<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
Form 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 31, 2000
Commission file number 0-8609
Bargo Energy Company
(Exact name of small business issuer as specified in charter)
Texas 87-0239185
(State or other jurisdiction of (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)
Not Applicable
(Former name and former address, if changed since last report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
BARGO ENERGY COMPANY
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
(a) Financial Statements of Business Acquired
Report of Independent Public Accountants F-2
Historical Summaries of Revenues and Direct Operating Expenses F-3
Notes to Historical Summaries and Direct Operating Expenses F-4
(b) Pro Forma Financial Information
Unaudited Pro Forma Financial Information PF-1
Notes to Unaudited Pro Forma Financial Information PF-4
</TABLE>
(c) Exhibits
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 of Form 8-K 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 of Form 8-K 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 of Form 8-K filed with the Securities and
Exchange Commission on April 17, 2000). *
* Confidential treatment has been requested.
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Bargo Energy Company:
We have audited the accompanying statements of combined revenues and direct
operating expenses of the oil and gas properties purchased by Bargo Energy
Company from Texaco Exploration and Production Inc., Four Star Oil and Gas
Company and McFarland Energy, Inc. (collectively, Texaco), for the years ended
December 31, 1999 and 1998. These statements are the responsibility of Texaco's
management. Our responsibility is to express an opinion on these statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying statements were prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission for inclusion in
Bargo Energy Company's Form 8-K and are not intended to be a complete financial
presentation of the properties described above.
In our opinion, the statements referred to above present fairly, in all material
respects, the combined revenues and direct operating expenses of the oil and gas
properties purchased by Bargo Energy Company from Texaco for the years ended
December 31, 1999 and 1998, in conformity with accounting principles generally
accepted in the United States.
ARTHUR ANDERSEN LLP
Houston, Texas
April 28, 2000
F-2
<PAGE> 4
BARGO ENERGY COMPANY
STATEMENTS OF COMBINED REVENUES
AND DIRECT OPERATING EXPENSES
OF THE OIL AND GAS PROPERTIES
PURCHASED BY BARGO ENERGY COMPANY FROM TEXACO
(In Thousands)
<TABLE>
<CAPTION>
Three Months Year Ended
Ended March 31 December 31
------------------- -------------------
2000 1999 1999 1998
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES $ 23,950 $ 12,677 $ 70,213 $ 64,090
DIRECT OPERATING EXPENSES 7,865 7,953 31,479 38,397
-------- -------- -------- --------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 16,085 $ 4,724 $ 38,734 $ 25,693
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 5
BARGO ENERGY COMPANY
NOTES TO STATEMENTS OF COMBINED REVENUES
AND DIRECT OPERATING EXPENSES
OF THE OIL AND GAS PROPERTIES
PURCHASED BY BARGO ENERGY COMPANY FROM TEXACO
1. THE PROPERTIES:
On February 22, 2000, Bargo Energy Company (Bargo) entered into an agreement
with Texaco Exploration and Production Inc., Four Star Oil and Gas Company and
McFarland Energy, Inc. (collectively, Texaco), to purchase Texaco's interests in
certain oil and gas properties located in the Permian Basin, East Texas,
Oklahoma and Kansas (the Acquired Properties) for $161.1 million, before closing
adjustments. The effective date of the agreement is January 1, 2000. The
transaction closed on March 31, 2000.
2. BASIS FOR PRESENTATION:
The accompanying statements were prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission for inclusion in
Bargo Energy Company's Form 8-K and are not intended to be a complete financial
presentation of the properties described above.
The revenues and direct operating expenses associated with the Acquired
Properties were derived from Texaco's accounting records and are presented on
the accrual basis of accounting. Revenues and direct operating expenses, as set
forth in the accompanying statements, include oil, gas and plant product
revenues and associated direct operating expenses related to the net revenues
and net working interests, respectively, in the Acquired Properties. The
statements include oil, gas and plant product revenues, net of royalties. Direct
operating expenses include labor, services, repairs and maintenance, and
supplies utilized to operate and maintain the wells and related equipment as
well as severance and ad valorem taxes.
