HOWELL CORPORATION
1111 Fannin Street, Suite 1500
Houston, Texas 77002-6923
Stockholders of Howell Corporation:
The Board of Directors at Howell Corporation (the "Company") is
soliciting written consents of the holders of shares of the Company's Common
Stock, par value $1.00 per share (the "Common Stock"), for the following
purposes:
1. to approve the acquisition by the Company of Voyager Energy
Corp., a Texas corporation ("Voyager"), by means of the merger (the "Merger") of
Voyager with Howell Acquisition Corp., a Texas corporation and wholly owned
subsidiary of the Company ("Newco"), pursuant to an Agreement and Plan of Merger
dated as of August 22, 1997 by and among the Company, Newco and Voyager; and
2. to approve an amendment to the Company's Certificate of
Incorporation, as amended, to increase the number of shares of Common Stock
that the Company is authorized to issue from 10 million to 50 million.
The consent procedure is being utilized in lieu of a formal meeting of
stockholders in order to avoid the expenses associated with a formal meeting.
Only holders of Common Stock of record at the close of business on August 29,
1997, are entitled to respond to this consent solicitation.
You are urged to complete, date, and sign the enclosed consent card and
return it in the accompanying envelope at your earliest convenience.
By order of the Board of Directors,
/s/ Robert T. Moffett
---------------------------------------------
Robert T. Moffett
Vice President, General Counsel and Secretary
Houston, Texas
September 2, 1997
YOUR VOTE IS IMPORTANT.
To ensure your representation in these matters, please complete, date,
and sign the enclosed consent card and return it in the accompanying envelope at
your earliest convenience. No additional postage is necessary if the consent
card is mailed in the United States. A consent is revocable at any time before
the action authorized by the consent becomes effective.
HOWELL CORPORATION
1111 Fannin Street, Suite 1500
Houston, Texas 77002-6923
(713) 658-4000
________________________
CONSENT STATEMENT
September 2, 1997
________________________
INTRODUCTION
This Consent Statement is being furnished in connection with the
solicitation by the Board of Directors of Howell Corporation (the "Company") of
written consents to take action without a stockholders meeting, as permitted by
Delaware law. This Consent Statement and the enclosed consent card will first
be sent to stockholders on or about September 2, 1997.
Written consents are being solicited (i) to approve the acquisition by
the Company of Voyager Energy Corp., a Texas corporation ("Voyager"), as more
fully described herein, and (ii) to approve an amendment to the Company's
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
to increase the number of shares of common stock, par value $1.00 per share (the
"Common Stock"), that the Company is authorized to issue from 10 million to 50
million.
Voting Securities
Holders of Common Stock of record at the close of business on August 29,
1997, are entitled to respond to this consent solicitation. As of August 29,
1997, 5,099,167 shares of Common Stock were issued and outstanding. Each share
of Common Stock is entitled to one vote on the matters for which consent is
being solicited. The Common Stock is the only class of securities of the
Company entitled to vote on such matters.
The following table sets forth certain information as of August 15,
1997, regarding the beneficial ownership of Common Stock by each person known to
the Company to own beneficially 5% or more of the outstanding shares of Common
Stock, each of the Company's directors and executive officers and all of the
Company's directors and executive officers as a group. Unless otherwise
indicated, such persons have sole voting and dispositive power with respect to
the shares indicated.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership of Class
- ------------------- ----------------- --------
<S> <C> <C>
Paul N. Howell
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002 1,239,399 1 23.8
Donald W. Clayton
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002 3,450 *
Richard K. Hebert
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002 - -
Robert T. Moffett
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002 18,261 2 *
J. Richard Lisenby
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002 - -
John E. Brewster, Jr.
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002 400 3 *
Robert M. Ayres, Jr.
5705 Scout Island Cove
Austin, Texas 78731 177,631 4 3.5
Ronald E. Hall
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002 50,000 5 1.0
Walter M. Mischer, Sr.
Hallmark Residential Group
2727 North Loop West, Suite 200
Houston, Texas 77008 20,000 6 *
Paul W. Murrill
206 Sunset Boulevard
Baton Rouge, Louisiana 70808 6,000 7 *
Otis A. Singletary
780 Chinoe Rd.
Lexington, Kentucky 40502 15,600 8 *
Jack T. Trotter
1000 Louisiana, Suite 3600
Houston, Texas 77002 13,000 9 *
All directors and executive officers as a group (12 persons) 1,543,741 10 29.1
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 361,100 11 7.1
The Guardian Life Insurance Company of America
201 Park Avenue
New York, New York 10003 475,500 12 9.1
Ingalls & Snyder
61 Broadway
New York, New York 10006 706,567 13 13.3
FB Investment Advisory Services, Inc.
5400 University Avenue
West Des Moines, Iowa 50266 1,148,978 14 19.7
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202 506,800 15 10.0
Bradley N. Howell
Howell Transportation Services, Inc.
1111 Fannin, Suite 1500
Houston, Texas 77002 281,352 16 5.5
</TABLE>
* Less than 1%.
_________________________
1 Includes 120,830 shares which Mr. Paul N. Howell has the right to acquire
within 60 days pursuant to certain options and 44,500 shares which are owned
by the Howell Foundation, as to which Mr. Howell shares voting and
dispositive power.
