorganized RGI Certificate of Incorporation
which Reorganized RGI will issue pursuant to the terms of the Plan.
1.58 "Restated Charter" shall mean the amended and restated certificate
of incorporation of RGI to be filed with the Secretary of State of Delaware to
be effective on the Effective Date, the form of which shall be a Plan Document.
1.59 "RGD" shall mean Rio Grande Drilling Company.
1.60 "RGI" shall mean Rio Grande, Inc.
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1.61 "RGI Group" shall mean, collectively, Rio Grande, Inc., Rio Grande
Drilling Company, Rio Grande Offshore Ltd., Rio Grande GulfMex, Ltd., and Rio
Grande Desert Oil Company.
1.62 "Secured Claim" shall mean any Claim secured by a valid,
perfected, and enforceable Lien on or against property of one or more of
Debtors, but only to the extent of the value of the collateral securing the
Claim.
1.63 "Security Instruments" shall mean all documents, instruments,
guarantees, security agreements, financing statements, mortgages, deeds of
trust, assignments of production, pledge agreements, certificates and agreements
executed and delivered in connection with the Note.
1.64 "Tax Code" shall mean the Internal Revenue Code of 1986, as
amended, or corresponding provisions of any subsequent federal revenue act.
1.65 "Tax Return" shall mean any consolidated federal income tax return
filed by the Debtors or the Reorganized Company.
1.66 "Unsecured Claim" shall mean a Claim, other than an Administrative
Claim, a Priority Tax Claim, a Priority Non-Tax Claim, or a Secured Claim.
1.67 "Voting Agreement" shall mean that certain Voting Agreement
effective November 2, 1998 by and among EXCO, Koch, and the Debtors, a copy of
which is attached hereto as Exhibit 1 to the Plan.
1.68 "Warrant Holders" shall mean the holders of any rights to purchase
Common Stock pursuant to the Common Stock Purchase Warrants issued by RGI in
connection with the Note Purchase Agreement, dated September 27, 1995, by and
among RGI, Drilling, and the various purchasers of 11.50% Subordinated Notes,
none of which Subordinated Notes remain outstanding at the Petition Date.
1.69 Interpretation. Unless otherwise specified, all section, article,
and exhibit references in this Plan are to the respective section in, article
of, or exhibit to, this Plan, as the same may be amended, waived, or modified
from time to time. The Exhibits annexed to this Plan and each of the Plan
Documents are incorporated into and are part of this Plan as if fully set forth
in this Plan. The headings in this Plan are for convenience of reference only
and shall not limit or otherwise affect the provisions hereof. Words denoting
the singular number shall include the plural number and vice versa, and words
denoting one gender shall include the other gender.
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ARTICLE II
PROVISIONS FOR PAYMENT
OF ADMINISTRATIVE AND PRIORITY TAX CLAIMS
2.1 Allowed Administrative Claims: The holders of Allowed
Administrative Claims shall be paid in Cash in full on the Effective Date, or on
such other terms as are acceptable to the holders of such Claims, in full
satisfaction of their Claims, except to the extent any holder of any such Claim
must have its Claim approved by the Court, in which case such Claim shall be
paid immediately after such Claim is approved by Final Order, which Final Order
is no longer subject to being modified or reversed on reconsideration or appeal.
Holders of these Claims are unclassified under the Code and the Debtors will not
solicit acceptances of the Plan from holders of these Claims.
2.2 Priority Tax Claims.
(a) Except as set forth in subsection (b) below, the holders
of Allowed Priority Tax Claims shall be paid in Cash in full on the later of (i)
the Effective Date; (ii) eleven (11) days after the date any such Claim becomes
an Allowed Claim; or (iii) on such other terms as are acceptable to the holders
of such Claims, in full satisfaction of their Claims.
(b) At the option of the Debtors, any holder of an Allowed
Priority Tax Claim may receive, in lieu of the cash consideration set forth in
subsection (a) above, a promissory note in the principal amount of any such
holder's Allowed Priority Tax Claim. Interest shall accrue under the note from
and after the Effective Date at the rate of 5% or such higher or lower rate as
is determined by the Bankruptcy Court to be appropriate under section
1129(a)(9)(C) of the Code and shall be paid semiannually in arrears. The
principal amount of the note shall be paid in full on a date or dates six (6)
years after the date of assessment of such Allowed Priority Tax Claim.
(c) Holders of these Claims are unclassified under the Code
and the Debtors will not solicit acceptances of the Plan from holders of these
Claims.
ARTICLE III
CLASSIFICATION OF CLAIMS
Claims against the Debtors (other than Administrative and Priority Tax
Claims) and Equity Interests are classified as follows:
3.1 Class 1. Class 1 shall contain the Allowed Secured Claim of
EXCO.
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3.2 Class 2. Class 2 shall contain all Allowed Secured Claims other
than the Allowed Secured Claim of EXCO.
3.3 Class 3. Class 3 shall contain all the Allowed Claims that are
unsecured claims entitled to priority, other than Priority Tax Claims and
priority claims specified in ss.ss. 507(a)(1), 507(a)(2) and 507(a)(8) of the
Bankruptcy Code.
3.4 Class 4. Class 4 shall contain any Allowed, Nonpriority,
Unsecured Claims not otherwise classified, including the Deficiency Claim under
the Note.
3.5 Class 5. Class 5 shall contain all claims and interests of Koch,
including but not limited to the Preferred Stock Interests.
3.6 Class 6. Class 6 shall contain the Allowed Limited Partnership
Interests in GulfMex.
3.7 Class 7. Class 7 shall contain the Common Stock and any
Derivative Claims or other rights or Claims in respect of such Common Stock, and
all other Equity Interests, excluding those Equity Interests, if any, classified
in Classes 5 or 6.
3.8 Class 8. Class 8 shall contain any and all claims by and between
any of the Debtors.
ARTICLE IV
IDENTIFICATION OF IMPAIRED CLASSES OF
CLAIMS AND EQUITY INTERESTS
4.1 Unimpaired Classes of Claims. Classes 2, 3, and 4 are not
impaired under this Plan.
4.2 Impaired Classes of Claims and Equity Interests. With the
exception of the Unimpaired Classes specified in Section 4.1 of this Plan, all
Classes of Claims and all Equity Interests are impaired under this Plan.
4.3 Impairment Controversies. If a controversy arises as to whether
any Class of Claims or Equity Interests is impaired under this Plan, the
Bankruptcy Court shall, after notice and a hearing, determine the controversy.
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ARTICLE V
PROVISIONS FOR TREATMENT OF
CLASSIFIED CLAIMS AND INTERESTS
5.1 Class 1 - EXCO Secured Claims. The Allowed Secured Claim of EXCO
shall be Allowed in full in the amount of $13,127,666.06 plus prepetition
interest, and satisfied in full by delivery, on the Effective Date, of all of
the Reorganized RGI Common Stock, free and clear of all claims, liens, or
encumbrances. Class 1 shall be impaired and entitled to vote with regard to the
Plan.
5.2 Class 2 - Other Secured Claims. Each Holder of an Allowed Secured
Claim, other than the Class 1 Claim, shall be paid in Cash in full on the later
of (i) the Effective Date; (ii) eleven (11) days after the date any such Claim
becomes an Allowed Claim; or (iii) on such other terms as are acceptable to the
holder of any such Claim, in full satisfaction of such Claim. The Plan leaves
unaltered the legal, equitable and contractual rights to which such Claim
entitles the holder of such Claim. Upon payment in full pursuant to the Plan,
the lien(s) of any holder of an Allowed Secured Claim shall be extinguished and
any holder of an Allowed Secured Claim shall execute such documentation as is
reasonably necessary to facilitate the release of its lien(s) against the
Debtors or the Debtors' property. This Class is deemed to have accepted the Plan
under the provisions of section 1126(f) of the Code and the Debtors will not
solicit acceptances of the Plan from this Class.
5.3 Class 3 - Priority Non-Tax Claims. Each Holder of an Allowed
Priority Non-Tax Claim shall be paid in Cash in full on the later of (i) the
Effective Date; (ii) eleven (11) days after the date any such Claim becomes an
Allowed Claim; or (iii) on such other terms as are acceptable to the holder of
any such Claim, in full satisfaction of such Claim. The Plan leaves unaltered
the legal, equitable and contractual rights to which such Claim entitles the
holder of such Claim. This Class is deemed to have accepted the Plan under the
provisions of section 1126(f) of the Code and the Debtors will not solicit
acceptances of the Plan from this Class.
5.4 Class 4 - Other Unsecured Claims. Each Holder of an Allowed
Unsecured Claim that is not in any other Class shall be paid in Cash in full on
the later of (i) the Effective Date; (ii) eleven (11) days after the date any
such Claim becomes an Allowed Claim; or (iii) on such other terms as are
acceptable to the holder of any such Claim, in full satisfaction of such Claim.
The Plan leaves unaltered the legal, equitable and contractual rights to which
such Claim entitles the holder of such Claim. This Class is deemed to have
accepted the Plan under the provisions of section 1126(f) of the Code and the
Debtors will not solicit acceptances of the Plan from this Class.
5.5 Class 5 - Claims and Interests of Koch Exploration Company. The
Allowed Class 5 claims and interests, including but not limited to all rights to
dividends
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and any other rights associated with the Preferred Stock Interests, shall be
cancelled, extinguished and deemed discharged upon distribution of an option to
acquire up to 24.5% of the working interest owned by the RGI Group in the
Righthand Creek Properties for $698,250 (assuming the full 24.5% is acquired,
which amount will be adjusted downward proportionately if Koch exercises its
option to acquire less than 24.5%). The option shall remain open for 30 days
after the Effective Date of the Plan. If Koch chooses to exercise such option,
the effective date of Koch's acquisition of this working interest shall be
deemed to be November 1, 1998. Class 5 shall be impaired and entitled to vote
with regard to the Plan.
5.6 Class 6 - Allowed Limited Partnership Interests in GulfMex. If any
Interest holder in Class 6 contributes capital (in the form of Cash) in an
amount equal to his pro rata share of 20% of the prepetition Claims against
GulfMex, then such Interest holder will retain his Interests in GulfMex and the
Plan will be deemed to leave unaltered the legal, equitable and contractual
rights associated with his limited partnership Interests. Such capital
contribution will be due to be paid on the Effective Date to RGI (which will be
the new general partner of GulfMex as of the Effective Date). If any Interest
holder in Class 6 chooses not to make such a capital contribution, then such
Interest holder's Interests will be discharged, extinguished and canceled as of
the Effective Date and there will be no distribution of any kind to such
Interest holder on account of his limited partnership Interests in GulfMex.
Class 6 will be considered impaired and entitled to vote with regard to the
Plan.
5.7 Class 7 - Common Stock. The existing holders of Common Stock shall
receive no distribution on account of such interests or claims arising out of
such interests and such interests shall be deemed cancelled and extinguished.
All options and warrants to purchase Common Stock in RGI shall be cancelled as
of the Effective Date. Class 7 shall be deemed to have rejected the Plan under
the provisions of section 1126(g) of the Code. The Debtors will not solicit
acceptances of the Plan from this Class.
5.8 Class 8 - Intercompany Claims. All claims between or among the
Debtors and any of their affiliates and/or shareholders shall receive nothing on
account of such claims and such claims shall be deemed discharged in full. Class
8 shall be deemed to have rejected the Plan under the provisions of section
1126(g) of the Code. The Debtors will not solicit acceptances of the Plan from
this Class.
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ARTICLE VI
ACCEPTANCE OR REJECTION OF PLAN
6.1 Classes Entitled to Vote. Each Unimpaired Class shall be deemed to
have accepted the Plan. Classes 7 and 8 shall be deemed to have rejected the
Plan. As a result, only Classes 1, 5 and 6 will be solicited for voting.
6.2 Class Acceptance Requirement. Whether a Class of Claims or Equity
Interests has accepted this Plan shall be determined in accordance with section
1126 of the Bankruptcy Code.
ARTICLE VII
MEANS FOR IMPLEMENTATION OF
PLAN OF REORGANIZATION
7.1 Merger. On the Effective Date, RGD, Offshore and Desert shall merge
with and into RGI. Upon such merger, the Reorganized RGI will own and have the
right to dispose of all of the assets of RGI, RGD, Offshore and Desert,
including the 80% general partnership interest in GulfMex that currently belongs
to Offshore.
7.2 Cash Payments on the Effective Date. Payments of Cash to holders of
Administrative Claims, Secured Claims other than EXCO, Priority Tax Claims,
Priority Non-Tax Claims, and Unsecured Claims as set forth in Article V shall be
made on the Effective Date, except as otherwise herein provided.
7.3 Restated Charter. The Reorganized RGI charter shall be amended and
restated as necessary so that, on the Effective Date, the Reorganized RGI
Certificate of Incorporation shall comply with section 1123(a)(6) of the Code
by, inter alia, providing for restrictions on issuance of nonvoting equity
securities.
7.4 Common Stock and Preferred Stock. At the close of business on the
Effective Date of the Plan, the share transfer records of RGI shall be adjusted
to reflect the cancellation of all shares of Common Stock and Preferred Stock.
On the Effective Date, the Debtors shall issue to the holders of Claims
in Class 1 the Reorganized RGI Common Stock.
7.5 Corporate Governance. Until the Effective Date, the Debtors will be
managed by, and their Boards of Directors shall consist of, substantially the
same personnel that managed, operated and directed the Debtors on the Petition
Date, subject to such changes as may be determined by the Boards of Directors of
the
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Debtors. Except as required by law, the Debtors shall: (a) conduct their
businesses in the usual, regular and ordinary course of business in a manner
consistent with past practice and sound practice subject to their obligations as
debtors-in-possession pursuant to the Code; (b) use their best efforts to
preserve intact their respective business organizations and goodwill, keep
available the services of their key employees, and preserve the goodwill and
business relationships with suppliers, distributors, customers, and others with
which they have business relationships; (c) not take any actions inconsistent
with this Plan; (d) use their best efforts to satisfy the conditions to the
effectiveness of the Plan; and (e) conduct cash management, in the ordinary
course of their businesses and in a manner consistent with the Agreed Cash
Collateral Order in this Case and the terms of the Plan. The names of the
members of the Board of Directors of Reorganized RGI that will serve on and
after the Effective Date will be identified in a document to be filed with the
Bankruptcy Court as part of the Plan Documents. The new officers of Reorganized
RGI that will serve on and after the Effective Date shall also be identified in
a document to be filed with the Bankruptcy Court as part of the Plan Documents.
EXCO and each of Guy Bob Buschman and Gary Scheele shall have executed the
Retention Agreements in substantially the form attached hereto as Exhibits 2 and
3, respectively.
7.6 Record Date. The record date for purposes of distributions to
holders of Claims or Equity Interests under this Plan shall be the close of
business on the Confirmation Date.
7.7 Means of Cash Payment. Cash payments made pursuant to this Plan
shall be in United States funds, by check drawn on a domestic bank, or by wire
transfer from a domestic bank.
7.8 Delivery of Distributions.
(a) Distributions and deliveries to holders of Allowed Claims
shall be made at the addresses set forth on the proofs of claim or proofs of
interest filed by the holders (or at the last known addresses of the holders if
no proof of claim or proof of interest is filed or if one or more of the Debtors
has been notified of a change of address).
(b) If any holder's distribution is returned as undeliverable,
no further distributions to the holder shall be made unless and until one or
more of the Debtors is notified of the holder's then current address, at which
time all missed distributions shall be made to the holder without interest.
(c) Amounts in respect of undeliverable distributions made by
the Debtors shall be returned to the Debtors until the distributions are
claimed.
(d) All claims for undeliverable distributions shall be
made on or before the first anniversary of the Effective Date, after which time
all unclaimed property shall
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be treated under section 347(b) of the Bankruptcy Code, and after which all such
Claims against the Debtors or the Reorganized Company shall be discharged and
forever barred.
(e) All distributions delivered pursuant to the terms of this
Plan shall unconditionally vest in the holder of the Claim receiving such
distribution.
7.9 Time Bar to Cash Payments.
(a) Checks issued by the Reorganized Company in respect
of Administrative Claims, Priority Non-Tax Claims, Priority Tax Claims, Secured
Claims and Unsecured Claims shall be null and void if not cashed within ninety
days of the date of issuance thereof.
(b) Requests for reissuance of any check shall be made
directly to the Reorganized Company by the holder of the Allowed Claim with
respect to which the check originally was issued.
(c) Any Claim in respect of such a voided check shall be
made on or before the later of the fifth anniversary of the Effective Date or
ninety days after the date of issuance of the check, after which time all Claims
in respect of void checks shall be discharged and forever barred, and the funds
or distributions shall become the property of the Debtors pursuant to section
347(b) of the Bankruptcy Code.
7.10 Vesting of Assets. As of the Effective Date, all property of the
Debtors shall unconditionally vest in the Reorganized Company free and clear of
all Claims and interests, including but not limited to Equity Interests, liens,
security interests, and/or encumbrances of any nature except as specifically
provided in this Plan. All distributions made pursuant to the terms of the Plan
shall unconditionally vest in the recipient of such distribution.
7.11 Effectuating Documents. Prior to the conclusion of the hearing on
confirmation of the Plan, the Debtors shall file the Plan Documents with the
Bankruptcy Court.
7.12 Avoidance Actions. Avoidance Actions shall vest in the Reorganized
Company and be retained and litigated thereby as deemed appropriate by the
Reorganized Company. Notwithstanding an affirmative vote by any Person, the
Debtors reserve the right to pursue any Avoidance Action against any Person;
provided, however, that no Avoidance Action may be brought or asserted against
EXCO or Koch or any of the other Released Parties, as defined in Section 11.1(B)
hereinbelow.
7.13 Effect of Confirmation: Discharge. Except as provided in this
Plan, on the Effective Date, the Reorganized RGI shall be discharged from any
debt that arose
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before the Effective Date and any debt of a kind specified in sections 502(g),
502(h) or 502(i) of the Code whether or not: (a) a proof of Claim based on such
debt is filed or deemed filed under section 501 of the Code; (b) such Claim is
allowed under section 502 of the Code; or (c) the holder of such Claim has
accepted the Plan. Except as otherwise expressly provided in this Plan, the
discharge of the Debtors granted pursuant to this Plan, and section 1141 of the
Code, operates as an injunction against the commencement or continuation of any
action, the employment of process, or any other act, to collect, recover or
offset any Claim against or debts of the Debtors or their property arising
prior to the Effective Date.
7.14 Exemption from Securities Laws. All notes, instruments, and stock
distributed pursuant to the Plan shall be entitled to the benefits and
exemptions provided by section 1145 of the Code to the maximum extent allowed by
law and equity.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF PLAN
8.1 Conditions to Confirmation. There shall be conditions to the
Confirmation of this Plan, that prior to Confirmation, each of the following
conditions shall have been met or waived pursuant to Section 8.3 below:
A. That no "Agreement Termination Event" as defined in the
Voting Agreement, has occurred.
B. That the Confirmation Order shall be in form and substance
acceptable to EXCO and Koch.
8.2 Conditions to Occurrence of Effective Date.
A. That no "Agreement Termination Event" as defined in the
Voting Agreement, has occurred.
B. That the "Conditions to Effectiveness and Implementation"
set forth in the Voting Agreement have been met.
C. That the Confirmation Order has been issued, at least ten
(10) days have elapsed since the Confirmation Date, and no stay of the
Confirmation Order is in effect.
D. That the Reorganized RGI Articles of Incorporation shall
have been filed with the Delaware Secretary of State, if and to the extent state
law so requires.
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E. EXCO and each of Guy Bob Buschman and Gary Scheele shall
have executed the Retention Agreements in substantially the form attached hereto
as Exhibits 2 and 3, respectively.
8.3 Waiver of Conditions. The Debtors, EXCO, and Koch, without
Bankruptcy Court approval, may mutually waive all or any portion of any of the
conditions to the Confirmation Date described in Section 8.1 and to the
Effective Date described in Sections 8.2 (except 8.2.C) of the Plan.
8.4 Effect of Nonoccurrence of Conditions to the Effective Date. If the
Effective Date has not occurred by March 31, 1999, the Plan shall automatically
terminate unless the Debtors, with the consent of EXCO and Koch, shall extend
the date by which the Effective Date must occur to a date which is not later
than ninety (90) days after March 31, 1999.
ARTICLE IX
TREATMENT OF
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
9.1 Assumed If Not Rejected. All executory contracts and unexpired
leases of the Debtors which have not previously been (a) assumed, (b) rejected,
or (c) assumed and assigned by the Debtors, pursuant to an order entered during
the Chapter 11 Case, or (d) which are not the subject of a pending motion at the
time of the confirmation hearing, or (e) which are not specified as being a
Rejected Contract (as herein defined) or Rejected Lease (as herein defined), or
otherwise rejected in this Plan shall be deemed assumed under this Plan. Except
as set forth in Section 9.2 hereinbelow, each Person who was or is a party to an
executory contract or unexpired lease, which was or is rejected pursuant to a
separate order entered in the Debtors' Chapter 11 Case or pursuant to this Plan,
shall be entitled to file and serve on Debtors' counsel, not later than thirty
(30) days after the entry of the rejecting order (or if rejection occurs
pursuant to a specific provision in this Plan, then not later than thirty (30)
days after the Confirmation Date), a proof of Claim for damages alleged to have
arisen from the rejection of such executory contract or lease. Objections to any
such Claim shall be filed within the time limit set forth in Article X herein.
All rejection damages Claims shall be Class 4 Claims under this Plan.
9.2 Employee Agreements. Each prepetition Employee Agreement shall be
rejected effective upon the last day of the calendar month in which "substantial
consummation" of the Plan occurs (as defined in section 1101 of the Code). Any
claims for damages for the breach or termination of such prepetition Employee
Agreements shall be disallowed, extinguished, waived, and discharged pursuant to
the Plan. Effective upon the first day of the calendar month following
"substantial consummation," Guy Bob Buschman and Gary Scheele shall execute
12-month Retention Agreements
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with EXCO, which agreements shall be substantially in the form attached hereto
as Exhibits 2 and 3, respectively.
9.3 Rejection of Specified Contracts and Leases. Entry of the
Confirmation Order shall constitute authorization of the Bankruptcy Court to the
Debtors to reject the Rejected Contracts and Rejected Leases, as well as any
others specifically rejected pursuant to the terms of this Plan.
9.4 Assumption of Contracts and Leases. Entry of the Confirmation Order
shall constitute authorization of the Bankruptcy Court to the Debtors to assume
any contracts and leases deemed assumed pursuant to Section 9.1, as of the
Effective Date.
9.5 Bar to Rejection Damages. If the rejection and termination of an
executory contract or unexpired lease by the Debtors results in damages to the
other party or parties to the contracts or leases, a Claim for the damages,
shall be forever barred and shall not be enforceable against the Debtors, their
successors, or their properties unless a proof of claim is filed with the
Bankruptcy Court and served upon one or more of the Debtors or the Reorganized
Company within the time frames set forth in Section 9.1 hereinabove.
9.6 Bar to "Cure" Claims. Any claims, including claims for actual
pecuniary loss arising from a default in an executory contract or unexpired
lease assumed by the Debtors must be evidenced by a proof of claim filed by the
bar date specified in Section 10.1, or, if applicable, a request for payment of
administrative expense claim, filed by the bar date specified in Section 10.4,
and such claims shall be forever barred and shall not be enforceable against the
Debtors, their successors, or their properties unless a proof of claim or
request for payment of claim or administrative expense is timely filed with the
Bankruptcy Court and served upon one or more of the Debtors or the Reorganized
Company.
ARTICLE X
PROCEDURES FOR RESOLVING AND TREATING
CONTESTED CLAIMS
10.1 Objection Deadline. The bar date or deadline for the filing of
proofs of claim in this case was set by the Court as January 11, 1999.
