<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
BARGO ENERGY COMPANY
(Exact name of small business issuer as specified in its charter)
Texas 0-8609 87-0239185
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
700 Louisiana, Suite 3700
Houston, Texas 77002
(Address of principal executive offices, including zip code)
(713)236-9792
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The Company had approximately 87,933,000 shares of common stock, par value $0.01
per share, issued and outstanding as of November 14, 2000.
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
<PAGE> 2
PART I
FINANCIAL INFORMATION
--------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. However, in the opinion of
management, all adjustments (which consist only of normal recurring adjustments)
necessary to present fairly the financial position and results of operations for
the periods presented have been made. These consolidated financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Company's Form 10-KSB filing for the year ended December
31, 1999.
<PAGE> 3
BARGO ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,175,000 $ 2,375,000
Trade accounts receivable, no allowance for
doubtful accounts considered necessary:
Joint interest billings 528,000 210,000
Accrued oil and gas sales 22,851,000 7,629,000
Due from affiliates 6,000 19,000
------------- -------------
TOTAL CURRENT ASSETS 25,560,000 10,233,000
------------- -------------
PROPERTY AND EQUIPMENT
Oil and gas properties, full cost method 193,679,000 76,107,000
Other 832,000 696,000
------------- -------------
TOTAL PROPERTY AND EQUIPMENT 194,511,000 76,803,000
Less accumulated depletion, depreciation
and amortization (18,515,000) (6,220,000)
------------- -------------
NET PROPERTY AND EQUIPMENT 175,996,000 70,583,000
------------- -------------
OTHER ASSETS
Goodwill, net of accumulated amortization of
$358,000 and $208,000 respectively 1,642,000 1,792,000
Loan costs, net of accumulated amortization of
$3,357,000 and $436,000 respectively 8,871,000 1,890,000
Other 791,000 41,000
------------- -------------
TOTAL OTHER ASSETS 11,304,000 3,723,000
------------- -------------
TOTAL ASSETS $ 212,860,000 $ 84,539,000
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
BARGO ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ -0- $ 6,000
Trade accounts payable 9,399,000 2,623,000
Accrued oil and gas proceeds payable 2,803,000 1,805,000
Accrued interest payable 737,000 84,000
Accrued income taxes payable 7,582,000 -0-
Due to affiliates 598,000 199,000
------------- -------------
TOTAL CURRENT LIABILITIES 21,119,000 4,717,000
------------- -------------
LONG TERM DEBT, less current portion 118,750,000 20,780,000
------------- -------------
DEFERRED TAX LIABILITY 3,317,000 3,085,000
------------- -------------
REDEEMABLE PREFERRED STOCK, 10% cumulative; $.01 par value; 10,000,000 and
5,000,000 shares authorized as of September 30, 2000 and December 31, 1999,
respectively; 5,000,000 shares outstanding as of September 30, 2000 and
December 31, 1999, net of unamortized issuance costs 56,021,000 51,664,000
------------- -------------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 200,000,000 and 120,000,000 shares authorized as
of September 30, 2000 and December 31, 1999, respectively, and 87,932,726 shares
issued and outstanding as of September 30, 2000 and December 31,
1999, respectively 921,000 921,000
Additional paid-in capital 6,878,000 6,878,000
Treasury stock (2,040,000) (2,040,000)
Retained earnings (deficit) 7,894,000 (1,466,000)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 13,653,000 4,293,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 212,860,000 $ 84,539,000
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
BARGO ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------------------
2000 1999
------------- -------------
<S> <C> <C>
REVENUES
Oil and gas sales $ 36,358,000 $ 4,304,000
------------- -------------
TOTAL REVENUES 36,358,000 4,304,000
------------- -------------
COSTS AND EXPENSES
Lease operations and production taxes 13,359,000 1,869,000
General and administrative 3,155,000 709,000
Depletion, depreciation and amortization 5,238,000 386,000
------------- -------------
TOTAL EXPENSES 21,752,000 2,964,000
------------- -------------
OTHER INCOME (EXPENSE)
Interest income 70,000 1,000
Interest expense (4,952,000) (221,000)
------------- -------------
TOTAL OTHER INCOME AND (EXPENSE) (4,882,000) (220,000)
------------- -------------
INCOME BEFORE INCOME TAXES 9,724,000 1,120,000
------------- -------------
INCOME TAX BENEFIT (EXPENSE)
Current (4,341,000) 0
Deferred 231,000 (380,000)
------------- -------------
TOTAL INCOME TAX BENEFIT (EXPENSE) (4,110,000) (380,000)
------------- -------------
NET INCOME 5,614,000 740,000
REDEEMABLE PREFERRED STOCK DIVIDENDS,
INCLUDING ACCRETION (1,496,000) (1,277,000)
------------- -------------
NET INCOME(LOSS)ALLOCABLE TO COMMON
SHAREHOLDERS $ 4,118,000 $ (537,000)
============= =============
EARNINGS (LOSS) PER COMMON SHARE - BASIC
Net income (loss) per common share $ .05 $ (.01)
============= =============
EARNINGS (LOSS) PER COMMON SHARE - DILUTED
Net income(loss) per common share $ .04 $ (.01)
============= =============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Basic 87,933,000 91,831,000
Diluted 103,280,000 91,831,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
BARGO ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------
2000 1999
------------- -------------
<S> <C> <C>
REVENUES
Oil and gas sales $ 83,213,000 $ 9,520,000
------------- -------------
TOTAL REVENUES 83,213,000 9,520,000
------------- -------------
COSTS AND EXPENSES
Lease operations and production taxes 28,370,000 4,187,000
General and administrative 6,415,000 2,377,000
Depletion, depreciation and amortization 12,817,000 2,559,000
------------- -------------
TOTAL EXPENSES 47,602,000 9,123,000
------------- -------------
OTHER INCOME (EXPENSE)
Interest income 151,000 6,000
Interest expense (11,275,000) (1,630,000)
------------- -------------
TOTAL OTHER INCOME AND (EXPENSE) (11,124,000)
(1,624,000)
------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 24,487,000 (1,227,000)
------------- -------------
INCOME TAX BENEFIT (EXPENSE)
Current (9,488,000) -0-
Deferred (232,000) 417,000
------------- -------------
