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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report: October 13, 2000
EVERGREEN RESOURCES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 0-13171 84-0834147
-------- ------- ----------
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification Number)
1401 17th St., Suite 1200, Denver, Colorado 80202
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 298-8100.
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ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Report of Independent Certified Public Accountants.
Statements of Natural Gas Revenues and Direct Operating
Expenses of the Acquisition Properties for the Years ended
December 31, 1999 and 1998 (audited) and for the Six Months
ended June 30, 2000 and 1999 (unaudited).
Notes to Statements of Natural Gas Revenues and Direct
Operating Expenses of the Acquisition Properties.
(b) Pro Forma Financial Information.
The following unaudited pro forma financial information of
Evergreen Resources, Inc. is attached as part of this report.
Unaudited Pro Forma Consolidated Condensed Balance Sheet as of
June 30, 2000.
Unaudited Pro Forma Consolidated Condensed Statement of
Operations for the Six Months ended June 30, 2000.
Unaudited Pro Forma Consolidated Condensed Statement of
Operations for the Year ended December 31, 1999.
(c) Exhibits
Exhibit No. Description
----------- -----------
2.1* Agreement for Purchase and Sale dated
September 19, 2000, by and between Apache
Canyon Gas, L.L.C., as Seller and
Evergreen Resources, Inc. as Buyer
2.2* Agreement for Purchase and Sale dated
September 19, 2000, by and between Apache
Canyon Gas, L.L.C., as seller and
Evergreen Resources, Inc. as Buyer
(Lorencito)
*Previously filed
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
Evergreen Resources, Inc.
Denver, Colorado
We have audited the accompanying statements of natural gas revenues and
direct operating expenses of the properties (the "Acquisition Properties")
acquired by Evergreen Resources, Inc. from Apache Canyon Gas, L.L.C., an
affiliate of KLT Gas Inc., an indirect wholly owned subsidiary of Kansas City
Power and Light Company for the years ended December 31, 1999 and 1998. These
financial statements are the responsibility of the management of Evergreen
Resources, Inc. Our responsibility is to express an opinion on the financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our
opinion.
The accompanying financial statements were prepared on the basis discussed in
Note 1 and are for the purpose of complying with certain rules and regulations
of the Securities and Exchange Commission ("SEC") for inclusion in certain SEC
regulatory reports and filings of Evergreen Resources, Inc. and are not intended
to be a complete presentation of the revenues and expenses of the Acquisition
Properties.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the revenues and direct operating expenses of the
Acquisition Properties for the years ended December 31, 1999 and 1998 in
conformity with generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP
Denver, Colorado
October 3, 2000
3
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ACQUISITION PROPERTIES
STATEMENTS OF NATURAL GAS REVENUES AND
DIRECT OPERATING EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended Years Ended
June 30, December 31,
------------------ -----------------
2000 1999 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Natural gas revenues $ 10,911 $ 5,093 $ 12,824 $ 6,256
Direct Operating Expenses:
Lease operating expenses 2,564 2,927 5,288 3,093
Production taxes 634 271 681 329
----------- ------------ ---------- ----------
Total direct operating expenses 3,198 3,198 5,969 3,422
----------- ------------ ---------- ----------
Revenues in excess of direct operating expenses $ 7,713 $ 1,895 $ 6,855 $ 2,834
=========== ============ ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
ACQUISITION PROPERTIES
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On September 20, 2000, Evergreen Resources, Inc. ("Evergreen") acquired
interests in approximately 24,000 acres of producing coal bed methane
properties in the Raton Basin (the "Acquisition Properties") from
Apache Canyon Gas, L.L.C., an affiliate of KLT Gas Inc., an indirect
wholly owned subsidiary of Kansas City Power & Light Company
("Apache"). The total consideration paid by Evergreen on closing was
approximately $70 million in cash, $100 million in mandatory redeemable
preferred stock and $6 million in Evergreen's common stock. The
transaction was effective September 1, 2000. The acquisition has been
accounted for as a purchase and the results of operations for the
Acquisition Properties will be included in Evergreen's results of
operations beginning September 1, 2000.