2 Includes 15,275 shares which Mr. Moffett has the right to acquire within 60
days pursuant to certain options.
3 All of these 400 shares are shares held by Mr. Brewster as custodian for his
children and over which he exercises sole voting and dispositive power.
4 Includes 5,250 shares owned by the Shield-Ayres Foundation, as to which Mr.
Ayres disclaims both voting and dispositive power, and 12,490 shares held by
Mr. Ayres' wife, as to which he disclaims both voting and dispositive power.
Also includes 10,000 shares which Mr. Ayres has the right to acquire within
60 days pursuant to certain options and 1,515 shares which Mr. Ayers has the
right to receive within 60 days should he elect to convert 500 shares of the
Company's $3.50 Convertible Preferred Stock, Series A (the "Series A
Preferred Stock"), held by him.
5 Includes 50,000 shares which Mr. Hall has the right to acquire within 60 days
pursuant to certain options.
6 Includes 10,000 shares which Mr. Mischer has the right to acquire within 60
days pursuant to certain options.
7 Includes 5,000 shares which Dr. Murrill has the right to acquire within 60
days pursuant to certain options.
8 Of these, 15,000 shares are held by Dr. Singletary directly, as to which he
exercises both voting and dispositive power, and 600 shares are held by Dr.
and Mrs. Singletary, as to which Dr. Singletary shares voting and dispositive
power.
9 Includes 10,000 shares which Mr. Trotter has the right to acquire within 60
days pursuant to certain options.
10 Includes 222,620 shares which the Company's directors and executive officers
have the right to acquire within 60 days pursuant to the exercise of certain
options and the conversion of shares of Series A Preferred Stock.
11 Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 361,100 shares of Howell
Corporation stock as of December 31, 1996, all of which shares are held in
portfolios of D.F.A. Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the D.F.A. Investment Trust Company, a
Delaware business trust, or the D.F.A. Group Trust and D.F.A. Participation
Group Trust, investment vehicles for qualified employee benefit plans, for
all of which Dimensional Fund Advisor Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
12 According to Amendment No. 1 to Schedule 13G filed by The Guardian Life
Insurance Company of America ("Guardian") with the Securities and Exchange
Commission (the "Commission"), shares are beneficially owned by a group
comprised of Guardian and certain of its affiliates, including Guardian
Investor Services Corporation, a wholly-owned subsidiary and registered
investment advisor. The group shares voting rights and dispositive power
over all such shares. Shares beneficially owned include 151,500 shares of
Common Stock which the group has the right to receive within 60 days should
it elect to convert the 50,000 shares of Series A Preferred Stock held by it.
13 Includes 220,287 shares of Common Stock which Ingalls & Snyder has the right
to receive within 60 days should it elect to convert the 72,702 shares of
Series A Preferred Stock held by it. Ingalls & Snyder is registered as a
broker or dealer with the Commission. Based on its Amendment No. 4 to
Schedule 13G filed with the Commission, Ingalls & Snyder has sole voting
power with respect to 129,940 of the shares of Common Stock owned
beneficially and sole dispositive power over all of the shares of Common
Stock owned beneficially.
14 Includes 747,378 shares of Common Stock which FB Investment Advisory
Services, Inc., has the right to receive within 60 days should it elect to
convert the 246,635 shares of Series A Preferred Stock held by it. FB
Investment Advisory Services, Inc., is registered as an investment adviser
with the Commission. Based on its Schedule 13G filed with the Commission, FB
Investment Advisory Services, Inc., has sole voting and dispositive power
over all such shares.
15 According to Schedule 13G filed by Heartland Advisors, Inc. ("Heartland")
with the Commission, Heartland is a registered investment advisor. Heartland
has sole voting power over 445,000 of the shares of Common Stock owned
beneficially and sole dispositive power over all the shares of Common Stock
owned beneficially.
16 Of these, 35,275 shares are held by Bradley N. Howell as custodian for minor
children, as to which he exercises both voting and dispositive power; 139,546
shares are held in trust for minor children and for himself, as to which he
shares voting and dispositive power; and 14,273 shares are held by Bradley N.
Howell's wife, as to which he disclaims both voting and dispositive power.
Pursuant to the transaction described under "Proposal to Approve the
Acquisition by the Company of Voyager," Donald W. Clayton, Richard K. Hebert and
John E. Brewster, Jr. will acquire 207,040, 135,603 and 9,995 shares of Common
Stock, respectively, and thereafter will own beneficially 3.9%, 2.5% and less
than 1%, respectively, of the outstanding shares of Common Stock.
Consent Procedure
Statutory Basis; Consents Required. The Board is soliciting consents
from stockholders of the Company pursuant to Section 228(a) of the Delaware
General Corporation Law (the "DGCL"). Section 228(a) provides that any action
which may be taken at any annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. The record date for the
determination of stockholders entitled to vote on the matters with respect to
which consents are solicited is August 29, 1997.
The Rules of the New York Stock Exchange require a minimum 20-day
solicitation period. In order to comply with this requirement, the Company will
not effect the Proposed Amendment or the Merger until a 20-day solicitation
period has expired, even if the requisite stockholder vote is obtained prior to
that date.
If, as is expected, the matters with respect to which consents are
solicited are approved by holders of the requisite number of shares of Common
Stock, prompt notice thereof will be given to stockholders who did not consent
thereto.
