UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14f-1
Information Statement Pursuant to Section 14(f)
of the
Securities Exchange Act of 1934
and
Rule 14f-1 Thereunder
Filed August 10, 1998
FUTURE PETROLEUM CORPORATION
(Exact name of registrant as specified in its corporate charter)
Commission file number 0-8609
Utah 87-0239185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2351 West Northwest Highway,
Suite 2130,
Dallas, Texas 75220
(Address of principal executive offices) (Zip Code)
(214)350-7602
(Registrant's telephone number,including area code)
<PAGE>
INFORMATION STATEMENT
Introduction
This Information Statement is being furnished pursuant to section 14(f)
of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 14f-1
thereunder, in connection with the consummation by Future Petroleum
Corporation (the "Company") of each of the Bargo and Encap Transactions, as
discussed and defined below. Pursuant to such transactions, the Company will
issue 6.6 million shares of common stock, par value $0.01, (the "Common
Stock"), and has agreed to restructure its board of directors which will
result in a change in the majority of the board of directors. The change in
directors is intended to be effective no earlier than ten days following the
date on which this Information Statement is filed with the Securities and
Exchange Commission (the "Commission") and mailed to all holders of record of
the Company's Common Stock.
NO ACTION IS REQUIRED BY THE SHAREHOLDERS OF THE COMPANY IN CONNECTION
WITH THE RESIGNATION OF ROBERT D. PRICE AND D. WILLIAM REYNOLDS, JR., AS
CURRENT DIRECTORS AND THE ELECTION OF TIM J. GOFF, THOMAS D. BARROW,
GARY R. PETERSEN, AND D. MARTIN PHILLIPS TO THE BOARD. However, Section
14(f) of the Exchange Act requires the mailing to the Company's shareholders
of the information set forth in this Information Statement at least ten days
prior to a change in the majority of the directors of the Company. The
Company therefore intends for this Information Statement to serve as notice
to its shareholders that the restructuring of the board will be effective
after ten days have elapsed from the time this Information Statement is
mailed to its shareholders and filed with the Commission.
Future Petroleum Corporation (the "Company") has entered into an
agreement to acquire from Bargo Energy Resources, Ltd., a Texas limited
partnership ("Bargo"), certain oil and gas producing properties located in
Kern County, California. Such acquisition will be structured as a merger of
a wholly owned subsidiary of Bargo (the "Bargo Sub") with and into a wholly
owned subsidiary of the Company. In connection with the merger, the Company
will issue 4.2 million shares of Common Stock to Bargo, a warrant to purchase
250,000 shares of the Company, and assume and pay an obligation of the Bargo
Sub in the approximate amount of $5.8 million (the "Bargo Indebtedness").
The Company will also enter into a financing arrangement with Bank of America
which will provide a line of credit to the Company in the amount of $20
million with the current ability to draw down approximately $10 million. The
Company will use the proceeds from such financing to pay the Bargo
Indebtedness and to reduce the indebtedness owed to Energy Capital
Investment Company PLC, an English investment company, and Encap Equity
1994 Limited Partnership, a Texas limited partnership (together, "Encap"),
incurred in connection with prior acquisitions of certain oil and gas
properties by the Company. Also in connection with such financing, Encap will
subordinate its security interests in and to the assets, properties and
rights of the Company and its subsidiaries to Bank of America (the "Encap
Transaction"). In consideration of such subordination, the Company will
issue to Encap 2.4 million shares of Common Stock. As a result of these
transactions, the Company has agreed to accept the resignation of
Robert D. Price and D. William Reynolds, Jr. as directors of the Company, to
increase the number of directors constituting the board of directors of the
Company to seven, and to appoint two nominees of Bargo and two nominees of
Encap to the board of directors of the Company. B. Carl Price and Don
William Reynolds will enter into an agreement with Bargo and Encap pursuant
to which each will agree to vote the shares of Common Stock held by each for
the nomination and election of their respective nominees to the board of
directors of the Company. B. Carl Price will remain as a director and the
president and chief executive officer of the Company and Don William Reynolds
and Charles D. Laudeman will remain as directors of the Company.
<PAGE>1
Change in Control Since Beginning of Last Fiscal Year
In connection with the Bargo and Encap Transactions, the Company will
issue to Bargo 4.2 million shares of Common Stock and Encap 2.4 million
shares of Common Stock. Consequently, together with the 1,850,000 shares
previously owned by Encap, each of Encap and Bargo own approximately
1/3 of the issued and outstanding shares of Common Stock of the Company.