TOTAL INCOME TAX BENEFIT (EXPENSE) (9,720,000) 417,000
------------- -------------
NET INCOME(LOSS)BEFORE EXTRAORDINARY ITEM 14,767,000 (810,000)
------------- -------------
EXTRAORDINARY LOSS ON EXTINGUISHMENT OF
DEBT (NET OF TAX OF $645,000) (1,051,000) -0-
------------- -------------
NET INCOME (LOSS) 13,716,000 (810,000)
REDEEMABLE PREFERRED STOCK DIVIDENDS,
INCLUDING ACCRETION (4,358,000) (1,934,000)
------------- -------------
NET INCOME(LOSS)ALLOCABLE TO COMMON
SHAREHOLDERS $ 9,358,000 $ (2,744,000)
============= =============
EARNINGS (LOSS) PER COMMON SHARE - BASIC
Net income (loss) per common share before
extraordinary item $ .12 $ (.04)
Net income (loss) per common share from
extraordinary item (.01) .00
------------- -------------
Net income (loss) per common share $ .11 $ (.04)
============= =============
EARNINGS (LOSS) PER COMMON SHARE - DILUTED
Net income (loss) per common share before
extraordinary item $ .10 $ (.04)
Net income (loss) per common share from
extraordinary item (.01) .00
------------- -------------
Net income (loss) per common share $ .09 $ (.04)
============= =============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Basic 87,933,000 70,622,000
Diluted 103,280,000 70,622,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
BARGO ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 13,716,000 $ (810,000)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion, depreciation, and amortization 12,817,000 2,558,000
Amortization of debt issue costs 3,551,000 154,000
Extraordinary loss on extinguishments of debt 1,696,000 -0-
Deferred income taxes 232,000 (417,000)
------------- -------------
32,012,000 1,485,000
Change in working capital items:
Increase in accounts receivable (15,540,000) (1,749,000)
Decrease(increase) in due from affiliates 13,000 (12,000)
Increase in accounts payable and accrued
liabilities 16,009,000 930,000
Increase (decrease) in due to affiliates 399,000 (564,000)
Other (749,000) (8,000)
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 32,144,000 82,000
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of oil and gas properties (158,937,000) (27,484,000)
Proceeds from the sale of oil and gas
properties 40,993,000 -0-
Additions to property and equipment (136,000) (65,000)
------------- -------------
NET CASH (USED IN)INVESTING ACTIVITIES (118,080,000) (27,549,000)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 200,550,000 17,760,000
Purchase of treasury stock -0- (90,000)
Repayment of long-term debt (102,586,000) (38,005,000)
Proceeds from issuance of stock -0- 50,000,000
Stock issuance costs -0- (2,199,000)
Loan costs (12,228,000) (103,000)
Proceeds from exercise of stock options -0- 10,000
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 85,736,000 27,373,000
------------- -------------
NET (DECREASE) IN CASH (200,000) (94,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,375,000 1,241,000
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,175,000 $ 1,147,000
============= =============
NONCASH ITEMS:
Dividends on redeemable preferred stock $ 4,358,000 $ 1,934,000
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
BARGO ENERGY COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: THE COMPANY AND ACCOUNTING PRINCIPLES
Bargo Energy Company (the "Company" or "Bargo") is engaged primarily in the
acquisition, development and production of oil and gas reserves and operation of
oil and gas wells. The accompanying financial statements include the accounts of
the Company and its wholly owned subsidiaries, Bargo Petroleum Corporation (BPC)
and Future Cal-Tex Corporation (FCT). Intercompany accounts and transactions are
eliminated in consolidation. All material adjustments, consisting only of normal
recurring adjustments that, in the opinion of management are necessary for a
fair statement of the results for the interim periods, have been reflected.
These interim financial statements should be read in conjunction with the annual
consolidated financial statements of the Company.
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Significant assumptions are
required in the valuation of proved oil and gas reserves which, as described
above, may affect the amounts at which oil and gas properties are recorded.
Actual results could differ from these estimates.
In June 1998 the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities." (as amended by
SFAS 137 and SFAS 138) This standard is effective for fiscal years beginning
after June 15, 2000 (January 1, 2001 for the Company). SFAS 133 requires that
all derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of hedge
transaction. The Company has not yet completed its evaluation of the impact of
the adoption of this new standard.
NOTE 2: PROPERTY ACQUISITIONS AND DIVESTITURES
On March 31, 2000, the Company acquired interests in oil and gas properties from
Texaco Exploration and Production, Inc., Four Star Oil and Gas Company and
McFarland Energy, Inc. ("Texaco Acquisition") for a gross purchase price of
$161.1 million, before closing adjustments. Such amount has been included as an
addition to oil and gas properties. The final determination of the purchase
price and its allocation is subject to adjustment over the current fiscal year.
The effective date of the purchase is January 1, 2000. The properties are
located in the Permian Basin, East Texas, Oklahoma and Kansas. The Company
utilized a new credit facility to acquire the properties (see Note 3.)
<PAGE> 9
The following Bargo Energy Company pro forma information gives effect to the
Texaco Acquisition referred to above and the East Texas properties (as reported
on Form 8-K filed on November 19, 1999) as if they had been acquired January 1,
1999:
<TABLE>
<CAPTION>
Nine months ended
September 30,
2000 1999
----------- -----------
<S> <C> <C>
(amounts in thousands except per share amount)
Revenues $ 107,163 $ 73,290
Net income before extraordinary item $ 19,815 $ 5,183
Net income $ 18,764 $ 5,183
Earnings per share:
Basic - Net income per common share
before extraordinary item $ .18 $ .05
Net income per common share $ .16 $ .05
Diluted - Net income per common share $ .15 $ .05
before extraordinary item
Net income per common share $ .14 $ .05
</TABLE>
On May 31, 2000 the Company sold its Ardmore Basin producing oil and gas
properties in southern Oklahoma to Le Norman Partners, LLC for $31.9 million.
