SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO REPORT
Filed Pursuant to Section 12, 13, or 15(d) of
The Securities Exchange Act of 1934
MAYNARD OIL COMPANY
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
AMENDMENT NO. 1
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8- K dated
November 23, 1999, as set forth in the pages attached hereto:
<PAGE>
INFORMATION TO BE INCLUDED
IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
------------------------------------
Pursuant to Instruction 6 (ii) of this item, financial
statements for the properties acquired and pro forma financial information has
been attached hereto as set forth in newly added Item 7 below.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements of business acquired
(1) Report of Independent Accountants
(2) Historical Financial Summaries of The
Interests in the Oil and Gas Revenues and
Direct Operating Expenses of the Properties
Acquired by Maynard Oil Company from Questar
Exploration and Production Company for the
two years ended December 31, 1998 and 1997
and the nine months ended September 30, 1999
and 1998 (Unaudited).
(3) Notes to Historical Financial Summaries of
The Interests in the Oil and Gas Revenues
and Direct Operating Expenses of the
Properties Acquired by Maynard Oil Company
from Questar Exploration and Production
Company for the years ended December 31,
1998 and 1997 and the nine months ended
September 30, 1999 and 1998.
(4) Supplementary Oil and Gas Information
(Unaudited)
(b) Pro Forma Financial Information.
(1) Pro Forma Condensed Consolidated Statement
of Operations (Unaudited) Nine Months Ended
September 30, 1999.
(2) Pro Forma Condensed Consolidated Balance
Sheet (Unaudited) September 30, 1999.
(3) Pro Forma Condensed Consolidated Statement
of Operations (Unaudited) Year Ended
December 31, 1998.
2
<PAGE>
(4) Pro Forma Condensed Consolidated Statement
of Operations (Unaudited) Year Ended
December 31, 1997.
(5) Notes to Pro Forma Condensed Consolidated
Financial Statements (Unaudited)
(6) Supplementary Oil and Gas Information
(Unaudited)
3
<PAGE>
Item 7(a), Financial Statements of Business Acquired.
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Accountants 5
Historical Financial Summaries of The Interests in the
Oil and Gas Revenues and Direct Operating Expenses of
the Properties Acquired by Maynard Oil Company from
Questar Exploration and Production Company for the
two years ended December 31, 1998 and 1997 and the nine
months ended September 30, 1999 and 1998 (Unaudited). 6
Notes to Historical Financial Summaries of The Interests
in the Oil and Gas Revenues and Direct Operating Expenses
of the Properties Acquired by Maynard Oil Company from Questar
Exploration and Production Company for the two years
ended December 31, 1998 and 1997 and the nine months
ended September 30, 1999 and 1998. 7
Supplementary Oil and Gas Information (Unaudited) 9
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Maynard Oil Company:
We have audited the accompanying historical financial summaries of the interests
in oil and gas revenues and direct operating expenses of the properties acquired
by Maynard Oil Company ("Maynard") from Questar Exploration and Production
Company, for the nine month period ended September 30, 1999 and for the years
ended December 31, 1998 and 1997. These financial statements are the
responsibility of Maynard's management. Our responsibility is to express an
opinion on these financial 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 financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
The accompanying historical financial summaries of the interests in oil and gas
revenues and direct operating expenses of the properties acquired by Maynard
from Questar Exploration and Production Company reflect the revenues and direct
operating expenses attributable to the properties, and are not intended to be a
complete presentation of the revenues and expenses of such properties.
In our opinion, the statements referred to above present fairly, in all material
respects, the oil and gas revenues and direct operating expenses of the
properties for the nine months ended September 30, 1999 and for the years ended
December 31, 1998 and 1997, in conformity with accounting principles generally
accepted in the United States.
Dallas, Texas
January 25, 2000
5
<PAGE>
<TABLE>
HISTORICAL FINANCIAL SUMMARIES OF THE INTERESTS IN THE
OIL AND GAS REVENUES AND DIRECT OPERATING EXPENSES OF THE PROPERTIES
ACQUIRED BY MAYNARD OIL COMPANY FROM QUESTAR EXPLORATION AND PRODUCTION COMPANY
<CAPTION>
Nine Months
Ended Years Ended
September 30, December 31,
-------------- ------------
1999 1998 1998 1997
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Oil and gas revenues $ 5,334,430 $5,453,161 $ 6,843,515 $11,405,912
Direct operating expenses 2,279,673 3,052,070 4,071,471 4,822,121
---------- --------- ---------- ----------
Revenues in excess of
direct operating expenses $ 3,054,757 $2,401,091 $ 2,772,044 $ 6,583,791
========== ========= ========== ==========
The accompanying notes are an integral part of the historical financial
summaries.