The accompanying statements do not represent a complete income statement in that
they do not show certain expenses, which were incurred in connection with the
ownership of the Acquired Properties, such as general and administrative
expenses and income taxes. These costs were not separately allocated to the
Acquired Properties in Texaco's accounting records, and any pro forma allocation
would be both impractical and would not be a reliable estimate of what these
costs would actually have been had the Acquired Properties been operated
historically as a stand-alone entity. In addition, these allocations, if made
using Texaco's general and administrative structures and tax burdens, would not
produce allocations that would be indicative of the performance of the Acquired
Properties had they been assets of Bargo due to the greatly varying size,
structure and operations of the two companies.
The accompanying statements also do not include Texaco's provisions for
depreciation, depletion and amortization, as such amounts would not be
indicative of those costs that would be incurred by Bargo upon allocation of the
purchase price.
F-4
<PAGE> 6
The interim revenues and direct operating expenses for the three months ended
March 31, 2000 and 1999, is unaudited; however, in the opinion of Texaco
management, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the revenues and direct
operating expenses for the interim periods.
3. COMMITMENTS AND CONTINGENCIES:
Pursuant to the terms of the purchase and sale agreement between Bargo and
Texaco, any claims, litigation or disputes pending as of January 1, 2000, or any
matters arising in connection with ownership of the properties prior to January
1, 2000, are retained by Texaco. Notwithstanding this indemnification, Texaco is
not aware of any legal, environmental or other commitments or contingencies that
would have a material effect on the statements of combined revenues and direct
operating expenses.
F-5
<PAGE> 7
BARGO ENERGY COMPANY
SUPPLEMENTAL OIL AND GAS INFORMATION
(Unaudited)
1. OIL AND GAS RESERVE INFORMATION:
Proved oil and gas reserve quantities are based on estimates prepared by
Texaco's engineers and from information provided by Texaco in accordance with
guidelines established by the Securities and Exchange Commission (SEC).
There are numerous uncertainties inherent in estimating quantities of proved
reserves and projecting future rates of production and timing of development
expenditures. The following reserve data represent estimates only and should not
be construed as being exact.
<TABLE>
<CAPTION>
Oil Gas
(Mbbls) (Mmcf)
---------- ----------
<S> <C> <C>
Proved reserves at December 31, 1997 51,949 40,181
Production (4,639) (4,987)
Extensions, discoveries and improved recovery 2,461 5,508
Revisions of previous estimates (701) 1,578
Net purchases 55 226
---------- ----------
Proved reserves at December 31, 1998 49,125 42,506
Production (3,942) (4,072)
Extensions, discoveries and improved recovery 6,032 2,804
Revisions of previous estimates (3,669) (3,993)
Net purchases 21 --
---------- ----------
Proved reserves at December 31, 1999 47,567 37,245
========== ==========
Proved developed reserves at-
December 31, 1997 47,493 37,067
December 31, 1998 44,488 36,855
December 31, 1999 39,884 33,372
</TABLE>
2. FUTURE NET CASH FLOWS:
Future cash inflows are based on year-end oil and gas prices except in those
instances where future natural gas or oil sales are covered by physical or
derivative contract terms providing for higher or lower amounts. Operating
costs, production and ad valorem taxes and future development costs are based on
current costs with no escalation.
F-6
<PAGE> 8
The following table sets forth unaudited information concerning future net cash
flows for oil and gas reserves. This information does not purport to present the
fair market value of Texaco's oil and gas assets, but does present a
standardized disclosure concerning possible future net cash flows that would
result under the assumptions used (in thousands).
<TABLE>
<CAPTION>
December 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Future cash inflows $ 1,160,342 $ 578,081
Future production costs (361,052) (390,470)
Future development costs (38,554) (30,662)
----------- -----------
Net cash flows 760,736 156,949
Less- 10% discount rate (365,970) (73,869)
----------- -----------
Discounted future net cash flows (before income taxes) $ 394,766 $ 83,080
=========== ===========
</TABLE>
The following table sets forth the principal sources of change in discounted
future net cash flows (in thousands).
<TABLE>
<CAPTION>
Year Ended
December 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Beginning of year $ 83,080 $ 257,808
Sales, net of production costs (38,734) (25,693)
Net change in prices and production costs 338,574 (173,790)
Extensions, discoveries and improved recovery, net of related costs 38,080 2,380
Development costs incurred during the year 5,121 14,657
Accretion of discount 8,308 25,783
Purchases of minerals in place 178 338
Revision of quantity estimates (34,231) (3,841)
Change in production rates (timing) and other (5,610) (14,562)
----------- -----------
End of year $ 394,766 $ 83,080
=========== ===========
</TABLE>
F-7
<PAGE> 9
BARGO ENERGY COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
The following unaudited pro forma combined statements of operations for the
years ended December 31, 1999 and 1998 reflect the acquisition of the Texaco
Properties by Bargo Energy Company that occurred on March 31, 2000 as if the
acquisition occurred at the beginning of the respective periods. The pro forma
statements of operations combine the operating results of Bargo for the years
ended December 31, 1999 and 1998 with the historical summaries of revenues and
direct operating expenses of the Texaco Properties for the same periods.