Bargo also completed the sale of its interest in the Russell Clearfork Unit to
Cross Timbers Oil Company for $2.9 million. Proceeds from both sales were used
to paydown outstanding indebtedness under the Company's term and revolving
credit facility. (See Note 3.) No gain or loss was recognized on these sales and
the full cost pool was adjusted for the sales price.
NOTE 3: CREDIT AGREEMENT
Effective March 31, 2000, the Company entered into a new syndicated credit
agreement ("Credit Agreement") with Chase Bank of Texas ("Chase") and several
other energy lending banks (all banks shall be referred to collectively as the
"Banks"), with Chase serving as administrative agent. Proceeds from the new
Credit Agreement were used to fully refinance the Company's previous bank
indebtedness and make the Texaco Acquisition. Borrowings under the Credit
Agreement are secured by mortgages covering substantially all of the Company's
producing oil and gas properties. As required by the Credit Agreement, the
Company has hedged 75% of estimated oil production generated from the Texaco
Acquisition through 2001 (see Note 4). In accordance with the Credit Agreement
the Banks were paid various underwriting, administrative and advisory fees
totaling $4.38 million. The Credit Agreement provides for a total commitment
amount of $245 million, comprised of a revolving and a term facility.
<PAGE> 10
The total commitment amount under the term facility was $45 million. The term
facility matures December 31, 2000. Borrowings under the term facility as of
September 30, 2000 were $20.1 million. The Company received commitments from
several of its current stockholders to purchase preferred stock and also
received a commitment from one of its lenders to convert a portion of the loan
into preferred stock, in an amount sufficient in the aggregate to repay the term
facility in full at maturity (see Note 5). As the Company has both the ability
and intent to refinance its term facility, the amounts have been classified as
long term in the balance sheet at September 30, 2000.
The total commitment amount under the revolving facility is $200 million with a
current borrowing base of $150 million ("Borrowing Base"). The revolving
facility matures March 31, 2003. Borrowings under the revolving facility as of
September 30, 2000 were $98.7 million. Under the revolving facility, the Company
has a choice of two different interest rates; the Base Rate or the LIBO Rate.
While the term facility is outstanding, the debt under the revolving credit
facility bears interest under the Base Rate (which is the higher of the lender's
"Prime Rate" or the Federal Funds Rate plus .5%) plus an applicable margin of
1.0% or interest under the LIBO Rate at the LIBO rate (reserve adjusted) plus
2.5%. The Company may convert any portion of the outstanding debt from one
interest rate type to another in increments of $1 million.
In connection with the new Credit Agreement, the Company wrote off $1,696,000 of
loan costs related to the previously existing revolving credit agreement. Such
amounts are shown separately, net of tax, as an extraordinary item.
Effective October 4, 2000, the borrowing base under the revolving facility was
increased to $170 million. On October 10, 2000, utilizing availability under the
revolving facility, the Company paid off the term facility in the amount of
$20,100,000 thereby eliminating the term facility commitment. Since the term
facility is terminated, the applicable margin for borrowings under the revolving
credit facility will be computed based on Borrowing Base utilization ranging
from 0%-.75% for Base Rate loans and 1.5%-2.25% for LIBO Rate loans. The current
balance outstanding under the revolving facility is $104,000,000 as of November
14, 2000.
NOTE 4: HEDGING AND DERIVATIVE ACTIVITIES
The Company engages in certain hedging activities related to the purchase and
delivery of oil and gas in the future. Such activities are accounted for in
accordance with Statement of Financial Accounting Standard No. 80, "Accounting
for Futures Contracts" (SFAS 80). The losses on hedging contracts are included
as a reduction of net revenues.
In addition to the hedges in place at December 31, 1999, the Company entered
into additional derivative contracts in the first quarter of 2000 in relation to
the Texaco Acquisition. The instruments cover approximately 75% (or
approximately 190,000 BBLS per month) of estimated oil production related to the
Texaco Acquisition through calendar year 2001. The contracts related to the
Texaco Acquisition production consist of a floor of $22 per BBL for April
through December 2000 and a floor of $21 per BBL for January through December
2001. The Company was required to hedge a portion of its production under the
terms of their new Credit Agreement (see Note 3). Accordingly, the cost of the
instrument ($6.22 million, paid in full during the first quarter of 2000), has
been capitalized as loan costs and will be amortized over the life of the loans.
NOTE 5: EQUITY BACKSTOP
The Company received commitments from several of its current stockholders to
purchase preferred stock, and also received a commitment from one of its lenders
<PAGE> 11
("Converting Lender") to convert a portion of the term facility into preferred
stock, in an amount sufficient in the aggregate to repay the term facility (see
Note 3) in full at maturity (the purchase of additional preferred stock and
conversion of a portion of the term facility into preferred stock in order to
retire the term facility at maturity shall be known as the "Equity Backstop").
In order to secure the Equity Backstop the Company paid an Equity Backstop fee
of $1.35 million to the preferred stockholders and the Converting Lender.
Additionally, the Company initiated a Consent Action to increase the Company's
outstanding capital stock, in preparation for the potential issuance of
additional shares as a result of the Equity Backstop. This Consent Action was
approved by a majority of the Company's stockholders on March 13, 2000 and
became effective April 10, 2000. The Company's articles of incorporation have
been amended to increase the authorized common shares to 200 million and
authorized preferred shares to 10 million. The Company repaid the term facility
on October 10, 2000 thereby canceling the Equity Backstop commitments.