The DGCL provides that, with respect to all matters other than the
election of directors and matters for which a specified vote is required,
approval by the stockholders requires the affirmative vote of the holders of a
majority of the outstanding shares present, in person or represented by proxy,
and entitled to vote at a meeting held for such purpose. Accordingly, pursuant
to Section 228(a) of the DGCL, approval of the acquisition by the Company of
Voyager will require the affirmative vote of a majority of the outstanding
shares of Common Stock. The DGCL provides that approval of an amendment to a
corporation's certificate of incorporation requires the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote. Accordingly,
the affirmative vote of 2,549,584 shares of Common Stock will be required for
approval of each of the proposals described herein. A dissent or abstention
with respect to either proposal will have the effect of a vote against the
proposal. Failure to return a consent card will have the effect of a vote
against both proposals.
Expiration. The action of approving the proposals described herein is
deemed to become effective at the time written, unrevoked consents, in the
accompanying form, are signed by the holders of record on August 29, 1997 of a
majority of the outstanding shares of Common Stock and such consents are
presented to the Company; provided, however, that all consents will expire,
unless so presented, on December 31, 1997, and provided further that, as
described above, the Company will not effect the proposed actions until the
expiration of a 20-day solicitation period, even if the requisite stockholder
consents are obtained earlier.
Special Instructions. Unlike proxies, which can be exercised if
unmarked but signed, the Board's consent cards will only be effective to take
the action requested by the Board if stockholders mark the "Consent" box on the
consent cards, sign the card, and return it to the Company.
Revocation of Consent Cards. Executed consent cards may be revoked at
any time before expiration by executing (signing and dating) a written
revocation before the time that the actions authorized by the executed consents
become effective, which shall occur when holders of a majority of the
outstanding Common Stock have consented (and not revoked their consent) to the
proposed action and the Board has presented consent cards evidencing such action
to the Company. A revocation may be in any written form provided that it
clearly states that the consent is no longer effective. Revocations should be
delivered to the Company. Any written and unrevoked consent cards shall be
deemed by the Company to remain in full force and effect until they expire or
until the Company receives notice of their revocation.
If you wish to consent to the proposals described herein and were a
stockholder of record of the Company on August 29, 1997 (the record date for
purposes of this Consent Statement), please mark the "Consent" box on the
accompanying Consent Card and complete, sign and return the accompanying consent
card today.
If you do not wish to consent to the proposals described herein, and
were a stockholder of record on August 29, 1997 (the record date for purposes of
this Consent Statement), please (i) mark the "Dissent" box on the accompanying
Consent Card, (ii) mark the "Abstain" box on the Consent Card or (iii) simply do
not return the Consent Card.
PROPOSAL TO APPROVE THE ACQUISITION BY THE COMPANY OF VOYAGER
General
In May 1997, the Company retained Donald W. Clayton, Richard K. Hebert
and John E. Brewster, Jr. to serve as the Company's Chairman and Chief Executive
Officer, President and Chief Operating Officer, and Vice President-Corporate
Development and Planning, respectively. Mr. Hebert had been elected to the
Board of Directors of the Company in January 1997. Contemporaneously with the
hiring of Messrs. Clayton, Hebert and Brewster, the Company signed a letter of
intent to acquire Voyager, an oil and gas company owned and managed by
Messrs. Clayton and Hebert. On August 22, 1997, the Company, Howell Acquisition
Corp., a newly formed Texas corporation that is wholly owned by the Company
("Newco"), and Voyager executed an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which the Company would acquire Voyager by means of the
merger of Newco with and into Voyager (the "Merger"), with Messrs. Clayton,
Hebert and Brewster, receiving 352,638 shares of Common Stock as consideration.
Terms of the Merger
Upon the effectiveness of the Merger (the "Effective Time"), Newco will
be merged with and into Voyager with Voyager being the surviving corporation of
the Merger. Newco will cease to exist, and Voyager will continue as a
corporation governed by the laws of the State of Texas, with all of the rights
and obligations of each of Voyager and Newco.
At the Effective Time, each share of Common Stock, no par value (the
"Voyager Common Stock"), and each share of Preferred Stock, no par value (the
"Voyager Preferred Stock"), of Voyager outstanding immediately prior to the
Effective Time, other than shares held in the treasury of Voyager (which will be
canceled), will, without any action on the part of the holder thereof, be
converted into the right to receive (i) 3.424135319 shares of Common Stock, with
the number of shares of Common Stock that each Voyager shareholder receives
being rounded to the nearest whole number of shares. Based on 102,986
outstanding shares of Voyager Common Stock and Voyager Preferred Stock as of
August 22, 1997, the total consideration payable to the shareholders of Voyager
will be 352,638 shares of Common Stock. At the Effective Time, each outstanding
share of Common Stock, par value $.01 per share, of Newco will be converted into
one share of Voyager Common Stock, resulting in the Company owning all of the
outstanding capital stock of Voyager.
The closing of the Merger will occur on the soonest date (the "Closing
Date") practicable after all of the conditions to the consummation of the Merger
have been fulfilled or, to the extent permissible, waived. On the Closing Date,
Articles of Merger relating to the Merger will be filed with the Secretary of
State of the State of Texas. The Effective Time will occur at such time as the
Articles of Merger have been so filed. The Company anticipates that the
Effective Time will occur promptly after the Company has received the required
number of stockholder consents. The Merger Agreement contains covenants of
Voyager regarding the conduct of the business of Voyager pending the Effective
Time.
