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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended January 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ______________
Commission File Number 1-7191
THOR ENERGY RESOURCES, INC.
(Name of small business issuer in its charter)
__________________
DELAWARE 59-1232278
(State or other jurisdiction (IRS employer
of incorporation or organization) identification number)
719 WEST FRONT STREET
P.O. BOX 307
TYLER, TEXAS 75710
(Address, including zip code, of
principal executive offices)
Issuer's telephone number: (903) 533-9111
__________________
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
TITLE OF CLASS
COMMON STOCK,
PAR VALUE $0.01 PER SHARE
__________________
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrants's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [x]
State issuer's revenues for its most recent fiscal year. $1,567,000.
To the Registrant's knowledge, there has been no trading of, or average bid and
asked prices for, the Registrant's Common Stock since trading of the
Registrant's Common Stock was halted on October 24, 1994. The Registrant's
Common Stock was delisted from
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the American Stock Exchange on December 23, 1994. As of January 31, 1995, the
Registrant had outstanding 6,464,676 shares of its Common Stock.
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [x] No [ ]
Transitional Small Business Disclosure Format (check one) Yes [ ] No [x]
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THOR ENERGY RESOURCES, INC.
INDEX TO THE JANUARY 31, 1995 FORM 10-KSB
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Page
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PART I
Item 1. Description of Business . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Description of Property . . . . . . . . . . . . . . . . . . . . . 7
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 13
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . 14
Item 6. Management's Discussion and Analysis or Plan of
Operation . . . . . . . . . . . . . . . . . . . . 14
Item 7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . 17
Item 8. Changes in and Disagreement with Accountants on
Accounting and Financial Disclosure . . . . . . . 17
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the
Exchange Act . . . . . . . . . . . . . . . . . . 18
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 18
Item 11. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . 18
Item 12. Certain Relationships and Related Transactions . . . . . . . . . 18
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 18
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
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DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III (Items 9, 10, 11 and 12) of Form 10-KSB is
incorporated by reference from portions of the registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission not later
than 120 days after the close of the fiscal year covered by this report. In
addition, certain information as set forth in Part III (Item 13) has been
incorporated by reference from the Company's Annual Reports on Form 10-KSB for
the fiscal years ended January 31, 1993 and 1994, as amended, and from the
Company's Current Reports on Form 8-K dated March 5, 1993, April 15, 1993,
October 24, 1994, and March 13, 1995, as amended, as set forth herein.
<PAGE> 5
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Thor Energy Resources, Inc. (referred to herein together with its
subsidiaries as the "Company") was organized as First Realty Investment
Corporation on February 7, 1969, under the laws of the District of Columbia.
On April 22, 1971, the Company was reincorporated under the laws of Delaware.
The corporate name was changed from First Realty Investment Corporation to Thor
Corporation on June 8, 1976, and from Thor Corporation to Thor Energy
Resources, Inc. on July 31, 1981. The Company's first public offering of its
securities was on September 30, 1969. The Company is engaged, through
subsidiaries, principally in oil and gas exploration and production. Prior to
March 31, 1993, the Company, through its wholly-owned subsidiary, Bio-Hazard
Management, Inc., which changed its name to BMI Services, Inc. subsequent to
March 31, 1993 ("BMI"), was engaged in the medical waste disposal business. As
of March 31, 1993, the Company's ownership in BMI was reduced to 10%. See
"Item 1. Description of Business - Discontinued Waste Services Business - Sale
by Subsidiary of Stock Subsequent to January 31, 1993."
On October 21, 1994, the Company filed a Form 1 Voluntary Petition in
the United States Bankruptcy Court for the Eastern District of Texas (the
"Bankruptcy Court"). The Company became a debtor-in-possession pursuant to the
Notice of Commencement of Case under Chapter 11 of the Bankruptcy Code, Meeting
of Creditors and Fixing of Dates In Re Thor Energy Resources, Inc., Case Number
94-61047. The bankruptcy petition was filed in response to continued and
mounting litigation cost resulting from a wrongful termination suit filed
against the Company by the Company's former chief financial officer that has
continued for the last three years. The Company filed a plan of
reorganization, which has not yet been approved, with the Federal bankruptcy
court on April 18, 1995. See "Item 3. Legal Proceedings - Bankruptcy."
EXPLORATION AND PRODUCTION ACTIVITIES
General
The Company is in the business of oil and gas exploration and production
and maintains its exploration and production office, staffed with land and
geological personnel, in Tyler, Texas. The Company's principal area of
exploration activity is in the north central portion of the East Texas Basin.
The Company locates exploration and development drilling prospects and acreage
acquisition prospects which are identified primarily by the Company's full-time
geologist. The Company's geologist engages in the development of the Company's
own prospects or the appraisal of prospects generated by other companies and
offered to the Company for its participation. The Company typically acquires,
for its own drilling purposes, fractional working interests in individual
prospects rather than acquiring large acreage blocks. This results in a
diversification of its holdings and enables it to spread its risk by
participating in the drilling of a greater number of wells. No assurances can
be given that the Company will be successful in searching for and finding oil
and gas properties which result in commercial production.
Prospects are principally acquired by purchasing oil and gas leasehold
interests directly from landowners in areas considered favorable for oil and
gas exploration. In addition, prospects are acquired by participating in
leasehold interests owned by other petroleum companies under arrangements that
permit the earning of an ownership interest in the leases by performing
drilling operations and by joining with other operators in drilling prospects
which they have generated. The Company has actively participated with larger
oil industry partners and independent geologists in both the generation and
exploration of drilling prospects. The Company continues to maintain these
relationships in order to augment the efforts of its own staff.
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The Company normally attempts to obtain outside participants to purchase
from 50% to 75% of the working interest (an interest whereby the owner bears a
portion of the cost of exploration and production) in a prospect, thereby
reducing financial risk and allowing diversification. These arrangements
involve various methods of cost sharing which are typical in the industry.
Usually, participants purchase an interest for a negotiated price which is
proportionately smaller than the participant's share of the costs of drilling
the initial well on the prospect and the Company retains an interest which is
proportionately greater than its share of such costs.
Planned Activities
Management's objective, market conditions, the Company's finances and
other circumstances permitting, is for the Company to acquire undeveloped oil,
gas and mineral leases and to conduct exploratory drilling operations on them.
The Company will require substantial funds in order to develop any leases it
acquires. Any leases acquired may be held for investment, or the Company may
contract with independent parties for services necessary to develop the leases
as financial resources permit. The Company currently anticipates that
financing for both future acquisitions of oil, gas and mineral leases and the
exploration for and development of prospects may be derived from several
sources including internally generated funds, bank borrowings, farm-outs and
farm-ins, the sponsorship of public or private drilling funds and/or private
equity or debt financings.
Sale of Properties
Effective December 1, 1994, the Company sold certain oil and gas working
interests and net royalty interests and its interest in four oil and gas leases
from the State of Louisiana to Neomar Resources, Inc., an unrelated third
party, for $110,000.
On March 5, 1993, the Company sold its interest in twelve oil and gas
properties located in Freestone and Smith Counties in Texas, which was owned by
its wholly-owned subsidiary, Thor Exploration, Inc., along with the related 7.2
miles of gas pipeline distribution system and pipeline surface equipment used
in connection with these properties, to an unrelated party, for cash
consideration of $1,860,000. The effective date of the transaction was January
1, 1993. The purchase price was subject to adjustment for revenues from the
properties for January and February 1993, for certain costs related to title
clearance and for certain other costs. As a result of the sale of these
properties, the Company's working capital increased by approximately $1,706,000
after related purchase price/revenue adjustments. The Company realized only a
small gain from this transaction in fiscal 1994. The transaction impacted the
Company at the time by (i) substantially increasing the Company's working
capital, thus increasing the funds available to the Company for new drilling
activity in fiscal 1994, (ii) reducing the Company's total debt by
approximately $433,000 or 72%, (iii) decreasing the Company's ongoing lease
operation and production tax expenses by approximately 48%, (iv) significantly
lowering depreciation, depletion and amortization expenses on an aggregate
basis, although not as a function of units sold, and (v) decreasing the
Company's oil and gas reserves and the revenue therefrom.
Marketing
Gas produced from the Company's properties is being sold in the "spot"
market. Oil is sold as produced at current prices within the production area.
There are no fixed and determinable quantities of oil or gas required to be
provided pursuant to any existing contracts or agreements relating to the
interests owned by the Company.
Most of the Company's oil and gas production is sold to oil and gas
marketers which take delivery of the oil and gas at the lease site or at the
"tailgate" of gas processing plants after the extraction of natural gas
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liquids from the natural gas. The availability of a ready market for any oil
and gas that may be discovered by the Company and the price obtained for such
oil and gas depends upon numerous factors, including general economic
conditions, the proximity to adequate transmission facilities and government
regulations on the production, transportation and sale of oil and gas.
Numerous factors also influence the prices of, and the demand for, crude
oil and natural gas. They include, among other things, the level of domestic
production, the availability of imported oil and gas, actions taken by foreign
oil producing nations, availability of pipelines with adequate capacity and
other transportation facilities, availability and marketing of other
competitive fuels, fluctuation and seasonal demand for both oil and gas and the
extent of governmental regulation and taxation, under present and future
legislation, of the production, refining, transportation, pricing, use and
allocation of oil, natural gas and substitute fuels. Accordingly, in view of
the many uncertainties affecting the supply and demand for crude oil, natural
gas and refined petroleum products, it is not possible to predict accurately
the prices or marketability of the Company's oil and gas production.
Competition in the Oil and Gas Industry
Exploration for oil and gas is a speculative business involving a high
degree of risk and intense competition in all its phases. Strong competition
is encountered from major oil and gas companies, independent contractors and
other companies, many of which have greater financial, technical and personnel
resources and many of which are more experienced in the exploration for and
production of oil and gas. Strong competition also exists for the acquisition
of oil and gas leases and drilling rights. The Company does not own any
drilling rigs and all of its drilling has been performed by independent
contractors. There is no assurance that the Company will be able to compete
satisfactorily in the acquisition of these properties and equipment.
The oil and gas industry competes with other industries in supplying
energy and fuel requirements of industrial, commercial and individual
consumers. The Company also competes with numerous substantial oil and gas
companies for both public and private funds to finance its operations. The
effect on the Company of these matters cannot accurately be predicted.
The Company competes with numerous companies and individuals for the
acquisition of exploratory and development oil and gas properties, a
substantial number of which have staffs and financial resources that far exceed
those of the Company. Strong competition is encountered from major oil
companies, independent operators and others in acquiring properties suitable
for exploration.
The Company will also experience competition from other industries in
raising capital for future exploration and development activities. The
Company's ability to raise capital will be dependent on various factors
including the success of its oil and gas exploration activities, market prices,
participation of third parties in its activities and the continued availability
of tax incentives in the oil and gas industry.
Although the Company is a small company, it is currently competitive
within these areas.
Operating Hazards and Uninsured Risks
Long term success is dependent upon the ability to locate and develop
oil and gas in commercial quantities. Crude oil and natural gas exploration
involves a high degree of risk, which even a combination of experience,
knowledge and careful evaluation may not be able to overcome. There is no
assurance that commercial quantities of crude oil or natural gas will be
discovered. The marketability of crude oil and natural gas that may be
acquired or discovered will be affected by numerous factors beyond the control
of the Company. These factors include market fluctuations and regulations
relating to prices, taxes, royalties, land
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tenure, allowable production, importing and exporting of crude oil and natural
gas and environmental protection. The exact effect of these factors cannot
accurately be predicted.
Hazards such as unusual or unexpected formations, pressures or other
conditions are involved in drilling and operating wells. Accordingly, the
Company's operations are subject to all the risks inherent in the exploration
for and production of oil and gas, including blowouts, craterings and fires
that could result in damage to or destruction of oil and gas wells, formations,
producing facilities or properties, as well as injury, loss of life or
environmental damage. The Company is self-insured with respect to these risks
because insurance is not available or the Company has elected not to insure due
to high premium costs or other reasons. The Company may incur substantial
costs if an uninsured loss should occur.
Regulation
The production and sale of oil and natural gas in the United States is
subject to regulation by federal and state authorities with respect to pricing,
production, marketing and environmental matters. The drilling and production
operations of the Company are subject to regulation by state commissions, which
have authority to require the Company to obtain various permits prior to the
commencement of drilling activities and which establish allowable rates of
production, control spacing of wells, limit waste, protect the environment and
aid in the conservation of oil and natural gas. Federal conservation
regulations, which are comparable to, and in some cases more restrictive than,
state regulations, may be encountered in all jurisdictions in which drilling by
the Company is expected.
Oil and gas production, operations and economics are continuously
affected by state and federal laws relating to the petroleum industry, changes
in such laws and changing administrative regulations. The following statements
are summaries of certain laws and regulations and are qualified in their
entirety by reference thereto.
-- Natural Gas Pricing
The Federal Energy Regulatory Commission maintains jurisdiction to
regulate interstate pipelines and, to a lesser degree, intrastate pipelines,
which retained jurisdiction affects the ability of producers to sell their gas
to remote buyers when transportation over such interstate or intrastate
pipeline systems is necessary. The availability and cost of any such
transportation did not significantly impact the Company's gas marketing during
fiscal 1995 or 1994.
Other statutes, rules, regulations and orders that relate to the
production and marketing of natural gas have not been discussed. Consequently,
the foregoing summary should by no means be relied upon as a complete review of
regulatory matters which may affect the marketing of natural gas production.
-- Petroleum Pricing Regulation
On January 28, 1981, President Reagan signed an executive order that,
effective that date, exempted all crude oil and refined petroleum products from
the price and allocation controls adopted pursuant to the Emergency Petroleum
Allocation Act of 1973, as amended. Despite the absence of any price controls
on sales of crude oil, the price at which individual crude oil transactions are
made depends upon a number of factors, including the well location, the crude
oil gravity and sulfur content and prices for imported oil.
-- Environmental Laws
The Company's oil and gas activities are subject to numerous federal
environmental laws and regulations. Such laws and regulations increase the
costs of exploring for, developing or producing oil and gas
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and may prevent or delay the commencement or continuation of a given operation.
Additionally, some states have stringent regulations. For example, Texas and
Louisiana have enacted "zero discharge" regulations to eliminate waste
discharges into the waters of the Gulf. These state requirements also
significantly increase the cost of offshore production of oil and gas.
Compliance with federal, state and local environmental laws has not had
a material effect on the capital expenditures, earnings or competitive position
of the Company in the last fiscal year. Based upon its experience, the Company
does not anticipate that compliance with such environmental laws will result in
material effects on or costs to the Company in the immediately foreseeable
future. However, the Company also anticipates that future compliance with
existing federal, state and local laws, rules and regulations enacted or
adopted to regulate the release of materials into the environment or otherwise
relating to the protection of the environment will continue to increase, but
cannot predict any material adverse effect upon its capital expenditures or
earnings.
-- General
In most, if not all, areas where the Company conducts activities there
are regulatory provisions which allow administrative agencies to promulgate
rules providing comprehensive regulation of the operation and production of
both oil and gas wells, for example, the method of developing new fields,
spacing of wells and maximum daily production allowable from both oil and gas
wells, based on a market demand or a conservation basis.
DISCONTINUED WASTE SERVICES BUSINESS
General
On February 14, 1989, the Company incorporated a wholly-owned
subsidiary, Bio-Hazard Management, Inc. ("BMI"). BMI is engaged in the
business of managing and disposing of infectious medical waste, the disposal of
which is regulated by both federal and state law. BMI picks up the waste at
the generator's facility and transports the waste to a transfer station owned
by BMI or directly to a state licensed incinerator for destruction. As a
result of the issuance and sale of the common stock of BMI (the "BMI Common
Stock") on March 31, 1993, as discussed below, the Company discontinued its
waste services businesses.
Sale by Subsidiary of Stock Subsequent to January 31, 1993
On March 31, 1993, the Company, BMI and Morris & Co., an unaffiliated
third party, entered into a Securities Purchase Agreement (the "Agreement").
Pursuant to the Agreement, which was negotiated on an arms-length basis between
the Company and Morris & Co., on March 31, 1993, BMI issued shares of its BMI
Common Stock to Morris & Co. in an amount that gave Morris & Co. ownership of
90% of the then outstanding BMI Common Stock, and Morris & Co. contributed
$750,000 to the capital of BMI. Additionally, as part of the Agreement, BMI
granted to the Company an option to put (the "Put Rights") to BMI the BMI
Common Stock then owned by the Company during a three-year period beginning
March 31, 1995. Further, pursuant to the terms of the Agreement, the Company
agreed to use its best efforts to distribute to its stockholders the shares of
BMI Common Stock then owned by the Company together with the related Put Rights
(the "Spin- Off").
The Shareholders' Agreement between the Company, Morris & Co. and BMI
(the "Shareholders' Agreement") provided that in the event that the Spin-Off
occurred prior to December 31, 1993, the aggregate purchase price payable upon
exercise of the Put Rights would be $2,000,000; otherwise the aggregate
purchase price payable upon exercise of the Put Rights would be $1,000,000.
BMI's payment obligation under the Put
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Rights was secured by a lien on the BMI Common Stock held by Morris & Co. The
Shareholders' Agreement provided that the December 31, 1993, date was subject
to extension to June 30, 1994, if the Spin-Off did not occur on or prior to
December 31, 1993, because of the litigation described in Item 3 hereof or
requisite Securities and Exchange Commission approvals were not obtained prior
to December 31, 1993. The Agreement stated that BMI would fully cooperate with
the Company to use its best efforts to enable the Company to effect the
Spin-Off by December 31, 1993, and placed upon BMI the responsibility to
prepare and file with the Securities and Exchange Commission the documents
necessary to enable the Company to effect the Spin-Off.
The Company was committed to effecting the Spin-Off. However, as the
result of threats of litigation against BMI by the plaintiff in the litigation
discussed in Item 3 - Sneed Litigation, BMI refused to go forward with
preparing the documents necessary to effect the Spin-Off until such time as
this litigation was resolved. The Company informed BMI that the Company did
not believe that the threat of litigation relieved BMI of its obligations to
use its best efforts to effect the Spin-Off.
Additionally, pursuant to the terms of the Agreement, if prior to
October 1, 1994, BMI and the University of Texas Medical Branch at Galveston
("UTMB") executed a new operating contract with a term of at least one year or
extended the existing contract between BMI and UTMB and such contract or
extension provided that BMI was entitled to burn all of UTMB's medical waste,
the Company would have had, at its option, the right to receive additional
shares of BMI Common Stock equal to 2.5% of the then outstanding shares of BMI
Common Stock or $500,000.