</TABLE>
6
<PAGE>
NOTES TO THE HISTORICAL FINANCIAL SUMMARIES OF THE INTERESTS
IN THE OIL AND GAS REVENUES AND DIRECT OPERATING EXPENSES OF THE
PROPERTIES ACQUIRED BY MAYNARD OIL COMPANY FROM
QUESTAR EXPLORATION AND PRODUCTION COMPANY
1. BASIS OF PRESENTATION
The accompanying Historical Financial Summaries represent the
interests in the oil and gas revenues and direct operating
expenses of the oil and gas producing properties acquired by
Maynard Oil Company ("Maynard" or the "Company") from Questar
Exploration and Production Company ("Questar") effective November
1, 1999 for cash consideration of $32 million (closing occurred on
November 12, 1999). The majority of properties acquired were
operated by Questar and will be operated by Maynard and are
located in the Permian Basin in southeastern New Mexico and West
Texas.
The oil and gas properties acquired were never operated as a
separate division by Questar and, accordingly, full separate,
historical financial statements prepared in accordance with
generally accepted accounting principles (GAAP) do not exist. A
practicable determination of the historical general and
administrative expenses and other indirect expenses which were
attributable to the properties acquired would not be possible or
indicative of the level of such expenses to be incurred by
Maynard. Likewise, the depreciation and any impairment charges of
Questar associated with the acquired properties would be based
upon Questar's historical costs and are not relevant to the
ongoing financial reporting of Maynard, or related investor
decisions, since the properties will be reviewed for impairment
and depreciated over future periods based upon Maynard's
acquisition costs. The presentation herein of historical financial
statements reflecting financial position, results of operations
and cash flows required by GAAP was not practicable in these
circumstances. Accordingly, the Historical Financial Summaries are
presented in lieu of the financial statements required under Rule
3-05 of Securities and Exchange Commission Regulation S-X.
The oil and gas revenues and direct operating expenses shown in
the Historical Financial Summaries may not be representative of
future operations.
7
<PAGE>
2. OIL AND GAS REVENUES
Oil and gas revenues have been based on realizations at the
point of sale using historical oil and gas prices and the
revenue and working interests purchased by the Company. There
were no sales to affiliated parties.
3. DIRECT OPERATING EXPENSES
Direct operating expenses include those costs incurred by Questar
with respect to production up to the point of sale, including
electricity, fuel, transportation costs, chemicals, other
materials and supplies, and the labor and associated costs of
employees working directly on these properties. These expenses
exclude depreciation and amortization of production facilities and
the estimated cost of abandonment of these facilities.
8
<PAGE>
SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited)
Estimated Net Quantities of Proved Developed and Undeveloped Oil and
Gas Reserves
Proved reserves are estimated quantities of crude oil and natural gas
which geological and engineering data demonstrate with reasonable certainty to
be recoverable in future years from known reservoirs under existing economic and
operating conditions. Proved developed reserves are proved reserves that can be
expected to be recovered through existing wells with existing equipment and
operating methods.
The following table presents the estimated net proved oil and gas
reserves, estimated by Maynard, attributable to the properties at November 1,
1999.
Proved Reserves
- ---------------
Crude Oil, Condensate and
Natural Gas Liquids
(Barrels) 4,276,878
==========
Natural Gas
(Thousands of Cubic Feet) (MCF) 11,533,302
==========
Production volumes for prior periods were added back to the above referenced
reserve amounts to arrive at reserve totals at December 31, 1998, and 1997,
respectively. There were no "new discovery" quantities considered for the
referenced disclosure.
Oil Gas
(Barrels) (MCF)
--------- -----
Total as of November 1, 1999 4,276,878 11,533,302
1999 Production (10 months) 288,568 826,506
Totals as of December 31, 1998 4,565,446 12,359,808
1998 Production 405,544 1,174,502
Totals as of December 31, 1997 4,970,990 13,534,310
1997 Production 467,225 1,288,857
Totals as of December 31, 1996 5,438,215 14,823,167
9
<PAGE>
SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited)
(continued)
Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Reserves
The following table sets forth the computation of the standardized
measure of discounted future net cash flows relating to proved reserves
attributable to the acquired properties, estimated by Maynard as of November 1,
1999. Future cash inflows represent expected revenues from production of proved
reserves based on November 1, 1999 prices and any fixed and determinable price
adjustments provided by contractual arrangements in existence at that date.