NOTE 6: EARNINGS PER SHARE
Net income or loss per common share is based on the weighted average number of
common shares outstanding. In accordance with SFAS 128, "Earnings Per Share",
income available to common stockholders is reduced by the amount of dividends on
cumulative preferred stock and accretion of related stock issuance costs. The
Company's common stock equivalents consisted of stock options and warrants. The
calculation of weighted average number of common shares outstanding for the
three and nine months ended September 30, 2000 is as follows:
<TABLE>
<S> <C>
Weighted average basic common shares outstanding 87,933,000
Options and warrants outstanding (Treasury Stock Method) 15,347,000
-----------
Weighted average fully diluted common and common equivalent
shares outstanding 103,280,000
===========
</TABLE>
<PAGE> 12
--------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
This report includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements
other than statements of historical fact included in the Report (and the
exhibits hereto), including without limitation, statements regarding the
Company's financial position and estimated quantities and net present values of
reserves, are forward looking statements. The Company can give no assurances
that the assumptions upon which such statements are based will prove to have
been correct. Important factors that could cause actual results to differ
materially from the Company's expectations ("Cautionary Statements") are
disclosed in the section "Risk Factors" included in the Company's Forms 10-KSB
and other periodic reports filed under the Exchange Act, which are herein
incorporated by reference. All subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified by the Cautionary Statements.
THE COMPANY
Bargo Energy Company (the "Company" or "Bargo") is engaged in the
acquisition and exploitation of oil and natural gas properties located onshore
primarily in the Gulf Coast Region (Texas and Louisiana), Permian Basin,
MidContinent, and California. The Company's principal business strategies
include (i) maximizing the value of its existing high-quality, long-life
reserves through efficient operating and marketing practices, (ii) conducting
detailed field studies using the latest technology to identify additional
reserves and exploration potential, and (iii) seeking acquisitions of producing
properties, with exploration and development potential in areas where the
Company has operating experience and expertise.
STRATEGIC DEVELOPMENTS
On March 31, 2000 the Company closed the acquisition of oil and gas
properties from subsidiaries of Texaco, Inc. for $161.1 million (the "Texaco
acquisition").
The Company borrowed from commercial banks sufficient amounts to
finance the entire acquisition and refinance existing bank indebtedness. The
loans consisted of a revolving credit facility and a term loan. The term loan
was scheduled to mature on December 31, 2000. The Company received commitments
from several of its current stockholders to purchase preferred stock, and also
received a commitment from one of its lenders to convert a portion of the loan
into preferred stock, in an amount sufficient in the aggregate to repay the term
loan in full. These commitments to purchase preferred stock at maturity of the
term loan also provide for the issuance of common stock. The company repaid the
term loan with availability under the revolving credit facility on October 10,
2000.
On August 29, 2000 the Company announced that it had retained Lehman
Brothers Inc. and Chase Securities, Inc. for the purpose of evaluating various
strategic alternatives for the future. The Company is currently considering
various alternatives to maximize shareholder value over the near term including
the possibility of an outright sale, merger, or recapitalization with public or
private equity.
<PAGE> 13
GENERAL
The Company's revenues, profitability and future growth and the
carrying value of its oil and gas properties are substantially dependent on
prevailing prices of oil and gas and its ability to find, develop and acquire
additional oil and gas reserves that are economically recoverable. The Company's
ability to maintain or increase its borrowing capacity and to obtain additional
capital on attractive terms is also influenced by oil and gas prices.
Prices for oil and gas are subject to large fluctuations in response to
relatively minor changes in the supply of and demand for oil and gas, market
uncertainty and a variety of additional factors beyond the control of the
Company. These factors include weather conditions in the United States, the
condition of the United States economy, the actions of the Organization of
Petroleum Exporting Countries, governmental regulation, political stability in
the Middle East and elsewhere, the foreign supply of crude oil and natural gas,
the price of foreign imports and the availability of alternate fuel sources. Any
substantial and extended decline in the price of crude oil or natural gas would
have an adverse effect on the Company's carrying value of its proved reserves,
borrowing capacity, revenues, profitability and cash flows from operations.
The Company uses the full cost method of accounting for the Company's
investment in oil and gas properties. Under the full cost method of accounting,
all costs of acquisition, exploration and development of oil and gas reserves
are capitalized into a "full cost pool." Oil and gas properties in the pool,
plus estimated future expenditures to develop proved reserves and future
abandonment, site remediation and dismantlement costs, are depleted and charged
to operations using the unit of production method based on the portion of
current production to total estimated proved recoverable oil and gas reserves.
To the extent that such capitalized costs (net of depreciation, depletion and
amortization) exceed the discounted future net cash flows on an after-tax basis
of estimated proved oil and gas reserves, such excess costs are charged to
operations. Once incurred, the write down of oil and gas properties is not
reversible at a later date even if oil or natural gas prices increase.
The Company does not have a specific acquisition budget because of the
unpredictability of the timing and size of forthcoming acquisition activities.
There is no assurance that the Company will be able to identify suitable
acquisition candidates in the future, or that the Company will be successful in
the acquisition of producing properties. In order to finance any possible future
acquisitions, the Company will either use borrowings available under its credit
facility or the Company may seek to obtain additional debt or equity financing
in the public or private capital markets. Further, there can be no assurances
that any future acquisitions made by the Company will be integrated successfully
into the Company's operations or will achieve desired profitability objectives.
In June 1998 the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities." (as amended by
SFAS 137 and SFAS 138) This standard is effective for fiscal years beginning
after June 15, 2000 (January 1, 2001 for the Company). SFAS 133 requires that
all derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of hedge
transaction. The Company has not yet completed its evaluation of the impact of
the adoption of this new standard.
The Company implements oil and gas hedges as it deems appropriate to
ensure minimum levels of cash flow or as market conditions are believed to
create an opportunity to increase cash flows. At December 31, 1999 collars were
in place for portions of the Company's oil production for October 1 through
September 2000 at floors of $18.00 and ceilings of $20.75 and $23.08. Contracted
volumes total 50,200 barrels per month declining each month to 42,000 barrels
representing approximately 14% of the Company's projected oil production.
Beginning October 2000 through September 2001 the Company has two
<PAGE> 14
swaps in place at $17.55 and $18.05. Contracted volumes total 41,350 barrels per
month declining to 34,300 barrels per month representing approximately 13% of
the Company's projected oil production for that period.