Further, if prior to April 1, 1996, UTMB received the approvals,
licenses, consents and permits from the necessary regulatory bodies to allow it
to incinerate third party waste at its incinerator in Galveston, Texas, then
the Company would have had, at its option, the right to receive additional
shares of BMI Common Stock equal to 2.5% of the then outstanding shares of BMI
Common Stock or $500,000.
The Company filed a suit, which it subsequently dismissed, against BMI
and Morris & Co. to enforce its rights under the Agreement and the Shareholder
Agreement. As a result of negotiations with Morris & Co. and BMI regarding the
Spin-Off and the Company's rights under the Agreement and the Shareholder
Agreement, the Company, BMI and Morris & Co. entered into a settlement
agreement (the "Settlement Agreement") under which the Company would receive
$300,000 in cash and $200,000 per year for at least five years in the future.
The Settlement Agreement was approved by the Bankruptcy Court, but subsequent
events occurred making the performance of the Settlement Agreement by BMI and
Morris & Co. questionable. The Company plans to continue to negotiate with BMI
and Morris & Co. to develop a mutually satisfactory resolution. See "Item 3.
Litigation - BMI."
EMPLOYEES
As of April 23, 1995, the Company employed 12 people in its Tyler
office, including executive officers, administrative and accounting personnel
and oil and gas exploration and production personnel. None of the Company's 10
full-time employees are represented by a labor organization. The Company
considers its employee relations to be satisfactory.
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ITEM 2. DESCRIPTION OF PROPERTY.
Reserve Information
Reports effective as of January 31, 1995, have been prepared with
respect to the Company's oil and gas reserves (net after royalties, capital
requirements and operating costs) primarily by the independent petroleum
engineering firms of Petroleum Consulting & Engineering, Inc. and James E.
Smith & Associates, Inc. Information regarding the Company's estimated net
quantities of proved oil and gas reserves and proved developed oil and gas
reserves and the standardized measure of discounted future net cash flow and
changes therein relating to proved oil and gas reserves will be found in Notes
11 and 12 of Notes to Consolidated Financial Statements included elsewhere
herein.
Virtually all aspects of estimating future oil and gas production,
revenues therefrom and present values thereof involve a substantial amount of
uncertainty. Therefore, estimated future net cash flow cannot be expected to
represent accurately the actual revenues that may be recognized with respect to
oil and gas properties or the actual present market value of such properties
and such estimated values should not be understood as a projection of any such
actual values.
Due to the unpredictability of oil and gas exploration and development
and the inherent uncertainty involved in estimating recoverable hydrocarbons in
a reservoir, the oil and gas ultimately recovered may vary materially from the
proved reserves set forth herein. Management believes there has been no
significant change in the Company's reserves since the date of the reports
except for the reduction as a result of production and there has been no major
discovery or other favorable or adverse event which would result in a
significant change in the estimated proved reserves.
The Company does not have any oil or gas subject to long-term supply or
similar agreements with foreign governments or authorities in which the Company
acts as producer; nor does the Company account for oil and gas investments by
the equity method. The Company does not have any material obligation to
provide fixed or determinable quantities of oil or gas in the future under
existing contracts or agreements. There were no reserve reports of the
Company's proved net oil and gas reserves filed with any governmental authority
or agency during the year ended January 31, 1995.
The most significant properties retained by the Company are discussed
below.
The Breedlove-Rogers #2 accounted for approximately 40% of the Company's
estimated present value of future net cash flow (discounted at 10%) as of
January 31, 1995. As of such date, proved developed reserves from this well
are estimated to be approximately 497,500 Mcf of gas and 9,200 barrels of
condensate, net to the Company's 21.7% working interest. The Breedlove-Rogers
#2, operated by Oryx Energy Company, was completed in the Travis Peak formation
of the Blackfork Creek field in Smith County, Texas. This property is pledged
to partially secure a note payable to an affiliate. See Note 7 of Notes to
Consolidated Financial Statements included elsewhere herein.
The Hopper #1 accounted for approximately 21% of the Company's estimated
present value of future net cash flow (discounted at 10%) as of January 31,
1995. As of such date, proved developed reserves from this well are estimated
to be approximately 257,200 Mcf of gas and 11,600 barrels of condensate, net to
the Company's 29.4% working interest. The Hopper #1, operated by the Company,
was completed as a new discovery well in the Rodessa formation of the
Hopper-Rodessa Field in Smith County, Texas.
The Carter #1 accounted for approximately 21% of the Company's estimated
present value of future net cash flow (discounted at 10%) as of January 31,
1995. As of such date, proved developed reserves from
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this well are estimated to be approximately 365,300 Mcf of gas and 3,100
barrels of condensate, net to the Company's 23.4% working interest. The Carter
#1, operated by Oryx Energy Company, was completed in the Rodessa and Travis
Peak formations of the Blackfork Creek Field in Smith County, Texas. This well
also encountered the Pettit formation; however, since the Pettit formation has
not been tested to date, no reserves have been attached thereto.
The Loy Gilbert #1 accounted for approximately 10.5% of the Company's
estimated present value of future net cash flow (discounted at 10%) as of
January 31, 1995. As of such date, proved developed reserves from this well
are estimated to be approximately 212,100 Mcf of gas and 900 barrels of
condensate, net to the Company's 10.6% non-consenting co-tenant's interest.
This gas well, operated by a privately-held unaffiliated company, was dually
completed in the Rodessa and in the Pettit and Travis Peak formations of the
Blackfork Creek Field in Smith County, Texas. This property is pledged to
partially secure a note payable to an affiliate. See Note 7 of Notes to
Consolidated Financial Statements included elsewhere herein.
Oil and Gas Production
The following tables set forth the Company's average sales price per
unit of oil and gas, net production of oil and gas and the average production
costs and amortization per equivalent unit of gas produced during each of the
years in the three-year period ended January 31, 1995.
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- ---------
<S> <C> <C> <C>
Oil prices (per Bbl) $15.66 $16.18 $18.90
Gas prices (per Mcf) $1.84 $2.19 $1.92
Oil production (Bbls) 18,000 19,000 57,000
Gas production (Mcf) 650,000 606,000 695,000
Equivalent Mcf of production (1) 757,000 720,000 1,037,000
Production costs (2) (per equivalent Mcf): $.56 $.59 $.71
Amortization (per equivalent Mcf):
Based upon current year production $.79 $.84 $.58
Due to limitation on capitalized costs $0 $0 $0
- ------------
</TABLE>
(1) One Bbl of oil is equivalent to six Mcf of gas.
(2) Production costs are costs incurred to operate and maintain wells and
equipment and production taxes.
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Acreage and Wells
The following tables set forth information, as of January 31, 1995, as
to the Company's wells with proved reserves and the Company's developed and
undeveloped acreage.
WELLS
<TABLE>
<CAPTION>
Oil Gas Total
--- --- -----
<S> <C> <C> <C>
Gross Wells (1)(2) 0 15 15
Net Wells (3) 0 3.25 3.25
</TABLE>
__________
(1) "Gross" as it applies to acreage or wells refers to the total number of
acres or wells in which a working interest is owned by the Company.
"Net" as it applies to acreage or wells refers to the sum of the
fractional ownership working interests owned by the Company in gross
wells or gross acres.
(2) A multiple completion is counted as one well. The Company had 3
multiple completions at January 31, 1995.
(3) Reversionary interests which may increase or decrease the interests
shown are not considered to be material and have been disregarded.
ACREAGE
<TABLE>
<CAPTION>
Gross Net
----- ---
<S> <C> <C>
Developed acreage: 8,380 2,937
Texas
Undeveloped acreage(1):
Texas 5,566 1,837
------ -----
</TABLE>
(1) Undeveloped acreage is that lease acreage on which wells have not been
drilled or completed to a point that would permit the production of
commercial quantities of oil and gas regardless of whether or not such
acreage contains proved reserves.
Title to the oil and gas leaseholds held by the Company are subject to
royalties, overriding royalties, certain customary operating or other
agreements and liens incident thereto, oil and gas purchase agreements, current
taxes, minor encumbrances, easements, restrictions and other burdens such as
reversionary interests held by third parties, preferential purchase rights and
drilling obligations. As is customary in the oil and gas industry, record
title often is not assigned when a property is farmed out and the Company makes
such title examination as it feels necessary by balancing the cost of the
properties with the cost of the title search. Also, certain curative actions
may not be taken prior to actual drilling operations on a given property (and
sometimes for a period thereafter). Due to the ongoing nature of the Company's
oil and gas operations, record title to certain properties, including certain
properties acquired, assigned or to be acquired or assigned pursuant to
farmout, operating or other agreements that require the Company or others to
participate in the drilling of an exploratory well or wells, may not yet
reflect ownership as specified in the relevant farmout, operating or other
agreement. Although the Company attempts to acquire satisfactory title to all
material oil and gas property
9
<PAGE> 14
interests, there can be no assurance that in all instances clear title can be
or has been obtained. Management of the Company is not aware of any material
title defects relating to the Company's properties.
Drilling Activities
The following table summarizes the number of net productive and dry
exploratory and development wells drilled in which the Company participated
during each of the years in the three-year period ended January 31, 1995.
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Exploratory:
Productive ___ .37 .28
Dry ___ .19 ___
Development:
Productive ___ ___ ___
Dry ___ ___ ___
</TABLE>
A productive well is an exploratory or a development well that is not a
dry well. A dry well is an exploratory or development well found to be
incapable of producing either oil or gas in sufficient quantities to justify
completion as an oil or gas well.
Virgin Islands Property
The Company owns 7 residential lots and approximately 86 acres of
undeveloped real estate in St. Croix in the United States Virgin Islands, which
is being held for investment purposes. The Company currently has no plans to
further develop or improve this property. This real estate is included in
Other Assets in the accompanying consolidated financial statements. Except for
a pledge of the acreage to partially secure a note payable to an affiliate at
January 31, 1995, the Company has clear title to the property. Since the
property is raw land, the Company does not feel that it is necessary to insure
the property. See Note 7 of Notes to Consolidated Financial Statements
included elsewhere herein.
Office Facilities
The Company leases approximately 6,333 square feet of office space in
Tyler, Texas for its executive offices at a monthly rental of $3,658 under a
lease expiring in 1997 with a three year renewal at the Company's option.
Investment Policies
The Company has no set investment policy with regard to investment in
real estate, interests in real estate, real estate mortgages or securities of
or interests in persons primarily engaged in real estate activities, although
management anticipates that the Company's focus will be oil and gas exploration
and production. The Company has no limitations on the percentage of assets
which may be invested in any one investment or type
10
<PAGE> 15
of investment, and this policy may be changed without a vote of the
stockholders. The Company's policy is to acquire properties both for capital
gain and for income.
ITEM 3. LEGAL PROCEEDINGS
Bankruptcy
On October 21, 1994, the Company filed a Form 1 Voluntary Petition in
the United States Bankruptcy Court for the Eastern District of Texas (the
"Bankruptcy Court"). The Company became a debtor-in-possession pursuant to the
Notice of Commencement of Case under Chapter 11 of the Bankruptcy Code, Meeting
of Creditors and Fixing of Dates In Re Thor Energy Resources, Inc., Case Number
94-61047. The Bankruptcy petition was filed in response to continued and
mounting litigation cost resulting from a wrongful termination suit filed
against the Company by the Company's former chief financial officer, Lindsay
Sneed ("Sneed"), that has continued for the last three years (the "Sneed
Litigation"). See "Sneed Litigation" below.
The Company filed a plan of reorganization with the Bankruptcy Court on
April 18, 1995 (the "Plan"). Under the Plan, (i) the Company's taxes will be
paid in cash in accordance with a payment schedule, (ii) the two secured notes
under which the Company is obligated will be paid, with interest, in monthly
installments equal to 50% of the production of the well that secures the
relevant note, (iii) holders of claims of less than $500 will be paid in cash,
(iv) royalty claims will be offset against expenses, and any remainder owed by
the Company will be paid, with interest, in 48 equal monthly installments, (v)
the holders of certain claims regarding an incinerator in New Hampshire will
receive title to the incinerator, (vi) the Company's other unsecured creditors
will receive, at their option, either (a) a six-month, interest-bearing note in
full payment of the debt or (b) a payment in cash equal to 75% of the amount of
the debt and (vii) the remainder of the Company's assets will be put into a
trust (the "Trust") from which the settlement or final judgment in the Sneed
Litigation, if any, will be paid; however, no claims from the Sneed Litigation
for any damage other than actual pecuniary damage suffered by Sneed will be
allowed. Once all the claims are paid as described above, each of the owners
(the "Minority Holders") of the Company's common stock (the "Common Stock")
other than Zapata Partnership, Ltd.(1) ("Zapata"), David Fender, Harris R.
Fender, Jr., LaVelle D. Fender and the LaVelle D. Fender Trust (the "Majority
Holders") will be paid $.38 per share, the closing price of the Common Stock on
the day the bankruptcy filing was made, less the amount paid to creditors and
the amount, if any, paid in regard to a settlement or final judgment of the
Sneed Litigation that is attributable to their shares. The funds for this
payment will come from a new capital contribution from an investor (the
"Investor"). (It is anticipated that the new Investor will be an entity
controlled by the Majority Holders.) On the effective date of the Plan, the
shares of Common Stock that are held by the Minority Holders and the Majority
Holders will be cancelled. In return for the new capital contribution, the
Investor will receive all the shares of the reorganized company ("New Thor").
New Thor will be a privately held company and will receive all of the assets,
if any, of the Trust that are not paid as described above. The Company
anticipates that the Plan will be approved or rejected within 60 to 90 days of
its filing. If the Plan is not approved, the Bankruptcy Court, the Company or
any of the creditors may submit another plan of reorganization for approval.
On April 20, 1995, the Bankruptcy Court held a hearing on Sneed's motion
to have an independent trustee appointed to administer the Company during the
bankruptcy proceedings; however, the Bankruptcy Court judge postponed ruling on
this motion pending a ruling in the Sneed Litigation.
__________________________________
(1) Zapata Partnership, Ltd. is a limited partnership. David M. Fender
and Harris R. Fender, Jr. are the general partners of Zapata. David M.
Fender is, and was at the time of the Transaction, President and Chief
Executive Officer of the Company. Harris R. Fender, Jr. is, and was at the
time of the Transaction, the Vice President and a Director of the Company.
11
<PAGE> 16
Sneed Litigation
In 1993, Sneed, who was the Chief Financial Officer, Vice President and
a Director of the Company from October 1988 to July 1992, filed an amended
petition (the "Petition") in the lawsuit he previously filed, in May 1992,
against the Company in the District Court of Dallas County, Texas (the "State
Court"). The Petition includes allegations that the Company's January 1989
purchase of oil and gas reserves (the "Transaction") from Zapata, a transaction
that was restructured in August of 1990, was based on false reserve information
and that the public disclosures made concerning the Transaction were inadequate
and misleading. The Petition also alleges that the Company and the members of
its Board of Directors refused to disclose the alleged nature of the
Transaction and other unspecified matters and that the Company wrongfully
terminated Sneed, in part, for his refusal to concur with the Company's
reporting of the Transaction. Sneed is seeking unspecified damages on these
claims as well as exemplary damages in excess of $10,000,000 and attorney's
fees.
In a second lawsuit involving the bankruptcy of Zapata, Zapata filed a
declaratory judgment action with the Bankruptcy Court, which originally
approved the Company's purchase of reserves from Zapata in connection with
Zapata's bankruptcy proceedings (which were originally instituted on March 20,
1987) requesting that the Bankruptcy Court confirm that no fraud was involved
in the Transaction. Sneed filed a counterclaim (the "Counterclaim") in the
Bankruptcy Court against the Company and each of its Directors. The
Counterclaim alleges that (i) David M. Fender and the Company acted
fraudulently in connection with the Transaction, (ii) public disclosures
regarding the Transaction were false, (iii) the Company and each of its
Directors refused to publicly disclose the alleged fraudulent nature of the
Transaction and other alleged self-dealing transactions, (iv) the Company's
Annual Report on Form 10-K for the year ended January 31, 1992, as well as such
reports for prior years, contained deficiencies and (v) the Company wrongfully
terminated Sneed's employment because he brought the alleged improprieties to
the attention of the Company's Board of Directors. In the Counterclaim, Sneed
seeks unspecified damages and attorney's fees from the Company for claims based
on federal racketeering laws, wrongful termination, breach of contract (against
the Company only), common law fraud, tortious interference with contractual
relations, breach of duty, negligent misrepresentation and quantum meruit
(against the Company and Zapata only). The Counterclaim was removed to the
Federal District Court for the Eastern District of Texas (the "Federal Court")
in January, 1993. Sneed dismissed the claims pending in the Federal Court
against the directors of the Company other than David Fender. The presiding
judge in the Federal Court dismissed that portion of the complaint against the
Company regarding alleged securities law violations.
The State Court action and the second lawsuit involving Zapata, were
transferred to and consolidated by the United States District Court for the
Northern District of Texas.
The consolidated case was tried before a jury in January and February,
1995. Testimony continued for 5 weeks, and, after the close of testimony, the
jury deliberated for an additional week. The jury in that case was unable to
reach a verdict as to all issues presented to it. Among the findings the jury
made were the following: (i) there was an employment contract between the
Company and Sneed; (ii) the Company was not guilty of fraud; (iii) the Company
had not made negligent misrepresentations to Sneed; (iv) the Company had not
made misrepresentations to Sneed regarding a transaction in which either the
Company or Sneed had an interest or in a stock transaction; (v) the Company
intentionally inflicted emotional distress on Sneed; (vi) the Company and its
Chief Executive Officer defamed Sneed; (vii) the Company made fraudulent
conveyances; (viii) the Company and its directors were part of an unspecified
civil conspiracy; (ix) the Company's directors had committed predicate acts for
a violation of the Racketeering Influenced Corrupt Practices Act; and (x) the
Company and its directors abused process. The Company believes there was no
evidence to support the findings referenced in clauses (vi), (vii), (viii),
(ix) and (x) of the immediately preceding sentence. The jury was not able to
make any finding as to whether the Company is liable to Sneed for damages. The
jury found
12
<PAGE> 17
that Sneed was negligent in the performance of his duties to the Company and to
its majority shareholder, Zapata, but did not award the Company any damages as
the result of such negligence. The jury was unable to make a finding as to
whether there was a breach or wrongful termination of Sneed's employment
agreement. The Company is awaiting the judge's ruling as to whether all or
only some of the issues presented to the jury must be retried and the related
question of whether some of the jury's findings will be preserved. The Company
requested the Court to declare a mistrial. Sneed requested the Court to enter
judgment against the Company beyond what was found by the jury. These matters
are pending.