Ten days following delivery to the shareholders and the filing with the
Commission of this Information Statement, the four new directors will become
members of the Company's board of directors, which will then consist of seven
members. As a result of these transactions, the Company has experienced an
effective change in control. The Company knows of no other arrangement or
events, the happening of which will result in a change in control.
Voting Securities Outstanding
Immediately following the effectiveness of the Bargo and Encap
transactions, there will be 12,757,015 shares of the Company's Common Stock
outstanding, each of which entitle the holder thereof to one vote on each
matter which may come before a meeting of the shareholders.
<PAGE>2
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date hereof, as adjusted to
give effect to the issuances of stock and grants of options in connection with
the Bargo and Encap Transactions, the outstanding Common Stock of the Company
owned of record or beneficially by each person who owned of record, or
was known by the Company to own beneficially, more than 5% of the Company's
12,757,015 shares of Common Stock issued and outstanding, and the name and
share holdings of each officer and director and all of the officers and
directors as a group:
<TABLE>
<CAPTION>
Nature of Number of
Name of Person or Group Ownership(1) Shares Owned Percent
Principal Shareholders
<S> <C> <C> <C>
B. Carl Price Direct 1,089,149 8.5%
2351 W. Northwest Highway Options 487,720 3.7%
Suite 2130 Total 1,576,869 11.9%
Dallas, TX 75220
Don Wm. Reynolds Direct 753,362 5.9%
206 Rock Street
Bowie, TX 76230
Encap Equity 1994 LP Direct 4,250,000 33.3%
Energy Capital Investment Co., PLC
1100 Louisiana, Suite 3150
Houston, TX 77002
Bargo Energy Resources, Ltd. Direct 4,200,000 32.9%
700 Louisiana, Suite 3700 Warrants 250,000 1.9%
Houston, TX 77002 Total 4,450,000 34.2%
Officers and Directors(2)
B. Carl Price -----------------------------See Above--------------------
Don Wm. Reynolds -----------------------------See Above--------------------
Robert D. Price Direct(3) 138,456 1.1%
Options 50,000 0.4%
Total 188,456 1.5%
D. William Reynolds, Jr. Direct 10,733 0.1%
Charles D. Laudeman Direct 14,017 0.0%
Options 20,000 0.1%
Total 34,017 0.2%
Christie Sirera Direct 16,808 0.0%
Options 40,000 0.1%
Total 56,808 0.2%
Gary R. Petersen Indirect 4,250,000(4) 33.3%
D. Martin Phillips Indirect 4,250,000(4) 33.3%
Tim J. Goff Indirect 4,200,000(5) 32.9%
Thomas D. Barrow Indirect 4,200,000(5) 32.9%
All Executive Officers and Direct 10,323,336 80.9%
Directors as a Group Options 797,720 5.9%
(8 persons) Total 11,121,056 82.0%
</TABLE>
(footnotes on following page)
<PAGE>3
(1) Shares owned directly are owned beneficially and of record and such
record shareholder has sole voting, except as provided herein,
investment and dispositive power.
(2) Gary R. Petersen and D. Martin Phillips have each been appointed to
serve on the board of directors as representatives of Encap and Tim J.
Goff and Thomas D. Barrow have each been appointed to serve on the
board of directors as the representatives of Bargo, such appointments to
be effective no earlier than ten days following the date on which this
Information Statement is filed with the Commission and mailed to the
holders of the Company's Common Stock. At such time, D. William
Reynolds, Jr., and Robert Price will each resign as members of the board
of directors. The total for all executive officers and directors as a
group gives effect to the foregoing.
(3) 15,409 of the shares held by Mr. Price are held jointly with his wife,
Martha Ann Price.
(4) Shares indicated will be held by Encap. Each of Mr. Peterson and Mr.
Phillips is a managing director of Encap.
(5) Shares indicated will be held by Bargo. Mr. Goff is a managing
principal and chief executive officer of Bargo and Mr. Barrow is a
managing principal of Bargo.
Legal Proceedings
No material legal proceedings to which the Company is a party or to
which the property of the Company is subject, are currently pending.
Also, the Company is not aware of any material legal proceedings in which
any director or nominee, officer, affiliate of the Company, or any owner of
record or beneficially, of five percent of any class of voting securities of
the Company, is a party adverse to the Company or any of its subsidiaries or
has as material interest adverse to the Company or any of its subsidiaries.
Directors and Executive Officers
The following table sets forth the name, age and position of each
executive officer and director of the Company.