The respective obligations of the Company, Voyager and Newco to
consummate the Merger are subject to the satisfaction of certain customary
conditions, including approval of the Merger by the holders of a majority of the
issued and outstanding shares of Common Stock. The Merger Agreement contains
representations and warranties of Voyager and Howell customary in transactions
of this type.
The Merger Agreement may be terminated by mutual consent of the Company,
Voyager and Newco at any time prior to the filing of the Articles of Merger.
The Merger Agreement may be terminated by action of the board of directors of
the Company, Voyager or Newco (i) if the Merger is not consummated by
November 30, 1997 provided that the party taking such action is not in material
breach of the Merger Agreement or (ii) if consummation of the Merger is
prohibited by final action of a court or other governmental entity.
Consummation of the Merger is not subject to any regulatory approvals.
It is expected that the Merger will constitute a tax-free reorganization
pursuant to Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code
of 1986, as amended, so that no gain or loss will be recognized by Howell,
Voyager or their respective stockholders as a result of the Merger. Approval of
the Merger by the stockholders of Howell is required by the rules of the New
York Stock Exchange.
Reasons for the Merger
During the past eighteen months, the Company's board of directors
initiated a number of transactions to focus the Company's future business solely
on exploration and production activities. In furtherance of this new approach,
on the recommendation of Paul N. Howell, founder of the Company, at its January
1997 meeting the board of directors elected Richard K. Hebert a director.
Subsequent to such meeting, Mr. Hebert introduced his long time associate Donald
W. Clayton to Mr. Howell. After becoming well acquainted, Mr. Howell determined
that Messrs. Clayton and Hebert were well qualified and experienced to assume
the responsibilities of Chief Executive Officer and President of the Company,
respectively, and the Company's board of directors concurred. In order to
procure the professional services of those gentlemen it was necessary to acquire
their exploration and production company. Accordingly, on May 14, 1997, the
Company, Voyager and Messrs. Clayton and Hebert entered into a letter of intent
contemplating the acquisition of Voyager by the Company.
Certain Financial and Other Information
Selected Historical Financial Information of Voyager
The following Selected Historical Financial Information of Voyager is
derived from the unaudited financial statements of Voyager included elsewhere
herein and should be read in conjunction with such financial statements,
including the notes thereto.
<TABLE>
<CAPTION>
Five Months Ended
May 31, 1997 Year Ended December 31,
----------------- -----------------------------------
1996 1995
---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C>
Revenues $ 421,371 $ 923,549 $ 417,570
---------- ---------- ----------
Net earnings (loss) from operations $ 19,228 $ (52,833) $ (179,407)
---------- ---------- ----------
Primary net earnings (loss) per common share
from operations $ .20 $ (.70) $ (3.59)
---------- ---------- ----------
Property, plant and equipment, net $2,290,599 $1,506,675 $1,656,306
---------- ---------- ----------
Total assets $2,714,342 $1,939,678 $2,162,578
---------- ---------- ----------
Long-term debt $ 626,792 $1,602,555 $2,536,737
---------- ---------- ----------
Shareholder's equity $1,207,417 $ 232,389 $(443,788)
---------- ---------- ----------
Cash dividends per common share $ -- $ -- $ --
---------- ---------- ----------
</TABLE>
Selected Historical Financial Information of the Company
The following Selected Historical Financial Information of the Company is
derived from the audited and unaudited consolidated financial statements of the
Company incorporated by reference herein and should be read in conjunction with
such financial statements including the notes thereto.
<TABLE>
<CAPTION>
Six Months Ended June 30, Year Ended December 31,
------------------------- ------------------------------------------------------
1997 1996 1996(1) 1995(1) 1994 1993 1992
---- ---- ---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 16,971 $332,512 $712,391 $673,537 $448,952 $411,736 $461,316
-------- -------- -------- -------- -------- -------- --------
Net earnings $ 2,041 $ 2,744 $ 14,077 $ 5,326 $ 2,883 $ 2,527 $ 431
-------- -------- -------- -------- -------- -------- --------
Primary net earnings per common
share from operations $ .17 $ .31 $ 2.31 $ .59 $ .10 $ .18 $ .09
-------- -------- -------- -------- -------- -------- --------
Property, plant and equipment, net $103,743 $103,495 $117,656 $195,341 $124,773 $125,113 $ 98,552
-------- -------- -------- -------- -------- -------- --------
Total assets $150,272 $269,688 $158,524 $273,326 $182,440 $164,542 $158,181
-------- -------- -------- -------- -------- -------- --------
Long-term debt $ 17,581 $ 92,785 $ 20,581 $ 96,205 $ 33,098 $ 35,879 $ 42,491
-------- -------- -------- -------- -------- -------- --------
Shareholder's equity $ 91,907 $ 80,188 $ 90,048 $ 79,020 $ 75,919 $ 76,225 $ 43,089
-------- -------- -------- -------- -------- -------- --------
Cash dividends per common share $ .08 $ .08 $ .16 $ .16 $ .16 $ .16 $ .16
-------- -------- -------- -------- -------- -------- --------
</TABLE>
- ---------------------
(1) See the notes to the Company's consolidated financial statements
incorporated herein by reference regarding the 1996 purchase and sale,
contribution and conveyance of crude oil gathering and marketing,
pipeline, and transportation operations to Genesis Energy, L.P., and the
1995 purchase of three pipeline systems from Exxon.