Escalation based on inflation and supply and demand are not considered.
Estimated future production and development costs related to future production
of proved reserves are based on November 1, 1999 costs. Future income tax
estimates are included based on tax rates currently in effect. A discount rate
of 10% is applied to the annual future net cash flows.
The methodology and assumptions used in calculating the standardized
measure are those required by Statement of Financial Accounting Standards No.
69. This data is not intended to be representative of the fair market value of
the properties' proved reserves. The valuation of revenues and costs do not
necessarily reflect the amounts to be received or expended. In addition to the
valuations used, numerous other factors are considered in evaluating known and
prospective oil and gas reserves.
As of
November 1,
1999
-------------
(000's)
Future cash inflows $109,294
Future production costs (43,718)
Future development costs (6,839)
Future income tax expense (6,759)
-------
Future net cash flows 51,978
Discount at 10 percent (20,178)
Standardized measure of
discounted future net cash
flows from estimated
production of proved oil
and gas reserves after
income taxes $ 31,800
=======
10
<PAGE>
MAYNARD OIL COMPANY
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Effective November 1, 1999, the Company purchased interests in
approximately 170 producing oil and gas properties located in the Permian Basin
in Southeastern New Mexico and West Texas from Questar Exploration and
Production Company for cash consideration of $32 million. This acquisition was
closed November 12, 1999.
The unaudited pro forma condensed consolidated balance sheet of Maynard
Oil Company and Subsidiary has been prepared as if the acquisition of these
assets occurred on September 30, 1999. The unaudited pro forma consolidated
statements of operations for the nine months ended September 30, 1999 and for
the years ended December 31, 1998 and 1997 have been prepared as if the
acquisition occurred at the beginning of the respective periods. The
consolidated pro forma information should be read in conjunction with the notes
thereto. Such pro forma information is not necessarily indicative of the results
which would have actually occurred had the transactions been in effect on the
dates or for the periods indicated or which may occur in the future.
11
<PAGE>
Item 7(b), Pro Forma Financial Information
INDEX TO PRO FORMA FINANCIAL INFORMATION
Page
----
Pro Forma Condensed Consolidated Statement of Operations
(Unaudited) for the Nine Months Ended September 30, 1999 13
Pro Forma Condensed Consolidated Balance Sheet(Unaudited)
September 30, 1999 14
Pro Forma Condensed Consolidated Statement of Operations
(Unaudited) for the Year Ended December 31, 1998 15
Pro Forma Condensed Consolidated Statement of Operations
(Unaudited) for the Year Ended December 31, 1997 16
Notes to Pro Forma Condensed Consolidated
Financial Statements (Unaudited) 17
Supplementary Pro Forma Oil and Gas Information
(Unaudited) 18
12
<PAGE>
<TABLE>
MAYNARD OIL COMPANY
Pro Forma Condensed Consolidated Statements of Operations (Unaudited)
For the Nine Months Ended September 30, 1999
<CAPTION>
Questar
Property
Maynard Acquisition
Historical Historical Pro Forma Pro Forma
Amounts Amounts Adjustments Amounts
------- ------- ----------- -------
(Thousands of Dollars, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales and royalties $ 14,519 $ 5,334 $ -- $ 19,853
Interest and other 662 -- -- 662
Gain on disposition of assets 303 -- -- 303
--------- --------- -------- --------
15,484 5,334 -- 20,818
--------- --------- -------- --------
Costs and expenses:
Operating expenses 6,004 2,280 603 (a) 8,887
Exploration, dry holes
and abandonments 487 -- -- 487
General and administrative, net 846 -- (479) (a) 367
Depreciation and amortization 4,618 -- 1,877 (b) (b) 6,495
Interest and other 456 -- 1,621 (c) 2,077
--------- --------- ------- ---------
12,411 2,280 3,622 18,313
--------- --------- ------ ---------
Income before income taxes 3,073 3,054 (3,622) 2,505
Income tax expense (benefit) 840 -- (193) (d) 647
--------- --------- ------- ---------
Net income (loss) $ 2,233 $ 3,054 $ (3,429) $ 1,858
========= ========= ======= =========
Weighted average number of common
shares outstanding 4,883,664 4,883,664
========= =========
Net income per common share:
(Basic and diluted) $0.46 $0.38
==== ====
See Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
13
<PAGE>
<TABLE>
MAYNARD OIL COMPANY
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1999
(Unaudited)
<CAPTION>
Historical Pro Forma Pro Forma
Amounts Adjustments(e) Amounts
------- -------------- -------