The accompanying historical statements of natural gas revenues and
direct operating expenses (the "historical statements") are presented
using accrual basis, full cost accounting and relate to the interests
in the producing gas properties described above. These historical
statements may not be representative of future operations. The
historical statements were prepared from the historical accounting
records of Apache. The historical statements do not include Federal and
state income taxes, interest expense, depletion, depreciation and
amortization or general and administrative expenses. The historical
statements include natural gas revenues and direct lease operating and
production expenses, including production and ad valorem taxes, for all
the periods presented.
Complete financial statements, including a balance sheet, are not
presented as the Acquisition Properties were not maintained as a
separate business unit, and assets, liabilities or indirect operating
costs applicable to the Acquisition Properties were not segregated.
Accordingly, it is not practicable to identify all assets, liabilities
or indirect operating costs applicable to the Acquisition Properties.
2. SUPPLEMENTAL INFORMATION ON GAS RESERVES (UNAUDITED)
There are numerous uncertainties inherent in estimating quantities of
proved reserves and in projecting the future rates of production and
timing of development expenditures. All reserves are located in the
United States. The following reserve data represent estimates only
and should not be construed as the current market value of the
Acquisition Properties or the cost that would be incurred to obtain
equivalent reserves.
An analysis of the estimated changes in quantities of proved natural
gas reserves for the years ended December 31, 1999 and 1998 is shown
below:
<TABLE>
<CAPTION>
1999 1998
Proved Reserves: Gas (Mmcf) Gas (Mmcf)
------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Beginning of year 167,467 73,604
Production (6,986) (3,575)
Revisions of previous estimates (19,841) 5,010
Extensions and discoveries 43,966 92,428
------------ ------------
End of year 184,606 167,467
============ ============
Proved developed reserves 157,205 129,655
============ ============
</TABLE>
5
<PAGE>
The estimated standardized measure of discounted future net cash flows
relating to proved reserves at December 31, 1999 and 1998 is shown
below, in thousands. No deductions were made for general overhead,
depletion, depreciation, and amortization, debt service and income
taxes or any indirect costs.
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1999 1998
----------------- ------------------
(in thousands)
<S> <C> <C>
Future cash inflows $ 347,059 $ 334,933
Future production costs (123,554) (112,272)
Future development costs (10,433) (7,260)
----------------- ------------------
Future net cash flows 213,072 215,401
10% annual discount for estimated timing of cash flows (102,888) (111,000)
----------------- ------------------
Standardized measure of discounted future net cash flows
relating to proved reserves $ 110,184 $ 104,401
================= ==================
</TABLE>
An analysis of the sources of changes in the standardized measure of
discounted future net cash flows relating to proved reserves on the
pricing basis described above for the Acquisition Properties for the
years ended December 31, 1999 and 1998 is shown below.
<TABLE>
<CAPTION>
December 31,
------------------------
1999 1998
---------- ----------
(in thousands)
<S> <C> <C>
Balance, beginning of period $ 104,401 $ 59,957 $
Increase (decrease) in discounted future net cash flows:
Sales of natural gas, net of production costs (6,855) (2,834)
Extensions and discoveries 27,997 46,188
Net change in sales prices, net of production costs (17,549) (1,243)
Revisions of quantity estimates (13,000) 3,000
Changes in future development costs (644) (743)
Accretion of discount 10,440 5,996
Changes in rates of production and other 5,395 (5,920)
---------- ----------
Balance, end of period $ 110,185 $ 104,401
========== ==========
</TABLE>
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<PAGE>
EVERGREEN RESOURCES, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
OVERVIEW
On September 20, 2000, Evergreen Resources, Inc. ("Evergreen") acquired
interests in approximately 24,000 acres of producing coal bed methane properties
in the Raton Basin from Apache Canyon Gas, L.L.C., an affiliate of KLT Gas,
Inc., an indirect wholly owned subsidiary of Kansas City Power and Light Company
("Apache"). The total consideration paid by Evergreen on closing was
approximately $70 million in cash, $100 million in mandatory redeemable
preferred stock and $6 million in Evergreen's common stock. The transaction was
effective September 1, 2000.