<TABLE>
<CAPTION>
Name Age Position(1) Term Expires
<S> <C> <C> <C>
B. Carl Price 40 President, Director and
Treasurer 2001
Don Wm. Reynolds 72 Chairman of the Board,
Director 2001
Robert Price 68 Vice-President, Director (1)
D. William Reynolds, Jr.36 Director (1)
Christine Sirera 28 Secretary N/A
Charles D. Laudeman 35 Director 2001
Gary R. Petersen 52 Director 2000
D. Martin Phillips 45 Director 1999
Tim J. Goff 40 Director 2000
Thomas D. Barrow 43 Director 1999
</TABLE>
(1) Gary R. Petersen and D. Martin Phillips have each been appointed to
serve on the board of directors as representatives of Encap and Tim J.
Goff and Thomas D. Barrow have each been appointed to serve on the
board of directors as representatives of Bargo, such appointments to
be effective no earlier than ten days following the date on which
this Information Statement is filed with the Commission and mailed to
the holders of the Company's Common Stock. At such time, D. William
Reynolds, Jr., and Robert Price will each resign as members of the board
of directors.
<PAGE>4
The articles of incorporation of the Company provide that the board of
directors shall be divided into three classes of approximately equal size,
with the directors in each class elected for a three-year term. Officers
serve at the pleasure of the board of directors. Biographical information
for each of the executive officers and directors is presented below:
B. Carl Price
B. Carl Price is the president, chief executive officer, director and
one of the largest shareholders of the Company. He attended Oklahoma State
University where he majored in business. Mr. Price has been a landman since the
mid 1980's where he gained much experience by initiating, managing, acquiring
and operating oil and gas ventures and properties, which he did with much
success. The company was established shortly after the oil and gas business
had reached its peak in the late 1970's and early 1980's. Since the Company
was established, Future has acquired several producing properties, drilled
numerous wells, including directional wells, and has consummated many
exploratory and development properties. His management skills have enabled
him to assemble a team of qualified Board of Directors each with varied
business, management, and political experience. Together with teamwork,
confidence, and knowledge, Mr. Price is determined to continue the rapid
growth of Future Petroleum Corporation.
Don Wm. Reynolds
Don Wm. Reynolds, Chairman of the Board of Directors, graduated from
Ohio State University in 1952 with a degree in Geology. After several
short stints with Rowan Drilling Company and Geochemical Engineering Company,
he joined Union Oil Company of California in 1953 as a geologist. He
retired from Unocal in 1992 after almost 40 years. He served in various
staff and management positions in West Texas, New Mexico, Alaska,
California and the mid-continent. Mr. Reynolds assembled the second largest
block of stock in Future Petroleum Corporation in the fall of 1992. He
joined the Board of Directors as Chairman in 1993 and also currently serves
on the board of directors of Austin Software Foundry. Mr. Reynolds has been
active in his profession and has served on many local and national
committees and held office in geological societies in West Texas and
California. He has been recognized for his efforts and can be found listed
in various editions of Who's Who in the business world.
Robert Price
Robert Price is vice-president of Future Petroleum and a member of the
Board of Directors. He received a Bachelor's Degree from Oklahoma State
University. Mr. Price owns and operates a working farm and cattle ranch in
the Texas Panhandle near Pampa, Texas. He, like his son Carl Price, has been
active in the oil and gas industry for over ten years. He is a meticulous
man who pays close attention to detail when overseeing many field operations.
His knowledge of the Texas Panhandle area has been crucial for optimum
drilling sights and exploratory developments. Before his success as an
oilman and cattle rancher, Mr. Price was a fighter pilot in the Korean War
where he flew 27 combat missions. He later went on to serve his country
as a United States Congressman and furthered his political career as a Texas
State Senator in Austin, Texas. His civic and social status in the
Oklahoma/Texas region has proved to be both beneficial and advantageous for
Future Petroleum. In connection with the Bargo and Encap Transactions,
Mr. Price will resign as a member of the board of directors.
<PAGE>5
D. William Reynolds, Jr.
D. William Reynolds, Jr. a member of the board of directors, is the
founder and president of Intelligent Financial Perspective, Inc. in Austin,
Texas. The corporation is a client server software development and
technology consulting firm specializing in financial applications. Prior to
starting his own business in 1989, Mr. Reynolds was a management consultant
for more than six years. He served on two nationwide consulting firms
specializing in the financial services industry. Mr. Reynolds earned a
Bachelor's Degree in Finance from the University of California at Berkeley.