Notwithstanding an affirmative vote, no provision of this Plan or principal of
law or equity, shall be a bar to an objection to any Claim, provided, however,
as soon as practicable, but in no event later than sixty (60) calendar days
following the Confirmation Date, the Reorganized Company shall file Objections
to Claims with the Bankruptcy Court and serve copies of the Objections in
accordance with Bankruptcy Rule 3007. This Section 10.1 shall not
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limit the Reorganized Company's right to object to Claims, if any, filed or
amended more than sixty (60) days after the Confirmation Date.
10.2 Prosecution of Objections. The Reorganized Company shall litigate
to judgment, settle, or withdraw Objections to Contested Claims.
10.3 No Distributions Pending Allowance. Notwithstanding any other
provision of this Plan, no payments or distributions shall be made to the holder
of a Contested Claim to which an Objection has been interposed or with regard to
which Debtors anticipates interposing an Objection unless and until the
Contested Claim has been Allowed.
10.4 Time for Filing Administrative Claims. Administrative Claims
against the Debtors must be filed no later than thirty (30) calendar days after
the entry of the Confirmation Order or they shall be deemed to be forever barred
and waived.
10.5 Time for Filing of Reimbursement Claims. Claims seeking
reimbursement and/or approval of fees and expenses incurred by members of the
Creditors Committee, EXCO or any other holder of a Secured Claim must be filed
no later than thirty (30) calendar days after the entry of the Confirmation
Order or they shall be deemed to be forever barred and waived.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Limitations of Liability / Releases.
A. Limitation of Liability. None of the Debtors, Reorganized
RGI, EXCO, Koch, nor any of their respective officers, directors, employees,
shareholders, subsidiaries, affiliates, predecessors, successors, assigns,
agents, representatives, guarantors, sureties, insurers, members, nor any
professional Persons employed by any of them (collectively the "Exculpated
Persons"), shall have or incur any liability to any Person for any act taken or
omission made in good faith in connection with or related to formulating,
implementing, confirming or consummating the Plan, the Disclosure Statement or
any contract, instrument, release or other agreement or document created in
connection with the Plan. The Exculpated Persons shall have no liability to any
Creditors or Equity Security holders for actions taken under the Plan, in
connection therewith or with respect thereto in good faith, including, without
limitation, failure to obtain Confirmation of the Plan or to satisfy any
condition or conditions, or refusal to waive any condition or conditions
precedent to Confirmation or to the occurrence of the Effective Date. Further,
the Exculpated Persons will not have or incur any liability to any holder of a
Claim, holder of an Interest, other party-in-interest herein
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or any other Person for any act or omission in connection with or arising out of
their administration of the Plan or the property to be distributed under the
Plan, or the operation of the business of the RGI Group, except for gross
negligence or willful misconduct, and in all respects such persons will be
entitled to rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan.
B. Releases. As of the Effective Date, in accordance with the
terms of the Voting Agreement, Reorganized RGI, on its own behalf and as
representative of the Debtors' estates, and each of the signatories to the
Voting Agreement shall, in consideration of services rendered in the Case and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, release unconditionally, and is hereby deemed to release
unconditionally, each of the Debtors' present and former officers, directors,
employees, subsidiaries, affiliates, predecessors, successors, assigns, agents,
representatives, guarantors, sureties, insurers, and their respective
professional advisers, and the entities that elected the directors to the extent
they are or may be liable for the actions or inactions of such directors, as
well as EXCO, Koch, and each of their present and former officers, directors,
employees, shareholders, subsidiaries, affiliates, predecessors, successors,
assigns, agents, representatives, guarantors, sureties, insurers, members, and
their respective professional advisers, and the entities that elected the
directors to the extent they are or may be liable for the actions or inactions
of such directors (collectively, the "Releasees"), from any and all claims,
obligations, suits, judgments, damages, rights, causes of action and liabilities
whatsoever (including, without limitation, those arising under the Code),
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity or otherwise, based in whole or in part on any act, omission,
transaction, event or other occurrence taking place before, on or after the
Petition Date up to the Effective Date, in any way relating to the Debtors
(before, on or after the Petition Date), the Case, or the Plan (collectively,
the "Released Matters"); provided, however, that the foregoing release shall not
apply to any action or omission that constitutes actual fraud or criminal
behavior. The foregoing release will be effective when the distributions
required to occur on the Effective Date have been made by the Reorganized RGI.
C. The Confirmation Order shall contain a permanent injunction
to effectuate the limitations of liability and releases granted in Sections
11.1(A) and (B) of the Plan.
11.2 Compliance with Tax Requirements. In connection with this Plan,
the Reorganized Company shall comply with all withholding and reporting
requirements imposed by federal, state, local, and foreign taxing authorities
and all distributions hereunder shall be subject to the withholding and
reporting requirements.
11.3 Compliance with All Applicable Laws. If notified by any
governmental authority that it is in violation of any applicable law, rule,
regulation, or order of the governmental authority relating to its business, the
Reorganized Company shall comply
19
<PAGE> 23
with the law, rule, regulation, or order; provided, however, that nothing
contained herein shall require such compliance if the legality or applicability
of the requirement is being contested in good faith in appropriate proceedings
and, if appropriate, for which an adequate reserve has been set aside on the
books of the Reorganized Company.
11.4 Setoffs. Except as otherwise provided in this Plan, the
Reorganized Company may, but shall not be required to, set off against any Claim
and the payments or other distributions to be made pursuant to this Plan in
respect of the Claim, claims of any nature whatsoever the estate may have
against the holder of the Claim, but neither the failure to do so nor the
allowance of any Claim hereunder shall constitute a waiver or release by the
Reorganized Company of any Claim that the estate may have against the holder;
provided, however, the Reorganized Company will not seek to set off any
obligation that is not yet due.
11.5 Maintenance of Causes of Action. Subject to Sections 7.12 and 11.1
herein, from and after the Effective Date, the Reorganized Company may litigate
any Avoidance Action or any other causes of action, rights to payments, or
claims that belong to the estate, that may be pending on the Effective Date or
timely instituted by the Reorganized Company after the Effective Date.
Notwithstanding an affirmative vote by any Person, the Debtors reserve the right
to pursue any Avoidance Action against any Person, right to payment or claim,
subject to Sections 7.12 and 11.1 herein.
11.6 Request for Cramdown under Section 1129(b) of the Bankruptcy Code.
This Plan shall be deemed a request for cramdown under section 1129(b) of the
Bankruptcy Code if any Class or Classes entitled to vote do not accept this Plan
under section 1126 of the Bankruptcy Code.
ARTICLE XII
CONSUMMATION OF PLAN
12.1 Retention of Jurisdiction. The Bankruptcy Court shall retain and
have exclusive jurisdiction over the Chapter 11 Cases for the following
purposes, except to the extent the Bankruptcy Court elects to retain concurrent
jurisdiction or decides to relinquish jurisdiction:
(a) To determine any and all required applications for
allowances of compensation and reimbursement of expenses and any other fees and
expenses incurred prior to the Effective Date and authorized to be paid or
reimbursed under the Bankruptcy Code or this Plan;
(b) To determine any applications pending on the Effective
Date for the rejection or assumption of executory contracts or unexpired leases
or for the
20
<PAGE> 24
assumption and assignment, as the case may be, of executory contracts or
unexpired leases to which one or more of the Debtors is a party or with respect
to which one or more of the Debtors may be liable, and to hear and determine,
and if need be to liquidate, any and all claims arising therefrom;
(c) To determine any and all applications, adversary
proceedings, and contested or litigated matters that may be pending on the
Effective Date;
(d) To consider any modifications of this Plan, remedy any
defect or omission or reconcile any inconsistency in any order of the Bankruptcy
Court, including the Confirmation Order, to the extent authorized by the
Bankruptcy Code;
(e) To determine all controversies, suits, and disputes that
may arise in connection with the interpretation, enforcement, or consummation of
this Plan or any person's obligations under this Plan;
(f) To issue such orders in aid of execution of this Plan to
the extent authorized by section 1142 of the Bankruptcy Code; and
(g) To allow or disallow any Objections to Claims and, to the
extent authorized by the Bankruptcy Code, to liquidate any Claim.
(h) To determine such other matters as may be set forth in the
Confirmation Order or which may arise in connection with this Plan or the
Confirmation Order.
12.2 Substantial Consummation. Substantial Consummation shall be deemed
to have occurred upon delivery of distributions due on the Effective Date to
holders of Allowed Claims as of the Effective Date.
12.3 Modification of Plan. Modifications of this Plan (including the
Plan Documents) may be proposed in writing by the Debtors at any time before
confirmation, provided that the Plan, as modified, meets the requirements of
sections 1122 and 1123 of the Bankruptcy Code, and the Debtors shall have
complied with section 1125 of the Bankruptcy Code. This Plan may be modified at
any time after confirmation and before its substantial consummation, provided
that the Plan, as modified, meets the requirements of sections 1122 and 1123 of
the Bankruptcy Code and the Bankruptcy Court, after notice and a hearing,
confirms the Plan, as modified, under section 1129 of the Bankruptcy Code, and
the circumstances warrant the modification. If a modification is determined by
the Bankruptcy Court to materially and adversely affect a particular class, a
resolicitation of that Class will be required pursuant to section 1127 of the
Bankruptcy Code. A holder of a Claim or Equity Interest that has accepted or
rejected this Plan shall be deemed to have accepted or rejected this Plan as
modified, unless, within the time fixed by the Bankruptcy Court, the holder
changes its previous acceptance or rejection.
21
<PAGE> 25
12.4 Inconsistencies. In the event that there is any inconsistency
between the Plan and the Disclosure Statement, any exhibit to the Plan or any
other instrument or document created or executed pursuant to the Plan, the Plan
shall govern.
12.5 U. S. Trustee Fees. The Debtors will comply with Public Law
104-99.
22
<PAGE> 26
Dated: San Antonio, Texas, January 25, 1999.
Respectfully submitted,
RIO GRANDE, INC.
By: /s/ GUY R. BUSCHMAN
----------------------------------------
Guy R. Buschman, President
RIO GRANDE DRILLING COMPANY
By: /s/ GUY R. BUSCHMAN
----------------------------------------
Guy R. Buschman, President
RIO GRANDE DESERT OIL COMPANY
By: /s/ GUY R. BUSCHMAN
----------------------------------------
Guy R. Buschman, President
RIO GRANDE OFFSHORE, LTD.
By: RIO GRANDE DRILLING COMPANY,
General Partner
By: /s/ GUY R. BUSCHMAN
------------------------------------
RIO GRANDE GULFMEX, LTD.
By: RIO GRANDE OFFSHORE, LTD.,
General Partner
By: RIO GRANDE DRILLING
COMPANY, General Partner
By: /s/ GUY R. BUSCHMAN
--------------------------------
23
<PAGE> 1
Exhibit 2.2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
IN RE: )
)
RIO GRANDE, INC., ) CASE NO. 98-55619-C
RIO GRANDE DRILLING, COMPANY, ) CASE NO. 98-55620-C
RIO GRANDE OFFSHORE, LTD., ) CASE NO. 98-55621-K
RIO GRANDE DESERT OIL COMPANY, ) CASE NO. 98-55622-C
RIO GRANDE GULFMEX, LTD., ) CASE NO. 98-55623-C
)
Debtors. ) Jointly Administered
) Under Case No. 98-55619-C
)
) Chapter 11
ORDER CONFIRMING FIRST AMENDED JOINT CHAPTER 11 PLAN OF
REORGANIZATION OF RIO GRANDE, INC., RIO GRANDE DRILLING
COMPANY, RIO GRANDE DESERT OIL COMPANY,
RIO GRANDE OFFSHORE, LTD., AND RIO GRANDE GULFMEX, LTD.
DATED JANUARY 25, 1999, AS MODIFIED MARCH 4, 1999
Rio Grande, Inc. ("RGI"), Rio Grande Drilling Company ("RGD"), Rio
Grande Desert Oil Company ("Desert"), Rio Grande Offshore, Ltd. ("Offshore"),
and Rio Grande GulfMex, Ltd. ("GulfMex," and together with RGI, RGD, Desert, and
Offshore, the "Debtors"), as debtors and debtors-in-possession,(1) having filed
with the Court the First Amended Joint Plan of Reorganization of Rio Grande,
Inc., Rio Grande Drilling Company, Rio Grande Desert Oil Company, Rio Grande
Offshore, Ltd., and Rio Grande GulfMex, Ltd., Dated January 25, 1999 (together
with the March 4, 1999 modifications and any and all
- --------
(1) References herein to the Debtors shall be deemed to refer to the
Debtors in the above-referenced bankruptcy cases, to the extent the context of
such reference applies to a time period prior to the Effective Date, and shall
be deemed to refer to the Reorganized RGI, to the extent the context of such
reference applies to a time period on or after the Effective Date.
1
<PAGE> 2
modifications and supplements thereto as of the date hereof, the "Plan") under
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"); and
the First Amended Disclosure Statement to First Amended Joint Plan of
Reorganization, Dated January 25, 1999 (the "Disclosure Statement"), having been
filed with and approved by the Court, pursuant to an Order entered January 25,
1999 (the "Disclosure Statement Order"), as containing "adequate information"
pursuant to section 1125 of the Bankruptcy Code; and copies of (a) the Plan
prior to the March 4, 1999 modifications, (b) the Disclosure Statement, (c) the
Disclosure Statement Order (without exhibits), and (d) a Ballot (only for those
"impaired" Creditors(2) entitled to vote on the Plan), having been transmitted
to all Creditors, the United States Trustee, and other parties-in-interest
entitled to receive same pursuant to the Disclosure Statement Order and
applicable law and rules; and copies of the Disclosure Statement Order (with
exhibits) and a certain specially approved "Notice Regarding First Amended Joint
Chapter 11 Plan of Reorganization" having been transmitted to all of the holders
of record of the RGI Common Stock pursuant to the Disclosure Statement Order;
and copies of the Disclosure Statement Order (without exhibits) and a specially
approved "Notice Regarding First Amended Joint Chapter 11 Plan of
Reorganization" having been transmitted to all of the royalty interest and
working interest owners listed in the Debtors' Schedules A or G and to all
parties to executory contracts and unexpired leases as listed on the Debtors'
Schedules A or G pursuant to the Disclosure Statement Order; and the Disclosure
Statement Order having fixed (a) February
- --------
(2) Capitalized terms used in this Order and not otherwise defined
shall have the respective meanings ascribed to such terms in the Plan and/or
Disclosure Statement.
2
<PAGE> 3
22, 1999 at 5:00 p.m., Central Standard Time, as (i) the last date by which any
objections to confirmation of the Plan (the "Objections") were required to be
filed with the Court and received by the Debtors, and (ii) the last date by
which Ballots, if applicable, were required to be received by the Debtors in
order to be considered as acceptances or rejections of the Plan, and (b) March
4, 1999 at 3:30 p.m., Central Standard Time, as the date and time for the
commencement of the hearing pursuant to sections 1128 and 1129 of the Bankruptcy
Code (the "Confirmation Hearing") to consider confirmation of the Plan and any
Objections thereto; and due notice of the Confirmation Hearing and the date by
which Objections must have been filed and served having been given in accordance
with the terms of the Disclosure Statement Order; and the Confirmation Hearing
having been held before the Court commencing on March 4, 1999; and the parties
having appeared for submission of the Findings of Fact and Conclusions of Law
("Findings and Conclusions") and an Order Confirming the First Amended Joint
Plan of Reorganization of Rio Grande, Inc., Rio Grande Drilling Company, Rio
Grande Desert Oil Company, Rio Grande Offshore, Ltd., and Rio Grande GulfMex,
Ltd., Dated January 25, 1999, as Modified March 4, 1999 ("Order") on March 4,
1999; and the Court having considered all Objections which have not been
withdrawn; and upon all consideration of the record of the Confirmation Hearing,
and it having been determined that the requirements for confirmation set forth
in 11 U.S.C. Sec. 1129(a) and (b) have been satisfied:
IT IS ORDERED, ADJUDGED AND DECREED that the Plan, as modified on March
4, 1999, is hereby and in all things confirmed, each of which modifications, by
this Order,
3
<PAGE> 4
are accepted and approved by the Court as a part of the Plan. A copy of the
confirmed Plan is on file in the records of these Chapter 11 Cases; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that, upon entry of this
Order, the Debtors (and specifically any officer of each Debtor) are authorized
and directed to effect all corporate transactions (such as merger transactions
and an amendment to the Certificate of Incorporation of RGI) contemplated by the
Plan and to take all steps necessary and appropriate to implement the terms of
the Plan; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that, upon entry of this
Order, the Retention Agreements will be deemed delivered, to become effective
upon April 1, 1999; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Plan Documents, as
the same may be non-substantively amended hereafter, are, in all things,
approved; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that to the extent
necessary, the Reorganized Debtor will serve as the Disbursing Agent under the
Plan; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the provisions of the
confirmed Plan and this Order bind the Debtors and any Creditor or equity holder
of the Debtors, whether or not the Claim or Interest of such Creditor or equity
holder is impaired under the Plan and whether or not such Creditor or equity
holder has accepted the Plan; and
4
<PAGE> 5
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that except as otherwise
provided in the Plan and this Order, confirmation of the Plan vests all property
of the Estates in the Debtors solely for the purposes set forth in the Plan; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that after confirmation of
the Plan by this Order, all property vested in the Debtors pursuant to this
Order shall be held by the Debtors free and clear of all Claims and Interests of
present or future Creditors and equity holders except as provided for by the
terms and provisions of the Plan and except as provided in this Order; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that except as otherwise
provided in the Plan or the specific provisions of this Order, the entry of this
Order shall:
a. void any judgment at any time obtained, to the extent
that such judgment is a determination of the personal liability of the Debtors
with respect to any debt or Claim discharged hereby;
b. operate as a permanent injunction against the
commencement or continuation of an action, the employment of process, or an act,
to collect, recover or offset any such debt or Claim discharged hereby as a
personal liability of the Debtors;
c. operate as a release and discharge of the Debtors of all
dischargeable debts; and
d. operate as a permanent injunction against the
commencement or continuation of any action or proceeding at law or in equity
relating to any of the Claims described in Section 11.1.A. of the Plan; and
5
<PAGE> 6
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Debtors retain the
right to object to any Claim to the extent that such right is allowed pursuant
to the Plan; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that Administrative Claims
against the Debtors (including requests for reimbursement of fees and expenses)
must be filed no later than thirty (30) calendar days after the entry of this
Order or they shall be deemed to be forever barred and waived; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that all fees chargeable
pursuant to 28 U.S.C. Sec. 1930 shall be timely paid; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Debtors shall
apply for entry of a Final Decree in these Chapter 11 Cases on or before the
expiration of six (6) months from the date of entry of this Order, unless the
entry of a Final Decree would be inappropriate, in which case the Debtors shall
file a Report of Status of Consummation of Confirmation on or before such date,
detailing why entry of a Final Decree should not be entered; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Court shall
retain full jurisdiction of these Chapter 11 Cases until entry of a Final
Decree, at which time the Court shall retain jurisdiction over these Chapter 11
Cases pursuant to the provisions of the Plan; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that pursuant to Bankruptcy
Rule 3020(c), the Debtors shall within five (5) business days after the entry of
this Order serve notice of the entry of this Order as provided in Bankruptcy
Rule 2002(f) to all persons and entities listed on the 2002 service list.
6
<PAGE> 7
DATED this 4th day of March, 1999.
/s/ LEIF M. CLARK
----------------------------------------------
HONORABLE LEIF M. CLARK
UNITED STATES BANKRUPTCY JUDGE
7
<PAGE> 1
Exhibit 2.3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
IN RE: )
)
RIO GRANDE, INC., ) CASE NO. 98-55619-C
RIO GRANDE DRILLING, COMPANY, ) CASE NO. 98-55620-C
RIO GRANDE OFFSHORE, LTD., ) CASE NO. 98-55621-K
RIO GRANDE DESERT OIL COMPANY, ) CASE NO. 98-55622-C
RIO GRANDE GULFMEX, LTD., ) CASE NO. 98-55623-C
)
Debtors. ) Jointly Administered
) Under Case No. 98-55619-C
)
) Chapter 11
FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING ORDER
CONFIRMING FIRST AMENDED JOINT CHAPTER 11 PLAN OF
REORGANIZATION OF RIO GRANDE, INC., RIO GRANDE DRILLING
COMPANY, RIO GRANDE DESERT OIL COMPANY,
RIO GRANDE OFFSHORE, LTD., AND RIO GRANDE GULFMEX, LTD.
DATED JANUARY 25, 1999, AS MODIFIED MARCH 4, 1999
Rio Grande, Inc. ("RGI"), Rio Grande Drilling Company ("RGD"), Rio
Grande Desert Oil Company ("Desert"), Rio Grande Offshore, Ltd. ("Offshore"),
and Rio Grande GulfMex, Ltd. ("GulfMex," and together with RGI, RGD, Desert, and
Offshore, the "Debtors"), as debtors and debtors-in-possession,(1) having filed
with the Court the
- --------
(1) References herein to the Debtors shall be deemed to refer to the Debtors in
the above-referenced bankruptcy cases, to the extent the context of such
reference applies to a time period prior to the Effective Date, and shall be
deemed to refer to the Reorganized RGI, to the extent the context of such
reference applies to a time period on or after the Effective Date.
1
<PAGE> 2
First Amended Joint Plan of Reorganization of Rio Grande, Inc., Rio Grande
Drilling Company, Rio Grande Desert Oil Company, Rio Grande Offshore, Ltd., and
Rio Grande GulfMex, Ltd., Dated January 25, 1999 (together with the March 4,
1999 modifications and any and all modifications and supplements thereto as of
the date hereof, the "Plan") under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code"); and the First Amended Disclosure Statement to
First Amended Joint Plan of Reorganization, Dated January 25, 1999 (the
"Disclosure Statement"), having been filed with and approved by the Court,
pursuant to an Order entered January 25, 1999 (the "Disclosure Statement
Order"), as containing "adequate information" pursuant to section 1125 of the
Bankruptcy Code; and copies of (a) the Plan [prior to the March 4, 1999
modifications], (b) the Disclosure Statement, (c) the Disclosure Statement Order
(without exhibits), and (d) a Ballot (only for those "impaired" Creditors(2)
entitled to vote on the Plan), having been transmitted to all Creditors, the
United States Trustee, and other parties-in-interest entitled to receive same
pursuant to the Disclosure Statement Order and applicable law and rules; and
copies of the Disclosure Statement Order (with exhibits) and a certain specially
approved "Notice Regarding First Amended Joint Chapter 11 Plan of
Reorganization" having been transmitted to all of the holders of record of the
RGI Common Stock pursuant
- --------
(2) Capitalized terms used in these Findings and Conclusions and not otherwise
defined shall have the respective meanings ascribed to such terms in the Plan
and/or Disclosure Statement.