The acquired properties, estimated to contain 153 billion cubic feet (Bcf) of
proved gas reserves, are located in the southern Colorado portion of the Raton
Basin. As of September 20, 2000, the acquired properties were generating daily
net sales of 28 million cubic feet (MMcf) of gas from a total of 151 net wells.
The number of shares of Evergreen's common stock issued upon the closing of
the acquisition was 201,748 and was calculated based on a per-share price
equal to the average closing price of Evergreen's common stock during the
fifteen-trading-day period ending on the day prior to the closing.
In addition to the consideration paid at the closing of the acquisition,
Evergreen will be required at January 5, 2001 to deliver additional shares of
its common stock valued at $4 million, in the event the average of the
monthly settle prices for the 2001 NYMEX natural gas futures contracts equals
or exceeds $4.465 per MMBtu. The number of shares of stock issuable would be
calculated based on a per-share price equal to the average closing price of
Evergreen's common stock during the fifteen-trading-day period ending on the
day prior to the date of delivery of such stock to Apache. As additional
purchase consideration, Evergreen is required to pay a monthly net profits
interest payment estimated at approximately $500,000 through the earlier of
the redemption of the preferred stock or January 1, 2003.
To provide the cash portion of the purchase price for this acquisition,
Evergreen drew on its credit facility with Hibernia National Bank, BNP-Paribas,
Wells Fargo Bank Texas, NA, Bank One, NA, Fleet National Bank and Bank of
Scotland.
The unaudited pro forma consolidated condensed statements of operations for
the year ended December 31, 1999 and the six months ended June 30, 2000 give
effect to the acquisition by Evergreen of certain producing gas properties
located in the state of Colorado (the "Acquisition Properties") as if the
acquisition, accounted for as a purchase, had occurred on January 1, 1999.
The pro forma information is based on the historical consolidated financial
statements of Evergreen and the historical statements of Natural Gas Revenues
and Direct Operating Expenses of the Acquisition Properties for the year
ended December 31, 1999 and six month period ended June 30, 2000 after giving
effect to the acquisition and the assumptions and adjustments in the
accompanying notes to the unaudited pro forma consolidated condensed
financial statements. The unaudited pro forma consolidated condensed balance
sheet as of June 30, 2000 gives effect to the acquisition as if it had
occurred on June 30, 2000. The pro forma financial statements reflect the
preliminary allocation of the purchase price. The purchase price will be
finalized upon completion of management's review and resolution of the
purchase contingencies.
The unaudited pro forma consolidated condensed financial statements may not be
indicative of the results that actually would have occurred if the acquisition
had been effective on the date indicated or which may be obtained in the future.
The pro forma financial statements should be read in conjunction with the
historical consolidated financial statements of Evergreen and the historical
statements of Natural Gas Revenues and Direct Operating Expenses of the
Acquisition Properties.
7
<PAGE>
EVERGREEN RESOURCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
Evergreen Acquisition
Historical Adjustments Pro Forma
---------- ----------- ------------
<S> <C> <C> <C>
Current assets $ 9,179 $ -- $ 9,179
Property, plant and equipment, net 206,814 176,000 (a) 382,814
Other assets, net 2,738 -- 2,738
---------- ----------- ------------
$ 218,731 $ 176,000 $ 394,731
========== =========== ============
Current liabilities $ 5,659 $ -- $ 5,659
Note payable 39,500 70,000 (a) 109,500
Deferred taxes and other liabilities 11,110 -- 11,110
Redeemable Preferred Stock -- 100,000 (a) 100,000
Stockholders' Equity 162,462 6,000 (a) 168,462
---------- ----------- ------------
Total Liabilities and Stockholders' Equity $ 218,731 $ 176,000 $ 394,731
========== =========== ============
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(a) To record purchase price of the oil and gas properties from Apache for
consideration of $70 million in cash funded through Evergreen's line of
credit, $100 million in mandatory redeemable preferred stock and $6 million
in Evergreen's common stock.
The acquisition adjustments do not reflect additional contingent purchase
consideration. Evergreen will be required to deliver at January 5, 2001
additional shares of common stock valued at $4 million in the event settle
prices for certain natural gas futures contracts exceed certain amounts as
defined in the purchase agreement. Also, Evergreen is required to pay a
monthly net profits interest through the earlier of redemption of the
preferred stock or January 1, 2003.