Continuing his education, he went to The University of Texas at Austin where
he earned his M.B.A. degree in Information Systems Management, and where he now
holds a faculty position in the graduate school of business. In connection
with the Bargo and Encap Transactions, Mr. Reynolds will resign as a member
of the board of directors.
B. Carl Price is the son of Robert Price, and D. William Reynolds, Jr.,
is the son of Don Wm. Reynolds.
Christie Sirera
Christie Sirera is the corporate secretary, office administrator and
shareholder of the Company. Ms. Sirera joined the Company in 1994 and was
appointed corporate secretary in 1996. Ms. Sirera attended Tarrant County
Junior College where she majored in business administration. In 1990,
Ms. Sirera started a small business in Dallas, which she still owns.
Charles D. Laudeman
Charles D. Laudeman, a member of the board of directors, is presently a
Gas Marketing Manager for Howell Petroleum Corporation, Houston, Texas. His
responsibilities include the direct marketing of Howells' gas and third party
gas, as well as identifying natural gas asset opportunities. He graduated
from Southern California University with a Bachelor of Arts Degree
in International Relations. A key accomplishment that Mr. Laudeman has been
able to provide for Future is market support and analysis of producers, end
users and marketers of natural gas. He is an affiliate of the Natural Gas
Association of Houston, New Orleans and Oklahoma.
Tim J. Goff
Mr. Goff currently serves as the president of Bargo Energy Company, and
was previously vice president of Torch Energy Advisors, a company
specializing in identifying oil and gas investment opportunities.
Gary R. Petersen
Gary R. Petersen is managing director and co-founder of Encap
Investments, L.C., Houston, Texas. He is was a senior vice president and
manager in the energy department of RepublicBank Dallas from 1985 to 1988,
responsible for mergers and acquisitions, financial advisory services, and
institutional fundraising for the oil and gas industry. From 1980 to 1984,
Mr. Petersen was executive vice president, chief financial officer, and a
member of the board of directors of Houston-based Nicklos oil and Gas
Company, a publicly-traded contract drilling and exploration company. From
1972 to 1979, he was employed by RepublicBank Dallas as a loan officer and
subsequently as group vice president. Mr. Petersen is also a director of
Energy Capital Investment Company P.L.C., Nuevo Energy Company,
Harken Energy Company, and Equus II.
<PAGE>6
D. Martin Phillips
Mr. Phillips serves as a managing director of Encap Investments, L.C.,
Houston, Texas. Prior to joining Encap in 1989, Mr. Phillips served as a
senior vice president and manager in the energy department of RepublicBank
Dallas. In his capacity as manager of the US/International Division from 1987
to 1989, he had responsibility for credit commitments totaling approximately
$1 billion to a broad spectrum of energy-related companies. Mr. Phillips
began his career with RepublicBank Dallas in 1978. Prior to his promotion to
division manager in 1987, he served for ten years in various senior energy
banking positions, including vice president and manager of RepublicBank's
energy loan production office in Denver from 1980 to 1985, and senior vice
president and division manager in RepublicBank's Houston office from 1986 to
1987. Mr. Phillips is a member of the Independent Petroleum Association of
America and the American Petroleum Institute. He received his B.S. and
M.B.A. degrees from Louisiana State University and has done post-graduate
work at the Stonier Graduate School of Banking at Rutgers University.
Thomas D. Barrow
Thomas D. Barrow has 23 years of experience in the oil and gas industry.
Prior to forming Bargo, he served as vice president of special projects and
assistant to the chairman of the board and CEO of Torch Energy Advisors, Inc.
He holds a Bachelor of Business Administration degree in Accounting from
Central Arkansas University. Mr. Barrow is also president of Barrow Energy
Corporation and vice president of Barrow-Heath, Inc., a real estate
investment firm. He also serves as a director of Nuevo Energy Company.
Committees of the Board of Directors
The Company does not have standing audit, nominating, or compensation
committees. During 1997, the board of directors held twelve meetings. In
addition, the directors also discussed the business and affairs of the
Company informally on numerous occasions throughout the year and took
several actions through unanimous written consents in lieu of meetings.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of forms 3, 4 and 5 and amendments thereto,
furnished to the Company during or respecting its last fiscal year, no
director, officer, beneficial owner of more than 10% of any class of
equity securities of the Company or any other person known to be subject to
Section 16 of the Exchange Act failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act for the last fiscal year.
Certain Relationships and Related Transactions
Unless otherwise indicated, the terms of the following transactions
between related parties were not the result of arm's length negotiations.