Floors are in place for April 2000 through December 2000 at a price of
$22.00 per bbl on 1,791,672 bbls. Additionally, the Company has secured a $21.00
per bbl floor for 2001 on a volume of 2,197,728 bbls. These floors protect
approximately 60% of the Company's current projected oil production.
The Company currently has no outstanding natural gas hedges.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of capital are its cash flows from
operations, borrowings and issuance of debt and equity securities.
The Company reported consolidated net income of $5,614,000 for the
quarter ended September 30, 2000 compared to consolidated net income of $740,000
for the quarter ended September 30, 1999. This increase is due to the Company's
significant acquisition activity. At September 30, 2000, the Company had working
capital of $4,441,000, which was a $1,075,000 decrease from the $5,516,000 of
working capital that the Company had as of December 31, 1999. The decrease in
working capital as of September 30, 2000 is primarily due to an increase in
accrued oil and gas receivables which are offset by increased payables,
including accrued income taxes payable.
Effective March 31, 2000, the Company entered into a new credit
agreement with Chase Bank of Texas ("Chase")and several other energy lending
banks, with Chase serving as the administrative agent(the "Credit Agreement").
Borrowings under the Credit Agreement are secured by mortgages covering
substantially all of the Company's producing oil and gas properties as well as
by certain pledges of the Company's Common Stock. The Credit Agreement provides
a commitment amount of $200 million and the Company currently has a $170 million
borrowing base ("Borrowing Base"). In addition to the $200 million commitment,
the Credit Agreement also provided for a $45 million term loan which matures 9
months from the closing date. The Company received commitments from several of
its current stockholders to purchase preferred stock, and also received a
commitment from one of its lenders to convert a portion of the loan into
preferred stock, in an amount sufficient in the aggregate to repay this term
loan in full. These commitments to purchase preferred stock at maturity of the
term loan also provided for the issuance of common stock.
The Company has a choice of two different interest rates; the Base Rate
or the LIBO Rate. While the term loan is outstanding, the debt under the
Borrowing Base loan bears interest under the Base Rate (which is the higher of
the lender's "Prime Rate" or the Federal Funds Rate plus .5%) plus an applicable
margin of 1.0% or interest under the LIBO Rate at the LIBO rate (reserve
adjusted) plus 2.5%. The term loan bears interest under the Base Rate plus an
applicable margin of 2.0% and under the LIBO Rate plus 3.5%. The Company may
convert any portion of the outstanding debt from one interest rate type to
another in increments of $1,000,000 with a minimum transfer amount of
$1,000,000.
As of September 30, 2000 borrowings under the Credit Agreement were
$20.1 million and $98.7 million for the term loan and the revolving credit
facility, respectively. The borrowing base was adjusted to $170 million on
October 4, 2000 in conjunction with the semi-annual borrowing base
redetermination. Utilizing availability under the revolving credit facility, the
company repaid the term loan in full on October 10, 2000. Now that the term
facility is terminated, the applicable margin for borrowings under the Company's
revolving credit facility will be computed based on Borrowing Base utilization
ranging from 0%-.75% for Base Rate loans and 1.5%-2.25% for LIBO Rate loans.
<PAGE> 15
As of November 14, 2000, the balance outstanding under the Company's revolving
credit facility is $104 million.
CASH FLOWS FROM OPERATING ACTIVITIES
Operating activities of the Company during the nine months ended
September 30, 2000 provided net cash of $32.1 million. In the same period during
1999, operations provided net cash of $82,000. The increase is due to the
Company's acquisition activity along with higher commodity prices during 2000.
Investing activities in the nine months ended September 30, 2000, used net cash
of $118.1 million, due to the acquisition of oil and gas properties. Financing
activities in the nine months ended September 30, 2000 provided net cash of
$85.7 million primarily due to proceeds from the issuance of debt related to the
Company's acquisition activity.
RESULTS OF OPERATIONS
Comparison of Quarters Ended September 30, 2000 and 1999
Production for the quarter ended September 30, 2000 increased by
1,031.4 MBOE, or 390%, to 1,295.6 MBOE versus the same period in 1999. This
increased production is due to the Texaco acquisition completed in March, 2000.
Total revenues for the three months ended September 30, 2000 increased
to $36.4 million from $4.3 million for the same period in 1999, primarily due to
increased production as a result of the Company's oil and gas property
acquisitions. In addition, total revenues have increased due to stronger pricing
in 2000. This represents a 747% increase over 1999. Production costs increased
from $1,869,000 in the three months ended September 30, 1999 to $13,359,000 in
the three months ended September 30, 2000 due to the purchase of proved
reserves. General and administrative expenses increased to $3,155,000 from
$709,000 in 1999 primarily due to $1.15 million of non-recurring accounting
system implementation charges related to the Company's recent Texaco acquisition
and $300,000 for the write-off of retainer fees. The Company had net income of
$5,614,000 for the three months ended September 30, 2000 compared to net income
of $740,000 for the same period in 1999. Income before income taxes and
extraordinary items increased by $8,604,000 to $9,724,000 for the three months
ended September 30, 2000 compared to net income of $1,120,000 for the comparable
period in 1999. Total interest expense for the three months ended September 30,
2000 was $4,952,000 compared to $221,000 for the same period in 1999. This
increase is related to an increased level of indebtedness associated with the
Texaco acquisition. Non-cash interest expense (amortization of debt issues
costs) for the three months ended September 30, 2000 totaled $1,677,000.
Depreciation, depletion and amortization for the three months ended September
30, 2000 was $5,238,000. For the same period in 1999, the total was $386,000.
This increase is primarily a result of increased production volumes resulting
from the Texaco acquisition.
Comparison of Nine Months ended September 30, 2000 and 1999
Production for the nine months ended September 30, 2000 increased by
2,465.4 MBOE, or 335%, to 3,201.6 MBOE versus the same period in 1999. This
increased production is due to the Texaco acquisition completed March 31, 2000.
