SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
June 24, 1996
(Date of Earliest Event Reported)
SEITEL, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-14488 76-0025431
(Commission File Number) (IRS Employer Identification No.)
50 Briar Hollow Lane, West 7th Floor
Houston, Texas 77027
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code
(713) 627-1990
Index to Exhibits at Page -3-
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 24, 1996, DDD Energy, Inc. ("DDD"), a wholly owned subsidiary of
the Registrant, acquired for $26.5 million in cash an additional 30% working
interest in mineral properties in Wharton County, Texas (the "Properties") from
Cox & Perkins Exploration, Inc. ("Cox & Perkins"). DDD previously owned a 20%
working interest in the Properties. On the same date, DDD sold a production
payment interest in the oil and gas production from the Properties to The
ReSourceFund, L.P. I, RIMCO Partners, L.P., RIMCO Partners, L.P. II, RIMCO
Partners, L.P. III, and RIMCO Partners, L.P. IV (the "Partnerships") for $20
million cash. Proceeds from this disposition were applied to the acquisition
cost of the additional working interest in the Properties, and the remaining
$6.5 million of purchase price was paid from working capital. The purchase price
for the acquired working interests and the sales price for the disposed
production payment interest were determined by arms length negotiations. There
is no material relationship between either Cox & Perkins or the Partnerships and
the Registrant or any of its affiliates, any director or officer of the
Registrant, or any associate of any such director or officer, except that Cox &
Perkins acts as operator for several mineral properties in which DDD has a
working interest, including the Properties. The Properties were used by Cox &
Perkins in the exploration and production of oil and gas, and will continue to
be so used by DDD.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
It is impracticable to provide the required pro forma financial
information relating to the Registrant. The required pro forma
financial information will be filed as soon as practicable, but
not later than 60 days from the date this report must be filed.
(c) Exhibits.
The following exhibit is attached in accordance with the
provisions of Item 601 of Regulation S-K:
2.1 Purchase and Sale Agreement (excluding exhibits and
schedules to such agreement, which will be provided to the
Securities and Exchange Commission on request), dated
June 10, 1996, by DDD Energy, Inc. and Cox & Perkins
Exploration, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 8, 1996
SEITEL, INC.
BY: /s/ Paul A. Frame
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PAUL A. FRAME
President and Chief Executive Officer
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INDEX TO EXHIBITS
Exhibits Page No.
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2.1 Purchase and Sale Agreement 4
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Page 3 of 12
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT dated June 10, 1996 (hereinafter referred
to as "Agreement") by and between Cox & