SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 9, 1996
Date of report (Date of earliest event reported)
GOLDEN TRIANGLE ROYALTY & OIL, INC.
Exact Name of Registrant as Specified in Its Charter
COLORADO 25-1302097 0-8301
(State or other jurisdiction (I.R.S. Commission File
of incorporation) EID #) Number
8504 Sonoma Valley, N.E., Albuquerque, NM 87122
Address of Principal Executive Offices
(505) 856-5075
Registrants Telephone Number
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Item 2. Acquisition or Disposition of Assets.
On May 9, 1996, Golden Triangle Royalty & Oil, Inc. (GTRO) entered into an
agreement with TransTexas Gas Corporation (TransTexas) to acquire the
Amando No. 1 salt water disposal well and all related fixtures and
equipment, which includes the Salt Water Disposal Agreement between
TransTexas and Amando, for $750,000. Of this total, $500,000 is to be paid
in cash and $250,000 is to be paid by crediting GTRO's accounts receivable
from TransTexas. (See Exhibit A "Assignment and Services Agreement" for
more complete details.) GTRO intends to continue to use these assets for
the disposal of salt water as they were being used by TransTexas.
GTRO's primary revenues are currently derived from its salt water disposal
facilities in South Texas with revenues of $1,789,864 reported during 1995.
This acquisition should add approximately $30,000-$40,000 per month in
gross operating revenues for GTRO, and will add significantly to GTRO's
asset base.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Golden Triangle Royalty & Oil, Inc.
By: /s/ Ivan Webb
Ivan Webb, Chief Financial Officer
Date: May 21, 1996
EXHIBIT A
ASSIGNMENT AND SERVICES AGREEMENT
STATE OF TEXAS
COUNTY OF WEBB
This agreement made and entered into this 9th day of May, 1996
is by and between TransTexas Gas Corporation, a Delaware corporation
with offices at 1300 East North Belt, Houston, Texas 77032 ("TTGC") and
Golden Triangle Royalty & Oil, Inc. with offices at Albuquerque, New
Mexico ("GOLDEN").
WITNESSETH:
ARTICLE I
ASSIGNMENT
THAT WHEREAS, TTGC is the Lessee pursuant to the terms of that certain
Salt Water Disposal Agreement dated July 1, 1993 by and between Amando
Villarreal, Jr. et al. and TransAmerican Natural Gas Corporation of
record in Volume 158 at Page 446 of the Official Real Property Records
of Webb County, Texas (such Agreement is hereinafter referred to as the
"Salt Water Disposal Agreement"); and,
WHEREAS, TTGC is an operator of various oil and gas wells located on or
near the property covered by said Salt Water Disposal Agreement, some of
which such oil and gas wells produce salt water which TTGC disposes of
by injection pursuant to the terms of the Salt Water Disposal Agreement;
and,
WHEREAS, TTGC desires to sell and GOLDEN desires to purchase TTGC's
right, title and interest in and to the Salt Water Disposal Agreement
and the salt water disposal facilities and related fixtures and
equipment which TTGC installed and constructed pursuant to the terms of
the Salt Water Disposal Agreement including the Amando No. 1 disposal
well (hereinafter the "Facilities") subject to the terms and conditions
set forth hereinbelow; and,
WHEREAS, TTGC desires to continue its use of such disposal facilities
for the disposal of salt water and GOLDEN desires to operate such
facilities for such purpose;
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE PURCHASE PRICE (as
defined below) TTGC does hereby assign and convey its right, title and
interest in and to the Salt Water Disposal Agreement to GOLDEN, together
with all salt water disposal facilities located on the lands covered
thereby which were constructed and installed by TTGC for the purpose of
underground injection of salt water produced on or off the land
described in the Salt Water Disposal Agreement, subject to the terms and
conditions set forth hereinbelow:
1. The purchase price (hereinafter "Purchase Price") for this
assignment is $750,000.00 (Seven Hundred Fifty Thousand and No/100
Dollars), payable at the time of GOLDEN's execution hereof in the manner
specified in this paragraph. $500,000.00 (Five Hundred Thousand and
No/100 Dollars) of such Purchase Price shall be tendered to TTGC in cash
at the time of GOLDEN's execution hereof, and $250,000.00 (Two Hundred
Fifty Thousand and No/100 Dollars) of such Purchase Price shall be
tendered to TTGC upon GOLDEN's execution hereof in the form of a credit
memo issued by GOLDEN constituting release, forgiveness and discharge of
all outstanding invoiced charges otherwise payable to GOLDEN by TTGC for
services performed in the months of February, March, and April of 1996,
up to the amount of $250,000.00 (Two Hundred Fifty Thousand and No/100
Dollars).
2. GOLDEN agrees to operate the salt water disposal facilities for the
benefit of TTGC and to receive and dispose of all salt water delivered
to it by TTGC for a monthly charge ("Monthly Expense Charge") per barrel
for each barrel of TTGC's salt water injected by GOLDEN during such
month which shall be equal to the lesser of (I) 19 (nineteen) cents, or
(ii) 5 (five) cents, plus GOLDEN's actual per barrel operating cost for
each barrel of salt water delivered to GOLDEN from any and all sources
and injected during such month. Such operating costs shall include
GOLDEN's out of pocket expenses which have been approved in advance by
TTGC (which such approval shall not be unreasonably withheld) and shall
include the monthly rental payment of $4,400.00 (Four Thousand Four
Hundred and No/100 Dollars) arising under the Salt Water Disposal
Agreement. In order to ensure an orderly transfer of operations, TTGC
agrees to make such rental payment due for the month of June, 1996,
provided that GOLDEN shall reimburse TTGC for same within thirty (30)
days of such payment. However, no depreciation or amortization expense
associated with the Facilities or any major capital improvements shall
be included in such costs. GOLDEN agrees to keep and maintain accurate
written records of all such operating costs and of all volumes of salt
water delivered and injected from all sources. TTGC shall have the
right to audit such records following ten (10) days prior written notice
of such audit. The parties understand and agree that GOLDEN may add
facilities such as truck washout pits and small fresh water loading
stations in order to improve the efficiency of the disposal facilities,
provided same are approved in advance by TTGC.
As further consideration to TTGC, GOLDEN and TTGC agree that any and all
condensate skim oil that is associated with or recovered from salt water
disposed of hereunder shall be owned by TTGC for as long as the disposal
facility shall remain in operation.
GOLDEN agrees to execute and file a P-4 with the Texas Railroad
Commission designating GOLDEN as operator of the Facilities. GOLDEN
shall operate the salt water disposal well and associated facilities in
accordance with the Salt Water Disposal Agreement and with all
applicable local, state and federal regulations governing the operation
of such wells and facilities and as such indemnifies and holds harmless
TTGC, its employees, agents, successors and assigns from all liability
arising from GOLDEN's operation of said well and disposal Facilities
from and after the date hereof.
3. TTGC may, at its election, furnish diesel fuel, natural gas or any
other material, equipment or labor which, in its good faith
determination, can be supplied by it at a lower out-of-pocket cost than
can be provided by GOLDEN. To the extent any such materials are so
furnished, TTGC shall be given credit for same against the Monthly
Expense Charge which such credit shall be in the amount equal to
TransTexas' actual cost of such materials plus an administrative fee in
the amount of two percent (2%) of such cost; or may, at its election,
apply such amounts as at a credit against the Option Price (as defined
below). If applied against the Monthly Expense Charge, such credit
shall be applied against the monthly expense billing for the month
immediately preceding the month in which such materials are furnished.
4. During the Option Period (as defined below), TTGC agrees that it
shall not build or install other salt water disposal facilities within
the immediate area normally serviced by the Amando No. 1 salt water
disposal well for the purpose of disposing of salt water produced from
wells it drills which would otherwise be disposed of in the Facilities.
The parties recognize and agree, however, that TTGC has other salt water
disposal facilities which have been constructed and installed prior to
the date hereof and nothing contained herein shall operate to alter or
diminish TTGC's use of such facilities. Notwithstanding the foregoing,
TTGC shall retain the right to construct and utilize disposal facilities
on lands covered by TTGC Oil and Gas Lease dated February 1, 1984
executed in its favor by Vegara Ltd., recorded in Volume 1057 at Page
737 of the Real Property Records of Webb County, Texas (the "Vegara
Lease"), provided that if such facilities are constructed, TTGC agrees
to limit its usage to salt water produced from the Vegara Lease.
ARTICLE II
OPTION TO REPURCHASE
1. For and in consideration of the mutual covenants contained herein,
GOLDEN hereby grants, sells and conveys unto TTGC the option to purchase
at a re-assignment of the Salt Water Disposal Agreement and any
amendments, extensions or renewals thereof together with all salt water
disposal facilities and equipment located on the lands covered thereby.
Such option shall extend for at a period of five (5) years following the
date shown above (the "Option Period") and shall be exercised by TTGC by
the delivery of written notice of such exercise to GOLDEN. Within
thirty (30) days thereafter, the parties will execute such re-assignment
documentation as shall be reasonably requested by TTGC, at which time
TTGC shall pay to GOLDEN, subject to the terms specified below, the
Option Price (as defined hereinbelow) plus an amount equal to one
percent (1%) of the Option Price, as then calculated for each full
calendar month following the date shown above until the payment of the
Option Price. The Option Price shall be equal to $750,000.00 (Seven
Hundred Fifty Thousand and No/100 Dollars), less the credits against
same as specified in this Agreement.
The parties recognize and agree that, provided capacity is available
after disposal of TTGC salt water, GOLDEN may utilize the Facilities for
the disposal of salt water delivered to it by third parties. TTGC shall
be issued credit against the Option Price, on at a monthly basis, in an
amount equal to ten percent (10%) of the gross revenue received by
GOLDEN in such month for the disposal of such third party water.
In addition, TTGC may, at its election, pay an amount or amounts in
excess of the Monthly Expense Charge and designate same as credits
against the Option Price.
2. A all times during the Option Period, GOLDEN shall comply with all
terms, covenants and conditions of the Salt Water Disposal Agreement,
ensure that same remains in full force and effect and shall ensure that
the lands covered thereby and all salt water disposal facilities and
equipment thereon remain free from any liens or encumbrances whatsoever.
GOLDEN shall not assign, convey, mortgage, pledge, amend, modify or
otherwise dispose of any interest under the Salt Water Disposal
Agreement without the prior written consent of TTGC. Likewise GOLDEN
may not modify, reconfigure, or remove any equipment or fixtures without
prior written consent of TTGC.
3. The parties herein understand and agree that the Salt Water Disposal
Agreement assigned hereunder will, in accordance with its terms, expire
in July of 1997. TTGC agrees to negotiate with the Lessor under the
Salt Water Disposal Agreement in at a good faith effort to obtain an
extension or renewal of such Agreement upon terms which are reasonably
acceptable to GOLDEN and TTGC. GOLDEN will cooperate in TTGC's efforts
to so extend the Agreement and shall not unreasonably withhold its
consent to or approval of an extension or renewal agreement proposed by
TTGC. The parties understand and agree that if an extension thereof
cannot be negotiated with the Lessor thereunder upon terms mutually
satisfactory to TTGC and GOLDEN, TTGC agrees to exercise its option to
re-purchase as provided hereinabove prior to the expiration of the Salt
Water Disposal Agreement.
ARTICLE III
GENERAL PROVISIONS
1. The parties acknowledge that the transaction that is the subject
matter of this Agreement bears at a reasonable relation to the State of
Texas and agree that the law of Texas, excluding its conflict of law
rules, will govern their rights and duties.
2. The terms of this Agreement are intended by the parties as at a
final expression of their agreement with respect to such terms and also
as at a complete and exclusive statement of all terms.
3. This Agreement binds and inures to the benefit of the parties and
their respective successors and assigns.
4. Upon request by either party hereto, the parties shall execute at a
Memorandum of Assignment and Services Agreement in recordable form in at
a form reasonably acceptable to both parties.
Effective as of the date shown hereinabove.
TRANSTEXAS GAS CORPORATION
By: /s/ ARNOLD BRACKENRIDGE
Arnold Brackenridge
GOLDEN TRIANGLE ROYALTY & OIL, INC.
By: /s/ KENNETH OWENS
Kenneth Owens
THE STATE OF TEXAS
COUNTY OF HARRIS
This instrument was acknowledged before me on May 9, 1996 by Arnold
Brackenridge, President of TransTexas Gas Corporation, a Delaware
corporation, on behalf of said corporation.
/s/ Betty L. Mahaffey
Notary Public for the State of Texas