The Company continues to believe that Sneed's claims are without merit.
Consequently, the Company intends to continue its vigorous defense of this
litigation. However, this litigation has, and continues to, place a serious
strain on the Company and its economic resources.
BMI
As a result of the failure of BMI to go forward with the preparation of
documents necessary to effect the Spin- Off until the Sneed Litigation is
resolved, which the Company does not believe relieves BMI of its obligations to
use its best efforts to assist the Company in effecting the Spin-Off, the
Company filed suit against BMI and Morris & Co. in the Smith County District
Court in August 1994 to enforce its rights under the Agreement and the
Shareholders' Agreement. See "Item 1. Description of Business - Discontinued
Waste Services Business - Sale by Subsidiary of Stock Subsequent to January 31,
1993." The Company sought specific performance or $1,000,000 in damages based
on breach of contract. The Company, BMI and Morris & Co. reached an agreement
to settle this action, which was approved by the Bankruptcy Court (the
"Settlement Agreement"), and the Company dismissed the suit. Under the terms
of the Settlement Agreement, (i) the Company would be paid $300,000 in cash
upon execution of definitive documentation, (ii) the Company's 10% equity
interest in BMI and the put rights related to the equity interest would be
converted into a 20% net profits interest (the "NPI") in any contract of BMI
and (iii) in the event that BMI or Morris & Co. determined to divest any
interests in contractual relationships between BMI and the University of Texas
Medical Branch at Galveston ("UTMB"), BMI was required to pay the Company,
within ten days following completion of any such transaction, the greater of
(a) 20% of the consideration attributable to such transaction or (b) the
difference between $2,500,000 and payments received by the Company prior to
such date attributable to the NPI. Under item (ii) of the preceding sentence,
the Company was to receive annually the greater of 20% of BMI's pre-tax annual
net profits or $200,000. Such payments were to begin on or before October 1,
1995, and were to be secured by a security interest in all contract rights held
by BMI pursuant to contracts between BMI and UTMB. However, subsequent to the
settlement, events occurred making the performance of the Settlement Agreement
by BMI and Morris & Co. questionable. The Company plans to continue to
negotiate with BMI and Morris & Co. to develop a mutually satisfactory
resolution.
Oryx
Thor Exploration, Inc., a wholly-owned subsidiary of the Company ("Thor
Exploration"), filed suit against Oryx Energy Company ("Oryx") in the Smith
County District Court in December, 1992 for negligence in operation of certain
gas wells under a joint operating agreement and for overcharges and
unauthorized and excessive expenses in connection with the operation of certain
wells in which Thor Exploration and Oryx are cotenants. Over 75 royalty
interest owners joined Thor Exploration in filing this suit against Oryx. Thor
Exploration's claims in this suit are in excess of $1,000,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the Company's stockholders during the
fourth quarter ended January 31, 1995.
13
<PAGE> 18
PART II
ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Prior to the trading halt on October 24, 1994, and delisting on December
23, 1994, the Common Stock was listed and traded on the American Stock Exchange
under the symbol "THR." Subsequent to October 24, 1994, there has been no
public market for the Common Stock. The following table sets forth by fiscal
quarters the high and low sales prices for the Common Stock as reported in the
consolidated transaction reporting system of the American Stock Exchange from
February 1, 1993, through October 24, 1994. As of April 20, 1995, the Company
had approximately 668 record holders of Common Stock.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal Year Ended January 31, 1995:
First Quarter $5/8 $3/8
Second Quarter $9/16 $1/4
Third Quarter $9/16 $1/4
Fourth Quarter
----- -----
Fiscal Year Ended January 31, 1994:
First Quarter $3/4 $1/2
Second Quarter $3/4 $3/8
Third Quarter $15/16 $3/8
Fourth Quarter $3/4 $7/16
</TABLE>
The declaration of dividends on the Common Stock is subject to the
discretion of the Board of Directors and will depend on bankruptcy rules,
profit levels, capital requirements, the financial condition of the Company and
other factors deemed relevant by the Board of Directors. The Company has
neither declared nor paid any dividends on the Common Stock during its last two
fiscal years, and the Board of Directors does not presently intend to pay cash
dividends on the Common Stock.
The Company's stockholders approved an amendment to the Company's
Restated Certificate of Incorporation to reduce the par value of the Common
Stock from $1.00 to $0.01 at the 1993 Annual Stockholders' Meeting. This
amendment enabled the Company to have "surplus" (as defined in the Delaware
General Corporation Law) from which the Company could pay dividends. However,
the Company's bankruptcy will prevent the Company from paying any dividend.
See "Item 1. Description of the Business - Discontinued Waste Services
Business - Sale by Subsidiary of Stock Subsequent to January 31, 1993."
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
RESULTS OF OPERATIONS - YEAR ENDED JANUARY 31, 1995
On October 21, 1994, Thor filed for protection under Chapter 11 of the
federal Bankruptcy Code. Further discussion of this matter is set forth under
"Liquidity and Capital Resources" in this item.
14
<PAGE> 19
Revenues decreased $260,000, or 14%, to $1,567,000 during the year ended
January 31, 1995, compared with the prior year. Oil and gas sales decreased
$113,000, or 7%, to $1,523,000 in the year ended January 31, 1995. Other
income decreased $147,000 to $44,000 primarily as a result of the recording of
a small gain resulting from the sale of properties discussed below and other
nonrecurring income in the prior year.
Reduced revenues were partially offset by the commencement of production
from Oryx's Breedlove-Rogers #2 well in April 1994. The cost of lease
operations and production taxes increased $1,000, or 0%, to $429,000 in fiscal
1995 due to increasing costs related to nonoperated properties. As a result of
the foregoing factors, oil and gas sales, net of lease operations and
production taxes, showed a decrease of $114,000, or 9%, to $1,094,000 in fiscal
1995 as compared to fiscal 1994.
General and administrative expenses increased $94,000, or 7%, to
$1,345,000 in fiscal 1995. Increases in legal and other professional fees were
the main reason for these increases. Legal and other professional fees
resulting from the litigation referred to in Part I, Item 3, included elsewhere
herein, are anticipated to continue at high levels until such litigation is
resolved.
Depreciation, depletion and amortization decreased $12,000, or 2%, to
$645,000 in fiscal 1995. This decrease was mainly due to the addition of
reserves attributable to the Breedlove-Rogers #2 well. The depletion and
amortization rate per equivalent Mcf decreased accordingly from $.84 in fiscal
1994 to $.79 in fiscal 1995.
Interest expense decreased $1,000 to $27,000 in fiscal 1995 as a result
of lower debt levels as compared to the year ended January 31, 1994.
No income tax benefit is reflected in the current or the prior year as a
result of the limitation of available loss carryback.
In fiscal 1995, the Company recorded a loss of $198,000 on its
investment in BMI, which reduced the carrying value to $0. This loss was due
to the inability to predict the outcome of any future distribution from BMI.
See "Item 3. Litigation - BMI."
As a result of the foregoing factors, the Company's net loss in fiscal
1995 increased $540,000 to $1,077,000, or $.18 per share ($.14 per share from
continuing operations), compared to a net loss of $537,000, or $.09 per share,
for fiscal 1994.
RESULTS OF OPERATIONS - YEAR ENDED JANUARY 31, 1994
Revenues decreased $684,000 for fiscal 1994 compared to fiscal 1993.
Oil and gas revenues decreased $775,000, or 32%, to $1,636,000. Other income
increased $91,000 to $191,000 in fiscal 1994 due primarily to transactions of a
nonrecurring nature.
Oil sales decreased $772,000 to $307,000 in fiscal 1994. Gas sales
decreased $3,000 to $1,329,000 in fiscal 1994. Reduced revenues, as a result
of the sale on March 5, 1993, of twelve of the Company's oil and gas properties
and reduced oil prices, were partially offset by higher gas prices and the
commencement of production from the Company's Hopper #1 well in September 1993.
The cost of lease operations and production taxes decreased $304,000, or 42%,
to $428,000 in fiscal 1994 due to fewer producing properties as a result of the
aforementioned sale of properties. As a result of the foregoing factors, oil
and gas sales, net of lease operations and production taxes, decreased
$471,000, or 28%, to $1,208,000 compared to the prior year.
15
<PAGE> 20
General and administrative expenses decreased $200,000 to $1,251,000 in
fiscal 1994. All categories of general and administrative expenses declined
from the prior year.
Depreciation, depletion and amortization decreased $32,000 to $657,000
in fiscal 1994. Although the Company had a 31% decrease in equivalent Mcf's of
production, the depletion and amortization rate per equivalent Mcf increased
from $.58 to $.84 as a result of higher exploration expenses relative to
reserves discovered. Accordingly, such expenses decreased only 5%.
Interest expense decreased $72,000 to $28,000 in fiscal 1994 due
primarily to lower levels of debt as a result of utilization of the proceeds
from the sale of oil and gas properties as previously discussed.
No income tax benefit is reflected in fiscal 1994 or 1993 as a result of
the limitation of available loss carryback.
As previously discussed, with the issuance by BMI, on March 31, 1993, of
an amount of BMI Common Stock equal to 90% of the BMI Common Stock outstanding
subsequent to the issuance, the Company discontinued all of its waste services
businesses. The loss from discontinued operations in fiscal 1993 of $405,000
reflects the activities of both BMI and Haz-Tech and includes the accrual of
estimated losses for the period subsequent to January 31, 1993 of $100,000.
The Company had no losses from discontinued operations in fiscal 1994.
As the result of the foregoing factors, the Company experienced a net
loss in fiscal 1994 of $537,000, or $.09 per share.
Liquidity and Capital Resources
On October 21, 1994, the Company filed for protection under Chapter 11
of the federal Bankruptcy Code in the Bankruptcy Court. The action was taken
in response to continuing and mounting litigation costs resulting from a
wrongful termination suit filed against the Company by Lindsay Sneed, the
Company's former Chief Financial Officer, that has continued for the last three
years. The Company filed a plan of reorganization with the Bankruptcy Court on
April 18, 1995. See "Item 3. Litigation - BMI." The bankruptcy filing and the
fact that the Common Stock is no longer listed on the American Stock Exchange
or any other stock exchange may have an adverse effect on the ability of the
Company to continue to obtain financing for its projects. However, Thor
Exploration, Inc. and Thor Operating Company, the Company's main operating
subsidiaries, have not filed for bankruptcy and intend to conduct business as
usual and are looking into future drilling programs with current working
interest partners.
At January 31, 1995, Thor had a working capital deficit of $645,000
after reclassifying debt due March, 1995 from long-term to current maturities.
Net cash provided by operations during the year ended January 31, 1995, was
$343,000. Net cash was also provided by financing activities in the amount of
$162,000 due to an increase in long-term debt.
The Company continues to experience substantial costs relating to its
defense of the litigation referred to in "Item 3. Legal Proceedings" in Part I
of this report. Such litigation continues to place a serious financial strain
on the Company.
In August, 1994, the Company obtained financing to fully pay the
drilling and completion costs of the Breedlove - Rogers #2 well. A loan from
a trust, the beneficiary of which is an affiliate, in the original principal
amount of $275,000,
16
<PAGE> 21
which was paid down to $177,000 as of January 31, 1995, and which covers all
actual costs accrued to date, will be repaid from future revenues generated
from this well. See Note 7 of Notes to Consolidated Financial Statements
included elsewhere herein. The Company's other anticipated drilling activities
during the next few quarters could require a substantial amount of working
capital that exceeds the Company's current resources. Although the Company is
attempting to fund such activities through farm-outs, carried interests,
non-recourse financing or other arrangements that would result in a substantial
reduction in the Company's cash requirements related thereto, no assurances can
be made as to the Company's success therein.
The sufficiency of the Company's financial resources for fiscal 1996 is
a function of the success of the Company's planned oil and gas projects as well
as the Company's ability to obtain adequate sources of debt or equity capital.
As such, the Company is unable to accurately predict the adequacy of its
working capital or its liquidity. Additionally, the Company cannot anticipate
whether it will have available lines of credit.
Inflation and Changing Prices
The effects of, and changes in, general inflation had a minimal impact
on the Company's operations over the last two years. There have, however, been
declines in the price the Company receives for its oil and gas products over
the same period due to a decline in the demand for, together with an oversupply
of, petroleum products. This trend in declining oil and gas prices could
adversely affect the Company's revenues if it continues. The lifting of price
controls has not had, and in the future the Company anticipates that it will
not have, a material effect on the Company. The trend toward increasing
interest rates should not have a material impact due to the Company's low debt
structure.
Spin-Off
Pursuant to the Agreement among the Company, BMI and Morris & Co., the
Company committed to use its best efforts to distribute to its stockholders the
10% ownership of BMI Common Stock and the related Put Rights the Company
retained after the sale of the BMI stock to Morris & Co. as soon as possible.
Efforts to effect the Spin-Off stalled as the result of BMI's decision to
suspend its efforts to effect the Spin-Off until resolution of the litigation
discussed herein. The Company entered into the Settlement Agreement regarding
this matter, which was approved by the Bankruptcy Court, but subsequent events
have made the performance of the Settlement Agreement by BMI and Morris & Co.
questionable. The Company plans to continue to negotiate with BMI and Morris &
Co. to develop a mutually satisfactory resolution. See "Item 1. Description of
Business - Discontinued Waste Services Business - Sale by Subsidiary of Stock
Subsequent to January 31, 1993" and "Item 3. Litigation - BMI."
ITEM 7. FINANCIAL STATEMENTS
The response to this item is submitted as a separate section of this
report (see pages F-1 through F-15).
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Previously disclosed on the Company's Current Report on Form 8-K, dated
March 13, 1995, as amended.
17
<PAGE> 22
PART III
The information required by Part III (Items 9 through 12) will be
included in the Company's definitive proxy statement to be filed with the
Securities and Exchange Commission no later than 120 days after the end of the
Company's fiscal year covered by this Report and is incorporated herein by
reference.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
a. The response to the portion of Item 13 regarding financial statements is submitted as a separate section of
this report (see page F-1).
The following exhibits are filed as part of this report:
2.1 Notice of Commencement of Case under Chapter 11 of the Bankruptcy Code,
Meeting of Creditors and Fixing of Dates In Re Thor Energy Resources,
Inc., Case Number 94-61047.(1)
2.2 Press Release dated October 24, 1994.(1)
2.3 Proposed Plan of Reorganization.(2)
3.1 Restated Certificate of Incorporation.(3)
3.2 Bylaws and all amendments to date.(3)
10.1 Amended and Restated 1986 Stock Option Plan.(4)
10.2 Form of Indemnity Agreement between the Company and each of its
directors.(3)
10.3 Agreement for sale of property between the Company and Neomar
Resources, Inc.(2)
10.4 Agreement for sale of property between Thor Exploration, Inc. and an
unrelated party executed March 3, 1993 [dated February 25, 1993].(5)
10.5 Securities Purchase Agreement between the Company, BMI and Morris & Co.
dated March 31, 1993.(6)
10.6 Shareholders' Agreement between the Company and Morris & Co. dated March
31, 1993.(6)
10.7 Pledge Agreement by Morris & Co. in favor of the Company dated March 31,
1993.(6)
</TABLE>
18
<PAGE> 23
<TABLE>
<S> <C>
10.8 Severance Agreement dated July 16, 1990, between David M. Fender and the
Company.(3)
10.9 Letter dated November 21, 1990, from the Company to David W. Sipperly.(3)
10.10 Letter dated August 30, 1991, from the Company to David W. Sipperly.(3)
10.11 Letter dated September 3, 1991, from David W. Sipperly to the Company.(3)
10.12 Letter dated October 7, 1991, from the Company to David W. Sipperly.(3)
10.13 $135,000 Promissory Note, dated March 16, 1995, executed by the Company
and payable to the LaVelle D. Fender Trust.(2)
10.14 Deed of Trust, dated March 16, 1992, executed by the Company in favor of
LaVelle D. Fender.(3)
10.15 Real Estate Lien Note, dated August 23, 1994, executed by the Company
and Thor Exploration, Inc. and payable to the LaVelle D. Fender Trust.(2)
10.16 Deed of Trust, dated August 23, 1994, executed by the Company and Thor
Exploration, Inc. in favor of the LaVelle D. Fender Trust.(2)
10.17 Office lease between the Company and Lucy Corporation commencing
October 1, 1993.(4)
21.1 Subsidiaries of the Registrant.(3)
23.1 Consent of Weaver and Tidwell.(2)
23.2 Consent of Hein + Associates.(2)
27.1 Financial Data Schedule.(2)
99.1 Order on Motion to Approve Compromise and Settlement of Advisory
Proceedings.(7)
</TABLE>
b. A Form 8-K dated October 21, 1994, was filed during the last quarter
of the period covered by this report. The report covered the Company's
bankruptcy filing. See "Item 3 - Legal Proceedings."
___________________
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the Company's filing for bankruptcy on October 21,
1994.
19
<PAGE> 24
(2) Filed herewith.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1993, and incorporated
herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1994, and incorporated
herein by reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the sale of certain oil and gas properties, on March
5, 1993.
(6) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the issuance of BMI stock to Morris & Co., on April
15, 1993.
(7) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the change in the Company's accountants on March 13,
1995.
20
<PAGE> 25
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THOR ENERGY RESOURCES, INC.
(Registrant)
By: /s/ David M. Fender By: /s/ Lashley Bell
David M. Fender Lashley Bell
President, Chief Executive Treasurer, Principal Accounting
Officer Officer and Chief
Financial Officer
Dated: April 26, 1995
21
<PAGE> 26
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C> <C>
/s/ David M. Fender President, Chief Executive Officer and April 26, 1995
David M. Fender Director
/s/ Harris R. Fender, Jr. Vice President and Director April 26, 1995
Harris R. Fender, Jr.