2
<PAGE> 3
to the Disclosure Statement Order; and copies of the Disclosure Statement Order
(without exhibits) and a specially approved "Notice Regarding First Amended
Joint Chapter 11 Plan of Reorganization" having been transmitted to all of the
royalty interest and working interest owners listed in the Debtors' Schedules A
or G and to all parties to executory contracts and unexpired leases as listed on
the Debtors' Schedules A or G pursuant to the Disclosure Statement Order; and
the Disclosure Statement Order having fixed (a) February 22, 1999 at 5:00 p.m.,
Central Standard Time, as (i) the last date by which any objections to
confirmation of the Plan (the "Objections") were required to be filed with the
Court and received by the Debtors, and (ii) the last date by which Ballots, if
applicable, were required to be received by the Debtors in order to be
considered as acceptances or rejections of the Plan, and (b) March 4, 1999 at
3:30 p.m., Central Standard Time, as the date and time for the commencement of
the hearing pursuant to sections 1128 and 1129 of the Bankruptcy Code (the
"Confirmation Hearing") to consider confirmation of the Plan and any Objections
thereto; and due notice of the Confirmation Hearing and the date by which
Objections must have been filed and served having been given in accordance with
the terms of the Disclosure Statement Order; and the Confirmation Hearing
having been held before the Court commencing on March 4, 1999; and the parties
having appeared for submission of the Findings of Fact and Conclusions of Law
("Findings and Conclusions") and an Order Confirming the First Amended Joint
Plan of Reorganization of Rio Grande,
3
<PAGE> 4
Inc., Rio Grande Drilling Company, Rio Grande Desert Oil Company, Rio Grande
Offshore, Ltd., and Rio Grande GulfMex, Ltd., Dated January 25, 1999, as
Modified March 4, 1999 ("Order") on March 4, 1999; and the Court having
considered all Objections which have not been withdrawn; and upon all
consideration of the record of the Confirmation Hearing, the Court makes the
following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT
1. On November 12, 1998 (the "Petition Date"), each of the Debtors
filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code.
On the same date, this Court entered orders directing the joint administration
of all of the Chapter 11 Cases under Case No. 98-55619-C, In re Rio Grande, Inc.
Since the Petition Date, the Debtors have continued to operate their businesses
and manage their assets as debtors-in-possession pursuant to sections 1107 and
1108 of the Bankruptcy Code.
4
<PAGE> 5
2. RGI is a Delaware corporation. RGI and its subsidiaries or
affiliates, RGD, Desert, Offshore and GulfMex, are in the business of acquiring,
producing, selling and developing oil and gas properties and businesses relating
to the foregoing, including exploring for, producing, transporting, marketing
and selling oil, natural gas and related hydrocarbons. RGI owns 100% of the
stock of RGD (a Texas corporation). RGD owns 100% of the stock of Desert (a
Nevada corporation). GulfMex is a Texas limited partnership owned 80% by
Offshore, as general partner, and 20% by three non-debtor limited partners.
Offshore is also a Texas limited partnership owned 98.75% by Desert, as limited
partner, and 1.25% by RGD, as general partner.
3. On November 2, 1998, (a) the Debtors, (b) EXCO Resources, Inc.
("EXCO"), the major secured creditor of the Debtors who bought its claims and
rights against the Debtors from Comerica Bank-Texas in a prepetition
transaction, and (c) Koch Exploration Company ("Koch"), the preferred
shareholder of RGI, entered into the Voting Agreement, a copy of which was
attached to the Plan as Exhibit "1." The Voting Agreement contemplated a
Financial Restructuring (therein so called) of the Debtors, through a Chapter 11
reorganization plan, and pursuant to certain terms and conditions that were set
forth in the Voting Agreement.
4. In accordance with the Voting Agreement, on December 11, 1998, the
Debtors filed the Joint Plan of Reorganization of Rio Grande, Inc., Rio Grande
Drilling
5
<PAGE> 6
Company, Rio Grande Desert Oil Company, Rio Grande Offshore, Ltd., and Rio
Grande GulfMex, Ltd., and an accompanying Disclosure Statement, which plan and
disclosure statement were thereafter amended on January 25, 1999, and the plan
subsequently amended on March 4, 1999.
5. The Plan provides for the merger on the Effective Date, without
further action or consent under applicable State law of any shareholders,
partners or Board of Directors of any merging entity of RGD, Desert and Offshore
with and into RGI and further provides that, upon such merger, the Reorganized
RGI will own and have the right to dispose of all of the assets of RGI, RGD,
Desert, and Offshore, including the 80% general partnership interest of GulfMex,
that currently belongs to Offshore. Any officer of each Debtor shall be
authorized to take such actions and execute such instruments necessary to
complete the above-described mergers.
6. The Plan provides, with regard to all Allowed Claims except for
those of EXCO, Koch and intercompany Claims, for their payment (a) in Cash, in
full, on the later of (i) the Effective Date (which date is defined as the first
Business Day after which the Confirmation Order becomes a Final Order) or (ii)
eleven (11) days after the date any Claim becomes an Allowed Claim, or (b) on
such other terms as are acceptable to the holder of any Claim, in full
satisfaction of the Claims.
6
<PAGE> 7
7. With regard to Priority Tax Claims, the Plan provides that the
Debtors have the option (in accordance with section 1129(a)(9)(C) of the
Bankruptcy Code) to issue any holder of any such Claim a promissory note in the
amount of such Claim, the principal of which shall be paid in full on a date six
(6) years after the date of assessment of such Claim, with interest payable
semiannually at the rate of 5%.
8. With regard to EXCO, the Plan provides for it to have an Allowed
Secured Claim in the amount of $13,127,666.06, plus its prepetition interest,
and for it to be satisfied in full by delivery, on the Effective Date, of all of
the new common stock of the Reorganized RGI, constituting 100% of the equity
ownership of Reorganized RGI free and clear of all liens, claims and
encumbrances.
9. With regard to Koch, the Plan provides for its Preferred Stock
Interests (as well as all rights and dividends associated therewith) to be
canceled and retired and for Koch to receive as its sole consideration under the
Plan an option to acquire up to 24.5% of the working interest owned by the RGI
Group in the Righthand Creek Properties in exchange for $698,250.00 from Koch
(with such option price to be adjusted downward proportionately if Koch should
choose to acquire less than 24.5%).
10. With regard to intercompany Claims, the Plan provides that they
shall receive no consideration and shall be deemed discharged in full.
7
<PAGE> 8
11. With regard to the Limited Partnership Interests in GulfMex, the
Plan provides that if any Limited Partnership Interest holder contributes
capital in the form of Cash in an amount equal to his pro rata share of 20% of
the prepetition Claims against GulfMex, then such Interest holder will retain
his Interests in GulfMex and his Limited Partnership Interests will be deemed
unaltered. However, if any Interest holder chooses not to make such a capital
contribution, then his Limited Partnership Interests will be canceled as of the
Effective Date.
12. The Plan provides for the cancellation and retirement, as of the
Effective Date, of the existing Common Stock of RGI (and any and all rights or
Claims associated therewith), and the holders of such Common Stock will receive
no distribution or consideration of any kind on account of their Common Stock
Interests in RGI.
13. The classifications and treatments for Claims are set forth in
Articles II, III and V of the Plan, and the Plan implementation procedures are
set forth in Article VII of the Plan, and the same comply with the applicable
provisions of the Bankruptcy Code and Rules, including sections 1122, 1123, and
1129, and are reasonable and appropriate.
14. The Plan, as required by section 1123 of the Bankruptcy Code:
a. designates, subject to section 1122, classes of Claims,
other than Claims of a kind specified in section 507(1)(1), 507(a)(2) or
507(a)(8), and classes of Interests;
8
<PAGE> 9
b. specifies every class of Claims or Interests that is not
impaired under the Plan;
c. specifies the treatment of any class of Claims or Interests
that is impaired under the Plan;
d. provides the same treatment for each Claim or Interest of a
particular class, unless the holder of a particular Claim or Interest agrees to
a less favorable treatment of such particular Claim or Interest;
e. provides adequate means for the Plan's implementation;
f. provides that the Reorganized Debtor's charter shall include
a provision prohibiting the issuance of nonvoting equity securities; and
g. contains only provisions that are consistent with the
interests of Creditors and equity security holders and with public policy with
respect to the manner of selection of any officer, director, or trustee under
the Plan and any successor to such officer, director, or trustee.
15. The Plan complies with the applicable provisions of Title 11, and
the Debtors have complied with the applicable provisions of Chapter 11, as
required by sections 1129(a)(1) and (2) of the Bankruptcy Code.
16. The Plan has been proposed in good faith and not by any means
forbidden by law as required by section 1129(a)(3) of the Bankruptcy Code.
9
<PAGE> 10
17. Any payment made or to be made by the Debtors, for services or for
costs and expenses in or in connection with the Case, or in connection with the
Plan and incident to the Case, has been approved by, or is subject to the
approval of the Court as reasonable, as required by section 1129(a)(4) of the
Bankruptcy Code.
18. As required by section 1129(a)(5) of the Bankruptcy Code, the
Debtors have disclosed (in their "Plan Documents," as defined in the Plan) the
identity and affiliations of the individuals proposed to serve, after
confirmation of the Plan, as the directors and officers of the Reorganized
Debtors, and the continuance of these individuals in such capacities is
consistent with the interests of Creditors and equity security holder and with
public policy. Additionally, the Debtors have disclosed the identity of any
insider that will be employed or retained by the Reorganized Debtor, and the
nature of any compensation for such insider (in Exhibits "2" and "3" to the
Plan).
19. The Plan does not provide for a "rate change" as contemplated by
section 1129(a)(6) of the Bankruptcy Code.
20. As required by section 1129(a)(7), with respect to each "impaired"
Class of Claims or Interests, each holder of a Claim or Interest of such Class
has either accepted the Plan or will receive or retain under the Plan, on
account of such Claim or Interest, property of a value, as of the Effective
Date, that is not less than the amount such holder would so receive or retain if
the Debtors were liquidated in Chapter 7. First, Classes 1, 5
10
<PAGE> 11
and 6 are "impaired" and all holders of Claims in those Classes that voted,
voted to accept the Plan. Second, Classes 2, 3 and 4 are not "impaired," so
section 1129(a)(7) does not apply. Finally, Classes 7 (Common Stock Interests in
RGI) and 8 (intercompany Claims) are "impaired" and are deemed to reject the
Plan, pursuant to section 1126(g) (and thus were not solicited), since they are
receiving no consideration under the Plan, but these Classes would receive no
consideration in a Chapter 7 liquidation since there would be insufficient
assets in these cases to even pay general unsecured creditors in full.
Therefore, the provisions of section 1129(a)(7) are met with regard to the Plan.
21. The Plan, together with all modifications and amendments thereto,
has been accepted by all Creditors who were entitled to vote pursuant to section
1126 and no further acceptance or solicitation is required. The vote with
respect to the Plan was set forth in the confirmation exhibits and is
incorporated and adopted herein by reference.
22. The Plan complies with section 1129(a)(9) of the Bankruptcy Code
since the holders of the type Claims specified in that section will receive cash
in the allowed amounts of their Claims on the Effective Date, unless a holder
agrees to different treatment.
23. The Plan does not comply with section 1129(a)(8) of the Bankruptcy
Code since not every impaired class of Creditors or Interest holders has
accepted the Plan (Classes 7 and 8 are deemed to reject, under section 1126(g),
since not receiving or
11
<PAGE> 12
retaining any property). However, the Plan complies with section 1129(a)(10) of
the Bankruptcy Code since at least one Class of Claims that is impaired under
the Plan has accepted the Plan, determined without including any acceptance of
the Plan by any insider.
24. The Court finds that the Plan is feasible. Confirmation and
consummation of the Plan is not likely to be followed by the liquidation, or the
need for further financial reorganization, of the Debtors or any successor of
the Debtors under the Plan, and accordingly, the Plan complies with section
1129(a)(11) of the Bankruptcy Code. The structure of the Plan and mechanisms for
implementation of the Plan are reasonable and appropriate.
25. All fees payable to date under 28 U.S.C. Section 1930 have been
paid, and the Plan provides for the payment of all such fees in accordance with
Public Law 104-99, in compliance with section 1129(a)(12) of the Bankruptcy
Code. In response to the Objection filed by the U.S. Trustee, the Debtors have
proposed a Plan modification to Section 12.5 of the Plan that would read as
follows: "The Debtors (or Reorganized RGI) shall pay U.S. Trustee quarterly
fees owed on or before the Effective Date. 11 U.S.C. Sec. 1129(a)(12). After
confirmation, the Debtors or Reorganized RGI shall timely pay post-confirmation
U.S. Trustee quarterly fees to the U.S. Trustee until a final decree is entered
or the case is converted or dismissed. 28 U.S.C. Sec. 1930(a)(6). The Debtors
or Reorganized RGI
12
<PAGE> 13
shall file with the Court and serve on the U.S. Trustee quarterly financial
reports in a format prescribed by the U.S. Trustee until the case is closed."
This modification is reasonable and appropriate and the Plan shall be deemed so
modified.
26. Section 1129(a)(13) of the Bankruptcy Code is not applicable to the
Plan as there are no retiree benefits at issue with respect to the Debtor.
27. The Plan does not discriminate unfairly, and is fair and equitable,
with respect to each Class of Claims or Interest that is impaired under, and has
not accepted, the Plan (that is, Classes 7 and 8).
28. The Debtors have complied with all solicitation requirements of the
Disclosure Statement Order and the Court finds that solicitation in connection
with the Plan (as set forth in the introductory paragraph of these Findings and
Conclusions) was fair and appropriate and in accordance with the Bankruptcy Code
and the Bankruptcy Rules.
29. The Plan provides for the assumption by the Debtors of various
executory contracts and leases and the rejection of certain others. The Debtors'
assumption and/or rejection, as the case may be, of the executory contracts and
leases, in the context of the Plan taken as a whole, reflects the Debtors' sound
business judgment and is reasonable and in the best interests of the estates.
30. The Limitations of Liability set forth in Section 11.1A. of the
Plan are reasonable and appropriate as to the "Exculpated Persons" named in that
Section.
13
<PAGE> 14
However, the "Release Provisions" set forth in Section 11.1.B. of the Plan, as
to which the United States Trustee has filed an Objection, are, by agreement of
the parties to the Voting Agreement, stricken in their entirety (as are any
cross-references in the Plan to Section 11.1.B). Section 11.1.C is amended to
read "The Confirmation Order shall contain a permanent injunction to effectuate
the limitations of liability granted in Sections 11.1(A) of the Plan." With
these modifications, the Objection of the United States Trustee thereto is
sustained and the Plan shall be deemed so modified and such modification is
reasonable.
31. In response to the Objection filed by certain taxing authorities,
the Debtors have proposed a Plan modification to Article XI of the Plan that
would read as follows: "Notwithstanding any other provision of the Plan, any
Claim of any taxing authority in respect of 1999 ad valorem taxes (which taxes
will not be assessed or due until after the anticipated Effective Date of the
Plan) shall not be considered discharged or otherwise dealt with under the Plan,
and the bar date for Administrative Claims, set forth herein, shall be
inapplicable to the enforceability of any such Claim. Moreover, any otherwise
enforceable tax lien securing any Claim of any taxing authority in respect of
1999 ad valorem taxes shall not be considered released or otherwise dealt with
by the Plan, notwithstanding the language of Section 7.10 of the Plan." This
modification is reasonable and appropriate and the Plan shall be deemed so
modified.
14
<PAGE> 15
32. All securities to be issued by the Reorganized RGI pursuant to the
Plan are being issued in exchange for Claims against or Interest in the Debtors,
as contemplated by section 1145 of the Bankruptcy Code.
33. EXCO and Koch have stipulated that all documentation relating to
the Financial Restructuring are in a form and substance reasonably satisfactory
to EXCO and Koch and consistent with the terms of Exhibit "A" to the Voting
Agreement.
34. An Agreement Termination Event has not occurred.
35. The Plan provides that the Certificate of Incorporation of the
Reorganized RGI shall be amended to prohibit the issuance by Reorganized RGI of
non-voting capital stock as required by section 1123(a)(6) of the Bankruptcy
Code. The Certificate of Incorporation of Reorganized RGI shall also be amended
as necessary to implement the Plan, including the cancellation and retirement of
all capital stock then issued or outstanding. Such amendment shall be executed
and filed by any officer of Reorganized RGI without further action of the
stockholders or board of directors.
36. To the extent that any provision designated herein as a Finding of
Fact is more properly characterized as a Conclusion of Law, it is adopted as
such.
CONCLUSIONS OF LAW
A. This is a core proceeding within the meaning of 28 U.S.C. Section
157(b)(2)(L). This matter arises under title 11, and jurisdiction is vested in
this Court to enter a final
15
<PAGE> 16
order by virtue of 28 U.S.C. Section 1334(a) and (b), 28 U.S.C. Sections 151,
157(a) and (b)(1) and the Standing Order of Reference in this District. These
Findings of Fact and Conclusions of Law are being entered under Bankruptcy Rules
7052 and 9014.
B. The information contained in the Disclosure Statement and presented
at the Confirmation Hearing, along with the record in this Case, are sufficient
to enable parties in interest and the Court to make an informed judgment that
the Plan is feasible, is fair and equitable and does not discriminate unfairly
with regard to nonaccepting, impaired Classes, is in the best interest of all
parties in interest, and should be approved.
C. The Plan complies with the applicable provisions of the Bankruptcy
Code, as required by section 1129(a)(1) thereof, including sections 1122, 1123,
and all of the applicable provisions of section 1129(a), and should be approved.
D. The Debtors, as proponents of the Plan, have complied with the
applicable provisions of the Bankruptcy Code as required by section 1129(a)(2)
thereof.
E. Notice and distribution of the Plan and Disclosure Statement were
appropriate under all the circumstances and complied with the applicable
provisions of the Bankruptcy Code and the Bankruptcy Rules. The opportunity for
a hearing on these matters was full and adequate.
F. In accordance with section 1141 of the Bankruptcy Code, (a) the Plan
and each of its provisions, (b) all documents executed in connection with and
pursuant to the
16
<PAGE> 17
terms of the Plan, and (c) the Confirmation Order, shall be binding upon the
Debtors, each Person or entity acquiring or receiving property under the Plan,
each lessor or lessee of property to or from the Debtors, each holder of a Claim
against or equity Interest in the Debtors, whether or not the Claim or equity
Interest of such Creditor or equity Interest holder is impaired under the Plan
and whether or not such Creditor or equity Interest holder has filed, or is
deemed to have filed, a proof of Claim or equity Interest, and each party to
this Case, and irrespective of whether such provision of the Plan is
specifically mentioned or otherwise referred to in these Findings and
Conclusions or the Confirmation Order.
G. In accordance with section 1141 of the Bankruptcy Code, the
consideration distributed under the Plan shall be in exchange for and in
complete satisfaction, discharge, release, and termination of, all Claims of any
nature whatsoever against the Debtors or any of their assets; and, except as
otherwise provided herein or in the Plan, or the instruments or other documents
executed in connection with the Plan (and except with respect to obligations
which the Debtors are required to perform under the Plan), the Debtors shall be
discharged and released pursuant to section 1141(d)(1)(A) of the Bankruptcy Code
from any and all debts of the kind specified in section 502(g), 502(h) or 502(i)
of the Bankruptcy Code, whether or not (a) a proof of Claim based upon such debt
is filed or deemed filed under section 501 of the Bankruptcy Code; (b) a Claim
based upon
17
<PAGE> 18
such debt is allowed under section 502 of the Bankruptcy Code; or (c) the holder
of a Claim based upon such debt has accepted the Plan. The Confirmation Order
shall be a judicial determination, effective upon the occurrence of the
Effective Date, of discharge and termination of all liabilities of and all
Claims against the Debtors, except as expressly set forth, or provided for, in
the Plan, the instruments and other documents executed in connection with the
Plan, and the Confirmation Order. Every holder of any discharged debt or Claim
is permanently enjoined and precluded from asserting against the Debtors, the
Reorganized Debtor, or against their assets or properties, any other or further
Claim based upon any document, instrument or act, omission, transaction or other
activity of any kind or nature that occurred prior to the Effective Date, except
as expressly set forth, or provided for, in the Plan, the instruments and other
documents executed in connection with the Plan, and the Confirmation Order.
H. In accordance with section 524 of the Bankruptcy Code, the
Confirmation Order:
1. voids any judgment at any time obtained, to the extent that
such judgment is a determination of the personal liability of the Debtors with
respect to any debt or Claim discharged hereby; and
18
<PAGE> 19
2. operates as a permanent injunction against the commencement
or continuation of an action, the employment of process, or an act, to collect,
recover or offset any such debt or Claim discharged hereby as a personal
liability of the Debtors.
I. The Confirmation Order operates as a permanent injunction against
the commencement or continuation of, and the Reorganized Debtor shall be
permanently released and discharged from, any action or proceeding at law or in
equity (including without limitation any action or proceeding seeking
indemnification or contribution) including Claims related to or arising in the
Bankruptcy Case through the Effective Date.
J. The Confirmation Order operates as a permanent injunction against
the commencement or continuation of any action or proceeding at law or in equity
relating to any of the Claims described in Section 11.1.A. of the Plan.
K. Pursuant to sections 1123(a) and 1142(a) of the Bankruptcy Code, the
provisions of the Confirmation Order, the Plan, and all other instruments and
other documents executed and delivered pursuant to the Plan shall apply and be
enforceable notwithstanding any otherwise applicable nonbankruptcy law.
L. The Reorganized Debtor shall have the right, to the full extent
permitted by section 1142 of the Bankruptcy Code, to apply to this Court for an
order, notwithstanding any otherwise applicable nonbankruptcy law, directing any
appropriate entity to execute
19
<PAGE> 20
and deliver an instrument or perform any other act necessary to implement the
Plan or the provisions of the Confirmation Order.
M. Except as otherwise provided in the Plan or any other instrument or
document entered into in connection with the Plan, on and after the Effective
Date, in accordance with section 1123(b) of the Bankruptcy Code, the Reorganized
Debtor shall retain and may enforce any claims, rights and causes of action that
the Debtors or the Estates may hold against any entity, including, without
limitation, any claims, rights or causes of action arising under sections 544
through 551 or other sections of the Bankruptcy Code or any similar provisions
of state law, or any other statute or legal theory. The Reorganized Debtor or
its designee may pursue those rights of action, as appropriate, in accordance
with what is in the best interest of the Reorganized Debtor. No claims of the
Debtors against any Person or entity shall be discharged, released or
compromised pursuant to the Plan or the Confirmation Order except to the extent
provided for in the Plan and all other instruments and documents executed and
delivered pursuant to the Plan.
N. The Plan, as modified, and which modifications are reflected in
Findings of Fact Nos. 25, 30, and 31 herein, and all provisions thereof, are
hereby confirmed in all respects. The modifications to the Plan referred to
hereinabove comply with section 1127 of the Bankruptcy Code.
20
<PAGE> 21
O. To the extent any Objections have not been resolved or withdrawn
prior to entry of the Confirmation Order or are not cured by the relief granted
therein, all such Objections are overruled. All withdrawn Objections are deemed
withdrawn with prejudice.
P. Notwithstanding the entry of the Confirmation Order or the
occurrence of the Effective Date, this Court shall retain jurisdiction as is set
forth in Article XII of the Plan.
Q. The Confirmation Order shall be effective according to its terms
upon the entry thereof. The Confirmation Order is a final Order immediately
subject to appeal.
R. The Court's oral Conclusions of Law on the record at the
Confirmation Hearing are incorporated herein by reference.
S. The record of the Confirmation Hearing is closed.
T. To the extent that any provision designated herein as a Conclusion
of Law is more properly characterized as a Finding of Fact, it is adopted as
such.
DATED this 4th day of March, 1999.
/s/ LEIF M. CLARK
----------------------------------------
HONORABLE LEIF M. CLARK
UNITED STATES BANKRUPTCY JUDGE
21
<PAGE> 1
EXHIBIT 99.2
[RIO GRANDE LETTERHEAD]
VIA ALAMO HOT SHOT
COURIER SERVICE
March 8, 1999
Mr. Jim Mullin
U.S. Department of Justice
Western District of Texas
615 East Houston, Room 533
San Antonio, Texas 78205
REFERENCE: Case Number: 98-55619, 55620, 55621, 55622, 55623
Monthly Operating Report Summary
Dear Jim:
Enclosed please find the copies of the above referenced individual company
Monthly Operating Report Summary. Under separate cover, the original MOR's have
been sent to Cox & Smith today for filing with the Court.
If you have any questions or need any additional information, please do
not hesitate to call me.
Sincerely,
RIO GRANDE, INC.