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 12,125 $ (300) $ 11,825
Accounts receivable and other
current assets 5,397 -- 5,397
--------- --------- ---------
Total current assets 17,522 (300) 17,222
--------- --------- ---------
Property and equipment, at cost
Oil and gas properties 119,380 32,300 151,680
Other property 460 -- 460
--------- --------- ---------
119,840 32,300 152,140
Less accumulated depreciation
and depletion (77,436) -- (77,436)
--------- --------- ---------
Net property and equipment 42,404 32,300 74,704
--------- --------- ---------
Deferred income taxes 381 -- 381
--------- --------- ---------
$ 60,307 $ 32,000 $ 92,307
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion, long-term debt $ 5,000 75 5,075
Accounts payable, accrued expenses
and other current liabilities 4,938 -- 4,938
--------- --------- ---------
9,938 75 10,013
--------- --------- ---------
Long-term debt 2,500 31,925 34,425
Shareholders' equity
Common stock 489 -- 489
Additional paid-in capital 18,831 -- 18,831
Retained earnings 28,549 -- 28,549
--------- --------- ---------
Total shareholders' equity 47,869 -- 47,869
--------- --------- ---------
$ 60,307 $ 32,000 $ 92,307
========= ========= =========
See Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
14
<PAGE>
<TABLE>
MAYNARD OIL COMPANY
Pro Forma Condensed Consolidated Statements of Operations (Unaudited)
For the Twelve Months Ended December 31, 1998
<CAPTION>
Questar
Property
Maynard Acquisition
Historical Historical Pro Forma Pro Forma
Amounts Amounts Adjustments Amounts
------- ------- ----------- -------
(Thousands of Dollars, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales and royalties $ 16,166 $ 6,843 $ -- $ 23,009
Interest and other 1,330 -- -- 1,330
Gain on disposition of assets 6 -- -- 6
--------- --------- -------- --------
17,502 6,843 -- 24,345
--------- --------- -------- --------
Costs and expenses:
Operating expenses 8,722 4,071 804 (a) 13,597
Exploration, dry holes
and abandonments 392 -- -- 392
General and administrative, net 674 -- (638) (a) 36
Depreciation and amortization 9,845 -- 2,687 (b) 12,532
Impairment of oil & gas properties 8,755 -- -- 8,755
Interest and other 1,011 -- 2,125 (f) 3,136
--------- --------- ------- ---------
29,399 4,071 4,978 38,448
--------- --------- ------ ---------
Income (loss) before income taxes (11,897) 2,772 (4,978) (14,103)
Income tax (benefit) (4,082) -- (750) (g) (4,832)
--------- --------- ------- ---------
Net income (loss) $ (7,815) $ 2,772 $ (4,228) (d) $ (9,271)
========= ========= ======= =========
Weighted average number of common
shares outstanding 4,887,882 4,887,882
========= =========
Net income (loss) per common share
(Basic and diluted) ($1.60) ($1.90)
==== ====
See Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
15
<PAGE>
<TABLE>
MAYNARD OIL COMPANY
Pro Forma Condensed Consolidated Statements of Operations (Unaudited)
For the Twelve Months Ended December 31, 1997
<CAPTION>
Questar
Property
Maynard Acquisition
Historical Historical Pro Forma Pro Forma
Amounts Amounts Adjustments Amounts
------- ------- ----------- -------
(Thousands of Dollars, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales and royalties $ 26,477 $ 11,406 $ -- $ 37,883
Interest and other 1,230 -- -- 1,230
Gain on disposition of assets 192 -- -- 192
--------- --------- -------- --------
27,899 11,406 -- 39,305
--------- --------- -------- --------
Costs and expenses:
Operating expenses 10,124 4,822 804 (a) 15,750
Exploration, dry holes
and abandonments 839 -- -- 839
General and administrative, net 563 -- (638) (a) (75)
Depreciation and amortization 8,291 -- 2,784 (b) 11,075
Interest and other 1,469 -- 2,397 (f) 3,866
--------- --------- ------- ---------
21,286 4,822 5,347 31,455
--------- --------- ------- ---------
Income before income taxes 6,613 6,584 (5,347) 7,850
Income tax expense 2,158 -- 421 (d) 2,579
--------- --------- ------- ---------
Net income $ 4,455 $ 6,584 $ (5,768) $ 5,271
========= ========= ======= =========
Weighted average number of common
shares outstanding 4,889,450 4,889,450
========= =========
Net income per common share:
(Basic and diluted) $0.91 $1.08
==== ====
See Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
16
<PAGE>
MAYNARD OIL COMPANY
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(a) Recognize additional corporate overhead incurred as a result of the
acquisition, net of overhead charges billed to working interest owners,
including the Company. The Company's working interest portion of the
overhead charges are included in operating expenses. See Note 1,
"Overhead Reimbursement Fees", to the Company's Consolidated Financial
Statements included in Maynard's 1998 Annual Report and Form 10-K.