/s/ Lashley Bell Treasurer, Principal Accounting Officer and April 26, 1995
Lashley Bell Chief Financial Officer
/s/ B. Bruce Freitag Director April 28, 1995
B. Bruce Freitag
/s/ LeRoy L. LaSalle Director April 26, 1995
LeRoy L. LaSalle
/s/ David W. Sipperly Director April 26, 1995
David W. Sipperly
/s/ G. Jeff Mennen Director April 28, 1995
G. Jeff Mennen
</TABLE>
22
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INDEPENDENT AUDITOR'S REPORT - Weaver and Tidwell, L.L.P. F-2
INDEPENDENT AUDITOR'S REPORT - Hein + Associates LLP F-3
FINANCIAL STATEMENTS
Consolidated balance sheet F-4
Consolidated statements of operations F-5
Consolidated statement of
changes in stockholders' equity F-6
Consolidated statements of cash flows F-7
Notes to consolidated financial statements F-8
</TABLE>
F-1
<PAGE> 28
To the Board of Directors
THOR ENERGY RESOURCES, INC.
Tyler, Texas
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of Thor
Energy Resources, Inc. and Subsidiaries as of January 31, 1995, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit 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 financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.
In our opinion, the 1995 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Thor
Energy Resources, Inc. and Subsidiaries as of January 31, 1995, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
As described in Note 10, the Company is currently the subject of certain
litigation, the outcome of which cannot be predicted at the present time.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 14 to the financial statements, the Company's losses from operations and
costs of defending the litigation noted above raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 14. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Weaver and Tidwell, L.L.P.
WEAVER AND TIDWELL, L.L.P.
Certified Public Accountants
Dallas, Texas
April 7, 1995
424
F-2
<PAGE> 29
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Thor Energy Resources, Inc.
Tyler, Texas
We have audited the accompanying consolidated statements of operations, changes
in stockholders' equity and cash flows of Thor Energy Resources, Inc. and
Subsidiaries for the year ended January 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of Thor Energy Resources, Inc.
and Subsidiaries' operations and cash flows for the year ended January 31,
1994, in conformity with generally accepted accounting principles.
As described in Note 10, the Company is currently the subject of certain
litigation, the outcome of which cannot be predicted at the present time.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES LLP
Dallas, Texas
April 6, 1994
F-3
<PAGE> 30
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JANUARY 31, 1995
(In Thousands, Except Per Share Amounts)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash and interest-bearing deposits
(market value approximates carrying value) $ 265
Receivables, net (Note 2) 584
Other current assets 83
--------
Total current assets 932
--------
INVESTMENT IN DISCONTINUED OPERATIONS OF SUBSIDIARIES (Note 9) 38
--------
PROPERTY AND EQUIPMENT (Notes 7 and 11)
Oil and gas properties, using the full cost method of accounting 6,932
Other 508
--------
7,440
Less - accumulated depreciation,
depletion, amortization and impairment (5,809)
--------
Net property and equipment 1,631
--------
OTHER ASSETS (Note 7) 370
--------
TOTAL ASSETS $ 2,971
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable (Note 7) $ 177
Accounts payable and accrued expenses 1,258
Accrued income taxes payable 142
--------
Total current liabilities 1,577
--------
LONG-TERM DEBT (Note 7) 145
--------
CONTINGENCY AND COMMITMENTS (Notes 4, 7 and 10)
STOCKHOLDERS' EQUITY (Note 6)
Preferred stock, par value $.01 per share;
1,000 shares authorized; no shares issued
Common stock, par value $.01 par value;
20,000 shares authorized; 6,465 issued 65
Capital in excess of par value 7,789
Accumulated deficit (6,411)
Treasury stock, at cost; 388 shares (194)
--------
Total stockholders' equity 1,249
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,971
========
</TABLE>
The Notes to Consolidated Financial Statements
are an integral part of this statement.
F-4
<PAGE> 31
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JANUARY 31, 1995 AND 1994
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
REVENUES
Oil and gas sales $ 1,523 $ 1,636
Other 44 191
----------- -----------
1,567 1,827
----------- -----------
COST AND EXPENSES
Lease operations and production taxes 429 428
General and administrative 1,345 1,251
Depreciation, depletion and amortization 645 657
Interest 27 28
----------- -----------
2,446 2,364
----------- -----------
LOSS FROM CONTINUING OPERATIONS ( 879) ( 537)
DISCONTINUED OPERATIONS
Provision for loss on investment (Note 9) ( 198)
----------- -----------
NET LOSS ($ 1,077) ($ 537)
=========== ===========
LOSS PER COMMON SHARE
Loss from continuing operations ($ .14) ($ .09)
=========== ===========
Net loss ($ .18) ($ .09)
=========== ===========
WEIGHTED AVERAGE SHARES 6,077 6,077
=========== ===========
</TABLE>
The Notes to Consolidated Financial Statements
are an integral part of this statement.
F-5
<PAGE> 32
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 31, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
Common Stock Capital Treasury Stock Total
--------------------------- In Excess Accumulated ------------------------ Stockholders'
Shares Amount of Par Value Deficit Shares Amount Equity
------------ ----------- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 31, 1993 6,465 $ 6,465 $ 1,389 ($ 4,797) 388 ($ 194) $ 2,863
Net loss ( 537) ( 537)
Change in par value of
common stock ( 6,400) 6,400
---------- ----------- --------- ---------- ----- -------- ----------
Balance,
January 31, 1994 6,465 65 7,789 ( 5,334) 388 ( 194) 2,326
Net loss ( 1,077) ( 1,077)
---------- ----------- --------- ---------- ----- -------- ----------
Balance,
January 31, 1995 6,465 $ 65 $ 7,789 ($ 6,411) 388 ($ 194) $ 1,249
========== =========== ========= ========== ===== ======== ==========
</TABLE>
The Notes to Consolidated Financial Statements
are an integral part of this statement.
F-6
<PAGE> 33
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 31, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 1,077) ($ 537)
Adjustments to reconcile to net cash from operations:
Depreciation, depletion and amortization 645 657
Provision for loss from discontinued operations 198
Gain on sale of assets ( 40)
Change in receivables 201 ( 26)
Change in other current assets ( 22) 53
Change in accounts payable and accrued expenses 368 ( 674)
Change in income taxes payable ( 61)
Other 30 15
------------ ----------
Net cash provided by (used in) operating activities 343 ( 613)
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 63 1,722
Additions to oil and gas properties ( 850) ( 774)
Additions to other property and equipment ( 1) ( 147)
------------ ----------
Net cash provided by (used in) investing activities ( 788) 801
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of long-term debt 275
Repayments of long-term debt ( 113) ( 440)
------------ ----------
Net cash provided by (used in) financing activities 162 ( 440)
------------ ----------
Net decrease in cash ( 283) ( 252)
------------ ----------
Cash and cash equivalents, beginning of year 548 800
------------ ----------
Cash and cash equivalents, end of year $ 265 $ 548
============ ==========
SUPPLEMENTAL INFORMATION:
Cash paid during the year for interest $ 27 $ 28
============ ==========
Cash paid during the year for income taxes $ $ 61
============ ==========
</TABLE>
NON-CASH INVESTING AND FINANCING ACTIVITIES (In Thousands)
During fiscal year 1995 and 1994, as part of his compensation, the president
of the Company received a 2% overriding royalty in wells drilled during the
year. The estimated fair market value of the royalties were $3 and $32,
respectively. In 1994, the Company sold real estate for consideration that
included a note receivable for $19. In 1995, the Company sold certain oil
and gas properties for consideration that included a receivable of $110.
The Notes to Consolidated Financial Statements
are an integral part of this statement.
F-7
<PAGE> 34
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
General and Basis of Financial Statements
The Company is currently engaged, through various wholly-owned
subsidiaries, in oil and gas exploration and production. Haz-Tech Waste
Management, Inc. a wholly-owned subsidiary (Haz-Tech), was engaged in
the management of the disposal of hazardous waste and as of January 31,
1993 had ceased operations. BMI Services, Inc. ("BMI"), formerly
Bio-Hazard Management, Inc. is engaged in the disposal of infectious
medical and biohazardous waste. The Company has accounted for its
investment in BMI as discontinued operations effective January 31, 1993.
(See Note 9). The consolidated financial statements include the
accounts of Thor Energy Resources, Inc., and its subsidiaries (referred
to collectively as "the Company"). All material intercompany balances
and transactions have been eliminated.
Oil and Gas Properties
The Company follows the full cost method of accounting for oil and gas
properties. Under this method, all costs of acquisition, exploration
and development of oil and gas reserves are capitalized, subject to a
"full cost ceiling" limitation. The full cost ceiling is equal to the
sum of (a) estimated future net revenues, after tax, from recoverable
proved oil and gas reserves, based on current costs and prices of oil
and gas, discounted at 10% per year and (b) the lower of cost or market
value of unproved properties.
Capitalized costs (excluding unevaluated oil and gas properties) and
related future development costs (the "amortization base") are amortized
on the unit-of-production method based on estimated recoverable proved
oil and gas reserves. No gains or losses are recognized upon the
disposition of oil and gas properties unless the disposition
significantly affects the relationship of capitalized costs and proved
reserves. Unproved properties are periodically reviewed to determine
possible impairment. all impairments are transferred to the
amortization base and amortized as described above.
Other Property and Equipment
Other property and equipment is stated at cost and depreciated on the
straight-line method over estimated useful lives of three to ten years.
Income Taxes
The Company and its subsidiaries file a consolidated income tax return.
Deferred income taxes are provided for all significant differences
between financial and tax reporting. Applicable tax credits are
recorded as a reduction of income tax expense in the year available for
utilization.
Statement of Financial Accounts Standards (SFAS) No. 109, issued by the
Financial Accounting Standards Board in February, 1992, required a
change in accounting for income taxes. The Company adopted SFAS No 109
in fiscal year 1994, and it did not have a material effect on the
Company's financial statements.
Net Loss Per Common Share
Net loss per common share is based on the weighted average number of
such shares outstanding. Employee stock options and rights were not
included in the calculation during the two years in the period ended
January 31, 1995 as their effect was nondilutive.
F-8
<PAGE> 35
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies - continued
Statement of Cash Flows
For purposes of reporting cash flows, the Company considers cash and
unrestricted interest bearing deposits with original maturities of three
months or less to be cash equivalents.
Real Estate Held For Investment
Real estate held for investment, which is classified with "other assets"
in the accompanying balance sheet, is recorded at cost net of valuation
allowances. The real estate is evaluated for impairment periodically
and any reductions in estimated value are charged to income only if
considered to be permanent in nature.
Note 2. Receivables
A summary of receivables (in thousands) at January 31, 1995 follows:
<TABLE>
<S> <C>
Oil and gas receivables, including accrued oil and gas sales $ 461
Notes receivable and other, net of allowance for doubtful accounts of $207 123
--------
$ 584
========
</TABLE>
Note 3. Sale of Oil and Gas Properties
On March 5, 1993, the Company sold twelve oil and gas properties and the
related gas gathering system, all of which were located in Texas. The
proved reserves associated with these properties at January 31, 1993
represented approximately 60% of the Company's total proved reserves, based
on the Company's most recent independent engineering report. The sales
price of $1,860,000 was adjusted for revenue from the effective date of
January 1, 1993, title charges and other charges to yield approximately
$1,706,000 in proceeds. The Company recorded a gain on the sale of
approximately $15,000 in fiscal 1994.
Note 4. Leases
The Company leases office space under a noncancelable operating lease that
is in effect until February 28, 1997 with an additional 36 month renewal
option. Future minimum lease payments (in thousands) under the lease are as
follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
January 31,
-------------------
<S> <C>
1996 $ 44
1997 44
1998 3
--------
$ 91
========
</TABLE>
Lease expense for the fiscal years ending January 31, 1995 and 1994 was
approximately $43,000 and $41,000, respectively.
F-9
<PAGE> 36
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Income Taxes
In fiscal year 1994, the Company adopted SFAS No. 109, which required a
change in the method of accounting for income taxes. The adoption of SFAS
No. 109 had no cumulative effect on the Company's accumulated deficit as of
February 1, 1993 nor any effect on its 1994 results of operations.
The components of the Company's net deferred tax asset (in thousands) as of
January 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
January 31, January 31,
1995 1994
------------ ------------
<S> <C> <C>
Deferred tax asset:
Net operating loss carryforwards $ 1,785 $ 1,294
Other tax credit carryforwards 46 46
Differences between book and tax bases
of oil and gas properties 108 210
--------- ---------
Total deferred tax asset 1,939 1,550
Valuation allowance ( 1,939) ( 1,550)
--------- ---------
Net deferred tax asset $ $
========= =========
</TABLE>
At January 31, 1995, the Company has a regular net operating loss carryover
for federal income tax purposes of approximately $5,200,000 and an
alternative minimum tax net operating loss carryover of approximately
$1,400,000, both expiring in the years 2005 through 2009, that may be used
to offset taxable income earned in future years. The Company's valuation
allowance increased by $389,000 and $465,000 during 1995 and 1994,
respectively.
Note 6. Stockholders' Equity
In May, 1986, the Company's stockholders and directors approved stock option
plans which provide for the granting of stock options and certain stock
appreciation rights to directors and key management employees of the Company
and its subsidiaries. A total of 390,630 shares of common stock are
reserved for issuance of which 334,630 shares are available for grant at
January 31, 1995. The options primarily become exercisable cumulatively in
four equal annual installments, beginning on the first anniversary date of
grant, and expire after the fifth year. The option price for shares granted
pursuant to the plan may not be less than the fair market value of the
shares at the date of grant.
F-10
<PAGE> 37
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6. Stockholders' Equity - continued
<TABLE>
<CAPTION>
Number of Number of Price
Shares Rights Per Share
------------ ------------ -----------
<S> <C> <C> <C>
Outstanding at January 31, 1993 48,000 14,240 $1.00 - $1.50
Granted 12,000 3,600 1.00
Canceled ( 8,000) ( 2,240) 1.00
----------- --------- -------------
Outstanding at January 31, 1994 52,000 15,600 1.00 - 1.50
Granted 12,000 3,600 1.00
Canceled ( 8,000) ( 2,400) 1.38
----------- --------- -------------
Outstanding at January 31, 1995 56,000 16,800 $1.00 - $1.50
=========== ========= =============
</TABLE>
At January 31, 1995 and 1994, options for 26,000 and 23,000 shares of common
stock, respectively, were exercisable.
The Company has 1,000,000 shares of preferred stock authorized, with none
issued as of January 31, 1995. The preferred stock may be issued in series
with terms as designated by the Company's board of directors.
In July, 1993, the Company changed the par value of its preferred and common
stock from $1.00 per share to $.01 per share, which resulted in a
reclassification of $6,400,000 from common stock to capital in excess of par
value.
Note 7. Transactions With Principals and Affiliates
The Company has notes payable of $145,000 and $176,827 to the LaVelle D.
Fender Trust, the beneficiary of which is a family member of the president
of the Company. The $145,000 note is due March 15, 1996 with interest
accrued at 10%, and is collateralized by a gas well and by undeveloped real
estate included in "other assets" in the accompanying balance sheet. The
$176,827 note is payable monthly based upon 80% of the net revenues of a
gas well. Projections of future net revenues from this well have resulted
in the note being classified as current. The note bears interest at 10%
and is collateralized by the gas well.
Certain directors and stockholders of the Company and members of their
families have purchased interests in oil and gas wells from the Company on
the same terms provided to outside investors in the wells. The aggregate
amount paid by such related parties for these interests in wells and related
drilling and completion costs was approximately $269,000 in fiscal 1994.
In fiscal 1991, the Company entered into an agreement with the president of
the Company. Under the agreement, the president would have the right to
receive approximately three times his prior five year average annual
compensation, and continue certain benefits, if the president's employment
is terminated by the Company other than for cause (as defined in the
agreement) following a change in control of the Company. The aggregate
maximum commitment under this agreement is approximately $742,000 at January
31, 1995. The term of this agreement expires on December 31, 1995, but
contains a self renewing provision subject to a cancellation clause.
F-11
<PAGE> 38
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Transactions With Principals and Affiliates - continued
During fiscal 1990, the Company entered into a compensation arrangement with
its president, which includes an annual cash bonus equal to 5% of the
Company's pre-tax earnings, an annual stock bonus equal to 5% of the
increase of the weighted average aggregate Company stock value over the
previous twelve month period and an additional cash bonus to cover the
income taxes of a 2% overriding royalty interest in any well drilled or sold
as defined in the agreement. The Company records compensation expense for
the 2% overriding royalty interests granted under this arrangement based
upon the estimated fair market value of the interests granted. Such amount
was $3,500 and $32,000 in 1995 and 1994, respectively. There was not a cash
or stock bonus earned under the agreement in fiscal 1995 and 1994.
Note 8. Profit Sharing (401k) Plan
During fiscal 1995, the Company established a Profit Sharing (401k) Plan
covering substantially all employees. Contributions are made at the
discretion of the Board of Directors. Total cost of the plan for 1995 was
approximately $8,000.
Note 9. Discontinued Operations
On March 31, 1993, the Company, BMI and Morris & Co. (an unrelated third
party) entered into a Securities Purchase Agreement whereby BMI issued to
Morris & Co. common stock in an amount equal to 90% of the BMI common stock
then outstanding for a $750,000 cash capital contribution to BMI. BMI also
granted the Company a "put option", which provides the right to sell the BMI
common stock owned by the Company on March 31, 1993 under certain conditions
to BMI during the three year period commencing March 31, 1995. In addition,
the Company agreed to use its best efforts to distribute to its stockholders
the shares of BMI common stock owned by the Company and the related put
option by December 31, 1993. Additional conditions exist that could provide
the Company up to an additional 5% of BMI common stock or $1,000,000. As
of January 31, 1995, the distribution of the BMI shares and put option had
not occurred. Management of the Company is currently unable to predict when
such distribution will occur. The Company has recorded a provision for
loss of $198,000 on its investment in BMI in fiscal year 1995 which reduced
the carrying value to $ -0-.
At January 31, 1995, Haz-Tech is carried as an investment in the Company's
balance sheet. Haz-Tech's remaining net assets, which at January 31, 1995
consisted primarily of equipment held for resale, had been written down to
net realizable value of $38,000.
F-12
<PAGE> 39
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Contingencies
In May, 1992, a person who was then a director and officer of the company
filed suit in state district court against the company, its directors and
majority stockholder. The amended complaint in this litigation alleges
wrongful termination and that the Company has previously improperly
structured and disclosed an oil and gas reserve purchase. In another action
the same individual filed counterclaim in Bankruptcy Court (subsequently
moved to the federal district court) against the Company and each director
alleging, among other things that the Company and the president of the
Company acted fraudulently in regards to the purchase of these oil and gas
reserves and their subsequent disclosure in various public filings. The
former director and officer subsequently dismissed the claims pending in
federal court against each director other than the president of the Company.