/s/ GARY SCHEELE
Gary Scheele
Vice President & CFO
GS/elg
cc: Deborah Williamson (via Alamo Hot Shot)
Cox & Smith
112 E. Pecan, Suite 1800
San Antonio, Texas 78205
WP\GS\MULLIN
<PAGE> 2
MOR-1 UNITED STATES BANKRUPTCY COURT
CASE NAME: RIO GRANDE, INC. PETITION DATE: 11/12/98
------------------ ---------------
CASE NUMBER: 98-55619-C DISTRICT OF TEXAS: Western
------------------ ---------------
PROPOSED PLAN DATE: DIVISION: San Antonio
------------- ---------------
<TABLE>
<CAPTION>
MONTHLY OPERATING REPORT SUMMARY FOR MONTH CONSOLIDATED YEAR
------------------------------------------ ------------ ----
MONTH November 1998 December 1998 January 1999
----- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-6) 313,288.85 387,800.69 324,703.20 0.00 0.00
---------- ---------- ---------- ---- ----
INCOME BEFORE INT; DEPREC./TAX (MOR-6) 44,793.12 213,698.05 100,697.10 0.00 0.00
---------- ---------- ---------- ---- ----
NET INCOME (LOSS) (MOR-6) (29,161.34) 90,982.05 (31,035.09) 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO INSIDERS (MOR-9) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO PROFESSIONALS (MOR-9) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
TOTAL DISBURSEMENTS (MOR-8) 0.00 0.00 0.00 0.00 0.00
========== ========== ========== ==== ====
</TABLE>
*** The original of this document must be filed with the United States
Bankruptcy Court and a copy must be sent to the United States Trustee***
<TABLE>
<CAPTION>
REQUIRED INSURANCE MAINTAINED
AS OF SIGNATURE DATE EXP.
DATE
- ----------------------------- ---------
<S> <C> <C>
CASUALTY YES [X] NO [ ] 05-01-99
LIABILITY YES [X] NO [ ] 05-01-99
VEHICLE YES [X] NO [ ] 05-01-99
WORKER'S YES [X] NO [ ] 05-01-99
EXCESS YES [X] NO [ ] 05-01-99
</TABLE>
<TABLE>
<CAPTION>
CIRCLE ONE
<S> <C>
Are all accounts receivable being collected within terms? Yes [X] No [ ]
Are all post-petition liabilities, including taxes, being paid within terms? Yes [X] No [ ]
Have any pre-petition liabilities been paid? Yes [X] No [ ]
If so, describe _________________________________________________________
Are all funds received being deposited into DIP bank accounts? Yes [X] No [ ]
Were any assets disposed of outside the normal course of business? Yes [ ] No [X]
If so, describe _________________________________________________________
Are all U.S. Trustee Quarterly Fee Payments current? Yes [X} No [ ]
What is the status of your Plan of Reorganization? Filed Plan - December 11, 1998
------------------------------
</TABLE>
ATTORNEY NAME: DEBORAH D. WILLIAMSON
-----------------------------
FIRM NAME: COX & SMITH INCORPORATED
-----------------------------
ADDRESS: 112 EAST PECAN STREET
-----------------------------
SUITE 1800
-----------------------------
CITY, STATE, ZIP: SAN ANTONIO, TEXAS 78205
-----------------------------
TELEPHONE: (210)554-5500
-----------------------------
I certify under penalty of perjury that the following complete
Monthly Operating Report (MOR), consisting of MOR-1 through
MOR-9 plus attachment, is true and correct.
SIGNED X /s/ GARY SCHEELE TITLE: Vice President
-------------------- -------------------
(ORIGINAL SIGNATURE)
Gary Scheele 03/04/99
- ------------------------- ------------
(PRINT NAME OF SIGNATORY) DATE
MOR-1
Revised 07/01/98
<PAGE> 3
CASE NAME: RIO GRANDE, INC.
----------------------
CASE NUMBER: 98-55619-C
-------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
ASSETS CONSL. TO 10QSB- -------------- -------------- -------------
CONSOLIDATED 10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
- ------------------------------- -------------- -------------- -------------- -------------- ----- -----
CURRENT ASSETS
Cash 433,711.27 521,725.78 469,759.18 563,901.61
-------------- -------------- -------------- -------------- ----- -----
Accounts Receivable, Net 500,362.87 540,594.62 706,256.01 597,462.29
-------------- -------------- -------------- -------------- ----- -----
Inventory: Lower of Cost
or Market 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
Prepaid Expenses 49,504.79 48,664.63 48,070.52 47,331.86
-------------- -------------- -------------- -------------- ----- -----
Investments 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
Other 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
TOTAL CURRENT ASSETS 983,578.93 1,110,985.03 1,224,085.71 1,208,695.76 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
PROPERTY, PLANT & EQUIP.
@ COST 27,371,508.56 27,133,246.28 27,135,793.53 27,158,193.85
-------------- -------------- -------------- -------------- ----- -----
Less Accumulated Depreciation 19,124,111.61 18,994,431.87 19,104,659.75 19,214,887.63
-------------- -------------- -------------- -------------- ----- -----
NET BOOK VALUE OF PP & E 8,247,396.95 8,138,814.41 8,031,133.78 7,943,306.22 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
OTHER ASSETS
1. Tax Deposits
-------------- -------------- -------------- -------------- ----- -----
2. Investments in Subsidiaries
-------------- -------------- -------------- -------------- ----- -----
3. Platform Abandonment Fund-
(Gulfmex) 360,857.03 363,678.08 363,678.08 363,678.08
-------------- -------------- -------------- -------------- ----- -----
4. Deferred Loan and Organi-
zation Costs 393,048.09 386,038.50 379,028.91 371,619.32
-------------- -------------- -------------- -------------- ----- -----
TOTAL ASSETS $ 9,984,881.00 $ 9,999,516.02 $ 9,997,926.48 $ 9,887,299.38 $0.00 $0.00
============== ============== ============== ============== ===== =====
</TABLE>
* Per Schedules and Statement of Affairs
MOR-2 Revised 07/01/98
<PAGE> 4
CASE NAME: RIO GRANDE, INC.
----------------
CASE NUMBER: 98-55619-C
----------------
CONSOLIDATED
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
CONSL. TO --------------- --------------- ---------------
LIABILITIES & OWNER'S EQUITY 10QSB-10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
- ---------------------------- ---------------- --------------- --------------- --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
---------------- --------------- --------------- --------------- ------ ------
POST-PETITION LIABILITIES(MOR-4) 434,246.00 341,674.41 262,082.40
---------------- --------------- --------------- --------------- ------ ------
PRE-PETITION LIABILITIES
Notes Payable - Secured
---------------- --------------- --------------- --------------- ------ ------
Priority Debt 13,141,806.63 13,141,248.14 13,141,248.14 13,141,248.14
---------------- --------------- --------------- --------------- ------ ------
Federal Income Tax
---------------- --------------- --------------- --------------- ------ ------
FICA/Withholding
---------------- --------------- --------------- --------------- ------ ------
Dividends Payable 304,055.00 304,055.00 304,055.00 304,055.00
---------------- --------------- --------------- --------------- ------ ------
Other - Trade, Royalty 1,368,283.51 965,131.36 965,131.36 965,131.36
---------------- --------------- --------------- --------------- ------ ------
Deferred Abandonment Expense 526,343.99 526,343.99 526,343.99 526,343.99
---------------- --------------- --------------- --------------- ------ ------
Advance - Affiliates 0.00 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
Minority interest - Limited Partners 157,334.14 157,334.14 157,334.14 157,334.14
---------------- --------------- --------------- --------------- ------ ------
TOTAL PRE-PETITION LIABILITIES 15,497,823.27 15,094,112.63 15,094,112.63 15,094,112.63 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES 15,497,823.27 15,528,358.63 15,435,787.04 15,356,195.03 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
OWNER'S EQUITY (DEFICIT)
PREFERRED STOCK 11,225,396.00 11,238,657.00 11,238,657.00 11,238,657.00
---------------- --------------- --------------- --------------- ------ ------
COMMON STOCK 61,774.34 61,774.34 61,774.34 61,774.34
---------------- --------------- --------------- --------------- ------ ------
ADDITIONAL PAID-IN CAPITAL 0.00 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Filing Date (16,800,112.61) (16,800,112.61) (16,800,112.61) (16,800,112.61)
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Post Filing Date 0.00 (29,161.34) 61,820.71 30,785.62
---------------- --------------- --------------- --------------- ------ ------
TOTAL OWNER'S EQUITY (NET WORTH) (5,512,942.27) (5,528,842.61) (5,437,860.56) (5,468,895.65) 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES & OWNER'S EQUITY $ 9,984,881.00 $ 9,999,516.02 $ 9,997,926.48 $ 9,887,299.38 $ 0.00 $ 0.00
================ =============== =============== =============== ====== ======
* Per Schedules and Statement of Affairs
</TABLE>
MOR-3
REVISED 07/01/98
<PAGE> 5
CASE NAME: RIO GRANDE, INC.
-----------------------
CASE NUMBER: 98-55619-C
---------------------
SCHEDULE OF POST-PETITION LIABILITIES
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH
NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
TRADE ACCOUNTS PAYABLE CONSOLIDATED 243,726.12 163,863.55 129,718.13
----------- ----------- ----------- ----------- -----------
TAX PAYABLE
Federal Payroll Taxes 497.53 44.57 44.57
----------- ----------- ----------- ----------- -----------
State Payroll Taxes 795.21 871.15 761.03
----------- ----------- ----------- ----------- -----------
Ad Valorem Taxes 4,000.00 8,000.00 12,000.00
----------- ----------- ----------- ----------- -----------
Other Taxes-State Franchise/Income 21,947.55 22,747.43 23,476.46
----------- ----------- ----------- ----------- -----------
TOTAL TAXES PAYABLE 27,240.29 31,663.15 36,282.06 0.00 0.00
----------- ----------- ----------- ----------- -----------
SECURED DEBT POST-PETITION (558.49) (1,116.98) (1,116.98)
----------- ----------- ----------- ----------- -----------
ACCRUED INTEREST PAYABLE 58,363.98 58,265.28 58,265.28
----------- ----------- ----------- ----------- -----------
ACCRUED DIVIDENDS PAYABLE 21,322.80 21,322.80 0.00
----------- ----------- ----------- ----------- -----------
ACCRUED PROFESSIONAL FEES* 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
OTHER ACCRUED LIABILITIES
1. Royalties 74,885.20 63,006.91 32,308.55
----------- ----------- ----------- ----------- -----------
2. Payroll 3,976.72 0.00 0.00
----------- ----------- ----------- ----------- -----------
3. Insurance (3,692.10) (11,147.49) (13,572.88)
----------- ----------- ----------- ----------- -----------
4. Deferred Abandonment Expense 1,459.31 5,159.31 8,859.31
----------- ----------- ----------- ----------- -----------
5. Minority Interest-Limited Partners 5,335.67 5,111.55 10,070.37
----------- ----------- ----------- ----------- -----------
6. Miscellaneous 2,186.50 5,546.33 1,268.56
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
TOTAL POST-PETITION LIABILITIES (MOR-3) $434,246.00 $341,674.41 $262,082.40 $ 0.00 $ 0.00
=========== =========== =========== =========== ===========
</TABLE>
* PAYMENT REQUIRES COURT APPROVAL
MOR-4
<PAGE> 6
<TABLE>
<S> <C>
$418,150.61 $333,305.99
$418,150.61 $332,134.82
$ 0.00 $ 1,171.17
</TABLE>
<PAGE> 7
CASE NAME: RIO GRANDE, INC.
----------------
CASE NUMBER: 98-55619-C
----------------
<TABLE>
<CAPTION>
AGING OF POST-PETITION LIABILITIES
------------ ------------ -------------
CONSOLIDATED MONTH JANUARY 1999 CONSOLIDATED
------------ ------------ -------------
TRADE FEDERAL STATE ADVALOREM, ADVANCES/ACCOUNTS ROYALTIES AND
DAYS TOTAL ACCOUNTS TAXES TAXES OTHER TAXES PAYABLE TO AFFILIATES REVENUE SUSPENSE OTHER
- -------- ------------ ----------- ------- -------- ----------- --------------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 248,095.26 129,718.13 44.57 761.03 27,476.46 0.00 32,308.55 57,786.52
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
31-60 9,987.14 0.00 0.00 0.00 4,000.00 0.00 0.00 5,987.14
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
61-90 4,000.00 0.00 0.00 0.00 4,000.00 0.00 0.00 0.00
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
91+ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
TOTAL(1) $ 262,082.40 $129,718.13 $ 44.57 $ 761.03 $ 35,476.46 $ 0.00 $ 32,308.55 $ 63,773.66
============ =========== ======= ======== =========== ================ =========== ===========
</TABLE>
(1) AGING OF ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
MONTH JANUARY 1999 JANUARY 1999
--------------- --------------
OIL & GAS SALES JOINT INTEREST
BILLINGS
- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 DAYS 517,817.66 13,633.68
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
31-60 DAYS 8,479.81 3,360.00
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
61-90 DAYS 9,338.82 1,782.69
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
91+ DAYS (8,725.59) 51,775.22
------------ ----------- ------- -------- ----------- ---------------- ----------- -----------
TOTAL $ 526,910.70 $70,551.59 $ 0.00 $ 0.00 $ 0.00 $ 0.00
============ =========== ======= ======== =========== ================ =========== ===========
</TABLE>
MOR-5
Revised 07/01/98
<PAGE> 8
CASE NAME: RIO GRANDE, INC.
-----------------------
CASE NUMBER: 98-55619-C
-----------------------
STATEMENT OF INCOME (LOSS)
<TABLE>
<CAPTION>
CONSOLIDATED
------------
MONTH MONTH MONTH MONTH MONTH FILING TO
NOVEMBER 1998 DECEMBER 1998 JANUARY 1999 DATE
------------- ------------ ------------ ----- ----- -------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES (MOR-1) 313,288.85 387,800.69 324,703.20 1,025,792.74
----------- ---------- ----------- ----- ----- -------------
TOTAL COST OF REVENUES 192,901.79 97,470.14 162,732.10 453,104.03
----------- ---------- ----------- ----- ----- -------------
GROSS PROFIT 120,387.06 290,330.55 161,971.10 0.00 0.00 572,688.71
----------- ---------- ----------- ----- ----- -------------
OPERATING EXPENSE:
Selling & Market 0.00 0.00 0.00 0.00
----------- ---------- ----------- ----- ----- -------------
General & Administrative 75,593.94 76,632.50 61,274.00 213,500.44
----------- ---------- ----------- ----- ----- -------------
Insiders Compensation 0.00 0.00 0.00 0.00
----------- ---------- ----------- ----- ----- -------------
Professional Fees 0.00 0.00 0.00 0.00
----------- ---------- ----------- ----- ----- -------------
Other 0.00
----------- ---------- ----------- ----- ----- -------------
Other 0.00
----------- ---------- ----------- ----- ----- -------------
TOTAL OPERATING EXPENSES 75,593.94 76,632.50 61,274.00 0.00 0.00 213,500.44
----------- ---------- ----------- ----- ----- -------------
INCOME BEFORE INT. DEPR/TAX (MOR-1) 44,793.12 213,698.05 100,697.10 0.00 0.00 359,188.27
----------- ---------- ----------- ----- ----- -------------
INTEREST EXPENSE 58,423.61 158.33 85.63 58,667.57
----------- ---------- ----------- ----- ----- -------------
DEPRECIATION/AMORTIZATION 121,295.47 120,937.47 127,687.67 369,920.61
----------- ---------- ----------- ----- ----- -------------
OTHER (INCOME) EXPENSE* (5,201.69) 1,259.32 (1,584.93) (5,527.30)
----------- ---------- ----------- ----- ----- -------------
OTHER ITEMS**(GAIN/LOSS ON SALE OF ASSET (139,114.66) 0.00 0.00 (139,114.66)
----------- ---------- ----------- ----- ----- -------------
MINORITY INTEREST OF LIMITER PARTNERS 5,335.67 (224.12) 4,958.82 10,070.37
----------- ---------- ----------- ----- ----- -------------
TOTAL INT. DEPR & OTHER ITEMS 40,738.40 122,131.00 131,147.19 0.00 0.00 294,016.59
----------- ---------- ----------- ----- ----- -------------
NET INCOME BEFORE TAXES 4,054.72 91,567.05 (30,450.09) 0.00 0.00 65,171.68
----------- ---------- ----------- ----- ----- -------------
FEDERAL INCOME BEFORE TAXES 585.00 585.00 585.00 1,755.00
----------- ---------- ----------- ----- ----- -------------
DIVIDENDS APPLICABLE TO PREFERRED STOCK 32,631.06 0.00 32,631.06
----------- ---------- ----------- ----- ----- -------------
NET INCOME (LOSS) (MOR-1) ($29,161.34) $90,982.05 ($31,035.09) $0.00 $0.00 $ 30,785.62
=========== ========== =========== ===== ===== =============
</TABLE>
Accrual Accounting Required, Otherwise Footnote with Explanation
* Footnote Mandatory
** Unusual and/or infrequent item(s) outside the ordinary course of business
requires footnote.
MOR-6
Revised 07/01/98
<PAGE> 9
CASE NAME: RIO GRANDE, INC.
-----------------------
CASE NUMBER: 98-55619-C
---------------------
<TABLE>
<CAPTION>
CONSOLIDATED
CASH RECEIPTS AND MONTH MONTH MONTH MONTH FILING TO
DISBURSEMENTS NOVEMBER 1998 DECEMBER 1998 JANUARY 1999 DATE
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1. CASH-BEGINNING OF MONTH $ 0.00 $ 0.00 $ 0.00 $ 0.00
----------- ----------- ----------- ----------- -----------
RECEIPTS:
2. CASH SALES 0.00
----------- ----------- ----------- ----------- -----------
3. COLLECTION OF ACCOUNTS RECEIVABLE 0.00
----------- ----------- ----------- ----------- -----------
4. LOANS & ADVANCES (attach list) 0.00
----------- ----------- ----------- ----------- -----------
5. SALE OF ASSETS 0.00
----------- ----------- ----------- ----------- -----------
6. OTHER (attach list) 0.00
----------- ----------- ----------- ----------- -----------
TOTAL RECEIPTS** 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
(Withdrawal) Contribution by Individual
Debtor MFR-2*
----------- ----------- ----------- ----------- -----------
DISBURSEMENTS:
7. NET PAYROLL 0.00
----------- ----------- ----------- ----------- -----------
8. PAYROLL TAXES PAID 0.00
----------- ----------- ----------- ----------- -----------
9. SALES, USE & OTHER TAXES PAID 0.00
----------- ----------- ----------- ----------- -----------
10. SECURED/RENTAL/LEASES 0.00
----------- ----------- ----------- ----------- -----------
11. UTILITIES 0.00
----------- ----------- ----------- ----------- -----------
12. INSURANCE 0.00
----------- ----------- ----------- ----------- -----------
13. INVENTORY PURCHASES 0.00
----------- ----------- ----------- ----------- -----------
14. VEHICLE EXPENSES 0.00
----------- ----------- ----------- ----------- -----------
15. TRAVEL & ENTERTAINMENT 0.00
----------- ----------- ----------- ----------- -----------
16. REPAIRS, MAINTENANCE & SUPPLIES 0.00
----------- ----------- ----------- ----------- -----------
17. ADMINISTRATIVE & SELLING 0.00
----------- ----------- ----------- ----------- -----------
18. OTHER (attach list) 0.00
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS FROM OPERATIONS 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
19. PROFESSIONAL FEES 0.00
----------- ----------- ----------- ----------- -----------
20. U.S. TRUSTEE FEES 0.00
----------- ----------- ----------- ----------- -----------
21. OTHER REORGANIZATION EXPENSES (attach list) 0.00
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS** 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
22. NET CASH FLOW 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
23. CASH - END OF MONTH (MOR-2) $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
=========== =========== =========== =========== ===========
</TABLE>
MOR-7 * Applies to Individual debtors only
** Numbers for the current month should balance (match)
RECEIPTS and CHECKS/OTHER DISBURSEMENTS lines on MOR-8
Revised 07/01/98
<PAGE> 10
CASE NAME: RIO GRANDE, INC.
-----------------
CASE NUMBER: 98-55619-C
-----------------
CASH ACCOUNT RECONCILIATION
MONTH OF JANUARY 1999
<TABLE>
<CAPTION>
CONSOLIDATED
------------
<S> <C> <C> <C> <C> <C> <C> <C>
BANK NAME
----- ------ ----- ----- ----- ----- -----
ACCOUNT NUMBER ACCOUNT WAS CLOSED AND NOT REOPENED
----- ------ ----- ----- ----- ----- -----
ACCOUNT TYPE TOTAL
----- ------ ----- ----- ----- ----- -----
BANK BALANCE $0.00 $ 0.00 $0.00 $0.00 $0.00 $0.00 $0.00
----- ------ ----- ----- ----- ----- -----
DEPOSITS IN TRANSIT 0.00 0.00 0.00 0.00 0.00 0.00 $0.00
----- ------ ----- ----- ----- ----- -----
BANK FEES, ADJUSTMENTS 0.00 22.00 0.00 0.00 0.00 0.00 $0.00
----- ------ ----- ----- ----- ----- -----
OUTSTANDING CHECKS 0.00 0.00 0.00 0.00 0.00 0.00 $0.00
----- ------ ----- ----- ----- ----- -----
ADJUSTED BANK BALANCE $0.00 $ 0.00 $0.00 $0.00 $0.00 $0.00 $0.00
----- ------ ----- ----- ----- ----- -----
BEGINNING CASH - PER BOOKS $0.00 $ 0.00 $0.00 $0.00 $0.00 $0.00 $0.00
----- ------ ----- ----- ----- ----- -----
RECEIPTS* 0.00 0.00 0.00 0.00 0.00 0.00 $0.00
----- ------ ----- ----- ----- ----- -----
TRANSFERS BETWEEN ACCOUNTS 0.00 0.00 0.00 0.00 0.00 0.00 $0.00
----- ------ ----- ----- ----- ----- -----
(WITHDRAWAL) CONTRIBUTION BY
INDIVIDUAL DEBTOR MFR-2 0.00 0.00 0.00 0.00 0.00 0.00 $0.00
----- ------ ----- ----- ----- ----- -----
CHECKS/OTHER DISBURSEMENTS* 0.00 0.00 0.00 0.00 0.00 0.00 $0.00
----- ------ ----- ----- ----- ----- -----
ENDING CASH - PER BOOKS $0.00 $ 0.00 $0.00 $0.00 $0.00 $0.00 $0.00
===== ====== ===== ===== ===== ===== =====
</TABLE>
*Numbers should balance (match) TOTAL RECEIPTS and
TOTAL DISBURSEMENTS lines on MOR-7
MOR-8 Revised 7/01/98
<PAGE> 11
CASE NAME: RIO GRANDE, INC.
-----------------------
CASE NUMBER: 98-55619-C
-----------------------
PAYMENTS TO INSIDERS AND PROFESSIONALS
Of the total disbursements shown for the month, list the amount paid to insiders
(as defined in Section 101(31)(A)-(F) of the U.S. Bankruptcy Code) and the
professions. Also, for insiders, identify the type of compensation paid (e.g.,
salary, commission, bonus, etc.) (Attach additional pages as necessary).
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH
INSIDERS: NAME/COMP TYPE November 1998 December 1998 January 1999
-------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1. No Payments Are Made By Rio Grande Inc.
--------- ---------- ---------- ---------- ----------
2.
--------- ---------- ---------- ---------- ----------
3.
--------- ---------- ---------- ---------- ----------
4.
--------- ---------- ---------- ---------- ----------
5.
--------- ---------- ---------- ---------- ----------
6.