The pro forma statements of operations also reflect the following transactions:
(1) the acquisitions of the South Coles Levee Unit (SCLU) in August 1998; (2)
the acquisition of several properties in October 1998 (the 10/15/98
acquisition); (3) the acquisition of the Cody Properties (Cody) in November and
December 1998; and (4) the acquisition of the East Texas Properties (East Texas)
in September 1999. These items are reflected in the pro forma statements of
operations as if they had occurred at the beginning of the respective periods.
These unaudited pro forma financial statements should be read in conjunction
with the historical summaries of revenues and operating expenses of the Texaco
properties included herein and with the historical financial statements of Bargo
as filed in its periodic reports with the Securities and Exchange Commission.
These unaudited pro forma financial statements should not be construed to be
indicative of future results or results that actually would have occurred if the
transactions had occurred at the dates presented.
PF-1
<PAGE> 10
BARGO ENERGY COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(amounts in thousands, except per share amount)
<TABLE>
<CAPTION>
Proforma Adjustments
Bargo Actual East Texas Proforma
1999 Texaco Properties Other 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Income:
Oil and gas sales (1) $ 19,134 $ 70,213 $ 11,110 $ -- $ 100,457
----------- ----------- ----------- ----------- -----------
$ 19,134 $ 70,213 $ 11,110 $ -- $ 100,457
----------- ----------- ----------- ----------- -----------
Expenses:
Lease operating expenses/production taxes (1) $ 7,685 $ 31,479 $ 5,790 $ -- $ 44,954
Depreciation, depletion and amortization (3) $ 4,898 $ -- $ 18,723 $ 23,621
General and administrative (2) $ 3,659 $ -- $ 3,272 $ 6,931
----------- ----------- ----------- ----------- -----------
$ 16,242 $ 31,479 $ 5,790 $ 21,995 $ 75,506
----------- ----------- ----------- ----------- -----------
$ 2,892 $ 38,734 $ 5,320 $ (21,995) $ 24,952
----------- ----------- ----------- ----------- -----------
Other (income) and expense:
Interest expense(4) $ 2,378 $ -- $ -- $ 16,080 $ 18,458
Other income $ (8) $ -- $ -- $ -- $ (8)
----------- ----------- ----------- ----------- -----------
$ 2,370 $ -- $ -- $ 16,080 $ 18,450
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes $ 522 $ 38,734 $ 5,320 $ (38,075) $ 6,502
Income tax benefit/(expense) (5) $ 141 $ -- $ -- $ (2,611) $ (2,470)
----------- ----------- ----------- ----------- -----------
Net income (loss) before redeemable preferred
stock dividends $ 663 $ 38,734 $ 5,320 $ (40,686) $ 4,032
Redeemable preferred stock dividends $ 3,473 $ -- $ -- $ -- $ 3,473
----------- ----------- ----------- ----------- -----------
Net income/(loss) allocable to common
Shareholders $ (2,810) $ 38,734 $ 5,320 $ (40,686) $ 559
=========== =========== =========== =========== ===========
Net income (loss) per common share - basic
and diluted $ (0.04) $ 0.01
Weighted average common shares outstanding $ 75,942 $ 75,942
</TABLE>
PF-2
<PAGE> 11
BARGO ENERGY COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(amounts in thousands, except per share amount)
<TABLE>
<CAPTION>
Proforma Adjustments
Bargo
Actual East Texas
1998 Texaco Properties 10/15/98 Acq
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Oil and gas sales (1) $ 3,663 $ 64,090 $ 18,549 $ 4,105
Other $ 16 $ -- $ -- $ --
---------- ---------- ---------- ----------
$ 3,679 $ 64,090 $ 18,549 $ 4,105
---------- ---------- ---------- ----------
Expenses:
Lease operating expenses/production taxes (1) $ 1,826 $ 38,397 $ 8,522 $ 1,366
Depreciation, depletion and amortization (3) $ 1,316 $ -- $ -- $ --
General and administrative (2) $ 783 $ -- $ -- $ --