The case was tried by a jury in January and February, 1995. The jury was
unable to reach a verdict on most issues and while determining that the
Company did commit some acts which might give rise to damages against the
former director and officer, could not agree on the amount of any damages to
award. No judgment has been rendered on the verdict to date. Management of
the Company believes the claims against the Company and its directors are
without merit and intends to continue a vigorous defense. Counsel to the
Company advises that the ultimate result of the proceedings cannot be
predicted at the present time given the uncertainties inherent in
litigation.
Note 11. Financial Data For Oil and Gas Producing Activities
The following table sets forth certain information (in thousands) with
respect to the oil and gas producing activities of the Company for each of
the years in the two-year period ended January 31, 1995.
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Capitalized costs incurred:
Acquisition of unproved properties $ 41 $ 37
Exploration costs 757 687
Development costs 53 50
--------- ----------
Total capitalized costs incurred $ 851 $ 774
========= ==========
Aggregate capitalized costs:
Evaluated $ 6,884 $ 6,280
Unevaluated 48
--------- ----------
6,932 6,280
Aggregated accumulated depreciation,
depletion, amortization and impairment ( 5,449) ( 4,847)
--------- ----------
Net property costs $ 1,483 $ 1,433
========= ==========
Depreciation, depletion and amortization
per equivalent mcf $ .79 $ .84
========= ==========
</TABLE>
F-13
<PAGE> 40
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Oil and Gas Reserve Data (Unaudited)
The following table, based on information prepared primarily by independent
petroleum engineers for January 31, 1995 and 1994, summarizes changes (in
thousands) in the estimates of the Company's net interest in total proved
and proved developed reserves of crude oil and condensate and natural gas,
all of which are domestic reserves. The reserve estimated for a well
representing approximately 9% of the proved reserves at January 31, 1994 was
prepared by the Company.
<TABLE>
<CAPTION>
Oil Gas
----------- -----------
(BBLS) (MCF)
<S> <C> <C>
Balance, January 31, 1993 177 3,096
Discovery 22 565
Revisions of previous estimates 2 126
Reserves sold ( 152) ( 1,805)
Production ( 19) ( 606)
------ ------
Balance, January 31, 1994 30 1,376
Discovery 12 686
Revisions of previous estimates 4 226
Reserves sold ( 125)
Production ( 18) ( 649)
------ ------
Balance, January 31, 1995 28 1,514
====== ======
Proved developed reserves:
January 31, 1993 177 3,096
January 31, 1994 30 1,376
January 31, 1995 28 1,514
</TABLE>
Proved oil and gas reserves are the estimated quantities of crude oil,
condensate and natural gas which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Proved
developed oil and gas reserves are reserves that can be expected to be
recovered through existing wells with existing equipment and operating
methods. The above estimated net interests in total proved and proved
developed reserves are based upon subjective engineering judgments and may
be affected by the limitations inherent in such estimation. The process of
estimating reserves is subject to continual revision as additional
information becomes available as a result of drilling, testing, reservoir
studies and production history. There can be no assurance that such
estimates will not be materially revised in subsequent periods.
Note 13. Standardized Measure of Changes in Future Net Revenues (Unaudited)
The standardized measure of discounted future net cash flows (in thousands)
at January 31, 1995, and 1994 relating to proved oil and gas is set forth
below. The assumptions used to compute the standardized measure are those
prescribed by the Financial Accounting Standards Board and as such, do not
necessarily reflect the Company's expectations of actual revenues to be
derived from those reserves nor their present worth. The limitations
inherent in the reserve quantity estimation process are equally applicable
to the standardized measure computations since these estimates are the basis
for the valuation process.
F-14
<PAGE> 41
THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Standardized Measure of Changes in Future Net Revenues (Unaudited) -
continued
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Future cash inflows $ 2,870 $ 2,973
Future production and development costs ( 744) ( 1,018)
Future income tax expense
----------- ----------
Future net cash flows 2,126 1,955
10% annual discount for estimated timing of cash flows ( 347) ( 275)
----------- ----------
Standardized measure of discounted future net cash flows $ 1,779 $ 1,680
=========== ==========
</TABLE>
Future net cash flows were computed using year-end prices and costs, and
year-end statutory tax rates (adjusted for permanent differences) that
relate to existing proved oil and gas reserves at year-end. The following
are the principal sources of change (in thousands) in the standardized
measure of discounted future net cash flows for each of the years in the
two-year period ended January 31, 1995.
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Sales and transfers of oil and gas produced,
net of production costs ($ 1,094) ($ 1,208)
Net changes in prices and production costs 8 ( 327)
Discovery of reserves 804 918
Revisions of previous quantity estimates 264 117
Accretion of discount 249 444
Sale of reserves in place ( 132) ( 2,701)
----------- ------------
Net change 99 ( 2,757)
Balance, beginning of year 1,680 4,437
----------- ------------
Balance, end of year $ 1,779 $ 1,680
=========== ============
</TABLE>
Note 14. Continued Operations
As noted by the financial statements, the Company experienced recurring
losses for the two years ended January 31, 1995 and at January 31, 1995 its
current liabilities exceeded its current assets by $645,000. The
circumstances surrounding and the costs of defending the lawsuit noted in
Note 10 caused the Company to seek protection under Chapter 11 of the U.S.
Bankruptcy Code on October 21, 1994. A plan of reorganization was filed
with the Bankruptcy Court in April, 1995 under which no claims would be
compromised. Such plan has not been approved. Notwithstanding the
uncertainties surrounding the litigation discussed in Note 10, the Company
plans to reduce or delay expenditures, restructure current debt and dispose
of oil and gas properties, as necessary, to continue operations.
F-15
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2.1 Notice of Commencemenet of Case under Chapter 11 of the
Bankruptcy Code, Meeting of Creditors and Fixing of
Dates In Re Thor Energy Resources, Inc., Case Number
94-61047.(1)
2.2 Press Release dated October 24, 1994.(1)
2.3 Proposed Plan of Reorganization.(2)
3.1 Restated Certificate of Incorporation.(3)
3.2 Bylaws and all amendments to date.(3)
10.1 Amended and Restated 1986 Stock Option Plan.(4)
10.2 Form of Indemnity Agreement between the Company
and each of its directors.(3)
10.3 Agreement for sale of property between the Company and Neomar
Resources, Inc.(2)
10.4 Agreement for sale of property between Thor Exploration, Inc.
and an unrelated party executed March 3, 1993
[dated February 25, 1993].(5)
10.5 Securities Purchase Agreement between the Company, BMI
and Morris & Co. dated March 31, 1993.(6)
10.6 Shareholders' Agreement between the Company and Morris & Co.
dated March 31, 1993.(6)
10.7 Pledge Agreement by Morris & Co. in favor of the Company
dated March 31, 1993.(6)
10.8 Severance Agreement dated July 16, 1990, between
David M. Fender and the Company.(3)
10.9 Letter dated November 21, 1990, from the Company to
David W. Sipperly.(3)
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.10 Letter dated August 30, 1991, from the Company to
David W. Sipperly.(3)
10.11 Letter dated September 3, 1991, from David W. Sipperly
to the Company.(3)
10.12 Letter dated October 7, 1991, from the Company to
David W. Sipperly.(3)
10.13 $135,000 Promissory Note, dated March 16, 1995, executed
by the Company and payable to the LaVelle D. Fender Trust.(2)
10.14 Deed of Trust, dated March 16, 1992, executed by the
Company in favor of LaVelle D. Fender.(3)
10.15 Real Estate Lien Note, dated August 23, 1994, executed by
the Company and Thor Exploration, Inc. and payable to
the LaVelle D. Fender Trust.(2)
10.16 Deed of Trust, dated August 23, 1994, executed by the Company
and Thor Exploration, Inc. in favor of the LaVelle D. Fender
Trust.(2)
10.17 Office lease between the Company and Lucy Corporation
commencing October 1, 1993.(4)
22.1 Subsidiaries of the Registrant.(3)
23.1 Consent of Weaver and Tidwell.(2)
23.2 Consent of Hein + Associates.(2)
27.1 Financial Data Schedule.(2)
99.1 Order on Motion to Approve Compromise and Settlement of
Advisory Proceeding.(7)
</TABLE>
<PAGE> 44
___________________
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the Company's filing for bankruptcy on October 21,
1994.
(2) Filed herewith.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1993, and incorporated
herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1994, and incorporated
herein by reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the sale of certain oil and gas properties, on
March 5, 1993.
(6) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the issuance of BMI stock to Morris & Co., on April
15, 1993.
(7) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, as amended, regarding the change in the Company's accountants
on March 13, 1995.
<PAGE> 1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER, DIVISION
IN RE: Section
Section CASE NO. 94-61047-A
THOR ENERGY RESOURCES, INC. Section
Section
DEBTOR Section CHAPTER 11
PLAN OF REORGANIZATION
Thor Energy Resources, Inc., Debtor herein, hereby proposes the
following Plan of Reorganization for approval by creditors and other parties
in interest.
ARTICLE I
DEFINITIONS
Definitions: For the purposes of this Plan of Reorganization, the
following terms and definitions shall have the following meanings unless the
context clearly indicates otherwise:
1. "ALLOWED CLAIM" OR "ALLOWED INTEREST" means a CLAIM against or
equity security INTEREST in the DEBTOR to the extent that:
(a) a proof of such CLAIM or INTEREST was
i) timely filed,
ii) deemed filed pursuant to Section 1111(a) of
the BANKRUPTCY CODE,
iii) deemed filed as an outstanding security of
the DEBTOR, or
iv) late filed with leave of the BANKRUPTCY COURT
after notice and opportunity for hearing
given to the counsel for
Plan of Reorganization - Thor Energy Resources, Inc.
1
<PAGE> 2
DEBTOR and the creditor's committee appointed
in this Chapter 11 case; and
(b) (i) which is not a DISPUTED CLAIM, or
(ii) which is allowed (and only to the extent
allowed) by a FINAL ORDER.
2. "ADMINISTRATIVE EXPENSE" means a CLAIM allowed under Section
503(b) and Section 507(a)(1) of the BANKRUPTCY CODE and fees and charges
assessed against the DEBTOR'S estate under 28 U.S.C. Section 1930.
3. "ALLOWED CLAIM", "ALLOWED SECURED CLAIM", "ALLOWED PRIORITY
CLAIM", or an "INTEREST" against or in the DEBTOR to the extent that:
(a) a proof of such CLAIM or INTEREST was
(i) timely filed;
ii) deemed filed pursuant to Section 111(a) of
the
iii) late filed with leave of the BANKRUPTCY COURT
after notice and opportunity for hearing
given to the DEBTOR and the creditor's and;
(b) (i) which is not a DISPUTED CLAIM, or
(ii) which is allowed (and only to the extent
allowed) by a FINAL ORDER.
4. "BANKRUPTCY CODE" means Title 11 of the United States Code.
5. "BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Eastern District of Texas, or, in the event such Court ceases to exercise
jurisdiction over this
Plan of Reorganization - Thor Energy Resources, Inc.
2
<PAGE> 3
Chapter 11 case, such Court or adjunct thereof that exercises jurisdiction over
this Chapter 11 case in lieu of the United States Bankruptcy Court for the
Eastern District of Texas.
6. "CASH" means cash and cash equivalents, including but not limited
to bank deposits, checks, and other similar items.
7. "CONFIRMATION DATE" means the date on which the CONFIRMATION ORDER
is entered.
8. "CONSUMMATION DATE" means the date on which the Thor Trust makes
its final Distributions.
9. "CONFIRMATION ORDER" means the entered ORDER confirming the PLAN
pursuant to Section 1129 of the BANKRUPTCY CODE.
10. "DEBTOR" means THOR ENERGY RESOURCES, INC., a Delaware
corporation.
11. "DISPUTED CLAIM" means an asserted CLAIM against or equity
INTEREST in DEBTOR (i) to which an objection has been filed on or before the
CONFIRMATION DATE or (ii) which has been scheduled as disputed contingent or
unliquidated and which has not been resolved or allowed by FINAL ORDER,
estimation or pursuant to this PLAN.
12. "DISTRIBUTIONS" means CASH, PROPERTY and/or NEW COMMON STOCK,
which are required by the PLAN to be distributed to the holders of ALLOWED
CLAIMS and ALLOWED INTERESTS and to the INVESTORS.
13. "EFFECTIVE DATE" means (a) the 30th business day following the
CONFIRMATION DATE or (b) at the option of the DEBTOR, the first business day of
the second calendar month following the date of the CONFIRMATION ORDER becomes
a FINAL ORDER after such date.
Plan of Reorganization - Thor Energy Resources, Inc.
3
<PAGE> 4
14. "FINAL ORDER" OR "FINAL JUDGMENT" means an order judgment of the
BANKRUPTCY COURT or any court of competent jurisdiction presiding over the
proceeding, as which: (a) any appeal that has been taken has been finally
determined or dismissed; (b) the time for appeal has expired and no appeal has
been filed timely (In the case of an order of the BANKRUPTCY COURT, the time
for appeal, for purposes of this definition, shall be the time permitted for an
appeal to the UNITED STATES DISTRICT COURT, unless the DEBTOR shall have
consented in writing prior to the expiration of such period to a direct appeal
to the United States Court of Appeals); or (c) if an appeal, reargument,
certiorari or rehearing thereof has been sought, such order has not been
stayed.
15. "INVESTOR" means person(s) subscribing to acquire NEW COMMON
STOCK. Under this Plan the Investors will be a corporation, partnership, or
other entity formed by or controlled by one or more of the holders of Class 5
claims, or their assigns.
16. "NEW ARTICLES/NEW BYLAWS" means the Articles of Incorporation and
the Bylaws of DEBTOR as reincorporated under the laws of Delaware which shall
become effective on and as of the EFFECTIVE DATE and which shall be in the form
of the "ARTICLES OF INCORPORATION" and the "BYLAWS" on file with the BANKRUPTCY
COURT, subject to the filing modifications thereto prior to the first date
fixed for the commencement of the hearing to consider confirmation of the PLAN.
The NEW ARTICLES shall be filed in the Office of the Secretary of State of the
State of Delaware.
17. "NEW COMMON STOCK" means the shares of $.01 par value common
stock of the REORGANIZED DEBTOR to be issued to the INVESTOR. The NEW ARTICLES
will authorize ten (10) million shares of NEW COMMON STOCK.
Plan of Reorganization - Thor Energy Resources, Inc.
4
<PAGE> 5
18. "OUTSTANDING SECURITIES" mean the common stock and all options to
acquire common stock of the DEBTOR which were issued and outstanding as of the
day preceding the CONFIRMATION DATE, all of which shall be canceled on the
EFFECTIVE DATE.
19. "PLAN" means this "DEBTOR'S PLAN OF REORGANIZATION" together with
any modifications thereto as may hereafter be filed by the DEBTOR, which PLAN
shall also constitute a plan of reorganization within the meaning of Section
368(a)(1) of the Internal Revenue Code, as amended.
20. "REORGANIZED DEBTOR" means the DEBTOR following the EFFECTIVE
DATE.
21. "PRIORITY CLAIMS" mean the CLAIMS specified in Section 507
(a)(2) through (7), inclusive, of the BANKRUPTCY CODE.
22. "PRO RATA" means proportionately so that the ratio of the amount
of consideration distributed on account of a particular claim or interest to
the total amount of ALLOWED CLAIMS or ALLOWED INTEREST of a class is the same
as the ratio of the amount of consideration distributed on account of all
ALLOWED CLAIMS or ALLOWED INTERESTS of the class in which the particular CLAIM
or INTEREST is included to the amount of all ALLOWED CLAIMS or allowed
INTERESTS of that class.
23. "SECURED CLAIM" means any CLAIM in respect of which a valid lien,
security interest or encumbrance is held in any of the DEBTOR'S assets.
24. "UNSECURED CLAIMS" mean all unsecured non-priority ALLOWED CLAIMS
against DEBTOR, including any deficiency CLAIM of the holder of a SECURED CLAIM
and
Plan of Reorganization - Thor Energy Resources, Inc.
5
<PAGE> 6
any CLAIM arising from the rejection of any executory contract or unexpired
lease of DEBTOR.
25. "VALUATION NOTICE" means the written report signed by the
appraisers stating the results of the Valuation Procedure.
26. "VALUATION PROCEDURE" shall consist of each party to the
valuation dispute selecting an appraiser and the two appraisers so chosen shall
select a third appraiser. The three appraisers shall arrive at a market value
for the property by agreement; if a unanimous agreement of value can not be
reached between the three appraisers chosen, the majority may agree and their
agreement shall constitute the value as reported by the appraisers. In the
event no agreement can be reached between a majority of the appraisers, the
average of their three valuations shall be the value as reported by the
appraisers. The costs of the appraisers shall be born by the party selecting
same with the third appraiser being paid one-half by each party. The results
of valuation shall be placed in writing in a Valuation Notice and delivered to
the parties disputing value. The results of the Valuation Notice shall be
binding on the parties.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
All ALLOWED CLAIMS and ALLOWED INTERESTS are placed in the following
classes:
A. PRIORITY CLAIMS: CLASS 1
CLASS 1: Class 1 consists of all ALLOWED PRIORITY CLAIMS
against DEBTOR entitled to priority pursuant to Section
507(a)(7) of the BANKRUPTCY CODE (taxes).
B. SECURED CLAIMS: CLASS 2
Plan of Reorganization - Thor Energy Resources, Inc.
6
<PAGE> 7
CLASS 2: Class 2 consists of the ALLOWED CLAIM of the Lavelle
D. Fender Trust. This claim consists of two promissory notes
secured by oil and gas properties owned by Thor Exploration,
Inc., a wholly owned subsidiary of Debtor, and the Debtor's
St. Croix property. Note A consists of the promissory note
with an approximate balance of $190,000 secured by the
Breedlove-Rogers #2 gas well and the St. Croix, Virgin
Islands, property totalling approximately 90 acres, more or
less.. Note B consists of the promissory note with an
approximate balance of $140,000 secured by the Loy-Gilbert oil
and gas well and the St. Croix property.
C. UNSECURED CLAIMS: CLASS 3
CLASS 3A: Class 3A consists of all unsecured ALLOWED CLAIMS
against DEBTOR for Five Hundred Dollars ($500) or less, or
claims for a larger amount which are reduced, at the election
of the holder thereof, to Five Hundred Dollars ($500).