--------- ---------- ---------- ---------- ----------
TOTAL INSIDERS (MOR-1) $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH
PROFESSIONALS November 1998 December 1998 January 1999
-------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1.
--------- ---------- ---------- ---------- ----------
2.
--------- ---------- ---------- ---------- ----------
3.
--------- ---------- ---------- ---------- ----------
4.
--------- ---------- ---------- ---------- ----------
5.
--------- ---------- ---------- ---------- ----------
6.
--------- ---------- ---------- ---------- ----------
TOTAL PROFESSIONALS (MOR-1) $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========== ========== ========== ==========
</TABLE>
MOR-9 Revised 07/01/98
<PAGE> 12
MOR-1 UNITED STATES BANKRUPTCY COURT
CASE NAME: RIO GRANDE DRILLING COMPANY PETITION DATE: 11/12/98
---------------------------- ---------------
CASE NUMBER: 98-55620-C DISTRICT OF TEXAS: Western
---------------------------- ---------------
PROPOSED PLAN DATE: DIVISION: San Antonio
----------------------- ---------------
<TABLE>
<CAPTION>
MONTHLY OPERATING REPORT SUMMARY FOR MONTH CONSOLIDATED YEAR
------------------------------------------ ------------ ----
MONTH November 1998 December 1998 January 1999
----- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-6) 313,288.85 387,800.69 324,703.20 0.00 0.00
---------- ---------- ---------- ---- ----
INCOME BEFORE INT; DEPREC./TAX (MOR-6) 50,285.41 216,691.28 103,494.59 0.00 0.00
---------- ---------- ---------- ---- ----
NET INCOME (LOSS) (MOR-6) 6,980.61 90,643.84 (30,219.00) 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO INSIDERS (MOR-9) 15,837.27 14,190.94 13,147.88 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO PROFESSIONALS (MOR-9) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
TOTAL DISBURSEMENTS (MOR-8) 52,456.47 90,951.25 95,140.13 0.00 0.00
========== ========== ========== ==== ====
</TABLE>
***The original of this document must be filed with the United States
Bankruptcy Court and a copy must be sent to the United States Trustee***
<TABLE>
<CAPTION>
REQUIRED INSURANCE MAINTAINED
AS OF SIGNATURE DATE EXP.
DATE
- ----------------------------- ---------
<S> <C> <C>
CASUALTY YES [X] NO [ ] 05-01-99
LIABILITY YES [X] NO [ ] 05-01-99
VEHICLE YES [X] NO [ ] 05-01-99
WORKER,S YES [X] NO [ ] 05-01-99
EXCESS YES [X] NO [ ] 05-01-99
</TABLE>
<TABLE>
<S> <C>
Are all accounts receivable being collected within terms? Yes [X] No [ ]
Are all post-petition liabilities, including taxes, being paid within terms? Yes [X] No [ ]
Have any pre-petition liabilities been paid? Yes [X] No [ ]
If so, describe _________________________________________________________
Are all funds received being deposited into DIP bank accounts? Yes [X] No [ ]
Were any assets disposed of outside the normal course of business? Yes [ ] No [X]
If so, describe _________________________________________________________
Are all U.S. Trustee Quarterly Fee Payments current? Yes [X} No [ ]
What is the status of your Plan of Reorganization? Filed Plan - December 11, 1998
------------------------------
</TABLE>
ATTORNEY NAME: DEBORAH D. WILLIAMSON
-----------------------------
FIRM NAME: COX & SMITH INCORPORATED
-----------------------------
ADDRESS: 112 EAST PECAN STREET
-----------------------------
SUITE 1800
-----------------------------
CITY, STATE, ZIP: SAN ANTONIO, TEXAS 78205
-----------------------------
TELEPHONE: (210)-554-5500
-----------------------------
I certify under penalty of perjury that the following complete
Monthly Operating Report (MOR), consisting of MOR-1 through
MOR-9 plus attachments, is true and correct.
SIGNED X /s/ GARY SCHEELE TITLE: Vice President
-------------------- -------------------
(ORIGINAL SIGNATURE)
Gary Scheele 03/04/99
- ------------------------- ------------
(PRINT NAME OF SIGNATORY) DATE
MOR-1
Revised 07/01/98
<PAGE> 13
CASE NAME: RIO GRANDE DRILLING COMPANY
---------------------------------
CASE NUMBER: 98-55620-C
------------------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
ASSETS CONSL. TO 10QSB- -------------- -------------- -------------
CONSOLIDATED 10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
- ------------------------------- -------------- -------------- -------------- -------------- ----- -----
CURRENT ASSETS
Cash 433,711.27 521,725.78 469,759.18 563,757.95
-------------- -------------- -------------- -------------- ----- -----
Accounts Receivable, Net 500,112.87 540,618.59 706,256.01 601,712.29
-------------- -------------- -------------- -------------- ----- -----
Inventory: Lower of Cost
or Market 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
Prepaid Expenses 49,504.79 48,664.63 48,070.52 47,331.86
-------------- -------------- -------------- -------------- ----- -----
Investments 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
Other/INTERCOMPANY 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
TOTAL CURRENT ASSETS 983,328.93 1,111,009.00 1,224,085.71 1,212,802.10 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
PROPERTY, PLANT & EQUIP.
@ COST 27,143,247.43 26,904,985.15 26,907,532.40 26,929,932.72
-------------- -------------- -------------- -------------- ----- -----
Less Accumulated Depreciation 18,910,896.14 18,781,216.40 18,891,444.28 19,001,672.16
-------------- -------------- -------------- -------------- ----- -----
NET BOOK VALUE OF PP & E 8,232,351.29 8,123,768.75 8,016,088.12 7,928,260.56 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
OTHER ASSETS
1. Tax Deposits
-------------- -------------- -------------- -------------- ----- -----
2. Investments in Subsidiaries
-------------- -------------- -------------- -------------- ----- -----
3. Platform Abandonment Fund-
(Gulfmex) 360,857.03 363,678.08 363,678.09 363,678.08
-------------- -------------- -------------- -------------- ----- -----
4. Deferred Loan and Organi-
zation Costs 141,456.34 140,958.50 140,460.66 139,562.82
-------------- -------------- -------------- -------------- ----- -----
TOTAL ASSETS $ 9,717,993.59 $ 9,739,414.33 $ 9,744,312.58 $ 9,644,303.56 $0.00 $0.00
============== ============== ============== ============== ===== =====
</TABLE>
* Per Schedules and Statement of Affairs
MOR-2 Revised 07/01/98
<PAGE> 14
CASE NAME: RIO GRANDE DRILLING COMPANY
---------------------------
CASE NUMBER: 98-55620-C
---------------------------
CONSOLIDATED COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
CONSL. TO --------------- --------------- ---------------
LIABILITIES & OWNER'S EQUITY 10QSB-10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
---------------- --------------- --------------- --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
POST-PETITION LIABILITIES(MOR-4) 418,150.61 332,134.82 257,386.30
---------------- --------------- --------------- --------------- ------ ------
PRE-PETITION LIABILITIES
---------------- --------------- --------------- --------------- ------ ------
Notes Payable - Secured
---------------- --------------- --------------- --------------- ------ ------
Priority Debt 13,141,806.63 13,141,248.14 13,141,806.63 13,141,806.63
---------------- --------------- --------------- --------------- ------ ------
Federal Income Tax
---------------- --------------- --------------- --------------- ------ ------
FICA/Withholding
---------------- --------------- --------------- --------------- ------ ------
Unsecured Debt
---------------- --------------- --------------- --------------- ------ ------
Other - Trade, Royalty 1,368,283.35 965,131.36 965,131.36 965,131.36
---------------- --------------- --------------- --------------- ------ ------
Deferred Abandonment Expense 526,343.99 526,343.99 526,343.99 526,343.99
---------------- --------------- --------------- --------------- ------ ------
Advance - Affiliates 9,122,544.55 9,122,544.55 9,122,544.55 9,122,544.55
---------------- --------------- --------------- --------------- ------ ------
Minority interest - Limited Partners 157,334.14 157,334.14 162,445.69 167,404.51
---------------- --------------- --------------- --------------- ------ ------
TOTAL PRE-PETITION LIABILITIES 24,316,312.66 23,912,602.18 23,918,272.22 23,923,231.04 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES 24,316,312.66 24,330,752.79 24,250,407.04 24,180,617.34 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
OWNER'S EQUITY (DEFICIT)
PREFERRED STOCK 0.00 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
COMMON STOCK 100.00 100.00 100.00 100.00
---------------- --------------- --------------- --------------- ------ ------
ADDITIONAL PAID-IN CAPITAL 0.00 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Filing Date (14,598,419.07) (14,598,419.07) (14,598,419.07) (14,598,419.07)
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Post Filing Date 0.00 6,980.61 92,224.61 62,005.29
---------------- --------------- --------------- --------------- ------ ------
TOTAL OWNER'S EQUITY (NET WORTH) (14,598,319.07) (14,591,338.46) (14,506,094.46) (14,536,313.78) 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES & OWNER'S EQUITY $ 9,717,993.59 $ 9,739,414.33 $ 9,744,312.58 $ 9,644,303.56 $ 0.00 $ 0.00
================ =============== =============== =============== ====== ======
</TABLE>
* Per Schedules and Statement of Affairs
MOR-3 Revised 6/10/98
<PAGE> 15
CASE NAME: RIO GRANDE DRILLING COMPANY
-----------------------
CASE NUMBER: 98-55620-C
---------------------
SCHEDULE OF POST-PETITION LIABILITIES
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
TRADE ACCOUNTS PAYABLE CONSOLIDATED 243,726.12 163,863.55 116,622.86
----------- ----------- ----------- -----------
TAX PAYABLE
Federal Payroll Taxes 497.53 44.57 44.57
----------- ----------- ----------- -----------
State Payroll Taxes 795.21 871.15 761.03
----------- ----------- ----------- -----------
Ad Valorem Taxes 4,000.00 8,000.00 12,000.00
----------- ----------- ----------- -----------
Other Taxes-State Franchise/Income 21,947.55 22,747.43 23,476.46
----------- ----------- ----------- -----------
TOTAL TAXES PAYABLE 27,240.29 31,663.15 36,282.06 0.00
----------- ----------- ----------- -----------
SECURED DEBT POST-PETITION (558.49) (1,116.98) (1,116.98)
----------- ----------- ----------- -----------
ACCRUED INTEREST PAYABLE 58,363.98 58,265.28 58,265.28
----------- ----------- ----------- -----------
ACCRUED DIVIDENDS PAYABLE 0.00 0.00 0.00
----------- ----------- ----------- -----------
ACCRUED PROFESSIONAL FEES* 0.00 0.00 0.00
----------- ----------- ----------- -----------
OTHER ACCRUED LIABILITIES
1. Royalties 74,885.20 63,006.91 32,308.55
----------- ----------- ----------- -----------
2. Payroll 3,976.72 0.00 0.00
----------- ----------- ----------- -----------
3. Insurance (3,692.10) (11,147.49) (13,572.88)
----------- ----------- ----------- -----------
4. Deferred Abandonment Expense 1,459.31 5,159.31 8,859.31
----------- ----------- ----------- -----------
5. Advance - Rio Grande, Inc. 5,227.41 12,954.38 3,171.76
----------- ----------- ----------- -----------
6. Minority Interest-Limited Partners 5,335.67 5,111.55 10,070.37
----------- ----------- ----------- -----------
7. Miscellaneous 2,186.50 4,375.16 6,495.97
----------- ----------- ----------- -----------
TOTAL POST-PETITION LIABILITIES (MOR-3) $418,150.61 $332,134.82 $257,386.30 $ 0.00
=========== =========== =========== ===========
</TABLE>
* PAYMENT REQUIRES COURT APPROVAL
MOR-4
<PAGE> 16
CASE NAME: RIO GRANDE DRILLING COMPANY
CASE NUMBER: 98-55620-C
AGING OF POST-PETITION LIABILITIES
CONSOLIDATED MONTH JANUARY 1999
<TABLE>
<CAPTION>
TRADE FEDERAL STATE AD VALOREM, ADVANCES/ACCOUNTS ROYALTIES AND
DAYS TOTAL ACCOUNTS TAXES TAXES OTHER TAXES PAYABLE TO AFFILIATES REVENUE SUSPENSE OTHER
- -------- ----------- ----------- -------- ------- ----------- --------------------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 238,171.75 116,622.86 44.57 761.03 27,476.46 3,171.76 32,308.55 57,786.52
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
31-60 15,214.55 0.00 0.00 0.00 4,000.00 5,227.41 0.00 5.987.14
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
61-90 4,000.00 0.00 0.00 0.00 4,000.00 0.00 0.00 0.00
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
91+ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
TOTAL(1) $257,386.30 $116,622.86 $44.57 $761.03 $35,476.46 $8,399.17 $32,308.55 $63,773.66
======== =========== =========== ====== ======= ========== ========= ========== ==========
(1) AGING OF ACCOUNTS RECEIVABLE
<CAPTION>
MONTH January 1999 January 1999
---------------------------- -----------------------
OIL & GAS SALES JOINT INTEREST BILLINGS
- -------- ---------------------------- ----------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 DAYS 522,317.66 13,633,68
- ---------- ----------- ---------- --------- --------- --------- --------- --------- ---------
31-60 DAYS 8,479.81 3,360.00
- ---------- ----------- ---------- --------- --------- --------- --------- --------- ---------
61-90 DAYS 9,338.82 1,782.69
- ---------- ----------- ---------- --------- --------- --------- --------- --------- ---------
91+ DAYS (8,975.59) 51,775.22
- ---------- ----------- ---------- --------- --------- --------- --------- --------- ---------
TOTAL $531,160.70 $70,551.59 $ 0.00 $ 0.00 $ 0.00 $ 0.00
========== =========== ========== ========= ========= ========= ========= ========= =========
</TABLE>
<PAGE> 17
CASE NAME: RIO GRANDE DRILLING COMPANY
-----------------------------------
CASE NUMBER: 98-55620-C
-----------------------------------
<TABLE>
<CAPTION>
STATEMENT OF INCOME (LOSS) CONSOLIDATED
============================================================================================================================
MONTH MONTH MONTH
--------------- --------------- -------------- FILING TO
NOVEMBER 1998 DECEMBER 1998 JANUARY 1999 MONTH DATE
------------- ------------- -------------- ----- -------------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-1) 313,288.85 387,800.69 324,703.20 1,025,792.74
------------ ----------- -------------- ----- -------------
TOTAL COST OF REVENUES 192,901.79 97,470.14 162,732.10 453,104.03
------------ ----------- -------------- ----- -------------
GROSS PROFIT 120,387.06 290,330.55 161,971.10 0.00 572,688.71
------------ ----------- -------------- ----- -------------
OPERATING EXPENSE:
Selling & Market 0.00 0.00 0.00 0.00
------------ ----------- -------------- ----- -------------
General & Administrative 54,264.38 59,448.33 45,328.63 159,041.34
------------ ----------- -------------- ----- -------------
Insiders Compensation 15,837.27 14,190.94 13,147.88 43,176.09
------------ ----------- -------------- ----- -------------
Professional Fees 0.00 0.00 0.00 0.00
------------ ----------- -------------- ----- -------------
Other 0.00
------------ ----------- -------------- ----- -------------
Other 0.00
------------ ----------- -------------- ----- -------------
TOTAL OPERATING EXPENSES 70,101.65 73,639.27 58,476.51 0.00 202,217.43
------------ ----------- -------------- ----- -------------
INCOME BEFORE INT. DEPR/TAX (MOR-1) 50,285.41 216,691.28 103,494.59 0.00 370,471.28
------------ ----------- -------------- ----- -------------
INTEREST EXPENSE 58,423.61 158.33 85.63 58,667.57
------------ ----------- -------------- ----- -------------
DEPRECIATION/AMORTIZATION 114,783.72 114,425.72 121,175.92 350,385.36
------------ ----------- -------------- ----- -------------
OTHER (INCOME) EXPENSE* 3,291.46 9,752.47 6,908.22 19,952.15
------------ ----------- -------------- ----- -------------
OTHER ITEMS**(GAIN/LOSS ON SALE OF ASSET (139,114.66) 0.00 0.00 (139,114.66)
------------ ----------- -------------- ----- -------------
MINORITY INTEREST OF LIMITED PARTNERS 5,335.67 1,125.92 4,958.82 11,420.41
------------ ----------- -------------- ----- -------------
TOTAL INT. DEPR & OTHER ITEMS 42,719.80 125,462.44 133,128.59 0.00 301,310.83
------------ ----------- -------------- ----- -------------
NET INCOME BEFORE TAXES 7,565.61 91,228.84 (29,634.00) 0.00 69,160.45
------------ ----------- -------------- ----- -------------
FEDERAL/STATE INCOME TAXES 585.00 585.00 585.00 1,755.00
------------ ----------- -------------- ----- -------------
DIVIDENDS APPLICABLE TO PREFERRED STOCK 0.00 0.00 0.00 0.00
------------ ----------- -------------- ----- -------------
NET INCOME (LOSS) (MOR-1) $ 6,980.61 $ 90,643.84 ($ 30,219.00) $0.00 $ 67,405.45
============ =========== ============= ===== =============
</TABLE>
Accrual Accounting Required, Otherwise Footnote with Explanation
* Footnote Mandatory
** Unusual and/or infrequent item(s) outside the ordinary course of business
requires footnote.
MOR-6
Revised 07/01/98
<PAGE> 18
CASE NAME: RIO GRANDE DRILLING COMPANY
--------------------------------
CASE NUMBER: 98-55620-C
------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED
CASH RECEIPTS AND MONTH MONTH MONTH MONTH FILING TO
DISBURSEMENTS NOVEMBER 1998 DECEMBER 1998 JANUARY 1999 DATE
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1. CASH - BEGINNING OF MONTH $ 8,614.26 $ 20,159.79 $ 10,756.54 $ 8,614.26
----------- ----------- ----------- ----------- -----------
RECEIPTS:
2. CASH SALES 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
3. COLLECTION OF ACCOUNTS RECEIVABLE 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
4. LOANS & ADVANCES (attach list Inter-
Company Transfers) 64,000.00 81,550.00 74,090.00 219,640.00
----------- ----------- ----------- ----------- -----------
5. SALE OF ASSETS 0.00 0.00
----------- ----------- ----------- ----------- -----------
6. OTHER (attach list) 0.00 0.00
----------- ----------- ----------- ----------- -----------
TOTAL RECEIPTS** 64,000.00 81,550.00 74,090.00 0.00 219,640.00
----------- ----------- ----------- ----------- -----------
(Withdrawal) Contribution by Individual
Debtor MFR-2*
DISBURSEMENTS:
7. NET PAYROLL 32,976.38 33,385.95 31,126.95 97,489.28
----------- ----------- ----------- ----------- -----------
8. PAYROLL TAXES PAID 5,609.10 15,450.36 15,071.24 36,130.70
----------- ----------- ----------- ----------- -----------
9. SALES, USE & OTHER TAXES PAID 0.00
----------- ----------- ----------- ----------- -----------
10. SECURED/RENTAL/LEASES 0.00
----------- ----------- ----------- ----------- -----------
11. UTILITIES 1,559.17 1,311.00 1,169.00 4,039.17
----------- ----------- ----------- ----------- -----------
12. INSURANCE 464.97 164.00 364.00 992.97
----------- ----------- ----------- ----------- -----------
13. INVENTORY PURCHASES 0.00
----------- ----------- ----------- ----------- -----------
14. VEHICLE EXPENSES 731.03 617.00 1,069.00 2,417.03
----------- ----------- ----------- ----------- -----------
15. TRAVEL & ENTERTAINMENT 1,541.73 1,960.00 138.00 3,639.73
----------- ----------- ----------- ----------- -----------
16. REPAIRS, MAINTENANCE & SUPPLIES 1,027.04 0.00 0.00 1,027.04
----------- ----------- ----------- ----------- -----------
17. ADMINISTRATIVE & SELLING 4,047.05 38,062.94 46,201.94 88,311.93
----------- ----------- ----------- ----------- -----------
18. OTHER (attach list) 4,499.63 0.00 0.00 4,499.63
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS FROM OPERATIONS 52,456.47 90,951.25 95,140.13 0.00 238,547.48
----------- ----------- ----------- ----------- -----------
19. PROFESSIONAL FEES 0.00
----------- ----------- ----------- ----------- -----------
20. U.S. TRUSTEE FEES 0.00
----------- ----------- ----------- ----------- -----------
21. OTHER REORGANIZATION EXPENSES (attach list) 0.00
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS** 52,456.49 90,951.25 95,140.13 0.00 238,547.48
----------- ----------- ----------- ----------- -----------
22. NET CASH FLOW 11,543.53 (9,401.25) (21,050.13) 0.00 (18,907.48)
----------- ----------- ----------- ----------- -----------
23. CASH - END OF MONTH (MOR-2) $ 20,157.79 $ 10,756.54 $(10,293.59) $ 0.00 $(10,293.22)
=========== =========== =========== =========== ===========
</TABLE>
MOR-7 * Applies to Individual debtors only
** Numbers for the current month should balance (match)
RECEIPTS and CHECKS/OTHER DISBURSEMENTS lines on MOR-8
<PAGE> 19
CASE NAME: RIO GRANDE DRILLING COMPANY
---------------------------
CASE NUMBER: 98-55620-C
---------------------------
CASH ACCOUNT RECONCILIATION
MONTH OF DECEMBER 1999
<TABLE>
<CAPTION>
CONSOLIDATED
----------------------
<S> <C> <C> <C> <C> <C> <C>
BANK NAME Broadway National Bank Broadway National Bank
---------------------- ---------------------- ----- ----- ----- -----
ACCOUNT NUMBER Account No. 0363464 Account No. 0353456
---------------------- ---------------------- ----- ----- ----- -----
ACCOUNT TYPE OPERATING-BGD AFE-ESCROW-BGDG
---------------------- ---------------------- ----- ----- ----- -----
BANK BALANCE $ 2,147.06 $ 8,272.62 $0.00 $0.00 $0.00 $0.00
---------------------- ---------------------- ----- ----- ----- -----
DEPOSITS IN TRANSIT 0.00 0.00 0.00 0.00 0.00 0.00
---------------------- ---------------------- ----- ----- ----- -----
BANK FEES, ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00 0.00
---------------------- ---------------------- ----- ----- ----- -----
OUTSTANDING CHECKS 20,712.90 0.00 0.00 0.00 0.00 0.00
---------------------- ---------------------- ----- ----- ----- -----
ADJUSTED BANK BALANCE $ (18,365.84) $ 8,272.62 $0.00 $0.00 $0.00 $0.00
---------------------- ---------------------- ----- ----- ----- -----
BEGINNING CASH - PER BOOKS $ 2,484.39 $ 8,272.62 $0.00 $0.00 $0.00 $0.00
---------------------- ---------------------- ----- ----- ----- -----
RECEIPTS* 0.00 0.00 0.00 0.00 0.00 0.00
---------------------- ---------------------- ----- ----- ----- -----
TRANSFERS BETWEEN ACCOUNTS 24,090.00 0.00 0.00 0.00 0.00 0.00
---------------------- ---------------------- ----- ----- ----- -----
(WITHDRAWAL) CONTRIBUTION BY
INDIVIDUAL DEBTOR MFR-2 0.00 0.00
---------------------- ---------------------- ----- ----- ----- -----
CHECKS/OTHER DISBURSEMENTS* 95,140.13 0.00 0.00 0.00 0.00 0.00
---------------------- ---------------------- ----- ----- ----- -----
ENDING CASH - PER BOOKS $ (18,365.84) $ 8,272.62 $0.00 $0.00 $0.00 $0.00
====================== ====================== ===== ===== ===== =====
<CAPTION>
<S> <C> <C> <C>
BANK NAME
----- ----- -----------
ACCOUNT NUMBER
----- ----- -----------
ACCOUNT TYPE TOTAL
----- ----- -----------
BANK BALANCE $0.00 $0.00 $ 10,419.68
----- ----- -----------
DEPOSITS IN TRANSIT 0.00 0.00 $ 0.00
----- ----- -----------
BANK FEES, ADJUSTMENTS 0.00
----- ----- -----------
OUTSTANDING CHECKS 0.00 0.00 $ 20,712.90
----- ----- -----------
ADJUSTED BANK BALANCE $0.00 $0.00 $(10,293.22)
----- ----- -----------
BEGINNING CASH - PER BOOKS $0.00 $0.00 $ 10,756.91
----- ----- -----------
RECEIPTS* 0.00 0.00 $ 0.00
----- ----- -----------
TRANSFERS BETWEEN ACCOUNTS 0.00 0.00 $ 74,090.00
----- ----- -----------
(WITHDRAWAL) CONTRIBUTION BY 0.00 $ 0.00
----- -----------
INDIVIDUAL DEBTOR MFR-2 $ 0.00
----- ----- -----------
CHECKS/OTHER DISBURSEMENTS* 0.00 0.00 $ 95,140.13
----- ----- -----------
ENDING CASH - PER BOOKS $0.00 $0.00 $(10,293.22)
===== ===== ===========
</TABLE>
MOR-8 *Numbers should balance (match) TOTAL RECEIPTS and
TOTAL DISBURSEMENTS lines on MOR-7
Revised 7/01/98
<PAGE> 20
CASE NAME: RIO GRANDE DRILLING COMPANY
------------------------------------
CASE NUMBER: 98-55620-C
------------------------------------
PAYMENTS TO INSIDERS AND PROFESSIONALS
Of the total disbursements shown for the month, list the amount paid to insiders
(as defined in Section 101(31)(A)-(F) of the U.S. Bankruptcy Code) and the
professionals. Also, for insiders, identify the type of compensation paid (e.g.,
salary, commission, bonus, etc.) (Attach additional pages as necessary).