---------- ---------- ---------- ----------
$ 3,925 $ 38,397 $ 8,522 $ 1,366
---------- ---------- ---------- ----------
Operating income/(loss) $ (246) $ 25,693 $ 10,027 $ 2,739
---------- ---------- ---------- ----------
Other (income) and expense:
Interest expense (4) $ 1,238 $ -- $ -- $ --
Other income $ (19) $ -- $ -- $ --
---------- ---------- ---------- ----------
$ 1,219 $ -- $ -- $ --
---------- ---------- ---------- ----------
Income (loss) before income taxes
and extraordinary item $ (1,465) $ 25,693 $ 10,027 $ 2,739
Income Tax Benefit/(Expense) (5) $ 287 $ -- $ -- $ --
---------- ---------- ---------- ----------
Income/(loss) before extraordinary item $ (1,178) $ 25,693 $ 10,027 $ 2,739
Extraordinary gain on conversion of debt $ 2,586 $ -- $ -- $ --
---------- ---------- ---------- ----------
Net income/(loss) $ 1,408 $ 25,693 $ 10,027 $ 2,739
========== ========== ========== ==========
Net income (loss) per common share - basic
and diluted $ 0.14
Weighted average common shares
outstanding 9,924
</TABLE>
<TABLE>
<CAPTION>
Proforma
Cody SCLU Other 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Oil and gas sales (1) $ 2,681 $ 1,645 $ -- $ 94,733
Other $ -- $ -- $ -- $ 16
---------- ---------- ---------- ----------
$ 2,681 $ 1,645 $ -- $ 94,749
---------- ---------- ---------- ----------
Expenses:
Lease operating expenses/production taxes (1) $ 1,011 $ 1,002 $ -- $ 52,124
Depreciation, depletion and amortization (3) $ -- $ -- $ 26,040 $ 27,356
General and administrative (2) $ -- $ -- $ 3,410 $ 4,193
---------- ---------- ---------- ----------
$ 1,011 $ 1,002 $ 29,450 $ 83,673
---------- ---------- ---------- ----------
Operating income/(loss) $ 1,670 $ 643 $ (29,450) $ 11,076
---------- ---------- ---------- ----------
Other (income) and expense:
Interest expense (4) $ -- $ -- $ 18,576 $ 19,814
Other income $ -- $ -- $ -- $ (19)
---------- ---------- ---------- ----------
$ -- $ -- $ 18,576 $ 19,795
---------- ---------- ---------- ----------
Income (loss) before income taxes
and extraordinary item $ 1,670 $ 643 $ (48,026) $ (8,719)
Income Tax Benefit/(Expense) (5) $ -- $ -- $ 3,026 $ 3,313
---------- ---------- ---------- ----------
Income/(loss) before extraordinary item $ 1,670 $ 643 $ (45,000) $ (5,406)
Extraordinary gain on conversion of debt $ -- $ -- $ -- $ 2,586
---------- ---------- ---------- ----------
Net income/(loss) $ 1,670 $ 643 $ (45,000) $ (2,820)
========== ========== ========== ==========
Net income (loss) per common share - basic
and diluted $ (0.28)
Weighted average common shares
outstanding 9,924
</TABLE>
PF-3
<PAGE> 12
BARGO ENERGY COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Pro Forma Statements of Operations
(1) Adjustments to reflect the oil and gas sales and production expenses of
the acquired properties prior to acquisition as if the acquisitions had
all occurred at the beginning of the respective periods.
(2) Adjustment to record estimated additional general and administrative
expense associated with the acquired properties as if they had all been
acquired at the beginning of the respective periods.
(3) Adjustment to record additional depletion and depreciation as if the
properties had all been acquired at the beginning of the respective
periods.
(4) Adjustment to record additional interest expense that would have been
incurred if the properties had all been acquired at the beginning of
the respective periods.
(5) Adjustment to record income tax effect (at statutory rates) as if the
transactions had all occurred at the beginning of the respective
periods.
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 hereunto duly authorized.
Bargo Energy Company
(Registrant)
Dated: May 18, 2000 -------------------------------
By: Kimberly G. Seekely
Vice President - Treasurer
PF-4