CLASS 3B: Class 3B consists of ALLOWED CLAIMS against DEBTOR,
other than CLAIMS in CLASSES 2, 3A, 3C, 3D and 3E, including
but not limited to:
a. CLAIMS arising from the rejection of
executory contracts and leases as finally
allowed and approved by the BANKRUPTCY COURT;
b. The non-priority and unsecured portions of
CLAIMS, as finally allowed and approved by
the BANKRUPTCY COURT, the priority portions
of which are included in CLASS 1;
Plan of Reorganization - Thor Energy Resources, Inc.
7
<PAGE> 8
c. CLAIMS of DEBTOR'S customers, vendors, and
representatives and;
d. All CLAIMS, secured or unsecured, final or
contingent, liquidated or unliquidated, not
scheduled by the DEBTOR, proven by the
claimant or finally allowed herein.
CLASS 3C: Class 3C consists of the unliquidated, disputed,
contingent claim of M. Lindsay Sneed, arising from claims
asserted, or which could have been asserted, in litigation
pending in any Court as of the date the petition for relief
under Title 11 was filed herein, on which a Final Judgment has
been entered.
CLASS 3D: Class 3D consists of all CLAIMS as finally allowed
for any fine, penalty or forfeiture, or the multiple
exemplary or punitive damages to the extent that any such
fine, penalty, forfeiture or damages do not constitute
compensation for actual pecuniary loss suffered by the holder
of any such CLAIM.
CLASS 3E: Class 3E consists of the claims of the State of New
Hampshire and/or the City of Portsmouth, New Hampshire,
relating to a waste incinerator owned by Debtor or its
subsidiaries located in New Hampshire.
D. MINORITY SHAREHOLDER COMMON STOCK AND OPTIONS
CLASS 4: Class 4 consists of all ALLOWED INTERESTS against
DEBTOR which are based upon stock ownership and options to
acquire the stock of the DEBTOR, other than those included in
CLASS 5.
E. MAJORITY SHAREHOLDER COMMON STOCK AND OPTIONS
CLASS 5: Class 5 consists of all ALLOWED INTEREST against
DEBTOR which are based upon stock ownership and options to
acquire the stock
Plan of Reorganization - Thor Energy Resources, Inc.
8
<PAGE> 9
of the DEBTOR held by Zapata Partnership, Ltd., David Fender,
Harris R. Fender, Jr., Lavelle D. Fender, or the Lavelle D.
Fender Trust.
ARTICLE III
TREATMENT OF CERTAIN UNCLASSIFIED CLAIMS
The holders of an ADMINISTRATIVE EXPENSE CLAIM entitled to priority
under Section 507(a)(1) of the BANKRUPTCY CODE, including entities entitled to
payment pursuant to Section 503 of the BANKRUPTCY CODE, shall receive on
account of such CLAIMS, CASH in the amount of such CLAIMS (i) as soon as
practical on or after the EFFECTIVE DATE or (ii) at the option of the DEBTOR,
in accordance with the ordinary business terms of payment of such CLAIMS.
Notwithstanding the foregoing, professionals employed at the expense of the
estate of the DEBTOR and entities who may be entitled to an allowance of fees
and expenses from the estate of the DEBTOR pursuant to Section 503(b)(2)
through (6) of the BANKRUPTCY CODE, shall receive CASH in the amount awarded to
such professionals and entities by order of the BANKRUPTCY COURT as soon as
practical after the later of the EFFECTIVE DATE and the date on which an order
which is entered by the BANKRUPTCY COURT pursuant to Section 330 or Sections
503(b)(2) through (6) of the BANKRUPTCY CODE approving allowance of
compensation or reimbursement of expenses in favor of such professionals and
entities becomes a FINAL ORDER. Provided, however, nothing herein shall
prohibit a different treatment of such claims if agreed to in writing by the
holder of the claim.
ARTICLE IV
DESIGNATION AND TREATMENT OF UNIMPAIRED CLASSES
There are no unimpaired classes under the Plan.
ARTICLE V
Plan of Reorganization - Thor Energy Resources, Inc.
9
<PAGE> 10
DESIGNATION AND TREATMENT OF IMPAIRED CLASSES
The following classes are impaired under PLAN. In the event a
controversy as to whether any class of CLAIMS is impaired under the PLAN, the
BANKRUPTCY COURT, after notice and an opportunity for a hearing, shall
determine such controversy. All impaired classes of CLAIMS and INTERESTS shall
receive the DISTRIBUTIONS set forth in this Article on account of and in
complete satisfaction of all CLAIMS against the DEBTOR, and shall have no
further rights or remedies against the DEBTOR or any of its assets or
properties, except as specifically set forth in the PLAN.
A. CLASS 1 (PRIORITY CLAIMS - Section 507(A)(7): Each holder of a
CLASS 1 ALLOWED PRIORITY CLAIM shall receive, at the option of the DEBTOR, on
or as soon as practicable after the EFFECTIVE DATE, shall be paid in cash or,
in the alternative, shall be paid according to the schedule set forth below by
the Debtor as and when their claims are allowed and/or ordered paid by the
Court. Prior to the Confirmation Date, the Debtor shall elect the manner by
which payment is to be made to the Creditors in this Class. If not paid in
cash on the Effective Date, said claims shall be paid in monthly installments.
Each monthly installment shall be equal to the proportionate pro rated number
of calendar months remaining as of the Effective Date until the sixth annual
anniversary of the assessment of such tax giving rise to the claim. In
addition to the monthly payment of principal, interest shall be paid at such
monthly intervals on the unpaid balance of the Tax Claims in Class 1 at the
interest rate of six and one half percent (6.5%) per annum. No penalties that
did or otherwise would have accrued after the Filing Date shall be paid. The
first monthly payment to creditors in Class Two shall be thirty days following
the Effective Date. Provided, however, Debtor reserves the right to pay Class
1 Claimants in full on the Effective Date.
Plan of Reorganization - Thor Energy Resources, Inc.
10
<PAGE> 11
B. CLASS 2 (SECURED CLAIMS): The holders of CLASS 2, ALLOWED SECURED
CLAIMS shall be treated as follows: (i) except as set out hereafter, holders of
claims in this class shall retain the legal, equitable, and contractual rights
against the property in which each such holder has a valid and perfected
security interest to the extent of each such ALLOWED SECURED CLAIM as
determined pursuant to Section 506 of the BANKRUPTCY CODE; (ii) Note A shall
be paid with interest as set out in the note in monthly installments equal to
50% of the net production attributable to Thor Exploration's ownership interest
in the Breedlove-Rogers #2 Gas well, provided that such monthly payment shall
not be less than $15,000 per month; (iii) Note B shall be paid with interest
as set out in the note in monthly installments equal to 50% of the net
production attributable to Thor Exploration's ownership interest in the Loy
Gilbert well, provided that such monthly payments shall not be less than
$5,000; and (iv) the liens held by the holder of this claim shall remain in
full force and affect.
C. CLASS 3A: On the Effective Date, the Thor Trust shall issue to
the holders of CLASS 3A ALLOWED CLAIMS, in full satisfaction and discharge of
all CLASS 3A ALLOWED CLAIMS, and any and all interest, costs and fees accrued
or otherwise owing thereon, CASH in the amount of ALLOWED CLAIM up to Five
Hundred Dollars ($500).
D. CLASS 3B: The DEBTOR shall issue to the holders of CLASS 3B
ALLOWED CLAIMS in full satisfaction and discharge of CLASS 3B ALLOWED CLAIMS,
at the option of the holder, either:
i) CREDITOR PAYMENTS alternative: an interest
bearing note in an amount equal to one
hundred percent (100%) of the amount of such
electing holders's ALLOWED CLAIM, which
UNSECURED CREDITOR NOTE shall be payable in
six equal monthly
Plan of Reorganization - Thor Energy Resources, Inc.
11
<PAGE> 12
installments of such ALLOWED CLAIM with the
first payment due 30 days following the
EFFECTIVE DATE; or
ii) CASH Alternative: CASH in an amount equal to
seventy five percent (75%) of the amount of
such electing holder's ALLOWED CLAIM.
In the event a holder fails to elect either of the
Alternatives on the ballot accompanying this PLAN,
DEBTOR may, in its sole discretion, designate one of
the Alternatives.
E. CLASS 3C: CLASS 3C claims shall be treated as follows:
(i) Holder, M. Lindsay Sneed ("Sneed") shall be
allowed to continue pursuit of a
determination of the validity of and
liquidation of his claim in litigation
pending at the time the Order for Relief was
entered herein; provided that the automatic
stay under 11 U.S.C. Section 362 shall
remain in full force and effect with regards
to any action or efforts to recover property
of the Debtor's estate except
as regards treatment of claims herein.
(ii) Upon entry of a Final Order of Final Judgment
in any litigation as set out above, if Sneed
is successful in obtaining an allowed claim,
he will be paid as follows: (a) for all award
of damages arising or from or related to any
employment contract he is found to have with
Debtor, if any, the amount allowed for such
claim under 11 U.S.C. Section 502(b)(7) shall
be paid by the issuance of a non-recourse
promissory note payable in 60 equal monthly
installments, bearing
Plan of Reorganization - Thor Energy Resources, Inc.
12
<PAGE> 13
interest at 7.5 percent per annum, said note
to be secured with a valid security interest
in non-income producing property of the
Debtor with market value of at least 110% of
the amount of the laim. If the DEBTOR and
holder can not agree in writing on the value
of the property selected by DEBTOR to secure
said note, the property shall be valued in
accordance with the VALUATION PROCEDURE and
for any and all amounts awarded as damages
not set out in (a), if any, the Allowed Claim
will be paid through a distribution from the
Thor Trust as set out in Article VIII herein.
F. CLASS 3D: Class 3D shall receive no payments or DISTRIBUTIONS
under the PLAN.
G. CLASS 3E: Class 3E shall receive title and ownership of the
incinerator located in New Hampshire owned by Debtor or its subsidiaries in
full and complete payment of all claims in this class. On the EFFECTIVE DATE
the Reorganized Thor Energy Resources, Inc. shall execute a transfer of title
necessary to convey title in common to the holders of claims in this class free
and clear of all liens or other claims.
I. CLASS 4: On the EFFECTIVE DATE all stock owned by holders of
claims in this class shall be transferred and delivered to the Thor Trust for
distribution in accordance with the trust provisions. On the EFFECTIVE DATE
the OUTSTANDING SECURITIES of DEBTOR will be canceled and on the CONSUMMATION
DATE the holders of CLASS 4 ALLOWED INTERESTS shall receive cash for each
OUTSTANDING ISSUED SECURITY in an amount per share to be computed as follows:
Plan of Reorganization - Thor Energy Resources, Inc.
13
<PAGE> 14
The value per share of the common stock at the Filing Date
($.38) (V) multiplied by the total number of issued and
outstanding shares of stock (N) less the amount of the
Allowed Class 1, 2, 3A, 3B, and 3D Claims (S) multiplied by
the total number of issued and outstanding shares of stock
(N) or (V x N) - (S x N) = price per share; provided,
however, that if the computed answer to this formula is zero
(0) or less, holders of claims in this class will receive no
payment for their claims nor the cancellation of their
securities. Any payments called for in this aragraph shall be
made by contributions of new capital from Investors and shall
not be paid from assets of Debtor's bankruptcy estate.
J. CLASS 5: The Claims in Class 5 will be treated as follows:
(a) All stock owned by holders of claims in this class will
be delivered and transferred to the Thor Trust on the
EFFECTIVE DATE for distribution in accordance with the terms
of said trust; and
(b) If Distributions from the Thor Trust are sufficient to
pay the Allowed Class 1, 2, 3A, 3B, and 3C claims, if any,
in full, and if a cash distribution is made to the holders
of Class 4 Claims, on the CONSUMMATION DATE the OUTSTANDING
SECURITIES of Debtor will be canceled and holders of Class 5
Claims will be issued one share of New Common Stock for each
share of stock canceled.
ARTICLE VI
MEANS OF EXECUTION OF THE PLAN
A. ISSUANCE OF COMMON STOCK
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DEBTOR has received certain preliminary commitments from INVESTORS
with respect to the sum of money necessary to fund any cash distributions
called for under the treatment of Class 4 Claims and NEW COMMON STOCK.
INVESTORS will receive one share of NEW COMMON STOCK for each share of stock in
Debtor held by Class 4 Claimholders being canceled. The net CASH proceeds from
the offering will be used to fund any cash payment to Class 4 Claimholders
called for in the PLAN.
B. UNCLAIMED DISTRIBUTIONS
For a period of five years following the EFFECTIVE DATE, REORGANIZED
DEBTOR shall retain for issuance any unclaimed DISTRIBUTIONS for the benefit of
the holders of ALLOWED CLAIMS and ALLOWED INTERESTS which have failed to claim
such property. At the end of five years following the EFFECTIVE DATE, the
holders of ALLOWED CLAIMS or ALLOWED INTERESTS theretofore entitled to
DISTRIBUTIONS held in such reserve shall cease to be entitled thereto and
thereupon such DISTRIBUTIONS shall become property of the REORGANIZED DEBTOR.
C. DISTRIBUTIONS OF NEW COMMON STOCK.
On the CONSUMMATION DATE, or as soon thereafter as feasible, the
REORGANIZED DEBTOR shall take such action as may be necessary to issue the NEW
COMMON STOCK.
ARTICLE VII
PROVISIONS FOR THE RETENTION, ENFORCEMENT
SETTLEMENT OR ADJUSTMENT OF CLAIMS
BELONGING TO THE DEBTOR OR TO THE ESTATE
PRESERVATION AND HANDLING OF CLAIM. Unless otherwise specifically
provided for to the contrary in this Plan, all rights pursuant to Sections 502,
510, 544, 545, and 546 of the
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Bankruptcy Code, all preference claims pursuant to Section 547 of the
Bankruptcy Code not settled prior to or as a part of this Plan, all fraudulent
transfer claims pursuant to Section 548 of the Bankruptcy Code, all claims
relating to post-petition transaction under Section 549 of the Bankruptcy Code,
all claims recoverable under Section 550 of the Bankruptcy Code, and all claims
against any third party on account of an indebtedness or any other claim owed
to or in favor of the Debtor of Action) are hereby preserved and retained for
enforcement by the Reorganized Thor Energy Resources, Inc. subsequent to the
Effective Date of this Plan. Proceeds of such claims of the Debtor against
third parties shall be delivered, less legal fees, expenses, and costs incurred
in collecting or enforcing same, into the Thor Trust. Reorganized Thor Energy
Resources, Inc. is designated as the representative of the estate to pursue the
various Claims set forth above and to defend the estate against all Claims
asserted against it.
ARTICLE VIII
ESTABLISHMENT OF THOR TRUST
8.1 VESTING OF ASSETS. On the Effective Date, all assets of the
bankruptcy estate, including but not limited to all stock, securities, oil and
gas leases, equipment, vehicles, rights to payment, claims, or causes of
action, shall and are hereby transferred to the Thor Trust. At such time,
title such assets shall vest in the trust free and clear of all liens, claims,
and encumbrances except as otherwise provided herein.
8.2 MANAGEMENT OF TRUST. Commencing on the Effective Date, the
Trustee of the Thor Trust shall manage, operate and liquidate the trust assets.
Income generated by trust assets shall be used to make the plan payments
described in this Plan and the ongoing reasonable and necessary expenses of
operating Reorganized Thor Energy Resources, Inc. Provided, however, the
Trustee shall comply with the covenants, both negative and affirmative, set out
in Article
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VIII of the Plan. The Trustee may pre-pay any payments due under this Plan
without penalty if, in its sole discretion, such pre-payment is in the best
interest of the Reorganized Debtor.
8.3 TRUSTEE. Reorganized Thor Energy Resources, Inc. shall act as
Trustee of the Thor Trust.
8.4 CAUSES OF ACTION. The Trustee shall have the right to pursue and
prosecute, as a representative of the bankruptcy estate pursuant to 11 U.S.C.
Section 1123(b)(3), any cause of action which the Debtor may assert against
entities which have not been otherwise released.
8.5 TRUSTEE COMPENSATION. The Trustee shall receive no compensation
for his services. However, the Trustee shall be reimbursed from trust assets
for all attorneys fees incurred in the pursuit of trust affairs together with
all other costs and expenses incurred in connection with the business affairs
of the trust. In addition, the Trustee shall be indemnified and reimbursed to
the extent of trust assets for any costs or damages assessed against the
Trustee in connection with the pursuit of trust affairs including any
counterclaims filed as a result of any actions pursued for the benefit of the
trust.
8.6 TERM. The Thor Trust shall continue in existence until the
Consummation Date.
8.7 DISTRIBUTIONS FROM TRUST ASSETS. Distributions shall be made to
Holders of Allowed Claims as called for in the Plan. Provided, however, no
assets of the trust shall be distributed to holders of Class 3C claims until a
Final Judgment has been entered and a claim allowed to the Class 3C
Claimholder. Within 30 days following such occurrence, the Trustee shall
tender to the claim holder property from the assets of the trust with a value
equal to the amount of the allowed Class 3C claim. In the event the Trustee's
valuation of such assets are disputed, the Class 3C Claimholder shall file
written notice of which assets he believes to be improperly valued setting out
his proposed valuation and the basis for the value claimed. Not
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more than 10 days following receipt of such written notice, if an agreement can
not be reached with the claimholder, the a determination of the value of the
assets proposed shall be made in accordance with the Valuation Process which
shall be binding on the parties. Upon such valuation, the trust assets shall be
distributed by the Trustee on the first day of the calendar month next
following the execution of the Valuation Notice.
8.8 TERMINATION OF TRUST. As soon as possible following the
Consummation Date, all assets remaining in the Thor Trust shall be transferred
to the REORGANIZED THOR ENERGY RESOURCES, INC. and the Trust shall terminate.
ARTICLE IX
FINANCIAL RECORDS
9.1. ANNUAL FINANCIAL STATEMENTS. The Thor Trust shall issue
unaudited financial statements at least annually, which financial statements
shall comport with generally accepted accounting principles consistently
applied. Said financial statements shall be completed no later than 90 days
after the end of each fiscal year and shall consist of the balance sheet of
Thor Trust as of the close of such fiscal year and statements of income and
retained earnings and statements of cash flow of Reorganized Thor energy
Resources, Inc. for such fiscal year, in each case setting forth in comparative
form the figures for the preceding fiscal year (except for the first fiscal
year), all in reasonable detail. The financial statements called for herein
shall be issued until the Consummation Date.