Total revenues for the nine months ended September 30, 2000 increased
to $83.2 million from $9.5 million for the same period in 1999, primarily due to
an increase in production from the Company's oil and gas property acquisitions.
This represents a 776% increase over 1999. Production costs increased from
$4,187,000 in the nine months ended September 30, 1999 to $28,370,000 in the
nine months ended June 30, 2000 due to the purchase of proved reserves. General
and administrative expenses increased to $6,415,000 from $2,377,000 in 1999 is
partially due to increased overhead associated with the Texaco acquisition as
<PAGE> 16
well as non-recurring accounting system implementation charges of $1.15 million.
The Company had net income of $13,716,000 for the nine months ended September
30, 2000 compared to a net loss of $810,000 for the same period in 1999. Income
before income taxes and extraordinary items increased by $25,714,000 to
$24,487,000 for the nine months ended September 30, 2000 compared to a net loss
of $1,227,000 for the comparable period in 1999. Total interest expense for the
nine months ended September 30, 2000 was $11,275,000 compared to $1,630,000 for
the same period in 1999. This increase is due to higher levels of indebtedness
in 2000 associated with the Texaco acquisition. For the nine months ended
September 30, 2000, non-cash interest expense (amortization of debt issue costs)
totaled $3,551,000. Depreciation, depletion and amortization for the nine months
ended September 30, 2000 was $12,817,000. For the same period in 1999, the total
was $2,559,000. This increase is primarily a result of increased production
volumes resulting from the Texaco acquisition.
INFLATION
The Company's activities have not been, and in the near term are not
expected to be, materially affected by inflation or changing prices in general.
The Company's oil exploration and production activities are generally affected
by prevailing prices for oil.
<PAGE> 17
--------------------------------------------------------------------------------
PART II
OTHER INFORMATION
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------
(a) Exhibits.
EXHIBIT NUMBER TITLE OF DOCUMENT
2. Plan of acquisition, reorganization, arrangement,
liquidation or succession
2.1 Purchase and Sale Agreement between Texaco Exploration &
Production Inc. and Bargo Petroleum Corporation
(Incorporated by reference from Exhibit 2.1 to the Company's
Current Report on Form 8-K dated March 31, 2000, filed with
the Securities and Exchange Commission on April 17, 2000) *
2.2 Asset Purchase Agreement between Four Star Oil & Gas Company
and Bargo Petroleum Corporation (Incorporated by reference
from Exhibit 2.2 to the Company's Current Report on Form 8-K
dated March 31, 2000, filed with the Securities and Exchange
Commission on April 17, 2000) *
2.3 Asset Purchase Agreement between McFarland Energy, Inc. and
Bargo Petroleum Corporation (Incorporated by reference from
Exhibit 2.3 to the Company's Current Report on Form 8-K
dated March 31, 2000, filed with the Securities and Exchange
Commission on April 17, 2000 and as amended by the Company's
Current Report on Form 8-KA dated March 31, 2000 filed with
the Securities and Exchange Commission on May 26, 2000.) *
3. Articles of Incorporation and By-laws
3.1 Articles of Incorporation of Bargo Energy Company
(Incorporated by reference from Exhibit 3.1 to the Company's
Current Report on Form 8-K dated April 26, 1999, filed with
the Securities and Exchange Commission on April 29, 1999)
3.2 Agreement and Plan of Merger, dated as of April 6, 1999
between Future Petroleum Corporation and FPT Corporation
(Incorporated by reference from Exhibit 2.1 to the Company's
Current Report on Form 8-K dated April 26, 1999, filed with
the Securities and Exchange Commission on April 29, 1999)
<PAGE> 18
EXHIBIT NUMBER TITLE OF DOCUMENT
3.3 By-laws of Bargo Energy Company (Incorporated by reference
from Exhibit 3.2 to the Company's Current Report on Form 8-K
dated April 26, 1999, filed with the Securities and Exchange
Commission on April 29, 1999)
3.4 Amendment to Bargo Energy Company By-laws (Incorporated by
reference from Exhibit 3.4 to the Company's Quarterly Report
on Form 10-QSB for the period ended March 31, 1999, filed
with the Securities and Exchange Commission on May 21, 1999)
3.5 Articles of Amendment to the Articles of Incorporation of
Bargo Energy Company (Incorporated by reference from Exhibit
3.5 to the Company's Quarterly report on Form 10-QSB for the
period ended March 31, 2000 filed with the SEC on May 15,
2000.)
4. Instruments defining the rights of security holders
4.1 Certificate of Designations of Cumulative Redeemable
Preferred Stock, Series B (Incorporated by reference from
Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB
for the period ended March 31, 1999, filed with the
Securities and Exchange Commission on May 21, 1999)
4.2 Certificate of Designations of Cumulative Redeemable
Preferred Stock, Series C (Incorporated by reference from
Exhibit 3.5 to the Company's Quarterly report on Form 10-QSB
for the period ended March 31, 2000 filed with the SEC on
May 15, 2000.)
10. Material Contracts
10.1 Subscription Agreement dated March 31, 2000, among Bargo
Energy Company, Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., and SGC Partners II LLC. (Incorporated by
reference from Exhibit 10.1 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
10.2 First Amendment to Second Amended and Restated Shareholders'
Agreement, dated March 31, 2000, among Bargo Energy Company,
B. Carl Price, Don Wm. Reynolds, Energy Capital Investment
Company PLC, EnCap Equity 1994 Limited Partnership, BER
Partnership L.P., TJG
<PAGE> 19
EXHIBIT NUMBER TITLE OF DOCUMENT
Investments, Inc., BEC Partnership, BOC Operating
Corporation, Inc., Tim J. Goff, Thomas Barrow, James E.
Sowell, EnCap Energy Capital Fund III-B, L.P., BOCP Energy
Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne
Anderson Energy Fund, L.P., BancAmerica Capital Investors
SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P.,
Eos Partners SBIC II, L.P., and SGC Partners II LLC.