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
INSIDERS: NAME/COMP TYPE November 1998 December 1998 January 1999
------------------------- -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1. Guy Bob Buschman-Salary 7,387.96 7,387.96 6,807.81
---------- ---------- ---------- ----------
2. Guy Bob Buschman-Expense Reimbursement 1,541.73 0.00 0.00
---------- ---------- ---------- ----------
3. Gary Scheele-Salary 6,376.76 6,376.76 5,913.84
---------- ---------- ---------- ----------
4. Gary Scheele-Expense Reimbursement 104.60 0.00 0.00
---------- ---------- ---------- ----------
5. Robert A. Buschman-Salary 426.22 426.22 426.23
---------- ---------- ---------- ----------
6. Robert A. Buschman-Expense Reimbursement 0.00 0.00 0.00
---------- ---------- ---------- ----------
TOTAL INSIDERS (MOR-1) $15,837.27 $14,190.94 $13,147.88 $ 0.00
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
PROFESSIONALS November 1998
------------- -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1.
--------- ---------- ---------- ----------
2.
--------- ---------- ---------- ----------
3.
--------- ---------- ---------- ----------
4.
--------- ---------- ---------- ----------
5.
--------- ---------- ---------- ----------
6.
--------- ---------- ---------- ----------
TOTAL PROFESSIONALS (MOR-1) $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========== ========== ==========
</TABLE>
MOR-9 Revised 07/01/98
<PAGE> 21
MOR-1 UNITED STATES BANKRUPTCY COURT
CASE NAME: RIO GRANDE DESERT OIL COMPANY PETITION DATE: 11/12/98
------------------------------ ---------------
CASE NUMBER: 98-55621-C DISTRICT OF TEXAS: Western
------------------ ---------------
PROPOSED PLAN DATE: DIVISION: San Antonio
------------- ---------------
<TABLE>
<CAPTION>
MONTHLY OPERATING REPORT SUMMARY FOR MONTH YEAR
------------------------------------------ ----
MONTH November 1998 December 1998 January 1999
----- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-6) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
INCOME BEFORE INT; DEPREC./TAX (MOR-6) (31.40) (10,887.69) 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
NET INCOME (LOSS) (MOR-6) 118,778.07 129,914.03 17,452.55 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO INSIDERS (MOR-9) 63,865.00 80,804.71 74,090.00 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO PROFESSIONALS (MOR-9) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
TOTAL DISBURSEMENTS (MOR-8) 63,896.40 91,692.40 0.00 0.00 0.00
========== ========== ========== ==== ====
</TABLE>
*** The original of this document must be filed with the United States
Bankruptcy Court and a copy must be sent to the United States Trustee***
<TABLE>
<CAPTION>
REQUIRED INSURANCE MAINTAINED
AS OF SIGNATURE DATE EXP.
DATE
- ----------------------------- ---------
<S> <C> <C>
CASUALTY YES [X] NO [ ] 05-01-99
LIABILITY YES [X] NO [ ] 05-01-99
VEHICLE YES [X] NO [ ] 05-01-99
WORKER'S YES [X] NO [ ] 05-01-99
EXCESS YES [X] NO [ ] 05-01-99
</TABLE>
<TABLE>
<S> <C>
Are all accounts receivable being collected within terms? Yes [X] No [ ]
Are all post-petition liabilities, including taxes, being paid within terms? Yes [X] No [ ]
Have any pre-petition liabilities been paid? Yes [ ] No [ ]
If so, describe _________________________________________________________
Are all funds received being deposited into DIP bank accounts? Yes [X] No [ ]
Were any assets disposed of outside the normal course of business? Yes [ ] No [X]
If so, describe _________________________________________________________
Are all U.S. Trustee Quarterly Fee Payments current? Yes [X} No [ ]
What is the status of your Plan of Reorganization? Filed Plan - December 11, 1998
------------------------------
</TABLE>
ATTORNEY NAME: DEBORAH D. WILLIAMSON
-----------------------------
FIRM NAME: COX & SMITH INCORPORATED
-----------------------------
ADDRESS: 112 EAST PECAN STREET
-----------------------------
SUITE 1800
-----------------------------
CITY, STATE, ZIP: SAN ANTONIO, TEXAS 78205
-----------------------------
TELEPHONE: (210)-554-5500
-----------------------------
I certify under penalty of perjury that the following complete
Monthly Operating Report (MOR), consisting of MOR-1 through
MOR-9 plus attachments, is true and correct.
SIGNED X /s/ GARY SCHEELE TITLE: Vice President
-------------------- -------------------
(ORIGINAL SIGNATURE)
Gary Scheele 03/04/99
- ------------------------- ------------
(PRINT NAME OF SIGNATORY) DATE
MOR-1
Revised 07/01/98
<PAGE> 22
CASE NAME: RIO GRANDE DESERT OIL COMPANY
--------------------------------
CASE NUMBER: 98-55621-C
------------------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
ASSETS CONSL. TO 10QSB-
10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash 197.75 166.35 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
Accounts Receivable, Net
-------------- -------------- -------------- -------------- ----- -----
Inventory: Lower of Cost
or Market
-------------- -------------- -------------- -------------- ----- -----
Prepaid Expenses
-------------- -------------- -------------- -------------- ----- -----
Investments
-------------- -------------- -------------- -------------- ----- -----
Other
-------------- -------------- -------------- -------------- ----- -----
TOTAL CURRENT ASSETS 197.75 166.35 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
PROPERTY, PLANT & EQUIP.
@ COST
-------------- -------------- -------------- -------------- ----- -----
Less Accumulated Depreciation
-------------- -------------- -------------- -------------- ----- -----
NET BOOK VALUE OF PP & E 0.00 0.00 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
OTHER ASSETS
1. Tax Deposits
-------------- -------------- -------------- -------------- ----- -----
2. Investments in Subsidiaries 10,451,708.91 10,584,321.51 10,733,436.07 10,764,319.60
-------------- -------------- -------------- -------------- ----- -----
3. Organization Costs, net 402.90 361.90 320.90 279.90
-------------- -------------- -------------- -------------- ----- -----
4. Minority Interests-Limited
Partnerships (831,792.65) (837,061.63) (836,840.32) (841,737.15)
-------------- -------------- -------------- -------------- ----- -----
TOTAL ASSETS $ 9,620,516.91 $ 9,747,788.13 $ 9,896,916.65 $ 9,922,862.35 $0.00 $0.00
============== ============== ============== ============== ===== =====
</TABLE>
* Per Schedules and Statement of Affairs
MOR-2 Revised 07/01/98
<PAGE> 23
CASE NAME: RIO GRANDE DESERT OIL COMPANY
-----------------------------
CASE NUMBER: 98-55621-C
-----------------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
CONSL. TO --------------- --------------- ---------------
10QSB-10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
---------------- --------------- --------------- --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
POST-PETITION LIABILITIES(MOR-4) 8,493.15 27,707.64 36,200.79
---------------- --------------- --------------- --------------- ------ ------
PRE-PETITION LIABILITIES
---------------- --------------- --------------- --------------- ------ ------
Notes Payable - Secured
---------------- --------------- --------------- --------------- ------ ------
Priority Debt
---------------- --------------- --------------- --------------- ------ ------
Federal Income Tax
---------------- --------------- --------------- --------------- ------ ------
FICA/Withholding
---------------- --------------- --------------- --------------- ------ ------
Unsecured Debt
---------------- --------------- --------------- --------------- ------ ------
Other - Advances - Affiliates 14,705,802.06 14,705,802.06 14,705,802.06 14,705,802.06
---------------- --------------- --------------- --------------- ------ ------
TOTAL PRE-PETITION LIABILITIES 14,705,802.06 14,705,802.06 14,705,802.06 14,705,802.06 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES 14,705,802.06 14,714,295.21 14,733,509.70 14,742,002.85 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
OWNER'S EQUITY (DEFICIT)
PREFERRED STOCK
---------------- --------------- --------------- --------------- ------ ------
COMMON STOCK 1,000.00 1,000.00 1,000.00 1,000.00
---------------- --------------- --------------- --------------- ------ ------
ADDITIONAL PAID-IN CAPITAL
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Filing Date (5,086,285.15) (5,086,285.15) (5,086,285.15) (5,086,285.15)
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Post Filing Date 0.00 118,778.07 248,692.10 266,144.65
---------------- --------------- --------------- --------------- ------ ------
TOTAL OWNER'S EQUITY (NET WORTH) (5,085,285.15) (4,966,507.08) (4,836,593.05) (4,819,140.50) 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES & OWNER'S EQUITY $ 9,620,516.91 $ 9,747,788.13 $ 9,896,916.65 $ 9,922,862.35 $ 0.00 $ 0.00
================ =============== =============== =============== ====== ======
</TABLE>
* Per Schedules and Statement of Affairs
MOR-3 Revised 07/01/98
<PAGE> 24
CASE NAME: RIO GRANDE DESERT OIL COMPANY
----------------------------------
CASE NUMBER: 98-55621-C
--------------------------------
SCHEDULE OF POST-PETITION LIABILITIES
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH
------------- ------------- ------------ ----------- -----------
TRADE ACCOUNTS PAYABLE NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
TAX PAYABLE
Federal Payroll Taxes
----------- ----------- ----------- ----------- -----------
State Payroll Taxes
----------- ----------- ----------- ----------- -----------
Ad Valorem Taxes
----------- ----------- ----------- ----------- -----------
Other Taxes
----------- ----------- ----------- ----------- -----------
TOTAL TAXES PAYABLE 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
SECURED DEBT POST-PETITION
----------- ----------- ----------- ----------- -----------
ACCRUED INTEREST PAYABLE
----------- ----------- ----------- ----------- -----------
ACCRUED PROFESSIONAL FEES*
----------- ----------- ----------- ----------- -----------
OTHER ACCRUED LIABILITIES
1. Advance-Affiliates 8,493.15 27,707.64 36,200.79
----------- ----------- ----------- ----------- -----------
2.
----------- ----------- ----------- ----------- -----------
3.
----------- ----------- ----------- ----------- -----------
TOTAL POST-PETITION LIABILITIES (MOR-3) $ 8,493.15 $ 27,707.64 $ 36,200.79 $ 0.00 $ 0.00
=========== =========== =========== =========== ===========
</TABLE>
* PAYMENT REQUIRES COURT APPROVAL
MOR-4
Revised 07/01/98
<PAGE> 25
CASE NAME: RIO GRANDE DESERT OIL COMPANY
-----------------------------------
CASE NUMBER: 98-55621-C
-----------------------------------
<TABLE>
<CAPTION>
AGING OF POST-PETITION LIABILITIES
MONTH NOVEMBER 1998
------------- ----------- ---------------------
TRADE FEDERAL STATE AD VALOREM, OTHER
DAYS TOTAL ACCOUNTS TAXES TAXES OTHER TAXES ADVANCES-AFFILIATES
- -------- ----------- ----------- -------- ------- ----------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
0-30 19,214.49 19,214.49
- -------- ----------- ----------- ------ ------- ---------- ----------
31-60 8,493.15 8,493.15
- -------- ----------- ----------- ------ ------- ---------- ----------
61-90 0.00 0.00
- -------- ----------- ----------- ------ ------- ---------- ----------
91+ 0.00 0.00
- -------- ----------- ----------- ------ ------- ---------- ----------
TOTAL $ 27,707.64 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $27,707.64
======== =========== =========== ====== ======= ========== ==========
AGING OF ACCOUNTS RECEIVABLE
<CAPTION>
MONTH
- ---------- ----------- ----------- ------ ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
0-30 DAYS
- ---------- ----------- ----------- ------ ------- ---------- ----------
31-60 DAYS
- ---------- ----------- ----------- ------ ------- ---------- ----------
61-90 DAYS
- ---------- ----------- ----------- ------ ------- ---------- ----------
91+ DAYS
- ---------- ----------- ----------- ------ ------- ---------- ----------
TOTAL $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
=========== =========== ====== ======= ========== ==========
</TABLE>
MOR-5 Revised 07/01/98
<PAGE> 26
CASE NAME: RIO GRANDE DESERT OIL COMPANY
------------------------------
CASE NUMBER: 98-55621-C
------------------------------
STATEMENT OF INCOME (LOSS)
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH FILING TO
November 1998 December 1998 January 1999 DATE
------------- ------------- ------------ ----- -----------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-1) 0.00
----------- ----------- ---------- ----- -----------
TOTAL COST OF REVENUES 0.00
----------- ----------- ---------- ----- -----------
GROSS PROFIT 0.00 0.00 0.00 0.00 0.00
----------- ----------- ---------- ----- -----------
OPERATING EXPENSE:
Selling & Marketing
----------- ----------- ---------- ----- -----------
General & Administrative 31.40 22.69 0.00 54.09
----------- ----------- ---------- ----- -----------
Insiders Compensation 0.00
----------- ----------- ---------- ----- -----------
Professional Fees 0.00
----------- ----------- ---------- ----- -----------
Other-LOUISIANA FRANCHISE/INCOME TAXES 0.00 10,865.00 0.00 10,865.00
----------- ----------- ---------- ----- -----------
Other 0.00
----------- ----------- ---------- ----- -----------
TOTAL OPERATING EXPENSES 31.40 10,887.69 0.00 0.00 10,919.09
----------- ----------- ---------- ----- -----------
INCOME BEFORE INT. DEPR/TAX (MOR-1) (31.40) (10,887.69) 0.00 0.00 (10,919.09)
----------- ----------- ---------- ----- -----------
INTEREST EXPENSE - AFFILIATE 8,493.15 8,493.15 8,493.15 25,479.45
----------- ----------- ---------- ----- -----------
DEPRECIATION/AMORTIZATION 41.00 41.00 41.00 123.00
----------- ----------- ---------- ----- -----------
OTHER (INCOME) EXPENSE* 0.00
----------- ----------- ---------- ----- -----------
OTHER ITEMS**EQUITY IN LIMITED PARTNERSHIP-(OFFSHORE) (132,612.60) (149,114.56) (30,883.53) (312,610.69)
----------- ----------- ---------- ----- -----------
MINORITY INTEREST OF LIMITER PARTNERS 5,268.98 (221.31) 4,896.83 1,111.85
----------- ----------- ---------- ----- -----------
----------- ----------- ---------- ----- -----------
TOTAL INT. DEPR & OTHER ITEMS (118,809.47) (140,801.72) (17,452.55) 0.00 (285,896.39)
----------- ----------- ---------- ----- -----------
NET INCOME BEFORE TAXES 118,778.07 129,914.03 17,452.55 0.00 274,977.30
----------- ----------- ---------- ----- -----------
FEDERAL INCOME TAXES 0.00
----------- ----------- ---------- ----- -----------
NET INCOME (LOSS) (MOR-1) $118,778.07 $129,914.03 $17,452.55 $0.00 $274,977.30
=========== =========== ========== ===== ===========
</TABLE>
Accrual Accounting Required, Otherwise Footnote with Explanation
* Footnote Mandatory
** Unusual and/or infrequent item(s) outside the ordinary course of business
requires footnote.
MOR-6
Revised 07/01/98
<PAGE> 27
CASE NAME: RIO GRANDE DESERT OIL COMPANY
----------------------------------
CASE NUMBER: 98-55621-C
--------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
CASH RECEIPTS AND MONTH MONTH MONTH MONTH FILING TO
DISBURSEMENTS NOVEMBER 1998 DECEMBER 1998 JANUARY 1999 DATE
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1. CASH-BEGINNING OF MONTH $ 197.75 $ 166.35 $ 197.75
----------- ----------- ----------- ----------- -----------
RECEIPTS
2. CASH SALES 0.00 0.00
----------- ----------- ----------- ----------- -----------
3. COLLECTION OF ACCOUNTS RECEIVABLE 0.00 0.00
----------- ----------- ----------- ----------- -----------
4. LOANS & ADVANCES (attach list)-RIO GRANDE
OFFSHORE, LTD. 63,865.00 91,526.05 155,391.05
----------- ----------- ----------- ----------- -----------
5. SALE OF ASSETS 0.00
----------- ----------- ----------- ----------- -----------
6. OTHER (attach list) 0.00
----------- ----------- ----------- ----------- -----------
TOTAL RECEIPTS** 63,865.00 91,526.05 0.00 0.00 155,391.05
----------- ----------- ----------- ----------- -----------
(Withdrawal) Contribution by Individual
Debtor MFR-2*
----------- ----------- ----------- ----------- -----------
DISBURSEMENTS:
7. NET PAYROLL 0.00
----------- ----------- ----------- ----------- -----------
8. PAYROLL TAXES PAID 0.00
----------- ----------- ----------- ----------- -----------
9. SALES, USE & OTHER TAXES PAID 10,865.00 10,865.00
----------- ----------- ----------- ----------- -----------
10. SECURED/RENTAL/LEASES 0.00
----------- ----------- ----------- ----------- -----------
11. UTILITIES 0.00
----------- ----------- ----------- ----------- -----------
12. INSURANCE 0.00
----------- ----------- ----------- ----------- -----------
13. INVENTORY PURCHASES 0.00
----------- ----------- ----------- ----------- -----------
14. VEHICLE EXPENSES 0.00
----------- ----------- ----------- ----------- -----------
15. TRAVEL & ENTERTAINMENT 0.00
----------- ----------- ----------- ----------- -----------
16. REPAIRS, MAINTENANCE & SUPPLIES 0.00
----------- ----------- ----------- ----------- -----------
17. ADMINISTRATIVE & SELLING 31.40 22.69 54.09
----------- ----------- ----------- ----------- -----------
18. OTHER (attach list) ADVANCE-RIO GRANDE
DRILLING CO. 63,865.00 80,804.71 144,669.71
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS FROM OPERATIONS 63,896.40 91,692.40 0.00 0.00 155,588.80
----------- ----------- ----------- ----------- -----------
19. PROFESSIONAL FEES 0.00
----------- ----------- ----------- ----------- -----------
20. U.S. TRUSTEE FEES 0.00
----------- ----------- ----------- ----------- -----------
21. OTHER REORGANIZATION EXPENSES (attach list) 0.00
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS** 63,896.40 91,692.40 0.00 0.00 155,588.80
----------- ----------- ----------- ----------- -----------
22. NET CASH FLOW (31.40) (166.35) 0.00 0.00 (197.75)
----------- ----------- ----------- ----------- -----------
23. CASH - END OF MONTH (MOR-2) $ 166.35 $ (0.00) $ 0.00 $ 0.00 $ (0.00)
=========== =========== =========== =========== ===========
</TABLE>
MOR-7 * Applies to Individual debtors only
** Numbers for the current month should balance (match)
Revised 07/01/98
<PAGE> 28
CASE NAME: RIO GRANDE DESERT OIL COMPANY
-----------------------------
CASE NUMBER: 98-55621-C
-----------------------------
CASH ACCOUNT RECONCILIATION
MONTH OF January 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
BANK NAME Comerica Bank-California
------------------------
ACCOUNT NUMBER Account No.-1890630203 N/A N/A
------------------------
ACCOUNT TYPE OPERATING TAX OTHER FUNDS TOTAL
------------------------ ----- ----------- ----------
BANK BALANCE 0 $ 0.00
------------------------ ----- ----- ----------- ----------
DEPOSITS IN TRANSIT 0 $ 0.00
------------------------ ----- ----- ----------- ----------
OUTSTANDING CHECKS 0 $ 0.00
------------------------ ----- ----- ----------- ----------
ADJUSTED BANK BALANCE $ 0.00 $0.00 $0.00 $ 0.00 $ 0.00
------------------------ ----- ----- ----------- ----------
BEGINNING CASH - PER BOOKS $ 0.00 $ 0.00
------------------------ ----- ----- ----------- ----------
RECEIPTS* 74,090.00 $74,090.00
------------------------ ----- ----- ----------- ----------
TRANSFERS BETWEEN ACCOUNTS $ 0.00
------------------------ ----- ----- ----------- ----------
(WITHDRAWAL) CONTRIBUTION BY
INDIVIDUAL DEBTOR MFR-2 $ 0.00
------------------------ ----- ----- ----------- ----------
CHECKS/OTHER DISBURSEMENTS* 74,090.00 $74,090.00
------------------------ ----- ----- ----------- ----------
ENDING CASH - PER BOOKS $ 0.00 $ 0.00
======================== ===== ===== =========== ==========
</TABLE>
MOR-8 *Numbers should balance (match) TOTAL RECEIPTS and
TOTAL DISBURSEMENTS lines on MOR-7
Revised 7/01/98
<PAGE> 29
CASE NAME: RIO GRANDE DESERT OIL COMPANY
---------------------------------
CASE NUMBER: 98-55621-C
---------------------------------
PAYMENTS TO INSIDERS AND PROFESSIONALS
Of the total disbursements shown for the month, list the amount paid to insiders
(as defined in Section 101(31)(A)-(F) of the U.S. Bankruptcy Code) and the
professionals. Also, for insiders, identify the type of compensation paid (e.g.,
salary, commission, bonus, etc.) (Attach additional pages as necessary).
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
INSIDERS: NAME/COMP TYPE November 1998 December 1998 January 1999
------------------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1. RIO GRANDE DRILLING COMPANY 63,865.00 80,804.71 74,090.00
---------- ---------- ---------- ----------
2.
---------- ---------- ---------- ----------
3.
---------- ---------- ---------- ----------
4.
---------- ---------- ---------- ----------
5.
---------- ---------- ---------- ----------
6.
---------- ---------- ---------- ----------
TOTAL INSIDERS (MOR-1) $63,865.00 $80,804.71 $74,090.00 $ 0.00
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
PROFESSIONALS November 1998
------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1.
--------- ---------- ---------- ----------
2.
--------- ---------- ---------- ----------
3.
--------- ---------- ---------- ----------
4.
--------- ---------- ---------- ----------
5.