9.2. MONTHLY FINANCIAL STATEMENTS. Prior to the Consummation Date,
the Thor Trust shall issue quarterly balance sheets and profit and loss
statements as to its financial condition which shall comport with generally
accepted accounting principles on an accrual basis. After the Consummation
Date, no further financial statements shall be required to be issued.
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9.3. ACCOUNTING METHOD. The method of accounting utilized by the
Thor Trust shall be in accordance with generally accepted accounting principles
consistently maintained and applied.
9.4. NOTICE. Copies of the Annual Financial Report and Quarterly
Financial Statements shall be mailed within 10 days after their preparation,
postage prepaid, first class U. S. mail, to the United States Trustee for the
Eastern District of Texas and a copy filed in the office of the Bankruptcy
Clerk.
9.5 ADDITIONAL REPORTING. Thor Trust shall make available upon
request by the United States Trustee for the Eastern District of Texas, on
reasonable notice during normal business hours, all books, records, contracts,
and agreements involving or relating to the finances or business operations and
affairs of the Thor Trust or the Debtor during the life of this Plan of
Reorganization.
ARTICLE X
SPECIFIC COVENANTS OF REORGANIZED THOR ENERGY RESOURCES, INC.
AND THOR TRUST
10.1. AFFIRMATIVE COVENANTS. Until such time as all payments
required to be made under this Plan have been made, Reorganized Thor Energy
Resources, Inc. and the Thor Trust shall:
10.1.1. Manage its assets for the purpose of pursuing the
most effective and efficient means of generating monies to implement
the terms of this Plan, without impairing the viability of on-going
operations;
10.1.2. Pay and discharge:
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10.1.2.1. All taxes, assessments and
governmental charges or levies imposed upon it or upon its
income or profits or upon any property belonging to it, before
delinquent;
10.1.2.2. All lawful claims (including claims
for labor, materials and supplies) which, if unpaid, might
become a lien upon any of its property; and
10.1.2.3. All of its other post-petition
indebtedness, except as prohibited hereunder; provided,
however, that Reorganized Thor Energy Resources, Inc. shall
not be required to pay any such tax, assessment, charge, or
levy if and so long as the amount, applicability, or validity
thereof shall currently be contested in good faith by
appropriate proceedings and appropriate accruals and reserves
therefor have been established in accordance with generally
accepted accounting principles;
10.1.3. Promptly comply with any and all covenants and
provisions of this Plan;
10.1.4. Maintain liability insurance and insurance on its
properties, assets and business, now owned or hereafter acquired,
against such casualties, risks and contingencies, and in such types
and amounts, as are consistent with customary practices and standards
of companies engaged in similar businesses.
10.2. NEGATIVE COVENANTS. Until such time as all payments required
to be made under this Plan have been made, Reorganized Thor Energy Resources,
Inc. and the Thor Trust shall not, without prior Court approval:
10.2.1. Incur, create, contract, waive, assume, have
outstanding, guarantee, or otherwise be or become, directly or
indirectly, liable for any indebtedness except (i) Claims; (ii)
indebtedness incurred in the ordinary course of business directly for
the
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business of Reorganized Thor Energy Resources, Inc. and/or the Thor
Trust; and (iii) current liabilities for taxes and assessments
incurred in the ordinary course of business;
10.2.2. Create or suffer to exist any mortgage, pledge,
security interest, conditional sale or other title retention
agreement, charge, incumbrance or other lien, (whether such interest
is based on common law, common statute, other law or contract) upon
any of its property or assets, now owned or hereafter acquired, except
for purchase money liens and security interests granted to secure the
provision of lines of credit from lenders and liens securing Allowed
Secured Claims.
10.2.3. Make or have outstanding any investment, whether by
means of share purchase, loan, advance, extension of credit, capital
contribution or otherwise, in or to any person, company, corporation,
or other entity, or guarantee, directly or indirectly, the
indebtedness of any person, company, corporation, or other entity;
provided, however, that nothing herein shall be deemed to prohibit
Reorganized Thor Energy Resources, Inc. or the Thor Trust from selling
on open account;
10.2.4. Sell, assign, convey, exchange, lease, or otherwise
dispose of any of its properties, rights, assets or business, whether
now owned or hereafter acquired, except in the ordinary course of its
business and for a fair consideration, or sell, assign or discount any
accounts receivable;
10.2.5. Make, or incur any obligation to make, any
expenditure for any fixed assets or improvements, replacements,
substitutions or additions thereto, which have been or should be
capitalized in accordance with generally accepted accounting
principles ("Capital Expenditure") during any fiscal year if, after
giving effect to such Capital Expenditure, the aggregate amount of all
such Capital Expenditures made by Reorganized
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Thor Energy Resources, Inc. or the Thor Trust such that the ratio of
debt to net worth of the assets shall be greater than 0.5:1;
10.2.6. Change its form of business organization, fiscal year
or method of accounting;
10.2.7. Acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any person, or
established company, corporation, or other entity unless the resulting
transaction shall maintain an asset to debt ratio of not less than
4:1;
10.2.8. Sell, transfer, lease or otherwise dispose of all or
any substantial part of its property or assets or business;
10.2.9. Amend its Certificate of Incorporation or By-Laws,
except as required to comply with this Plan; or
10.2.10. Change the nature of its business or substantially
curtail the scope or extent of its business operations or
substantially expand its business beyond exploitation or exploration
of oil and gas, leasing of oil and gas properties, options to lease or
purchase oil and gas properties, and the acquisition of royalties
and/or minerals and/or seismic options within the normal course of its
business.
ARTICLE XI
MISCELLANEOUS
11.1. DISCHARGE. Except as otherwise expressly provided for in this
Plan or the Confirmation Order, Confirmation of this Plan constitutes a
discharge as of the Effective Date of all Claims and "debts" (as that term is
defined in Section 101(11) of the Code), and the Debtor's liability in respect
thereof is extinguished completely and all such other Claims and debts of the
Debtor (whether reduced to judgment or not, liquidated or unliquidated,
contingent
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or non-contingent, asserted or unasserted, fixed or not, matured or unmatured,
disputed or undisputed, legal or equitable, known unknown) that arose from any
agreement of the Debtor entered into, or obligation of the Debtor incurred,
before the Confirmation Date, or from any conduct of the Debtor prior to the
Confirmation Date, or that otherwise arose before the Confirmation Date,
including, without limitation, all interest, if any, on any such debts, whether
such interest accrued before or after the Filing Date (including, without
limitation, any liability of a kind specified in Sections 502(g), 502(h) and
502(i) of the Code, whether or not a proof of claim is filed or deemed filed
under Section 501 of the Code, such Claim is allowed under Section 502 of the
Code, or the holder of such Claim has accepted this Plan) are released and
discharged as of the Effective Date of this Plan.
11.2. REVESTING. Except as otherwise expressly provided in this
Plan or the Confirmation Order, the Debtor shall be deemed reorganized on the
date of the Confirmation Order, and on the Effective Date Reorganized Thor
Energy Resources, Inc. shall be vested with all of the property of the Estates
free and clear of all claims, liens, encumbrances, charges and other interests
of creditors and equity security holders, (except as provided under this Plan
or the Confirmation Order), and may operate its business free of any
restrictions imposed by the Code or by the Court.
11.3. INJUNCTION. Except as otherwise expressly provided in this
Plan or the Confirmation Order: (a) all Persons who have held, hold or may hold
Claims, who have held, hold, or may hold interests; (b) Reorganized Thor Energy
Resources, Inc. and any of its affiliates, and (c) the holders of any claims
created by or against the Debtor secured by property belonging to any entity
other than the Debtor; are permanently enjoined on and after the Effective Date
from: (i) commencing or continuing in any manner any action or other proceeding
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of any kind with respect to any such Claim or any complaint against the Debtor,
Reorganized Thor Energy Resources, Inc., or any of their respective affiliates
for any enforcement, attachment, collection or recovery by any manner or means
of any judgment, award, decree or order against the Debtor, Reorganized Thor
Energy Resources, Inc. or any of the affiliates thereof, with respect to any
such Claim or complaint; (ii) creating, perfecting, or enforcing any
encumbrance of any kind against the Debtor, Reorganized Thor Energy Resources,
Inc. or any of their respective affiliates, or against the property of the
Debtor, Reorganized Thor Energy Resources, Inc., or any of their respective
affiliates, or against the property of any person or entity by virtue of a
claim or debt created by or due from the Debtor; or with respect to any such
Claim or complaint; and (iii) asserting any set-off, right of subrogation or
recoupment of any kind against any obligation due the Debtor, Reorganized Thor
Energy Resources, Inc. or any of their respective affiliates, or against the
property of the Debtor, Reorganized Thor Energy Resources, Inc. or any of their
respective affiliates, with respect to any such Claim or complaint.
11.4. TERM OF INJUNCTION OR STAYS. Unless otherwise provided, all
injunctions or stays, (other than as established by Section 11.3) provided for
in the case pursuant to Sections 105 or 362 of the Code or otherwise shall
remain in full force and effect until the Effective Date.
11.5. JURISDICTION RETAINED. Until the case is closed, the Court
shall have jurisdiction of all matters arising under, arising out of or
relating to this case including, but not limited to, the following:
11.5.1. To insure that the purpose and intent of this Plan
are carried out;
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11.5.2. To consider any modification of this Plan under
Section 1127 of the Code and/or modification of this Plan after
substantial Consummation as defined in Section 1101(2) of the Code;
11.5.3. To hear and determine all claims, controversies,
suits and disputes against the Debtor;
11.5.4. To hear, determine and enforce all claims and causes
of action which may exist on behalf of the Debtor or the Estate,
including, but not limited to, any right of the Debtor or the Estate
to recover such claims, causes, or rights;
11.5.5. To hear and determine all controversies, suits,
defaults and disputes that may arise in connection with the
interpretation, execution or enforcement of this Plan;
11.5.6. To hear and determine all requests for compensation
and/or reimbursement for services rendered or expenses incurred prior
to the Effective Date which may be made after the Effective Date of
the Plan;
11.5.7. To hear and determine all objections to claims,
controversies, suits and disputes that nay be pending at or initiated
after the Effective Date, except as provided in the Confirmation
Order;
11.5.8. To consider and act on the compromise and settlement
of any claim against or cause of action on behalf of the Debtor or the
Estate;
11.5.9. To enforce and interpret by injunction or otherwise
the terms and conditions of the Plan;
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11.5.10. To correct any defect, cure any omission, or
reconcile any inconsistency in the Plan or Confirmation Order which
may be necessary or helpful to carry out the purposes and intent of
the Plan;
11.5.11. To determine all questions and disputes
regarding titles to the assets of the Debtor or the Estate;
11.5.12. To classify the Claims of any creditor and to
re-examine Claims which have been allowed for purposes of voting, and
to determine objections which may be filed to creditors' Claims (the
failure by the Debtor to object to, or examine any Claim for the
purposes of voting shall not be deemed a waiver of the Debtor's right
to object to, or re-examine the Claim in whole or in part);
11.5.13. To consider and act on such other matters
consistent with this Plan as may be provided in the Confirmation
Order; and
11.5.14. To consider the rejection of executory
contracts that are not discovered prior to Confirmation and allow
Claims for damages with respect to the rejection of any such executory
contracts within such other time as the Court may direct.
11.6. MODIFICATION OF THE PLAN. The Proponent may propose
amendments or modifications of this Plan any time prior to the Confirmation
Date with leave of the Court upon notice to appropriate parties. After
Confirmation of the Plan, the Proponent may, with approval of the Court, and so
long as it does not materially or adversely affect the interest of the
creditors or shareholders, amend the Plan to remedy any defect or omission or
to reconsider any inconsistencies in the Plan or in the Confirmation Order in
such manner as may be necessary to carry out the purposes and effect of the
Plan.
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11.7. PAYMENT DATES. Whenever any payment or distribution to be
made under the Plan shall be due on a day on which banks and/or federal or
state government offices are required or permitted to be closed pursuant to
federal or state law ("Business Day"), such payment or distribution shall
instead be made, without interest, on the next Business Day, except as may be
provided in negotiable instruments requiring such payments.
11.8. NOTICES. All notices, requests, elections or demands in
connection with the Plan shall be in writing and shall be deemed to have been
given or received when actually received or, if mailed, five days after the
date of mailing provided such writing shall have been sent properly addressed
by registered or certified mail, postage prepaid, return receipt requested, and
if sent to the Debtor or to the Reorganized Thor Energy Resources, Inc., at
their regular business address.
All notices and requests to Claimants and holders of Interest shall be
sent to them at their last known addresses. The Debtor, and any holder of any
Claim or Interests of any Class, may designate in writing any other address for
purposes of this Section 12.8, which designation shall be effective upon
receipt.
11.9. HEADINGS. The headings used in this Plan are inserted for
convenience only and neither constitute a portion of the Plan nor in any manner
affect the provisions of the Plan.
11.10. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE BANKRUPTCY CODE
IS APPLICABLE, THE RIGHTS AND OBLIGATIONS ARISING UNDER THIS PLAN SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF TEXAS, EXCEPT FOR ISSUES OF CORPORATE LAW WHICH SHALL BE
GOVERNED BY AND
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CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
INCORPORATION OF THE DEBTOR.
11.11. SUCCESSORS AND ASSIGNS. The rights and obligations of any
Person named or referred to in the Plan shall be binding upon, and shall inure
to the benefit of, the successors and assigns of such Person.
11.12. SEVERABILITY. Should any provision in this Plan be determined
to be unenforceable, such determination shall in no way limit or affect the
enforceability and operative effect of any and all other provisions of this
Plan.
11.13. UNDEFINED TERMS. A term used in this Plan of Reorganization
and not defined herein, but that is defined in the Code, has the meaning
assigned to that term in the Code, and the rules of construction used in
Section 102 of the Code shall apply to the construction of this Plan of
Reorganization.
11.14. SINGULAR/PLURAL TERMS. Any term that is used in the singular
may be construed as plural where the context requires. Any term used in the
plural may be construed in the singular where the context requires.
ARTICLE XII
EXECUTORY CONTRACTS AND LEASES
Except as hereinafter provided, all unexpired leases and executory
contracts ("AGREEMENTS") not heretofore rejected by the DEBTOR (whether or not
the subject of an order by the BANKRUPTCY COURT) are intended to be affirmed
and performed in accordance with their terms by DEBTOR, from and after the
EFFECTIVE DATE; provided that DEBTOR reserves the right and privilege to reject
any additional AGREEMENTS up to the time of entry of an order confirming the
PLAN and, absent other arrangements between DEBTOR and the
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other parties to any AGREEMENTS so rejected, such other parties, to the extent
of any deficiency, loss or damage realized or sustained by reason of such
rejections and allowed as a CLAIM in this case, shall be entitled to be treated
as, and shall have the same rights and privileges as unsecured creditors whose
CLAIMS are dealt with as CLASS 3C CLAIMS. Such creditors shall file proof of
the general UNSECURED CLAIM and appropriate elections within such time as is
fixed by the BANKRUPTCY COURT.
ARTICLE XIII
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
On the CONSUMMATION DATE, Thor Energy Resources, Inc. shall be
reincorporated under the laws of the State of Delaware and the NEW ARTICLES
shall contain the provisions required by Section 1123(a)(6) of Title 11 of the
United States Code in the form of the "Articles of Incorporation" to be filed
with and approved by the BANKRUPTCY COURT, subject to the filing of
modifications thereto prior to the first date fixed for the commencement of the
hearing to consider confirmation of the PLAN. In addition, DEBTOR shall be
deemed to have adopted NEW BYLAWS on and as of the CONSUMMATION DATE in the
form of the "Bylaws" filed with the BANKRUPTCY COURT, subject to the filing of
modifications thereto prior to the first date fixed for the commencement of the
hearing to consider confirmation of the Plan. The NEW ARTICLES as they shall
exist on the CONSUMMATION DATE shall provide that all voting power in the
DEBTOR shall be held by the NEW COMMON STOCK which will vote in the manner
prescribed by the NEW ARTICLES.
ARTICLE XIV
REVESTING
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Except as provided for in the PLAN or in the CONFIRMATION ORDER, on
the CONSUMMATION DATE, REORGANIZED DEBTOR shall be vested with full ownership
of and dominion over its property and assets free and clear of all CLAIMS,
liens, charges and other interests of creditors arising prior to the FILING
DATE. Upon the EFFECTIVE DATE, REORGANIZED DEBTOR may operate its business
free of any restrictions of the BANKRUPTCY CODE, the BANKRUPTCY COURT or the
United States Trustee, and subject only to the provisions of this PLAN.
RESPECTFULLY SUBMITTED this _________ day of April, 1995.
Thor Energy Resources, Inc.
By:______________________________
David Fender
President
ATTORNEY FOR DEBTOR:
Jason R. Searcy, P.C.
P.O. Box 3929
Longview, Tx. 75606
(903) 757-3399
(903) 757-9559 FAX
STATE BAR NO. 17953500
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<PAGE> 1
THOR ENERGY RESOURCES, INC.
Post Office Box 307
Tyler, TX 75710
903-533-9111 Fax 593-7031
November 22, 1994
Neomar Resources, Inc.
333 North Belt, Suite 1160
Houston, TX 77060
Re: Letter Agreement
Bay Marchand Area
Todd III and Todd III-D
Lafourche Parish, Louisiana
Gentlemen:
Neomar Resources, Inc. (Buyer) has offered Thor Energy Resources, Inc.
(Seller) one hundred ten thousand and 00/100 Dollars (110,000.00) (Purchase
Price), as consideration for an assignment of Seller's 7.560 WI and 5.4432 NRI
in and to the Todd III acreage and Seller's 7.375 WI and 5.31 NRI in and to the
Todd III-D acreage along with Seller's interest in and to the leases described
on Exhibit "A" attached hereto. Fifty-five thousand dollars ($55,000.00)
payable to Seller within three (3) days of Seller furnishing Buyer a
nonappealable written consent from the Bankruptcy Court authorizing Seller to
convey same. The remaining fifty-five thousand dollars ($55,000.00) payable
over the next six months in equal installments at $9,166.66 per month plus 10%
simple interest, evidenced by Note and secured by Mortgage.
The Purchase Price shall cover all of Seller's right, title and
interest in and to the Properties, including, without limitation, all of
Seller's rights, titles and interest in and to the oil, gas and minerals leases
covering the Properties, together with all of Seller's interests in and to all
the property, platform, equipment, plugging fund and rights appurtenant or
incidental thereto.