Price Lease
In November 1990, the Company entered into a lease with Robert D. Price,
an officer and director of the Company, and Martha Ann Price, his wife,
respecting the Price Ranch prospect, consisting of 8,388 acres on thirteen
tracts of land in Gray, Roberts, Hutchinson and Carson Counties, Texas. The
term of the lease is for 10 years, subject to an extension for an additional
ten years at the option of the Company. A royalty of 1/8 of the oil and
gas produced from the wells drilled on the property is reserved to the
lessors, as well as a shut-in royalty after the expiration of the primary
term of $1.00 per acre subject to the lease if the Company performs no
operations on the property or all wells drilled thereon are shut-in for a
period of 90 consecutive days.
<PAGE>7
Encap and Bargo Transactions
Prior to the transactions described herein, Encap owned approximately
30.0% of the issued and outstanding Common Stock of the Company. For a
description of the Encap and Bargo Transactions, see above.
Executive Officer Compensation
The following table sets forth, for each of the last three fiscal years,
cash compensation received by any person serving as chief executive officer
of the Company during the last preceding fiscal year and any of the four
remaining most highly compensated other executive officers whose salary and
bonus for all services in all capacities exceeded $100,000 for the most
recent fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
______________________________________________________________________________
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All Other
Annual Restricted Underlying Compen-
Name and Year Compen- Stock Options/ LTIP sation
Principal Ended Salary Bonus sation Award(s) SARs Payouts
Position Dec. 31 ($) ($) ($) ($) (#) ($) ($)
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
B. Carl 1997 $12,000 -- $50,300(1) 25,832(4) 200,000(3) -- --
Price(CEO) 1996 $12,000 -- $21,853(1) -- -- -- --
President,
Director 1995 $12,000 -- $35,000(1) -- -- -- --
_______________________________________________________________________________
</TABLE>
(1) During 1997, 1996 and 1995, Price Oil & Gas Co., which is a company,
owned by Mr. Price was paid money for consulting services provided to
the Company.
(2) During 1994, Mr. Price was paid $31,000 as an independent contractor.
(3) On January 10, 1997, the Company granted 200,000 options to purchase
shares to Mr. Price.
(4) On November 18, 1997, the Company granted 25,832 shares to Mr. Price.
On February 25, 1994, the Company granted to B. Carl Price five year
options to purchase 150,000 shares, respectively, at $0.267 to Mr. Price (at
110% of the market price), based on the approximate market price of the
Company's common stock on the date of grant. On October 17, 1994, Mr. Price
exercised options to acquire 112,280 shares for cancellation of a debt owed
to a company owned by Mr. Price in the amount of $29,979.
The following table sets forth information respecting the exercise of
options and SARs during the fiscal year ended December 31, 1995, by the named
executive officer of the Company and the fiscal year end values of
unexercised options and SARs.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARS Options/SARs
at FY End (#) at FY End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
B. Carl Price (1)- -- 37,720 --
_______________________________________________________________________________
</TABLE>
(1) Options to purchase 150,000 shares of Common Stock at any time through
February 25, 1999, at an exercise price of $0.267 per share. On October
17, 1994, Mr. Price exercised options to acquire 112,280 shares for
cancellation of a debt owed to a company owned by Mr. Price in the
amount of $29,979.
Employment Agreements, Deferred Salary and Benefits
In November 1997, the Company entered into five-year agreements with
two directors to provide compensation for future services and for rental of
certain property used as a storage yard. The minimum annual compensation
anticipated by the agreements is $33,600. A portion of the compensation may
be paid in stock of the Company, based on the market price of the stock,
as specified in the agreements.
In connection with the Encap and Bargo Transactions, the Company will
enter into a new employment agreement with B. Carl Price which provides for
an annual salary of $125,000. A portion of the compensation may be paid in
stock of the Company, based on the market price of the stock, as specified in
the agreements. Mr. Price's employment agreement will provide that upon
termination of the agreement in connection with a change of control of the
Company, Mr. Price will be entitled to receive compensation equal to two
times his annual salary.
Stock Options
In connection with the Encap and Bargo Transactions, B. Carl Price
will be granted five-year incentive stock options to purchase up to 250,000
shares of Common Stock of the Company at a price to be determined based on
the five day average trading price as of the date of the closing of the
transactions.
On January 10, 1997, the Company granted to B. Carl Price five-year
options to purchase 200,000 shares at $0.44275, based on the approximate market
price of the Company's common stock on the date of grant.
On February 25, 1994, the Company granted to B. Carl Price five-year
options to purchase 150,000 shares at $0.267 per share (110% of the
approximate market price of the Company's common stock on the date of grant).