(b) Depreciation, depletion, and amortization of the Questar Properties
determined by using the unit-of-production method.
(c) Recognize interest expense associated with the borrowings incurred to
fund the acquisition at an annual rate of 6.75 percent, which would
have been incurred if the Questar acquisition had occurred on January
1, 1999.
(d) Record the tax effect, at 34 percent for U.S. Federal income taxes, of
the pro forma adjustments and net income from the Questar properties
for the nine months ended September 30, 1999 and the two years ended
December 31, 1998.
(e) Record the adjusted purchase price as an increase of $32,300,000 to Oil
and Gas Properties consisting of $32,000,000 cash for the properties
and $300,000 of additional expenses incurred to close the purchase. The
$32,000,000 was funded by bank financing which was added to the
Company's existing debt. The revised loan agreement provides for
repayment of the loan over a five year period beginning April 1, 2000.
(f) Recognize interest expense associated with the borrowings incurred to
fund the acquisition at an annual rate of 6.64 and 7.49 percent,
respectively, which would have been incurred if the Questar acquisition
had occurred on January 1, 1998 and 1997.
17
<PAGE>
SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited)
Estimated Net Quantities of Proved Reserves
Proved reserves are estimated quantities of crude oil and natural gas which
geological and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing economic and
operating conditions.
The following pro forma historical data as of December 31, 1998 gives
effect to the acquisition of the Questar Properties.
<TABLE>
Questar
Properties
Company (Historical) Pro Forma
------- ------------ ---------
Proved Reserves
- ---------------
<S> <C> <C> <C>
Crude Oil, Condensate and
Natural Gas Liquids
(Barrels) 5,019,452 4,565,446 9,584,898
Natural Gas
(Thousands of Cubic
Feet) (MCF) 12,904,100 12,359,808 25,263,908
</TABLE>
18
<PAGE>
SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited)
(continued)
Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Reserves
The following table sets forth the computation of the standardized
measure of discounted future net cash flows relating to proved reserves,
estimated by the Company as of December 31, 1998. Future cash inflows represent
expected revenues from production of proved reserves based on December 31, 1998
prices and any fixed and determinable future escalation provided by contractual
arrangements in existence at that date. Escalation based on inflation and supply
and demand are not considered. Estimated future production and development costs
related to future production of proved reserves are based on December 31, 1998
costs. Future income tax estimates are included based on tax rates currently in
effect. A discount rate of 10% is applied to the annual future net cash flows.
The methodology and assumptions used in calculating the standardized
measure are those required by Statement of Financial Accounting Standards No.
69. This data is not intended to be representative of the fair market value of
the properties' proved reserves. The valuation of revenues and costs do not
necessarily reflect the amounts to be received or expended. In addition to the
valuations used, numerous other factors are considered in evaluating known and
prospective oil and gas reserves.
Standardized measure (in thousands of dollars):
<TABLE>
Questar
Company Properties Pro Forma
------- ---------- ---------
<S> <C> <C> <C>
Future cash inflows $ 74,282 $ 62,282 $ 136,564
Future production costs (38,158) (36,747) (74,905)
Future development costs (773) (6,839) (7,612)
--------- --------- ---------
Future net cash flows 35,351 18,696 54,047
Future income tax benefit 487 4,625 5,112
--------- --------- ---------
35,838 23,321 59,159
Discount at 10 percent (11,348) (7,463) (18,811)
--------- --------- ---------
Standardized measure of
discounted future net
cash flows from estimated
production of proved oil
and gas reserves after
income taxes $ 24,490 $ 15,858 $ 40,348
========= ========= =========
</TABLE>
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MAYNARD OIL COMPANY
BY: /s/ Kenneth W. Hatcher
--------------------------
Kenneth W. Hatcher
Vice President of Finance
Dated: January 25, 2000
20