Market Information
The Common Stock is listed on the New York Stock Exchange ("NYSE") where
it trades under the symbol "HWL." On May 13, 1997, the last trading day
preceding public announcement of the Merger, the closing price per share of the
Common Stock on the NYSE was $13 and on August 15, 1997, such price was $18.
There is no public market for Voyager Common Stock.
Incorporation by Reference of Certain Information Relating to the Company
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997; and
(3) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997.
In addition, all documents filed by the Company with the Securities and
Exchange Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the date hereof and prior to
the date of the Meeting shall be deemed to be incorporated by reference herein.
Information Relating to Voyager
Description of Business
Voyager was formed in 1993 by Donald W. Clayton and Richard K. Hebert as a
vehicle to sponsor and act as general partner of oil and gas limited
partnerships, and through which to invest their own funds in oil and gas
activities.
From 1993 through early 1997, Voyager participated in the drilling of
exploratory and development wells, mostly located in the Gulf Coast area of
south Texas. Voyager's most significant oil property was South Bearhead Creek
located in Beauregard Parish, Louisiana. In November of 1993, Voyager acquired
a 50% working interest in three producing wells, a salt water disposal well and
a shut-in oil well in the South Bearhead Creek field. That property was
producing approximately 38 barrels of oil (Bbls) per day as of May 31, 1997.
Voyager's most significant producing gas property was the I. P. Farms
C-2 well located in Brazoria County, Texas. The C-2 was producing an average of
322 thousand cubic feet of natural gas (Mcf) per day and 5.57 Bbls per day, net,
as of May 31, 1997.
As of May 31, 1997, Voyager owned working interests in 11 properties
with an average 15.9% net revenue interest. Net average daily production was 63
Bbls per day and 218 Mcf per day. The wells had a projected reserve life of 11
years. Net proved developed producing reserves were 105 thousand Bbls (MBbls)
per day and 1,074 million cubic feet of natural gas (MMcf) per day, or a total
of 284 MBbls equivalent (MBOE) on a 6:1 equivalent basis.
Voyager also purchased producing mineral, royalty, and overriding royalty
interests (collectively "the royalty interests"). As of May 31, 1997, the
royalty interests consisted of a total of 66 properties with an average 0.7% net
revenue interest. Net average daily production attributable to the royalty
interests was 27 Bbls per day and 86 Mcf per day. The properties had a
projected reserve life of 50 years. Net proved developed producing reserves
attributable to the royalty interests were 115 MBbls and 265 MMcf, or a total of
159 MBOE on a 6:1 equivalent basis.
In November of 1993, Voyenergy Partners I, L.P. ("Voyenergy"), a Texas
limited partnership, was formed. Voyager was the sponsor and acted as general
partner. Ten and one-half units of limited partnership interest, each unit
involving a minimum investment of $112,500, were sold to accredited investors
pursuant to Regulation D promulgated under the Securities Act of 1933, as
amended. The offering was closed in early 1994 with subscriptions totaling
$1,575,000 (inclusive of investor note obligations and limited and general
partner contributions). As the general partner, on behalf of the partnership
Voyager invested in exploitation and development wells and acquired producing
properties, including mineral interests and royalty (together the "Voyenergy
properties"). Voyager retained a 75% interest in the Voyenergy properties; the
limited partners owed a 25% interest in the Voyenergy properties.
As of May 31, 1997, the Voyenergy properties consisted of 14 properties
with an average 11.2% net revenue interest. Voyager's net (75%) average daily
production was 26 Bbls per day and 428 Mcf per day. Net proved developed
producing reserves were 40 MBbls and 565 MMcf, or a total of 134 MBOE on a 6:1
equivalent.
In the aggregate, the oil and gas producing properties being acquired by
the Company pursuant to the proposed merger total 90 properties having an
average 2.1% net revenue interest (approximately 14% if the royalty interests
were not considered). Net average daily production was 116 Bbls per day and 732
Mcf per day. Net proved reserves were estimated to be 259 MBbls and 1,905 MMcf,
or a total of 577 MBOE on a 6:1 equivalent basis. A more detailed presentation
of Voyager's oil and gas reserve information including the standardized measure
prescribed in Statement of Financial Accounting Standards No. 69, is set forth
below under the heading "--Description of Properties."
Voyager's principal executive offices are located at 20405 State Highway
249, Suite 140, Houston, Texas 77070.
Description of Properties
Estimated Quantities of Proved Oil and Gas Reserves (unaudited):
Set forth below is a summary of the changes in the net quantities of
proved crude oil and natural gas reserves of Voyager as of December 31, 1996,
and May 31, 1997. The estimates were prepared by Voyager. All of Voyager's
reserves are located in the continental United States.
Proved reserves are estimated quantities of oil and 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 operating methods.
Oil and gas reserve estimates are inherently imprecise, and estimates of
new discoveries are more imprecise than those of producing oil and gas
properties. Accordingly, the estimates are expected to change as further
information becomes available.