(Incorporated by reference from Exhibit 10.2 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
10.3 Third Amendment to Registration Rights Agreement dated March
31, 2000 among Energy Capital Investment Company PLC, EnCap
Equity 1994 Limited Partnership, EnCap Energy Capital Fund
III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy
Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P.,
BancAmerica Capital Investors SBIC I, L.P., Eos Partners,
L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P.,
and SGC Partners II LLC. (Incorporated by reference from
Exhibit 10.3 to the Company's Current Report on Form 8-K
dated March 31, 2000, filed with the Securities and Exchange
Commission on April 17, 2000)
10.4 First Amendment to Stock Purchase Agreement dated March 31,
2000, among Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., and SGC Partners II LLC and Bargo Energy Company.
(Incorporated by reference from Exhibit 10.4 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
10.5 Assignment, Acknowledgment, Consent and Waiver dated March
31, 2000, among Bargo Energy Company, Energy Capital
Investment Company PLC, EnCap Energy Capital Fund III-B,
L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund
III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica
Capital Investors SBIC I, L.P., Eos Partners, L.P., Eos
Partners SBIC, L.P., Eos Partners SBIC II, L.P., SGC
Partners II LLC, and Chase Bank of Texas, National
Association. (Incorporated by reference from Exhibit 10.5 to
the Company's Current Report on Form 8-K dated March 31,
2000, filed with the Securities and Exchange Commission on
April 17, 2000)
10.6 Escrow Agreement dated March 31, 2000, among Bargo Energy
Company, Energy Capital Investment Company PLC, EnCap Energy
Capital Fund III-B, L.P., EnCap Equity 1994, L.P., BOCP
Energy Partners, L.P., EnCap Energy Capital Fund III,
<PAGE> 20
EXHIBIT NUMBER TITLE OF DOCUMENT
L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital
Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners
SBIC, L.P., Eos Partners SBIC II, L.P., SGC Partners II LLC,
and Chase Bank of Texas, National Association. (Incorporated
by reference from Exhibit 10.6 to the Company's Current
Report on Form 8-K dated March 31, 2000, filed with the
Securities and Exchange Commission on April 17, 2000)
10.7 Acknowledgment and Consent dated March 31, 2000, among Bargo
Energy Company, Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., and SGC Capital Partners II LLC. (Incorporated by
reference from Exhibit 10.7 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
10.8 Indemnification Agreement dated March 31, 2000, among Bargo
Energy Company, Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., SGC Partners II LLC, and Bankers Trust Company.
(Incorporated by reference from Exhibit 10.8 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
10.9 Consent to Amendment to Registration Rights Agreement by TJG
Investments, Inc., BEC Partnership, BER Partnership, L.P.,
BOC Operating Corporation, Tim J. Goff, Thomas Barrow, James
E. Sowell, B. Carl Price, Don Wm. Reynolds, Christie Price,
Robert Price and Charles D. Laudeman. (Incorporated by
reference from Exhibit 10.9 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
10.10 Credit Agreement dated March 31, 2000, among Bargo Energy
Company, Chase Bank of Texas National Association, as
administrative agent, Bankers Trust Company, as syndication
agent and the other agents and lenders signatory thereto.
(Incorporated by reference from Exhibit 10.10 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
11. Statement regarding computation of per share earnings (1)
<PAGE> 21
EXHIBIT NUMBER TITLE OF DOCUMENT
15. Letter on unaudited interim financial information (1)
18. Letter on change in accounting principles (1)
21. Subsidiaries of the Registrant (2)
22. Published report regarding matters submitted to vote (1)
23. Consents of experts and counsel (1)
24. Power of attorney (1)
27. Financial data schedule (2)
99. Additional exhibits (1)
----------
(1) Inapplicable to this filing.
(2) Included herewith.
* Confidential treatment has been requested.
<PAGE> 22
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarterly period ended
September 30, 2000.
--------------------------------------------------------------------------------
SIGNATURES
--------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
BARGO ENERGY COMPANY
(Registrant)
Dated: November 14, 2000 By: /s/ Jonathan M. Clarkson
Jonathan M. Clarkson,
On behalf of the Registrant and
as President
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
2. Plan of acquisition, reorganization, arrangement,
liquidation or succession
2.1 Purchase and Sale Agreement between Texaco Exploration &
Production Inc. and Bargo Petroleum Corporation
(Incorporated by reference from Exhibit 2.1 to the Company's
Current Report on Form 8-K dated March 31, 2000, filed with
the Securities and Exchange Commission on April 17, 2000) *
2.2 Asset Purchase Agreement between Four Star Oil & Gas Company
and Bargo Petroleum Corporation (Incorporated by reference
from Exhibit 2.2 to the Company's Current Report on Form 8-K
dated March 31, 2000, filed with the Securities and Exchange
Commission on April 17, 2000) *
2.3 Asset Purchase Agreement between McFarland Energy, Inc. and
Bargo Petroleum Corporation (Incorporated by reference from
Exhibit 2.3 to the Company's Current Report on Form 8-K
dated March 31, 2000, filed with the Securities and Exchange
Commission on April 17, 2000 and as amended by the Company's
Current Report on Form 8-KA dated March 31, 2000 filed with
the
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
Securities and Exchange Commission on May 26, 2000.) *
3. Articles of Incorporation and By-laws
3.1 Articles of Incorporation of Bargo Energy Company
(Incorporated by reference from Exhibit 3.1 to the Company's
Current Report on Form 8-K dated April 26, 1999, filed with
the Securities and Exchange Commission on April 29, 1999)
3.2 Agreement and Plan of Merger, dated as of April 6, 1999
between Future Petroleum Corporation and FPT Corporation
(Incorporated by reference from Exhibit 2.1 to the Company's
Current Report on Form 8-K dated April 26, 1999, filed with
the Securities and Exchange Commission on April 29, 1999)
3.3 By-laws of Bargo Energy Company (Incorporated by reference
from Exhibit 3.2 to the Company's Current Report on Form 8-K
dated April 26, 1999, filed with the Securities and Exchange
Commission on April 29, 1999)
3.4 Amendment to Bargo Energy Company By-laws (Incorporated by
reference from Exhibit 3.4 to the Company's Quarterly Report
on Form 10-QSB for the period ended March 31, 1999, filed
with the Securities and Exchange Commission on May 21, 1999)
3.5 Articles of Amendment to the Articles of Incorporation of
Bargo Energy Company (Incorporated by reference from Exhibit
3.5 to the Company's Quarterly report on Form 10-QSB for the
period ended March 31, 2000 filed with the SEC on May 15,
2000.)