--------- ---------- ---------- ----------
6.
--------- ---------- ---------- ----------
TOTAL PROFESSIONALS (MOR-1) $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========== ========== ==========
</TABLE>
MOR-9 Revised 07/01/98
<PAGE> 30
MOR-1 UNITED STATES BANKRUPTCY COURT
CASE NAME: RIO GRANDE OFFSHORE, LTD. PETITION DATE: 11/12/98
-------------------------- ---------------
CASE NUMBER: 98-55622-C DISTRICT OF TEXAS: Western
-------------------------- ---------------
PROPOSED PLAN DATE: DIVISION: San Antonio
--------------------- ---------------
<TABLE>
<CAPTION>
MONTHLY OPERATING REPORT SUMMARY FOR MONTH YEAR
------------------------------------------ ----
MONTH November 1998 December 1998 January 1999
----- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-6) 268,714.35 347,309.78 288,138.01 0.00 0.00
---------- ---------- ---------- ---- ----
INCOME BEFORE INT; DEPREC./TAX (MOR-6) 69,388.60 254,679.34 106,385.51 0.00 0.00
---------- ---------- ---------- ---- ----
NET INCOME (LOSS) (MOR-6) 128,955.57 151,226.20 26,315.64 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO INSIDERS (MOR-9) 64,000.00 81,550.00 97,500.00 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO PROFESSIONALS (MOR-9) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
TOTAL DISBURSEMENTS (MOR-8) 339,697.57 364,518.75 316,017.53 0.00 0.00
========== ========== ========== ==== ====
</TABLE>
*** The original of this document must be filed with the United States
Bankruptcy Court and a copy must be sent to the United States Trustee***
<TABLE>
<CAPTION>
REQUIRED INSURANCE MAINTAINED
AS OF SIGNATURE DATE EXP.
DATE
- ----------------------------- ---------
<S> <C> <C>
CASUALTY YES [X] NO [ ] 05-01-99
LIABILITY YES [X] NO [ ] 05-01-99
VEHICLE YES [X] NO [ ] 05-01-99
WORKER'S YES [X] NO [ ] 05-01-99
EXCESS YES [X] NO [ ] 05-01-99
</TABLE>
<TABLE>
<CAPTION>
CIRCLE ONE
<S> <C>
Are all accounts receivable being collected within terms? Yes [X] No [ ]
Are all post-petition liabilities, including taxes, being paid within terms? Yes [X] No [ ]
Have any pre-petition liabilities been paid? Yes [X] No [ ]
if so, describe _________________________________________________________
Are all funds received being deposited into DIP bank accounts? Yes [X] No [ ]
Were any assets disposed of outside the normal course of business? Yes [ ] No [X]
if so, describe _________________________________________________________
Are all U.S. Trustee Quarterly Fee Payments current? Yes [X} No [ ]
What is the status of your Plan of Reorganization? Filed Plan - December 11, 1998
------------------------------
</TABLE>
ATTORNEY NAME: DEBORAH D. WILLIAMSON
-----------------------------
FIRM NAME: COX & SMITH INCORPORATED
-----------------------------
ADDRESS: 112 EAST PECAN STREET
-----------------------------
SUITE 1800
-----------------------------
CITY, STATE, ZIP: SAN ANTONIO, TEXAS 78205
-----------------------------
TELEPHONE: (210)554-5500
-----------------------------
I certify under penalty of perjury that the following complete
Monthly Operating Report (MOR), consisting of MOR-1 through
MOR-9 plus attachments, is true and correct.
SIGNED X /s/ GARY SCHEELE TITLE: Vice President
-------------------- -------------------
(ORIGINAL SIGNATURE)
Gary Scheele 03/04/99
- ------------------------- ------------
(PRINT NAME OF SIGNATORY) DATE
MOR-1
Revised 07/01/98
<PAGE> 31
CASE NAME: RIO GRANDE OFFSHORE, LTD.
----------------------------
CASE NUMBER: 98-55622-C
--------------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH MONTH
CONSL. TO 10QSB-
ASSETS 10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
- ------ ---------------- -------------- -------------- ------------ -----
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash 375,498.02 466,112.30 436,606.91 578,177.32
-------------- -------------- -------------- -------------- -----
Accounts Receivable, Net 405,488.15 445,962.30 599,684.19 496,910.83
-------------- -------------- -------------- -------------- -----
Inventory: Lower of Cost
or Market 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- -----
Prepaid Expenses (7,021.26) (7,021.26) (7,021.26) (7,021.26)
-------------- -------------- -------------- -------------- -----
Investments 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- -----
Other-A/R and Advances-Affiliates 1,849,041.07 1,892,081.32 1,890,555.47 1,928,295.45
-------------- -------------- -------------- -------------- -----
TOTAL CURRENT ASSETS 2,623,005.98 2,797,134.66 2,919,825.31 2,996,362.34 0.00
-------------- -------------- -------------- -------------- -----
PROPERTY, PLANT & EQUIP.
@ COST 24,612,211.83 24,372,028.85 24,373,167.11 24,395,567.43
-------------- -------------- -------------- -------------- -----
Less Accumulated Depreciation 17,517,824.24 17,379,046.67 17,480,399.72 17,581,752.77
-------------- -------------- -------------- -------------- -----
NET BOOK VALUE OF PP & E 7,094,387.59 6,992,982.18 6,892,767.39 6,813,814.66 0.00
-------------- -------------- -------------- -------------- -----
OTHER ASSETS
1. Tax Deposits
-------------- -------------- -------------- -------------- -----
2. Investments in Subsidiaries 636,721.47 658,064.17 657,167.71 677,002.98
-------------- -------------- -------------- -------------- -----
3. Other assets, net 880.00 880.00 880.00 480.00
-------------- -------------- -------------- -------------- -----
4.
-------------- -------------- -------------- -------------- -----
TOTAL ASSETS $10,354,995.04 $10,449,061.01 $10,470,640.41 $10,487,659.98 $0.00
============== ============== ============== ============== =====
</TABLE>
* Per Schedules and Statement of Affairs
MOR-2 Revised 07/01/98
<PAGE> 32
CASE NAME: RIO GRANDE OFFSHORE, LTD.
-------------------------
CASE NUMBER: 98-55622-C
-------------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
LIABILITIES & PARTNERS' CONSL. TO --------------- --------------- ---------------
CAPITAL 10QSB-10/31/98 November 1998 December 1998 January 1999
- ----------------------- ---------------- --------------- --------------- --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
POST-PETITION LIABILITIES(MOR-4) 295,629.03 165,982.23 156,686.16
---------------- --------------- --------------- --------------- ------ ------
PRE-PETITION LIABILITIES
Notes Payable - Secured
---------------- --------------- --------------- --------------- ------ ------
Priority Debt
---------------- --------------- --------------- --------------- ------ ------
Federal Income Tax
---------------- --------------- --------------- --------------- ------ ------
FICA/Withholding
---------------- --------------- --------------- --------------- ------ ------
Unsecured Debt
---------------- --------------- --------------- --------------- ------ ------
Other 613,024.75 282,506.12 282,506.12 282,506.12
---------------- --------------- --------------- --------------- ------ ------
TOTAL PRE-PETITION LIABILITIES 613,024.75 282,506.12 282,506.12 282,506.12 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES 613,024.75 578,135.15 448,488.35 439,192.28 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
PARTNERS' CAPITAL (DEFICIT)
General Partner-Rio Grande Drilling Company 223,185.24 223,185.24 223,185.24 223,185.24
---------------- --------------- --------------- --------------- ------ ------
Limited Partner-Rio Grande Desert Oil
Company 17,609,202.96 17,609,202.96 17,609,202.96 17,609,202.96
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: October 31, 1998 (8,090,417.91) (8,090,417.91) (8,090,417.91) (8,090,417.91)
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Post Filing Date 0.00 128,955.57 280,181.77 306,497.41
---------------- --------------- --------------- --------------- ------ ------
TOTAL OWNER'S EQUITY (NET WORTH) 9,741,970.29 9,870,925.86 10,022,152.06 10,048,467.70 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES & PARTNERS' CAPITAL $ 10,354,995.04 $ 10,449,061.01 $ 10,470,640.41 $ 10,487,659.98 $ 0.00 $ 0.00
================ =============== =============== =============== ====== ======
MOR-3 * Per Schedules and Statement of Affairs
</TABLE>
Revised 07/01/98
<PAGE> 33
CASE NAME: RIO GRANDE OFFSHORE, LTD.
------------------------------
CASE NUMBER: 98-55622-C
----------------------------
SCHEDULE OF POST-PETITION LIABILITIES
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
TRADE ACCOUNTS PAYABLE 197,651.62 56,697.17 53,109.08
----------- ----------- ----------- -----------
TAX PAYABLE
Federal Payroll Taxes 0.00 0.00 0.00
----------- ----------- ----------- -----------
State Payroll Taxes 795.21 871.15 761.03
----------- ----------- ----------- -----------
Ad Valorem Taxes 4,000.00 8,000.00 12,000.00
----------- ----------- ----------- -----------
Other Taxes-Production 3,137.96 2,930.56 3,155.43
----------- ----------- ----------- -----------
TOTAL TAXES PAYABLE 7,933.17 11,801.71 15,916.46 0.00
----------- ----------- ----------- -----------
SECURED DEBT POST-PETITION 0.00 0.00 0.00
----------- ----------- ----------- -----------
ACCRUED INTEREST PAYABLE 0.00 0.00 0.00
----------- ----------- ----------- -----------
ACCRUED PROFESSIONAL FEES* 0.00 0.00 0.00
----------- ----------- ----------- -----------
OTHER ACCRUED LIABILITIES
1. Royalties 71,251.56 59,675.11 30,099.50
----------- ----------- ----------- -----------
2. Advances-affiliates 16,385.67 32,978.35 50,382.20
----------- ----------- ----------- -----------
3. Insurance 220.51 454.73 682.95
----------- ----------- ----------- -----------
4. Miscellaneous 2,186.50 4,375.16 6,495.97
----------- ----------- ----------- -----------
TOTAL POST-PETITION LIABILITIES (MOR-3) $295,629.03 $165,982.23 $156,686.16 $ 0.00
=========== =========== =========== ===========
</TABLE>
* PAYMENT REQUIRES COURT APPROVAL
MOR-4
Revised 07/01/98
<PAGE> 34
CASE NAME: RIO GRANDE OFFSHORE, LTD.
-------------------------
CASE NUMBER: 98-55622-C
-------------------------
AGING OF POST-PETITION LIABILITIES
MONTH JANUARY 1999
<TABLE>
<CAPTION>
TRADE FEDERAL STATE AD VALOREM, ADVANCES/ACCOUNTS ROYALTIES AND
DAYS TOTAL ACCOUNTS TAXES TAXES OTHER TAXES PAYABLE TO AFFILIATES REVENUE SUSPENSE OTHER
- -------- ----------- ----------- -------- ------- ----------- --------------------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 110,877.92 53,109.08 761.03 4,000.00 17,524.66 33,254.93 2,228.22
- -------- ----------- ----------- ------ ------- ---------- ---------- ---------- ----------
31-60 23,015.56 0.00 4,000.00 16,592.68 0.00 2,422.88
- -------- ----------- ----------- ------ ------- ---------- ---------- ---------- ----------
61-90 22,792.68 0.00 4,000.00 16,385.67 0.00 2,407.01
- -------- ----------- ----------- ------ ------- ---------- ---------- ---------- ----------
91+ 0.00 0.00 0.00 0.00 0.00 0.00
- -------- ----------- ----------- ------ ------- ---------- ---------- ---------- ----------
TOTAL $156,686.16 $ 53,109.08 $ 0.00 $761.03 $12,000.00 $50,503.01 $33,254.93 $ 7,058.11
======== =========== =========== ====== ======= ========== ========== ========== ==========
AGING OF ACCOUNTS RECEIVABLE
<CAPTION>
MONTH JANUARY 1999 JANUARY 1999 JANUARY 1999
--------------- ----------------------- -------------------
OIL & GAS SALES JOINT INTEREST BILLINGS ADVANCES-AFFILIATES
- ---------- --------------- ----------------------- ------------------- ------- ------ ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 DAYS 433,450.36 13,633,68 37,739.98
- ---------- ----------- ----------- ------------- ----- ----- ----- ---------- -----
31-60 DAYS 2,078.81 3,360.00 59,189.52
- ---------- ----------- ----------- ------------- ----- ----- ----- ---------- -----
61-90 0.04 1,782.69 59,189.52
- ---------- ----------- ----------- ------------- ----- ----- ----- ---------- -----
91+ DAYS (9,169.97) 51,775.22 1,772,176.43
- ---------- ----------- ----------- ------------- ----- ----- ----- ---------- -----
TOTAL $426,359.24 $70,551.59 $1,928,295.45 $0.00 $0.00 $0.00
========== =========== =========== ============= ===== ===== ===== ========== =====
</TABLE>
MOR-5 Revised 07/01/98
<PAGE> 35
CASE NAME:
-----------------------
CASE NUMBER: 98-55622-C
--------------------
STATEMENT OF INCOME (LOSS)
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH FILING TO
November 1998 December 1998 January 1999 DATE
------------- ------------- ------------ ----- -----------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-1) 268,714.35 347,309.78 288,138.01 904,162.14
------------- ------------- ------------ ----- -----------
TOTAL COST OF REVENUES 197,535.94 89,974.37 179,137.34 466,647.65
------------- ------------- ------------ ----- -----------
GROSS PROFIT 71,178.41 257,335.41 109,000.67 0.00 437,514.49
------------- ------------- ------------ ----- -----------
OPERATING EXPENSE:
Selling & Marketing 0.00 0.00 0.00 0.00
------------- ------------- ------------ ----- -----------
General & Administrative 1,789.81 2,656.07 2,615.16 7,061.04
------------- ------------- ------------ ----- -----------
Insiders Compensation 0.00
------------- ------------- ------------ ----- -----------
Professional Fees 0.00
------------- ------------- ------------ ----- -----------
Other 0.00
------------- ------------- ------------ ----- -----------
Other 0.00
------------- ------------- ------------ ----- -----------
TOTAL OPERATING EXPENSES 1,789.81 2,656.07 2,615.16 0.00 7,061.04
------------- ------------- ------------ ----- -----------
INCOME BEFORE INT. DEPR/TAX (MOR-1) 69,388.60 254,679.34 106,385.51 0.00 430,453.45
------------- ------------- ------------ ----- -----------
INTEREST EXPENSE (788.03) 0.00 0.00 (788.03)
------------- ------------- ------------ ----- -----------
DEPRECIATION/AMORTIZATION 101,353.05 101,353.05 101,353.05 304,059.15
------------- ------------- ------------ ----- -----------
OTHER (INCOME) EXPENSE* 190.37 1,203.63 (1,447.91) (53.91)
------------- ------------- ------------ ----- -----------
OTHER ITEMS**(GAIN/LOSS ON SALE OF ASSETS (138,979.66) 0.00 (138,979.66)
------------- ------------- ------------ ----- -----------
EQUITY EARNINGS IN RIO GRANDE GULFMEX, LTD. (26,678.37) 1,120.58 (24,794.09)
------------- ------------- ------------ ----- -----------
MINORITY INTEREST OF RIO GRANDE
GULFMEX, LTD. LIMITED PARTNERS 5,335.67 (224.12) 4,958.82
------------- ------------- ------------ ----- -----------
TOTAL INT. DEPR & OTHER ITEMS (59,566.97) 103,453.14 80,069.87 0.00 164,237.55
------------- ------------- ------------ ----- -----------
NET INCOME TAXES 128,955.57 151,226.20 26,315.64 0.00 266,215.90
------------- ------------- ------------ ----- -----------
FEDERAL INCOME TAXES 0.00
------------- ------------- ------------ ----- -----------
NET INCOME (LOSS) (MOR-1) $ 128,955.57 $ 151,226.20 $ 26,315.64 $0.00 $266,215.90
============= ============= ============ ===== ===========
</TABLE>
Accrual Accounting Required, Otherwise Footnote with Explanation
* Footnote Mandatory
** Unusual and/or infrequent item(s) outside the ordinary course of business
requires footnote.
MOR-6
Revised 07/01/98
<PAGE> 36
CASE NAME: RIO GRANDE OFFSHORE, LTD.
----------------------------------
CASE NUMBER: 98-55622-C
--------------------------------
<TABLE>
<CAPTION>
CASH RECEIPTS AND MONTH MONTH MONTH MONTH FILING TO
DISBURSEMENTS November 1998 December 1998 January 1999 DATE
- ----------------- ------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1. CASH-BEGINNING OF MONTH $375,498.39 $466,112.30 $586,886.18 $ 375,498.39
----------- ----------- ----------- ----------- -------------
RECEIPTS:
2. CASH SALES 0.00 0.00
----------- ----------- ----------- ----------- -------------
3. COLLECTION OF ACCOUNTS RECEIVABLE 287,343.78 485,292.63 301,713.71 1,074,350.12
----------- ----------- ----------- ----------- -------------
4. LOANS & ADVANCES (attach list) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -------------
5. SALE OF ASSETS 11-02-98 - CRUMPTON-WILLIAMS
LEASEHOLD 142,179.67 0.00 0.00 142,179.67
----------- ----------- ----------- ----------- -------------
6. OTHER (attach list) - INTEREST INCOME BANK 788.03 0.00 0.00 788.03
----------- ----------- ----------- ----------- -------------
TOTAL RECEIPTS** 430,311.48 485,292.63 301,713.71 0.00 1,217,317.82
----------- ----------- ----------- ----------- -------------
(Withdrawal) Contribution by Individual
Debtor MFR-2*
DISBURSEMENTS: 0.00
----------- ----------- ----------- ----------- -------------
7. NET PAYROLL 0.00
----------- ----------- ----------- ----------- -------------
8. PAYROLL TAXES PAID 0.00
----------- ----------- ----------- ----------- -------------
9. SALES, USE & OTHER TAXES PAID 0.00
----------- ----------- ----------- ----------- -------------
10. SECURED/RENTAL/LEASES 0.00
----------- ----------- ----------- ----------- -------------
11. UTILITIES 0.00
----------- ----------- ----------- ----------- -------------
12. INSURANCE 0.00
----------- ----------- ----------- ----------- -------------
13. INVENTORY PURCHASES 0.00
----------- ----------- ----------- ----------- -------------
14. VEHICLE EXPENSES 0.00
----------- ----------- ----------- ----------- -------------
15. TRAVEL & ENTERTAINMENT 0.00
----------- ----------- ----------- ----------- -------------
16. REPAIRS, MAINTENANCE & SUPPLIES - A/P FOR
LEASE OPERATING EXPS. 206,947.93 218,806.53 170,479.31 596,233.77
----------- ----------- ----------- ----------- -------------
17. ADMINISTRATIVE & SELLING 0.00
----------- ----------- ----------- ----------- -------------
18. OTHER (attach list) ADVANCE TO RIO GRANDE
DRILLING COMPANY 64,000.00 81,550.00 97,500.00 243,050.00
----------- ----------- ----------- ----------- -------------
BANK FEE 22.00 1,163.92 39.60 1,225.52
----------- ----------- ----------- ----------- -------------
ROYALTIES 68,727.64 62,998.30 47,998.62 179,724.56
----------- ----------- ----------- ----------- -------------
TOTAL DISBURSEMENTS FROM OPERATIONS 339,697.57 364,518.75 316,017.53 0.00 1,020,233.85
----------- ----------- ----------- ----------- -------------
19. PROFESSIONAL FEES 0.00
----------- ----------- ----------- ----------- -------------
20. U.S. TRUSTEE FEES 0.00
----------- ----------- ----------- ----------- -------------
21. OTHER REORGANIZATION EXPENSES (attach list) 0.00
----------- ----------- ----------- ----------- -------------
TOTAL DISBURSEMENTS** 339,697.57 364,518.75 316,017.53 0.00 1,020,233.85
----------- ----------- ----------- ----------- -------------
22. NET CASH FLOW 90,613.91 120,773.88 (14,303.82) 0.00 197,083.97
----------- ----------- ----------- ----------- -------------
23. CASH - END OF MONTH (MOR-2) $466,112.30 $586,886.18 $572,582.36 $ 0.00 $ 572,582.36
=========== =========== =========== =========== =============
</TABLE>
* Applies to Individual debtors only
** Numbers for the current month should balance (match)
MOR-7 Revised 07/01/98
<PAGE> 37
CASE NAME: RIO GRANDE OFFSHORE, LTD.
-------------------------
CASE NUMBER: 98-55622-C
-----------------
CASH ACCOUNT RECONCILIATION
MONTH OF January 1999
<TABLE>
<CAPTION>
BANK NAME Broadway National Bank Comerica Bank - Texas Broadway National Bank
---------------------- ---------------------- ----------------------
ACCOUNT NUMBER Account No. 0363448 Account No. 1880286073 Account No. 0363448
---------------------- ---------------------- ----------------------
ACCOUNT TYPE OPERATING OPERATING MONEY MARKET
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
BANK BALANCE $ 29,364.52 $ 0.00 $ 0.00
---------------------- ---------------------- ----------------------
DEPOSITS IN TRANSIT 0.00 0.00 0.00
---------------------- ---------------------- ----------------------
OUTSTANDING CHECKS 0.00 0.00 0.00
---------------------- ---------------------- ----------------------
BANK FEES, ADJUSTMENTS 0.00 0.00 0.00
---------------------- ---------------------- ----------------------
ADJUSTED BANK BALANCE $ 29,364.52 $ 0.00 $ 0.00
---------------------- ---------------------- ----------------------
BEGINNING CASH - PER BOOKS $ 1,908.57 $ 48.79 $ 0.00
---------------------- ---------------------- ----------------------
RECEIPTS* 0.00 0.00 0.00
---------------------- ---------------------- ----------------------
TRANSFERS BETWEEN ACCOUNTS 152,110.00 0.00 0.00
---------------------- ---------------------- ----------------------
(WITHDRAWAL) CONTRIBUTION BY
INDIVIDUAL DEBTOR MFR-2
---------------------- ---------------------- ----------------------
CHECKS/OTHER DISBURSEMENTS* 218,517.53 0.00 0.00
---------------------- ---------------------- ----------------------
ENDING CASH - PER BOOKS $ (64,498.96) $ 48.79 $ 0.00
====================== ====================== ======================
<CAPTION>
BANK NAME NATIONS Bank - Texas
---------------------- -----------
ACCOUNT NUMBER Account No. 3751223890
---------------------- -----------
ACCOUNT TYPE COLLATERAL TOTAL
---------------------- -----------
<S> <C> <C>
BANK BALANCE $ 637,032.53 $666,397.05
--------------------- -----------
DEPOSITS IN TRANSIT 0.00 0.00
--------------------- -----------
OUTSTANDING CHECKS 0.00 0.00
--------------------- -----------
BANK FEES, ADJUSTMENTS 0.00 0.00
--------------------- -----------
ADJUSTED BANK BALANCE $ 637,032.53 $666,397.05
--------------------- -----------
BEGINNING CASH - PER BOOKS $ 584,928.82 $586,886.18
--------------------- -----------
RECEIPTS* 301,713.71 301,713.71
--------------------- -----------
TRANSFERS BETWEEN ACCOUNTS (249,610.00) (97,500.00)
--------------------- -----------
(WITHDRAWAL) CONTRIBUTION BY
INDIVIDUAL DEBTOR MFR-2 0.00
--------------------- -----------
CHECKS/OTHER DISBURSEMENTS* 0.00 218,517.53
--------------------- -----------
ENDING CASH - PER BOOKS $ 637,032.53 $572,582.36
===================== ===========
</TABLE>
MOR-8 *Numbers should balance (match) TOTAL RECEIPTS and
TOTAL DISBURSEMENTS lines on MOR-7
Revised 7/01/98
<PAGE> 38
CASE NAME: RIO GRANDE OFFSHORE, LTD.