Total
------------------------
Oil Gas
(Mbbls) (MMcf)
------- ------
Proved Reserves
Reserves, December 31, 1995 84.40 787.20
Acquisitions of reserves in place 4.50 155.70
Extensions, discoveries, and additions 68.80 610.90
Production (20.70) (186.20)
Revisions 14.10 481.50
Reserves, December 31, 1996 151.10 1,849.10
Acquisitions of reserves in place 114.90 265.30
Extensions, discoveries, and additions 0.00 0.00
Production (11.60) (103.10)
Revisions 5.00 (106.90)
Reserves, May 31, 1997 259.40 1,904.40
Proved Developed Reserves
December 31, 1996 134.00 1,789.40
May 31, 1997 242.40 1,865.30
Standardized Measure of Discounted Future Net Cash Flows and Changes Therein
Relating to Proved Oil and Gas Reserves (unaudited):
The following summary sets forth Voyager's unaudited future net cash
flows relating to proved oil and gas reserves, based on the standardized measure
prescribed in Statement of Financial Accounting Standards No. 69, as of December
31, 1996, and May 31, 1997. Cash flows are based on the following average year-
end pricing held constant for the period: $23.97 per Bbl and $3.68 per Mcf at
December 31, 1996, and $18.81 per Bbl and $1.97 per Mcf at May 31, 1997.
<TABLE>
<CAPTION>
1997 SEC VALUE 1996 SEC VALUE
-------------- --------------
<S>
<C> <C>
Future gross reserves $8,499,694 $10,581,241
Future production/development costs $2,067,722 $2,672,701
Future net cash flows $6,431,972 $7,908,540
Discount of 10% per annum ($2,304,667) ($2,271,247)
Estimated future net cash flows discounted at 10% $4,127,305 $5,637,293
</TABLE>
THE INFORMATION PRESENTED SHOULD NOT BE VIEWED AS AN ESTIMATE OF THE FAIR VALUE
OF VOYAGER'S OIL AND GAS PROPERTIES. A MARKET VALUE DETERMINATION INCLUDES MANY
OTHER FACTORS INCLUDING ANTICIPATED FUTURE CHANGES IN OIL AND GAS PRICES, THE
VALUE OF UNPROVED PROPERTIES, AND RESERVES NOT YET ESTABLISHED AS PROVED BY
DRILLING, FIELD DEVELOPMENT, OR PRODUCTION HISTORY.
Financial Statements of Voyager
Reference is made to the financial statements of Voyager and the notes
thereto beginning at page F-1 of this Proxy Statement.
Interests of Certain Persons in the Transaction
In the Merger, Messrs. Clayton, Hebert and Brewster will receive 207,040,
135,603 and 9,995 shares of Common Stock, respectively. See "--Terms of the
Merger." Because this results in more than one percent of the shares of Common
Stock outstanding being issued to officers and directors of the Company, the
rules of the New York Stock Exchange require that the stockholders of the
Company approve the Merger.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
ACQUISITION BY THE COMPANY OF VOYAGER.
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has proposed an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 10 million to 50 million.
As of August 15, 1997, there were 5,095,155 shares of Common Stock
issued and outstanding, 991,349 shares reserved for issuance pursuant to the
Company's stock option Plans and 2,090,700 shares reserved for issuance upon
conversion of outstanding at the Company's $3.50 Convertible Preferred Stock,
Series A ("Series A Preferred Stock"). In addition, an aggregate of 352,638
shares of Common Stock are reserved for issuance in the Merger. Accordingly,
there are only 1,470,158 shares of Common Stock available for issuance by the
Company from time to time. In order to enhance the Company's financing
flexibility, the Board of Directors believes that it would be desirable to have
additional authorized shares of Common Stock available for use by the Company.
The availability of the additional authorized shares will enhance the Company's
ability to meet advantageous market conditions for the sale of additional
equity, for the acquisition of desirable assets or companies and for other
corporate purposes, such as attracting and retaining qualified employees.
Although the Company monitors the various financial markets and other
business opportunities available to it in an effort to be prepared to take
advantage of relatively attractive market conditions and acquisition
opportunities, the Company currently has no understandings or agreements for the
issuance of securities. No stockholder of the Company has, or will have, any
preemptive or other right to acquire additional shares. Depending on the amount
of, or purpose for which, additional shares are issued, stockholder approval may
or may not be required. Issuance of additional shares might, under certain
circumstances, dilute either stockholder equity or voting rights or both.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK TO 50 MILLION SHARES.
EXPENSES OF SOLICITATION
The cost of soliciting consents on behalf of the Board of Directors will
be borne by the Company. Solicitations of consents will be made by the Company
through the mail and may also be made in person or by telephone. Directors and
employees of the Company may be utilized in connection with such solicitations.
The Company also will request brokers and nominees to forward soliciting
materials to the beneficial owners of the Common Stock held of record by such
persons and will reimburse them for their reasonable forwarding expenses.
DATE OF SUBMISSION OF STOCKHOLDER PROPOSALS
For stockholder proposals to be included in the Company's proxy
statement and proxy relating to the Company's 1998 Annual Meeting of
Stockholders, such proposals must be received by the Company at its principal
executive offices not later than November 28, 1997.