4. Instruments defining the rights of security holders
4.1 Certificate of Designations of Cumulative Redeemable
Preferred Stock, Series B (Incorporated by reference from
Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB
for the period ended March 31, 1999, filed with the
Securities and Exchange Commission on May 21, 1999)
4.2 Certificate of Designations of Cumulative Redeemable
Preferred Stock, Series C (Incorporated by reference from
Exhibit 3.5 to the Company's Quarterly report on Form 10-QSB
for the period ended March 31, 2000 filed with the SEC on
May 15, 2000.)
10. Material Contracts
10.1 Subscription Agreement dated March 31, 2000, among Bargo
Energy Company, Energy Capital Investment Company PLC, EnCap
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., and SGC Partners II LLC. (Incorporated by
reference from Exhibit 10.1 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
10.2 First Amendment to Second Amended and Restated Shareholders'
Agreement, dated March 31, 2000, among Bargo Energy Company,
B. Carl Price, Don Wm. Reynolds, Energy Capital Investment
Company PLC, EnCap Equity 1994 Limited Partnership, BER
Partnership L.P., TJG Investments, Inc., BEC Partnership,
BOC Operating Corporation, Inc., Tim J. Goff, Thomas Barrow,
James E. Sowell, EnCap Energy Capital Fund III-B, L.P., BOCP
Energy Partners, L.P., EnCap Energy Capital Fund III, L.P.,
Kayne Anderson Energy Fund, L.P., BancAmerica Capital
Investors SBIC I, L.P., Eos Partners, L.P., Eos Partners
SBIC, L.P., Eos Partners SBIC II, L.P., and SGC Partners II
LLC. (Incorporated by reference from Exhibit 10.2 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
10.3 Third Amendment to Registration Rights Agreement dated March
31, 2000 among Energy Capital Investment Company PLC, EnCap
Equity 1994 Limited Partnership, EnCap Energy Capital Fund
III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy
Capital Fund III, L.P., Kayne Anderson Energy Fund, L.P.,
BancAmerica Capital Investors SBIC I, L.P., Eos Partners,
L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P.,
and SGC Partners II LLC. (Incorporated by reference from
Exhibit 10.3 to the Company's Current Report on Form 8-K
dated March 31, 2000, filed with the Securities and Exchange
Commission on April 17, 2000)
10.4 First Amendment to Stock Purchase Agreement dated March 31,
2000, among Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., and SGC Partners II LLC and Bargo Energy Company.
(Incorporated by reference from Exhibit 10.4 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
10.5 Assignment, Acknowledgment, Consent and Waiver dated March
31, 2000, among Bargo Energy Company, Energy Capital
Investment Company PLC, EnCap Energy Capital Fund III-B,
L.P., BOCP Energy
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne
Anderson Energy Fund, L.P., BancAmerica Capital Investors
SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P.,
Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase
Bank of Texas, National Association. (Incorporated by
reference from Exhibit 10.5 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
10.6 Escrow Agreement dated March 31, 2000, among Bargo Energy
Company, Energy Capital Investment Company PLC, EnCap Energy
Capital Fund III-B, L.P., EnCap Equity 1994, L.P., BOCP
Energy
Partners, L.P., EnCap Energy Capital Fund III, L.P., Kayne
Anderson Energy Fund, L.P., BancAmerica Capital Investors
SBIC I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P.,
Eos Partners SBIC II, L.P., SGC Partners II LLC, and Chase
Bank of Texas, National Association. (Incorporated by
reference from Exhibit 10.6 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
10.7 Acknowledgment and Consent dated March 31, 2000, among Bargo
Energy Company, Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., and SGC Capital Partners II LLC. (Incorporated by
reference from Exhibit 10.7 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
10.8 Indemnification Agreement dated March 31, 2000, among Bargo
Energy Company, Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P.,
EnCap Energy Capital Fund III, L.P., Kayne Anderson Energy
Fund, L.P., BancAmerica Capital Investors SBIC I, L.P., Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC
II, L.P., SGC Partners II LLC, and Bankers Trust Company.
(Incorporated by reference from Exhibit 10.8 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
10.9 Consent to Amendment to Registration Rights Agreement by TJG
Investments, Inc., BEC Partnership, BER Partnership, L.P.,
BOC Operating Corporation, Tim J. Goff, Thomas Barrow, James
E. Sowell, B. Carl Price, Don Wm. Reynolds, Christie Price,
Robert Price and Charles D. Laudeman. (Incorporated by
reference from Exhibit 10.9 to the Company's Current Report
on Form 8-K dated March 31, 2000, filed with the Securities
and Exchange Commission on April 17, 2000)
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
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<S> <C>
10.10 Credit Agreement dated March 31, 2000, among Bargo Energy
Company, Chase Bank of Texas National Association, as
administrative agent, Bankers Trust Company, as syndication
agent and the other agents and lenders signatory thereto.
(Incorporated by reference from Exhibit 10.10 to the
Company's Current Report on Form 8-K dated March 31, 2000,
filed with the Securities and Exchange Commission on April
17, 2000)
11. Statement regarding computation of per share earnings (1)
15. Letter on unaudited interim financial information (1)
18. Letter on change in accounting principles (1)
21. Subsidiaries of the Registrant (2)
22. Published report regarding matters submitted to vote (1)
23. Consents of experts and counsel (1)
24. Power of attorney (1)
27. Financial data schedule (2)
99. Additional exhibits (1)
</TABLE>
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(1) Inapplicable to this filing.
(2) Included herewith.
* Confidential treatment has been requested.