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EVERGREEN RESOURCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Evergreen Acquisition
Historical Adjustments Pro Forma
---------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Natural gas revenues $ 15,649 $ 10,911 (a) $ 26,560
Interest and other 162 -- 162
---------- ------------ ------------
Total revenues 15,811 10,911 26,722
---------- ------------ ------------
Expenses:
Lease operating expense 3,073 2,564 (a) 5,637
Production taxes 653 634 (a) 1,287
Depreciation, depletion and amortization 2,564 3,036 (b) 5,600
General and administrative expenses 1,902 -- 1,902
Interest expense 802 2,888 (c) 3,690
Other 84 -- 84
---------- ------------ ------------
Total expenses 9,078 9,122 18,200
---------- ------------ ------------
Income before income taxes 6,733 1,789 8,522
Income tax provision - deferred 2,626 667 (d) 3,293
---------- ------------ ------------
Net income 4,107 1,122 5,229
Preferred stock dividends -- 4,750 (e) 4,750
---------- ------------ ------------
Net income (loss) attributable to common stock $ 4,107 $ (3,628) $ 479
========== ============ ============
Income per common share:
Basic $ 0.28 $ 0.03
========== ============
Diluted $ 0.26 $ 0.03
========== ============
Weighted average shares outstanding:
Basic 14,905 15,107
========== ============
Diluted 15,596 15,798
========== ============
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(a) To record the incremental effect of natural gas sales and the related
operating expenses from properties purchased from Apache.
(b) To record additional depreciation, depletion and amortization expense.
(c) To record interest expense relating to the debt incurred in connection
with the acquisition at an effective rate of 8.25%.
(d) To record the incremental tax effect of the acquisition adjustments at an
effective tax rate of 37.3%.
(e) To record preferred stock dividends at a rate of 9.5%.
9
<PAGE>
EVERGREEN RESOURCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Evergreen Acquisition
Historical Adjustments Pro Forma
---------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Natural gas revenues $ 22,721 $ 12,824 (a) $ 35,545
Interest and other 207 -- 207
---------- ------------ ------------
Total revenues 22,928 12,824 35,752
---------- ------------ ------------
Expenses:
Lease operating expense 4,697 5,288 (a) 9,985
Production taxes 694 681 (a) 1,375
Depreciation, depletion and amortization 4,757 5,771 (b) 10,528
General and administrative expenses 3,024 -- 3,024
Interest expense 1,927 5,950 (c) 7,877
Other 175 -- 175
---------- ------------ ------------
Total expenses 15,274 17,690 32,964
---------- ------------ ------------
Income (loss) from continuing operations before income taxes 7,654 (4,866) 2,788
Income tax provision - deferred 2,979 (1,815)(d) 1,164
---------- ------------ ------------
Income (loss) from continuing operations 4,675 (3,051) 1,624
Preferred stock dividends -- 9,500 (e) 9,500
---------- ------------ ------------
Net income (loss) from continuing operations
attributable to common stock $ 4,675 $ (12,551) $ (7,876)
========== ============ ===========
Income (loss) per common share:
Basic $ 0.36 $ (0.60)
========== ===========
Diluted $ 0.34 $ (0.60)
========== ===========
Weighted average shares outstanding:
Basic 12,953 13,155
========== ===========
Diluted 13,633 13,155
========== ===========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(a) To record the incremental effect of natural gas sales and the related
operating expenses from properties purchased from Apache.
(b) To record additional depreciation, depletion and amortization expense.
(c) To record interest expense relating to the debt incurred in connection
with the acquisition at an effective rate of 8.5%.
(d) To record the incremental tax effect of the acquisition adjustments at an
effective tax rate of 37.3%.
(e) To record preferred stock dividends at a rate of 9.5%.
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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.
EVERGREEN RESOURCES, INC.
By: /s/ Kevin Collins
--------------------------
Kevin Collins
Vice President Finance and
Chief Financial Officer
October 13, 2000
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