By order of the Board of Directors,
/s/Robert T. Moffett
----------------------------------------
Robert T. Moffett
Vice President, General Counsel and Secretary
<TABLE>
<CAPTION>
VOYAGER ENERGY CORP.
UNAUDITED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1995 AND 1996 AND MAY 31, 1997
31-May-97 31-Dec-96 31-Dec-95
---------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
CASH $ 248,791 $ 141,802 $ 374,791
ACCOUNTS RECEIVABLE 167,773 278,360 118,302
PREPAID INSURANCE 3,739
----------------------------------------
TOTAL CURRENT ASSETS 420,303 420,162 493,093
----------------------------------------
OIL & GAS ASSETS (Note 1)
PRODUCING OIL & GAS ASSETS
WORKING INTEREST PROPERTIES 1,980,488 1,952,268 1,910,187
ROYALTY INTEREST PROPERTIES (Note 2) 950,460 54,510 54,510
LESS ACCUMULATED DD&A (755,268) (675,798) (342,437)
----------------------------------------
TOTAL PRODUCING OIL & GAS ASSETS 2,175,680 1,330,980 1,622,260
----------------------------------------
NON-PRODUCING OIL & GAS ASSETS
WELLS IN PROGRESS 114,919 177,695 34,046
----------------------------------------
TOTAL OIL & GAS ASSETS 2,290,599 1,508,675 1,656,306
----------------------------------------
OFFICE FURNITURE & FIXTURES 0 7,399 9,738
OTHER ASSETS 3,440 3,440 3,440
----------------------------------------
TOTAL ASSETS $2,714,342 $1,939,676 $2,162,577
========================================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 55,725 $ 61,825 $ 30,807
ACCRUED INTEREST PAYABLE 71,808 42,907 39,021
CURRENT NOTES PAYABLE (Note 3) 752,600 0 0
----------------------------------------
TOTAL CURRENT LIABILITIES 880,133 104,732 69,828
----------------------------------------
NOTES PAYABLE NON-CURRENT
SHAREHOLDER DEBT (Note 4) 0 816,505 1,787,105
PARTNERSHIP INVESTOR DEBT (Note 3) 626,792 786,050 749,632
----------------------------------------
TOTAL LONG-TERM LIABILITIES 626,792 1,602,555 2,536,737
----------------------------------------
TOTAL LIABILITIES 1,506,925 1,707,287 2,606,565
----------------------------------------
EQUITY
COMMON STOCK AND PAID IN CAPITAL (Note 4) 1,966,854 1,050,000 50,000
PREFERRED STOCK (Note 2) 143,379 0 0
----------------------------------------
RETAINED EARNINGS (902,816) (817,611) (493,988)
----------------------------------------
TOTAL EQUITY 1,207,417 232,389 (443,988)
----------------------------------------
TOTAL LIABILITIES AND EQUITY $2,714,342 $1,939,676 $2,162,577
========================================
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
VOYAGER ENERGY CORP.
UNAUDITED COMBINED STATEMENT OF OPERATIONS
AS OF DECEMBER 31, 1995 AND 1996 AND MAY 31, 1997
<S> <C> <C> <C>
31-May-97 31-Dec-96 31-Dec-95
----------------------------------------
OIL & GAS REVENUES $ 421,371 $ 923,549 $ 417,570
----------------------------------------
OIL AND GAS EXPENSES
LEASE OPERATING AND WORKOVER EXPENSES (158,499) (254,164) (174,919)
PRODUCTION TAXES (27,540) (77,264) (43,654)
DEPRECIATION AND DEPLETION EXPENSE (141,476) (318,200) (152,644)
GEOLOGICAL & GEOPHYSICAL EXPENSE (1,510) (17,007) (16,816)
WELL INSURANCE 10,097 (14,955) (14,955)
OTHER (3,032) (1,847) (928)
----------------------------------------
TOTAL OIL & GAS EXPENSES (321,960) (683,437) (403,916)
----------------------------------------
NET INCOME FROM PRODUCING PROPERTIES 99,411 240,112 13,654
DRY HOLE, LEASE ABANDONMENT, AND
IMPAIRMENTS TO PROPERTIES (80,185) (292,945) (193,061)
----------------------------------------
NET INCOME FROM OIL & GAS OPERATIONS 19,226 (52,833) (179,407)
----------------------------------------
OTHER INCOME
INTEREST INCOME 1,747 6,025 6,231
PARTNERSHIP MANAGEMENT FEE 12,742 7,172 28,346
----------------------------------------
TOTAL OTHER INCOME 14,489 13,197 34,577
----------------------------------------
OTHER EXPENSE
PROFESSIONAL FEES (45,220) (69,068) (30,381)
INTEREST EXPENSE (52,233) (184,524) (101,060)
RENT AND UTILITIES (12,470) (27,212) (24,639)
OTHER OFFICE EXPENSE (5,497) (2,088) (6,207)
FRANCHISE TAXES (3,500) (1,095) 0
----------------------------------------
TOTAL OTHER EXPENSE (118,920) (283,987) (162,287)
----------------------------------------
NET INCOME (LOSS) $ (85,205) $ (323,623) $ (307,117)
========================================
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
VOYAGER ENERGY CORP. AND VOYENERGY PARTNERS I, L.P.