Seller hereby represents the following:
(1) that it has good and marketable title to the Properties;
(2) that Seller has the right, power and authority to accept this
offer and to perform its obligations hereunder, and that this letter agreement
is and will be, upon execution and delivery, a legal, valid and binding
obligation of Seller subject to approval by the Bankruptcy Court prior to
closing date of January 1, 1995.
<PAGE> 2
Neomar Resources, Inc.
November 22, 1994
Seller shall:
(1) deliver to Neomar Resources, Inc. a recordable Assignment of 100%
of its interest in the Properties, in a form which is mutually acceptable to
both parties and suitable for recording in Lafourche Parish, Louisiana, as will
as an assignment of the leases which shall be submitted by Seller for approval
by the State of Louisiana.
Buyer shall:
(1) furnish to Seller recorded copies of Assignments and Resolution
of the State Mineral Board.
The Effective date of the conveyance of the Properties shall be 7:00
A.M. on December 1, 1994 and closing is planned for January 1, 1995.
If the terms contained herein are acceptable to you, please indicate
your agreement by executing both originals of this letter agreement and faxing
or returning one executed copy to this office.
Yours very truly,
THOR ENERGY RESOURCES, INC.
/s/ DAVID M. FENDER
David M. Fender, President
AGREED AND ACCEPTED THIS DAY OF NOVEMBER, 1994
NEOMAR RESOURCES, INC.
BY:_____________________________________
2
<PAGE> 3
EXHIBIT "A"
LEASES:
Louisiana State Lease 12726 covering some 1,333.78 acres in Bay
Marchand Area, Louisiana State Waters.
Louisiana State Lease 13040 covering 182.5 acres of South Timbalier
Area Block 21.
Louisiana State Lease 14312 covering 267.33 acres of Bay Marchand Area.
Louisiana State Lease 14313 covering 105.83 acres of Bay Marchand Area.
3
<PAGE> 1
PROMISSORY NOTE
$135,000.00 Tyler, Texas March 16, 1995
On or before one (1) year after date, for value received, I, we, or
either of us, promise to pay to the order of The LaVelle D. Fender Trust the
sum of One Hundred Thirty-Five Thousand and No/100 Dollars ($135,000.00) with
interest from date to maturity at the rate of ten percent (10%) per annum,
payable at Tyler, Texas.
We the makers, sureties, endorsers, and guarantors of this Note hereby
severally waive presentation for payment, notice of non-payment, protest and
notice of protest and diligence in bringing suit against any party thereto, and
consent that the time of payment may be extended without notice from time to
time. It is further expressly agreed that in the event this Note is placed in
the hands of an attorney for collection, or suit is brought on same, or if
collected through bankruptcy or probate then, and in that event, to pay the
additional amount of fifteen percent (15%) additional on the principal and
interest then due as attorney's fees. This Note renews and extends Note dated
March 16, 1992, for $300,000.00.
Thor Energy Resources, Inc.
By: /s/ David M. Fender
President
Due: March 16, 1996
Address: P.O. Box 307
Tyler, Texas 75710
Phone:
___________________
<PAGE> 1
REAL ESTATE LIEN NOTE
Date: August 23, 1994
Maker: THOR ENERGY RESOURCES, INC. and THOR EXPLORATION, INC.
Maker's Mailing Address (including county): P.O. Box 307, Tyler, Smith County,
Texas 75710
Payee: LaVELLE D. FENDER TRUST
Place for Payment (including county): P.O. Box 449, Tyler, Smith County, Texas
75710
Principal Amount: $275,000.00
Annual Rate on Unpaid Principal from Date: ten percent (10%)
Annual Interest Rate on Matured, Unpaid Amount: fifteen percent (15%)
Terms of Payment (principal and interest): Maker promises to make monthly
payments on this note equal to eighty percent (80%) of the net revenue received
by Maker from the sale of oil and gas from its interest in the Breedlove-Rogers
Unit, Well No. 2, and the entire balance of the principal and interest on this
note shall be due and payable on or before two (2) years after date.
Security for Payment:
All of the interest of Thor Energy Resources, Inc. and/or Thor Exploration,
Inc. in Well No. 2, and the proration unit assigned to that well, in the
Breedlove-Rogers Gas Unit No. 1, Smith County, Texas, consisting of 690.257
acres of land, created by Unit Declaration dated March 7, 1988, recorded in
Volume 2786, Page 660, et seq., Land Records, Smith County, Texas, and being a
.154753670 net revenue interest in said Well No. 2.
Maker promises to pay to the order of Payee at the place for payment
and according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
If Maker defaults in the payment of this note or in the performance of
any obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
Payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser and guarantor waive all
demands for payment, presentations for payment, notice of intention to
accelerate maturity,
<PAGE> 2
notices of acceleration of maturity, protests, and notices of protest, to the
extent permitted by law.
If this note or any instrument securing or collateral to it is given
to an attorney for collection or enforcement, or if suit is brought for
collection or enforcement, or if it is collected or enforced through probate,
bankruptcy, or other judicial proceeding, then Maker shall pay Payee all costs
of collection and enforcement, including reasonable attorney's fees and court
costs, in addition to other amounts due. Reasonable attorney's fees shall be
10% of all amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the
maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that
maximum amount shall be credited on the principal of the debt or, if that has
been paid, refunded. On any acceleration or required or permitted prepayment,
any such excess shall be cancelled automatically as of the acceleration or
prepayment or, if already paid, credited on the principal of the debt or, if
the principal of the debt has been paid, refunded. This provision overrides
other provisions in this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the
plural.
THOR ENERGY RESOURCES, INC.
By: /s/ David M. Fender
David M. Fender, President
THOR EXPLORATION, INC.
By: /s/ David M. Fender
David M. Fender, President
PREPARED IN THE LAW OFFICE OF
LASATER & KNIGHT
P.O. BOX 508
TYLER, TEXAS 75710
<PAGE> 1
DEED OF TRUST
Date: August 23, 1994
Grantor: THOR ENERGY RESOURCES, INC. and THOR EXPLORATION, INC., its
wholly owned subsidiary
Grantor's Mailing Address (including county): P.O. Box 307, Tyler, Smith
County, Texas 75710
Trustee: Wilbert Lasater
Trustee's Mailing Address (including county): P.O. Box 508, Tyler, Smith
County, Texas 75710
Beneficiary: LaVELLE D. FENDER TRUST
Beneficiary's Mailing Address (including county): P.O. Box 449, Tyler, Smith
County, Texas 75710
Note
Date: August 23, 1994
Amount: $275,000.00
Maker: Thor Energy Resources, Inc. and Thor Exploration, Inc.
Payee: LaVelle D. Fender Trust
Final Maturity Date: Two years after date
Terms of Payment (optional): Payable in monthly installments equal to eighty
percent (80%) of the oil and gas runs paid to Grantor by the purchasers of
production from the property described below, with the entire balance being due
on or before two (2) years after date.
Property (including any improvement):
All of the interest of Thor Energy Resources, Inc. and/or Thor Exploration,
Inc., in Well No. 2, and the proration unit assigned to that well, in the
Breedlove-Rogers Gas Unit No. 1, Smith County, Texas, consisting of 690.257
acres of land, created by Unit Declaration dated March 7, 1988, recorded in
Volume 2786, Page 660, et seq., Land Records, Smith County, Texas, and being a
.154753670 net revenue interest in said Well No. 2.
1
<PAGE> 2
Prior Lien(s) (including recording information):
None.
Other Exceptions to Conveyance and Warranty:
None.
For value received and to secure payment of the note, Grantor conveys
the property to Trustee in trust. Grantor warrants and agrees to defend the
title to the property. If Grantor performs all the covenants and pays the note
according to its terms, this deed of trust shall have no further effect, and
Beneficiary shall release it at Grantor's expense.
GRANTOR'S OBLIGATIONS
Grantor agrees to:
1. keep the property in good repair and condition;
2. pay all taxes and assessments on the property when
due;
3. preserve the lien's priority as it is established in
this deed of trust;
4. maintain, in a form acceptable to Beneficiary, an
insurance policy that:
a. covers all improvements for their full
insurable value as determined when the policy
is issued and renewed, unless the Beneficiary
approves a smaller amount in writing;
b. contains an 80% coinsurance clause;
c. provides fire and extended coverage,
including windstorm coverage;
d. protects Beneficiary with a standard mortgage
clause;
e. provides flood insurance at any time the
property is in a flood hazard area; and
f. contains such other coverage as Beneficiary
may reasonably require;
5. comply at all times with the requirements of the 80%
coinsurance clause;
6. deliver the insurance policy to Beneficiary and
deliver renewals to Beneficiary at least ten days
before expiration;
7. keep any buildings occupied as required by the
insurance policy; and
8. if this is not a first lien, pay all prior lien notes
that Grantor is personally liable to pay and abide
by all prior lien instruments.
BENEFICIARY'S RIGHTS
1. Beneficiary may appoint in writing a substitute or successor
trustee, succeeding to all the rights and responsibilities of Trustee.
2. If the proceeds of the note are used to pay any debt secured
by prior liens, Beneficiary is subrogated to all of the rights and liens of the
holders of any debt so paid.
3. Beneficiary may apply any proceeds received under the
insurance policy either to reduce the note or to repair or replace damaged or
destroyed improvements covered by the policy.
2
<PAGE> 3
4. If the Grantor fails to perform any of Grantor's obligations,
Beneficiary may perform those obligations and be reimbursed by Grantor on
demand at the place where the note is payable for any sums so paid, including
attorney's fees, plus interest on those sums from the dates of payment at the
rate stated in the note for matured, unpaid amounts. The sum to be reimbursed
shall be secured by this deed of trust.
5. If Grantor defaults on the note or fails to perform any of
Grantor's obligations or if default occurs on a prior lien or other instrument,
and the default continues after Beneficiary gives Grantor notice of the default
and the time within which it must be cured, as may be required bylaw or by
written agreement, then Beneficiary may:
a. declare the unpaid principal balance and earned
interest on the note immediately due;
b. request Trustee to foreclose this lien, in which case
Beneficiary or Beneficiary's agent shall give notice
of the foreclosure sale as provided by the Texas
Property Code as then amended; and
c. purchase the property at any foreclosure sale by
offering the highest bid and then have the bid
credited on the note.
TRUSTEE'S DUTIES
If requested by Beneficiary to foreclose this lien, Trustee shall:
1. either personally or by agent give notice of the foreclosure
sale as required by the Texas Property Code as then amended;
2. sell and convey all or part of the property to the highest
bidder for cash with a general warranty binding Grantor, subject to prior liens
and to other exceptions to conveyance and warranty; and
3. from the proceeds of the sale, pay, in this order:
a. expenses of foreclosure, including a commission to
Trustee of 5% of the bid;
b. to Beneficiary, the full amount of principal,
interest, attorney's fees, and other charges due and
unpaid;
c. any amounts required by law to be paid before payment
to Grantor; and
d. to Grantor, any balance.
GENERAL PROVISIONS
1. If any of the property is sold under this deed of trust,
Grantor shall immediately surrender possession to the purchaser. If Grantor
fails to do so, Grantor shall become a tenant at sufferance of the purchaser,
subject to an action for forcible detainer.
2. Recitals in any Trustee's deed conveying the property will be
presumed to be true.
3. Proceeding under this deed of trust, filing suit for
foreclosure, or pursuing any other remedy will not constitute an election of
remedies.
4. This lien shall remain superior to liens later created even if
the time of payment of all or part of the note is extended or part of the
property is released.
5. If any portion of the note cannot be lawfully secured by this
deed of trust, payments will be applied first to discharge that portion.
3
<PAGE> 4
6. Grantor assigns to Beneficiary all sums payable to or received
by Grantor from condemnation of all or part of the property, from private sale
in lieu of condemnation, and from damages caused by public works or
construction on or near the property. After deducting any expenses incurred,
including reasonable attorney's fees, Beneficiary may release any remaining
sums to Grantor or apply them to reduce the note. Beneficiary shall not be
liable for failure to collect or to exercise diligence in collecting any such
sums.
7. Grantor assigns to Beneficiary absolutely, not only as
collateral, all present and future rent and other income and receipts from the
property. Grantor warrants the validity and enforceability of the assignment.
Grantor may as Beneficiary's licensee collect rent and other income and
receipts as long as Grantor is not in default under the note or this deed of
trust. Grantor will apply all rent and other income and receipts to payment of
the note and performance of this deed of trust, but if the rent and other
income and receipts exceed the amount due under the note and deed of trust,
Grantor may retain the excess. If Grantor defaults in payment of the note or
performance of this deed of trust, Beneficiary may terminate Grantor's license
to collect and then as Grantor's agent may rent the property if it is vacant
and collect all rent and other income and receipts. Beneficiary neither has
nor assumes any obligations as lessor or landlord with respect to any occupant
of the property. Beneficiary may exercise Beneficiary's rights and remedies
under this paragraph without taking possession of the property. Beneficiary
shall apply all rent and other income and receipts collected under this
paragraph first to expenses incurred in exercising Beneficiary's rights and
remedies and then to Grantor's obligations under the note and this deed of
trust in the order determined by Beneficiary. Beneficiary is not required to
act under this paragraph, and acting under this paragraph does not waive any of
Beneficiary's other rights or remedies. If Grantor becomes a voluntary or
involuntary bankrupt, Beneficiary's filing a proof of claim in bankruptcy will
be tantamount to the appointment of a receiver under Texas law.
8. Interest on the debt secured by this deed of trust shall not
exceed the maximum amount of nonusurious interest that may be contracted for,
taken, reserved, charged, or received under law; any interest in excess of that
maximum amount shall be credited on the principal of the debt or, if that has
been paid, refunded. On any acceleration or required or permitted prepayment,
any such excess shall be cancelled automatically as of the acceleration or
prepayment or, if already paid, credited on the principal of the debt or, if
the principal of the debt has been paid, refunded. This provision overrides
other provisions in this and all other instruments concerning the debt.
9. When the context requires, singular nouns and pronouns include
the plural.
10. The term note includes all sums secured by this deed of trust.
11. This deed of trust shall bind, inure to the benefit of, and be
exercised by successors in interest of all parties.
12. If Grantor and Maker are not the same person, the term Grantor
shall include Maker.
13. Grantor represents that this deed of trust and the note are
given for the following purposes: to evidence and secure current loan by
Beneficiary to Grantor for $275,000.00 to be advanced as required by Grantor to
pay costs of drilling and completing Well No. 2 on the Breedlove-Rogers Unit.
14. Grantor shall collect the oil and gas runs from the interest
covered by this deed of trust and Grantor shall pay eighty percent (80%) of
such funds to the holder of said note each
4
<PAGE> 5
month. If Grantor fails to make such payments on this note each month, the
holder of the note may require that all of the oil and gas runs from the
interest covered by this deed of trust be paid to the holder of the note
direct; and Grantor authorizes and directs the purchaser of oil or gas from
such interest to pay such runs direct to the holder of said note each month,
upon receipt from the holder of said note of written demand for such payment.
EXECUTED, the day and year first above written.
THOR ENERGY RESOURCES, INC.
By: /s/ David M. Fender
David M. Fender, President
THOR EXPLORATION, INC.
By: /s/ David M. Fender
David M. Fender, President
5
<PAGE> 6
THE STATE OF TEXAS
COUNTY OF SMITH
THIS INSTRUMENT WAS ACKNOWLEDGED BEFORE ME, on the 23rd day of August,
1994, by DAVID M. FENDER, as President of THOR ENERGY RESOURCES, INC. and THOR
EXPLORATION, INC., Texas corporations, on behalf of the corporations.
/s/ Lashley A. Bell
Notary Public, State of Texas
Notary's commission expires: 4/2/98
AFTER RECORDING RETURN TO: PREPARED IN LAW OFFICE OF:
LaVelle D. Fender Trust Lasater & Knight
P. O. Box 449 P. O. Box 508
Tyler, Texas 75710 Tyler, Texas 75710
6
<PAGE> 1
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
Thor Energy Resources, Inc.
We consent to the incorporation by reference in the Registration Statement (No.
33-11012) on Form S-8 of Thor Energy Resources, Inc. of our report dated April
7, 1995 relating to the consolidated balance sheet of Thor Energy Resources,
Inc. and Subsidiaries as of January 31, 1995, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for
the year ended January 31, 1995, which report is incorporated by reference in
the January 31, 1995 annual report on Form 10-KSB of Thor Energy Resources,
Inc.
/s/ Weaver and Tidwell, L.P.
WEAVER AND TIDWELL, L.L.P.
Certified Public Accountants
Dallas, Texas
April 27, 1994
<PAGE> 1
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
Thor Energy Resources, Inc.
We consent to the incorporation by reference in the Registration Statement (No.
33-11012) on Form S-8 of Thor Energy Resources, Inc. of our report dated April
6, 1994 relating to the consolidated statements of operations, changes in
stockholders' equity and cash flows for the year ended January 31, 1994 of Thor
Energy Resources, Inc. and Subsidiaries, which report is incorporated by
reference in the January 31, 1995 annual report on Form 10-KSB of Thor Energy
Resources, Inc.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES LLP
Dallas, Texas
April 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF THOR ENERGY RESOURCES, INC. AND SUBSIDIARIES AS OF
JANUARY 31, 1995 AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
TWO YEARS IN THE PERIOD ENDED JANUARY 31, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JAN-31-1995 JAN-31-1994
<PERIOD-END> JAN-31-1995 JAN-31-1994
<CASH> 265 0
<SECURITIES> 0 0
<RECEIVABLES> 584 0
<ALLOWANCES> 207 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 932 0
<PP&E> 7,440 0
<DEPRECIATION> 5,809 0
<TOTAL-ASSETS> 2,971 0
<CURRENT-LIABILITIES> 1,577 0
<BONDS> 65 0
<COMMON> 0 0
0 0
322 0
<OTHER-SE> 1,184 0
<TOTAL-LIABILITY-AND-EQUITY> 2,971 0
<SALES> 1,523 1,636
<TOTAL-REVENUES> 1,567 1,827
<CGS> 429 428
<TOTAL-COSTS> 2,446 2,364
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27 28
<INCOME-PRETAX> (879) (573)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (879) (537)
<DISCONTINUED> (198) 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,077) (537)
<EPS-PRIMARY> (0.18) (0.09)
<EPS-DILUTED> (0.18) (0.09)
</TABLE>