---------------------------
CASE NUMBER: 98-55622-C
---------------------------
PAYMENTS TO INSIDERS AND PROFESSIONALS
Of the total disbursements shown for the month, list the amount paid to insiders
(as defined in Section 101(31)(A)-(F) of the U.S. Bankruptcy Code) and the
professional. Also, for insiders, identify the type of compensation paid (e.g.,
salary, commission, bonus, etc.) (Attach additional pages as necessary).
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
INSIDERS: NAME/COMP TYPE November 1998 December 1998 January 1999
------------------------- -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1. RIO GRANDE DESERT COMPANY-ADVANCE 64,000.00 81,550.00 74,090.00
---------- ---------- ---------- ----------
2. RIO GRANDE GULFMEX, LTD-ADVANCE 0.00 0.00 23,410.00
---------- ---------- ---------- ----------
3.
---------- ---------- ---------- ----------
4.
---------- ---------- ---------- ----------
5.
---------- ---------- ---------- ----------
6.
---------- ---------- ---------- ----------
TOTAL INSIDERS (MOR-1) $64,000.00 $81,550.00 $97,500.00 $ 0.00
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
PROFESSIONALS November 1998
------------- -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1.
--------- ---------- ---------- ----------
2.
--------- ---------- ---------- ----------
3.
--------- ---------- ---------- ----------
4.
--------- ---------- ---------- ----------
5.
--------- ---------- ---------- ----------
6.
--------- ---------- ---------- ----------
TOTAL PROFESSIONALS (MOR-1) $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========== ========== ==========
</TABLE>
MOR-9 Revised 07/01/98
<PAGE> 39
MOR-1 UNITED STATES BANKRUPTCY COURT
CASE NAME: RIO GRANDE GULFMEX, LTD. PETITION DATE: 11/12/98
-------------------------- ---------------
CASE NUMBER: 98-55623-C DISTRICT OF TEXAS: Western
-------------------------- ---------------
PROPOSED PLAN DATE: DIVISION: San Antonio
--------------------- ---------------
<TABLE>
<CAPTION>
MONTHLY OPERATING REPORT SUMMARY FOR MONTH YEAR
------------------------------------------ ----
MONTH November 1998 December 1998 January 1999
----- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-6) 44,574.50 40,490.91 36,565.19 0.00 0.00
---------- ---------- ---------- ---- ----
INCOME BEFORE INT; DEPREC./TAX (MOR-6) 32,322.98 15,902.46 35,066.93 0.00 0.00
---------- ---------- ---------- ---- ----
NET INCOME (LOSS) (MOR-6) 26,678.37 5,629.62 18,043.88 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO INSIDERS (MOR-9) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
PAYMENTS TO PROFESSIONALS (MOR-9) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---- ----
TOTAL DISBURSEMENTS (MOR-8) 14,111.90 12,937.27 49,888.22 0.00 0.00
========== ========== ========== ==== ====
</TABLE>
*** The original of this document must be filed with the United States
Bankruptcy Court and a copy must be sent to the United States Trustee***
<TABLE>
<CAPTION>
REQUIRED INSURANCE MAINTAINED
AS OF SIGNATURE DATE EXP.
DATE
- ----------------------------- ---------
<S> <C> <C>
CASUALTY YES [X] NO [ ] 05-01-99
LIABILITY YES [X] NO [ ] 05-01-99
VEHICLE YES [X] NO [ ] 05-01-99
WORKER'S YES [X] NO [ ] 05-01-99
EXCESS YES [X] NO [ ] 05-01-99
</TABLE>
<TABLE>
<S> <C>
Are all accounts receivable being collected within terms? Yes [X] No [ ]
Are all post-petition liabilities, including taxes, being paid within terms? Yes [X] No [ ]
Have any pre-petition liabilities been paid? Yes [X] No [ ]
If so, describe _________________________________________________________
Are all funds received being deposited into DIP bank accounts? Yes [X] No [ ]
Were any assets disposed of outside the normal course of business? Yes [ ] No [X]
If so, describe _________________________________________________________
Are all U.S. Trustee Quarterly Fee Payments current? Yes [X} No [ ]
What is the status of your Plan of Reorganization? Filed Plan - December 11, 1998
------------------------------
</TABLE>
ATTORNEY NAME: DEBORAH D. WILLIAMSON
-----------------------------
FIRM NAME: COX & SMITH INCORPORATED
-----------------------------
ADDRESS: 112 EAST PECAN STREET
-----------------------------
SUITE 1800
-----------------------------
CITY, STATE, ZIP: SAN ANTONIO, TEXAS 78205
-----------------------------
TELEPHONE: (210)-554-5500
-----------------------------
I certify under penalty of perjury that the following complete
Monthly Operating Report (MOR), consisting of MOR-1 through
MOR-9 plus attachments, is true and correct.
SIGNED X /s/ GARY SCHEELE TITLE: Vice President
-------------------- -------------------
(ORIGINAL SIGNATURE)
Gary Scheele 03/04/99
- ------------------------- ------------
(PRINT NAME OF SIGNATORY) DATE
MOR-1
Revised 07/01/98
<PAGE> 40
CASE NAME: RIO GRANDE GULFMEX, LTD
---------------------------
CASE NUMBER: 98-55623-C
-------------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH MONTH MONTH
ASSETS CONSL. TO 10QSB-
10/31/98 NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash 49,401.24 35,289.34 22,352.07 (4,126.15)
-------------- -------------- -------------- -------------- ----- -----
Accounts Receivable, Net 94,430.34 77,464.01 113,127.64 104,607.08
-------------- -------------- -------------- -------------- ----- -----
Inventory: Lower of Cost
or Market 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
Prepaid Expenses (9,977.72) (9,977.72) (9,977.72) (9,977.72)
-------------- -------------- -------------- -------------- ----- -----
Investments 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
Other-Advances to Affiliated
Companies 293,665.24 299,162.46 385,670.57 414,466.56
-------------- -------------- -------------- -------------- ----- -----
TOTAL CURRENT ASSETS 427,519.10 401,938.09 511,172.56 504,969.77 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
PROPERTY, PLANT & EQUIP.
@ COST 2,213,601.60 2,215,657.30 2,217,066.29 2,217,066.29
-------------- -------------- -------------- -------------- ----- -----
Less Accumulated Depreciation 1,234,388.52 1,240,761.52 1,247,134.52 1,253,507.52
-------------- -------------- -------------- -------------- ----- -----
NET BOOK VALUE OF PP & E 979,213.08 974,895.78 969,931.77 963,558.77 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
OTHER ASSETS
1. Tax Deposits 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
2. Investments in Subsidiaries 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- ----- -----
3. Platform Abandonment Fund 360,857.03 363,678.08 363,678.08 363,678.08
-------------- -------------- -------------- -------------- ----- -----
4. Deferred loan and organi-
zation cost 5,395.68 5,195.84 4,996.00 4,796.16
-------------- -------------- -------------- -------------- ----- -----
TOTAL ASSETS $ 1,772,984.89 $ 1,745,707.79 $ 1,849,778.41 $ 1,837,002.78 $0.00 $0.00
============== ============== ============== ============== ===== =====
</TABLE>
* Per Schedules and Statement of Affairs
MOR-2 Revised 07/01/98
<PAGE> 41
CASE NAME: RIO GRANDE GULFMEX, LTD.
----------------------------
CASE NUMBER: 98-55623-C
----------------------------
COMPARATIVE BALANCE SHEETS
<TABLE>
<CAPTION>
FILING DATE* MONTH MONTH MONTH
LIABILITIES & PARTNER'S CONSL. TO --------------- --------------- ---------------
CAPITAL 10QSB-10/31/98 November 1998 December 1998 January 1999 MONTH MONTH
- ----------------------- ---------------- --------------- --------------- --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
POST-PETITION LIABILITIES(MOR-4) 21,855.06 120,296.05 89,476.53
---------------- --------------- --------------- --------------- ------ ------
PRE-PETITION LIABILITIES
Notes Payable - Secured 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
Priority Debt 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
Federal Income Tax 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
FICA/Withholding 0.00 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
Unsecured Debt-Trade Payable 417,517.07 341,706.56 341,706.56 341,706.56
---------------- --------------- --------------- --------------- ------ ------
Accounts Payable to Affiliated
Companies 35,068.21 35,068.21 35,068.21 35,068.21
---------------- --------------- --------------- --------------- ------ ------
Other-Deferred Abandonment Expense 526,343.98 526,343.98 526,343.98 526,343.98
---------------- --------------- --------------- --------------- ------ ------
TOTAL PRE-PETITION LIABILITIES 978,929.26 903,118.75 903,118.75 903,118.75 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES 978,929.26 924,973.81 1,023,414.80 992,595.28 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
PARTNER'S CAPITAL (DEFICIT)
General Partner-Rio Grande Offshore, Ltd. 54,609.78 54,609.78 54,609.78 54,609.78
---------------- --------------- --------------- --------------- ------ ------
Limited Partner- H. Wayne Hightower 4,132.19 4,132.19 4,132.19 4,132.19
---------------- --------------- --------------- --------------- ------ ------
Limited Partner- H. Wayne Hightower, Jr. 1,770.94 1,770.94 1,770.94 1,770.94
---------------- --------------- --------------- --------------- ------ ------
Limited Partner- Robert A. Buschman 5,903.12 5,903.12 5,903.12 5,903.12
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: October 31, 1998 727,639.60 727,639.60 727,639.60 727,639.60
---------------- --------------- --------------- --------------- ------ ------
RETAINED EARNINGS: Post Filing Date 0.00 26,678.35 32,307.98 50,351.87
---------------- --------------- --------------- --------------- ------ ------
TOTAL OWNER'S EQUITY (NET WORTH) 794,055.63 820,733.98 826,363.61 844,407.50 0.00 0.00
---------------- --------------- --------------- --------------- ------ ------
TOTAL LIABILITIES & PARTNER'S CAPITAL $ 1,772,984.89 $ 1,745,707.79 $ 1,849,778.41 $ 1,837,002.78 $ 0.00 $ 0.00
================ =============== =============== =============== ====== ======
</TABLE>
MOR-3 * Per Schedules and Statement of Affairs Revised 07/01/98
<PAGE> 42
CASE NAME: RIO GRANDE GULFMEX, LTD.
-----------------------------
CASE NUMBER: 98-55623-C
---------------------------
SCHEDULE OF POST-PETITION LIABILITIES
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH
NOVEMBER 1998 DECEMBER 1998 JANUARY 1999
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
TRADE ACCOUNTS PAYABLE 16,262.10 110,804.93 79,265.84
----------- ----------- ----------- ----------- -----------
TAX PAYABLE
Federal Payroll Taxes 0.00
----------- ----------- ----------- ----------- -----------
State Payroll Taxes 0.00
----------- ----------- ----------- ----------- -----------
Ad Valorem Taxes 0.00
----------- ----------- ----------- ----------- -----------
Other Taxes 0.00
----------- ----------- ----------- ----------- -----------
TOTAL TAXES PAYABLE 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
SECURED DEBT POST-PETITION 0.00
----------- ----------- ----------- ----------- -----------
ACCRUED INTEREST PAYABLE 0.00
----------- ----------- ----------- ----------- -----------
ACCRUED PROFESSIONAL FEES* 0.00
----------- ----------- ----------- ----------- -----------
OTHER ACCRUED LIABILITIES
1. Advances-Affiliates 500.00 1,000.00 (857.68)
----------- ----------- ----------- ----------- -----------
2. Royalties payable 3,633.64 3,331.80 2,209.05
----------- ----------- ----------- ----------- -----------
3. Deferred abandonment Expense 1,459.32 5,159.32 8,859.32
----------- ----------- ----------- ----------- -----------
TOTAL POST-PETITION LIABILITIES (MOR-3) $ 21,855.06 $120,296.05 $ 89,476.53 $ 0.00 $ 0.00
=========== =========== =========== =========== ===========
</TABLE>
* PAYMENT REQUIRES COURT APPROVAL
MOR-4
Revised 07/01/98
<PAGE> 43
CASE NAME: RIO GRANDE GULFMEX, LTD.
------------------------
CASE NUMBER: 98-55623-C
----------
AGING OF POST-PETITION LIABILITIES
MONTH JANUARY 1999
<TABLE>
<CAPTION>
TRADE FEDERAL STATE AD VALOREM, ADVANCES/ACCOUNTS ROYALTIES AND
DAYS TOTAL ACCOUNTS TAXES TAXES OTHER TAXES PAYABLE TO AFFILIATES REVENUE SUSPENSE OTHER
- -------- ----------- ----------- -------- ------- ----------- --------------------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 14,141.88 7,732.83 500.00 2,209.05 3,700.00
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
31-60 75,334.65 71,134.65 500.00 0.00 3,700.00
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
61-90 0.00 0.00
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
91+ 0.00 0.00 0.00 0.00
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ----------
TOTAL(1) $ 89,476.53 $ 78,867.48 $ 0.00 $ 0.00 $ 0.00 $1,000.00 $ 2,209.05 $ 7,400.00
======== =========== =========== ====== ======= ========== ========= ========== ==========
</TABLE>
AGING OF ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
MONTH January 1999 January 1999
OIL & GAS SALES ADVANCES-AFFILIATES
- -------- --------------- ------------------- ----------------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-30 DAYS 88,867.30 28,795,99
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ---------
31-60 DAYS 6,401.00 86,508.11
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ---------
61-90 9,338.78 5,497.22
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ---------
91+ DAYS 0.00 293,665,24
- -------- ----------- ----------- ------ ------- ---------- --------- ---------- ---------
TOTAL $104,607.08 $414,466.56 $ 0.00 $ 0.00 $ 0.00 $ 0.00
======== =========== =========== ====== ======= ========== ========= ========== =========
</TABLE>
MOR - 5 REVISED 07/01/98
<PAGE> 44
CASE NAME: RIO GRANDE GULMEX, LTD.
----------------------
CASE NUMBER: 98-55623-C
----------------------
STATEMENT OF INCOME (LOSS)
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH FILING TO
NOVEMBER 1998 DECEMBER 1998 JANUARY 1999 DATE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES (MOR-1) 44,574.50 40,490.91 36,565.19 121,630.60
---------- ---------- ---------- ------- -----------
TOTAL COST OF REVENUES 11,751.52 24,088.45 998.61 36,838.58
---------- ---------- ---------- ------- -----------
GROSS PROFIT 32,822.98 16,402.46 35,566.58 0.00 84,792.02
---------- ---------- ---------- ------- -----------
OPERATING EXPENSE:
Selling & Marketing 0.00 0.00 0.00 0.00
---------- ---------- ---------- ------- -----------
General & Administrative 500.00 500.00 500.00 1,500.00
---------- ---------- ---------- ------- -----------
Insiders Compensation 0.00 0.00 0.00 0.00
---------- ---------- ---------- ------- -----------
Professional Fees 0.00 0.00 0.00 0.00
---------- ---------- ---------- ------- -----------
Other 0.00 0.00 0.00 0.00
---------- ---------- ---------- ------- -----------
Other 0.00 0.00 (0.35) (0.35)
---------- ---------- ---------- ------- -----------
TOTAL OPERATING EXPENSES 500.00 500.00 499.65 0.0 1,499.65
---------- ---------- ---------- ------- -----------
INCOME BEFORE INT. DEPR/TAX (MOR-1) 32,322.98 15,902.46 35,066.93 0.0 83,292.37
---------- ---------- ---------- ------- -----------
INTEREST EXPENSE (INCOME) (4,628.23) 0.00 (4,628.23)
---------- ---------- ---------- ------- -----------
DEPRECIATION AND AMORTIZATION 6,572.84 6,572.84 13,323.05 26,468.73
---------- ---------- ---------- ------- -----------
OTHER (INCOME) EXPENSE* PROVISION FOR ABANDONMENT 3,700.00 3,700.00 3,700.00 11,100.00
---------- ---------- ---------- ------- -----------
OTHER ITEMS** 0.00
---------- ---------- ---------- ------- -----------
TOTAL INT. DEPR & OTHER ITEMS 5,644.61 10,272.84 17,023.05 0.00 32,940.50
---------- ---------- ---------- ------- -----------
NET INCOME BEFORE TAXES 26,678.37 5,629.62 18,043.88 0.00 50,351.87
---------- ---------- ---------- ------- -----------
FEDERAL INCOME TAXES 0.00
---------- ---------- ---------- ------- -----------
NET INCOME (LOSS) (MOR-1) $26,678.37 $ 5,629.62 $18,043.88 $0.00 $ 50,351.87
========== ========== ========== ======= ===========
</TABLE>
Accrual Accounting Required, Otherwise Footnote with Explanation
* Footnote Mandatory
** Unusual and/or infrequent item(s) outside the ordinary course of business
requires footnote.
R-6 Revised 07/01/98
<PAGE> 45
CASE NAME: RIO GRANDE GULFMEX, LTD.
----------------------------------
CASE NUMBER: 98-55623-C
--------------------------------
<TABLE>
<CAPTION>
CASH RECEIPTS AND MONTH MONTH MONTH MONTH FILING TO
DISBURSEMENTS NOVEMBER 1998 DECEMBER 1998 JANUARY 1999 DATE
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1. CASH-BEGINNING OF MONTH $ 49,401.24 $ 35,289.34 $ 22,352.07 $ 49,401.24
----------- ----------- ----------- ----------- -----------
RECEIPTS:
2. CASH SALES 0.00
----------- ----------- ----------- ----------- -----------
3. COLLECTION OF ACCOUNTS RECEIVABLE 0.00
----------- ----------- ----------- ----------- -----------
4. LOANS & ADVANCES (attach list) 0.00
----------- ----------- ----------- ----------- -----------
5. SALE OF ASSETS 0.00
----------- ----------- ----------- ----------- -----------
6. OTHER (attach list) INTERCOMPANY ADVANCE 23,410.00 23,410.00
----------- ----------- ----------- ----------- -----------
TOTAL RECEIPTS** 0.00 0.00 23,410.00 0.00 23,410.00
----------- ----------- ----------- ----------- -----------
(Withdrawal) Contribution by Individual
Debtor MFR-2*
----------- ----------- ----------- ----------- -----------
DISBURSEMENTS:
7. NET PAYROLL 0.00
----------- ----------- ----------- ----------- -----------
8. PAYROLL TAXES PAID 0.00
----------- ----------- ----------- ----------- -----------
9. SALES, USE & OTHER TAXES PAID 0.00
----------- ----------- ----------- ----------- -----------
10. SECURED/RENTAL/LEASES 0.00
----------- ----------- ----------- ----------- -----------
11. UTILITIES 0.00
----------- ----------- ----------- ----------- -----------
12. INSURANCE 0.00
----------- ----------- ----------- ----------- -----------
13. INVENTORY PURCHASES 0.00
----------- ----------- ----------- ----------- -----------
14. VEHICLE EXPENSES 0.00
----------- ----------- ----------- ----------- -----------
15. TRAVEL & ENTERTAINMENT 0.00
----------- ----------- ----------- ----------- -----------
16. REPAIRS, MAINTENANCE & SUPPLIES LOE'S 2,519.30 8,146.31 45,399.07 56,064.68
----------- ----------- ----------- ----------- -----------
17. ADMINISTRATIVE & SELLING 0.00
----------- ----------- ----------- ----------- -----------
18. OTHER (attach list) ROYALTIES 11,592.60 4,790.96 4,489.15 20,872.71
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS FROM OPERATIONS 14,111.90 12,937.27 49,888.22 0.00 76,937.39
----------- ----------- ----------- ----------- -----------
19. PROFESSIONAL FEES 0.00
----------- ----------- ----------- ----------- -----------
20. U.S. TRUSTEE FEES 0.00
----------- ----------- ----------- ----------- -----------
21. OTHER REORGANIZATION EXPENSES (attach list) 0.00
----------- ----------- ----------- ----------- -----------
TOTAL DISBURSEMENTS** 14,111.90 12,937.27 49,888.22 0.00 76,937.39
----------- ----------- ----------- ----------- -----------
22. NET CASH FLOW (14,111.90) (12,937.27) (26,478.22) 0.00 (53,527.39)
----------- ----------- ----------- ----------- -----------
23. CASH - END OF MONTH (MOR-2) $ 35,289.34 $ 22,352.07 $ (4,126.15) $ 0.00 $ (4,126.15)
=========== =========== =========== =========== ===========
</TABLE>
* Applies to Individual debtors only
<PAGE> 46
CASE NAME: RIO GRANDE GULFMEX, LTD.
------------------------
CASE NUMBER: 98-55623-C
------------------------
CASH ACCOUNT RECONCILIATION
MONTH OF January 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
BANK NAME Broadway National Bank
----------------------
ACCOUNT NUMBER Account No. 0363472 N/A N/A
----------------------
ACCOUNT TYPE OPERATING TAX OTHER FUNDS TOTAL
---------------------- ----- ----------- ----------
BANK BALANCE 2689.09 $ 2,689.09
---------------------- ----- ----- ----------- ----------
DEPOSITS IN TRANSIT 0 $ 0.00
---------------------- ----- ----- ----------- ----------
OUTSTANDING CHECKS 6815.24 $ 6,815.24
---------------------- ----- ----- ----------- ----------
ADJUSTED BANK BALANCE $ (4,126.15) $0.00 $0.00 $ 0.00 $(4,126.15)
---------------------- ----- ----- ----------- ----------
BEGINNING CASH - PER BOOKS $ 22,352.07 $22,352.07
---------------------- ----- ----- ----------- ----------
RECEIPTS* Intercompany Advance 23,410.00 $23,410.00
---------------------- ----- ----- ----------- ----------
TRANSFERS BETWEEN ACCOUNTS 0 $ 0.00
---------------------- ----- ----- ----------- ----------
(WITHDRAWAL) CONTRIBUTION BY 0 $ 0.00
INDIVIDUAL DEBTOR MFR-2
---------------------- ----- ----- ----------- ----------
CHECKS/OTHER DISBURSEMENTS* 49,888.22 $49,888.22
---------------------- ----- ----- ----------- ----------
ENDING CASH - PER BOOKS $ (4,126.15) $(4,126.15)
====================== ===== ===== =========== ==========
</TABLE>
MOR-8 *Numbers should balance (match) TOTAL RECEIPTS and
TOTAL DISBURSEMENTS lines on MOR-7
Revised 7/01/98
<PAGE> 47
CASE NAME: RIO GRANDE GULFMEX, LTD.
----------------------------
CASE NUMBER: 98-55623-C
----------------------------
PAYMENTS TO INSIDERS AND PROFESSIONALS
Of the total disbursements shown for the month, list the amount paid to insiders
(as defined in Section 101(31)(A)-(F) of the U.S. Bankruptcy Code) and the
professionals. Also, for insiders, identify the type of compensation paid (e.g.,
salary, commission, bonus, etc.) (Attach additional pages as necessary).
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
INSIDERS: NAME/COMP TYPE November 1998 December 1998 January 1999
------------------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1. NONE NONE NONE
--------- ---------- ---------- ----------
2.
--------- ---------- ---------- ----------
3.
--------- ---------- ---------- ----------
4.
--------- ---------- ---------- ----------
5.
--------- ---------- ---------- ----------
6.
--------- ---------- ---------- ----------
TOTAL INSIDERS (MOR-1) $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH
PROFESSIONALS November 1998
------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
1. NONE
--------- ---------- ---------- ----------
2.
--------- ---------- ---------- ----------
3.
--------- ---------- ---------- ----------
4.
--------- ---------- ---------- ----------
5.
--------- ---------- ---------- ----------
6.
--------- ---------- ---------- ----------
TOTAL PROFESSIONALS (MOR-1) $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========== ========== ==========
</TABLE>
MOR-9 Revised 07/01/98