UNAUDITED COMBINED STATEMENT OF STOCKHOLDERS EQUITY
AS OF DECEMBER 31, 1995 AND 1996 AND MAY 31, 1997
COMMON STOCK PREFERRED STOCK
------------ ---------------
TOTAL
ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT DEFICIT EQUITY
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 50,000 $ 50,000 $(186,871) $(136,871)
NET LOSS (307,117) (307,117)
--------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 50,000 50,000 (493,988) (443,988)
CONVERSION OF STOCKHOLDERS'
DEBT 25,000 1,000,000 1,000,000
NET LOSS (323,623) (323,623)
--------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1996 75,000 1,050,000 (817,611) 232,389
CONVERSION OF STOCKHOLDERS'
DEBT 21,719 916,854 916,854
ISSUANCE OF PREFERRED STOCK 6,267 143,379 143,379
NET LOSS (85,205) (85,205)
--------------------------------------------------------------------
BALANCE AT MAY 31, 1997 96,719 $1,966,854 6,267 $143,379 $(902,816) $1,207,417
</TABLE>
See accompanying notes.
VOYAGER ENERGY CORP. AND VOYENERGY PARTNERS I, L.P.
NOTES TO UNAUDITED COMBINED FINANCIAL INFORMATION
Note 1 -- Summary of Significant Accounting Policies
Combination
The unaudited combined financial statements are based on the historical
financial statements of Voyager Energy Corp. (Voyager) and Voyenergy Partners I,
L.P. (Voyenergy). Voyager owns a 75% general partnership interest in Voyenergy
and Voyenergy accounts are included in the unaudited financial statements based
on the 75% interest. All material transactions between Voyager and Voyenergy
have been eliminated.
Oil and Gas Properties
Oil and gas properties are stated at cost. Depreciation and depletion
are computed using the unit of production method. Unsuccessful exploration
costs are expended in the year such efforts are determined to be unsuccessful.
Income Taxes
Voyager has been a qualified Subchapter S Corporation from inception
until immediately preceding the merger when a second class of stock was issued
and Voyenergy became a partnership. No tax provision is applicable.
Use of Estimates in Preparing Financial Statements
In preparing unaudited combined financial statements in conformity with
generally accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the statements and the revenue and expenses during the accounting
period. Actual results could differ from those estimates.
Note 2 - Acquisitions
On May 13, 1997 Voyager acquired a group of royalty properties from a
major shareholder. This acquisition concluded an agreement between the
shareholders dated July 10, 1995. Voyager paid for the royalties with a
combination of preferred stock and funds provided from a loan from Paine Webber.
Note 3 - Debt
Paine Webber - Voyager borrowed $752,600 on May 13, 1997 for 90 days at
an interest rate of 7.375%. The funds were used to acquire royalty properties
from a major shareholder. This was intended as an interim financing arrangement
and management intends to convert this debt into an asset based collateralized
debt instrument.
Partnership Debt - Incident to the formation of Voyenergy certain
partners made loans to the Partnership. The majority of the cash flow from the
Partnership was dedicated to the repayment of these loans.
Note 4 - Stockholder Debt
Stockholder debt was capitalized into common stock in 1996 ($1,000,000)
and 1997 ($916,854).
Note 5 - Subsequent Transactions
Voyager was approached by the minority ownership of the Partnership with a
plan which would eventually result in the liquidation of the Partnership. The
plan requires that Voyager pay its 75% portion of the investor notes prior to
the liquidation.
CONSENT
HOWELL CORPORATION
Solicited on Behalf of the Board of Directors
The undersigned hereby acknowledges receipt of the Consent Statement dated
September 2, 1997 accompanying this consent card.
The undersigned, a holder of record of Common Stock, par value $1.00 per
share (the "Common Stock"), of Howell Corporation (the "Company") on August 29,
1997, hereby takes the following action pursuant to Section 228(a) of the
General Corporation Law of the State of Delaware:
A / X / Please mark your
---- votes as in this
example.
CONSENT DISSENT ABSTAIN
1. APPROVAL OF THE ACQUISITION BY THE COMPANY / / / / / /
OF VOYAGER ENERGY CORP., as described in --- --- ---
the accompanying Consent Statement.
CONSENT DISSENT ABSTAIN
2. APPROVAL OF THE AMENDMENT OF THE COMPANY'S / / / / / /
CERTIFICATE OF INCORPORATION to increase --- --- ---
the number of shares of Common Stock that
the Company is authorized to issue from
10 million to 50 million.
The Board of Directors recommends that you consent to both proposals.
Stockholders approving a proposal should mark the appropriate "CONSENT" box
above; those opposing a proposal should mark the appropriate "DISSENT" OR
"ABSTAIN" box above. By not returning a consent card, a stockholder will be
deemed not to have consented to either proposal.
The action expressed on this consent shall constitute action with respect to
all shares of Common Stock owned of record on August 29, 1997.
Signature(s) of Shareholder(s)__________________________ Date:___________, 1997
Note: Please sign your name exactly as it appears below. If shares are held
jointly, all joint owners should sign. If shares are held by a
corporation, please sign the full corporate name by the president or any
other authorized corporate officer. If shares are held by a partnership,
please sign the full partnership name by an authorized person. If you
are signing as attorney, executor, administrator, trustee or guardian,
please set forth your full title as such.
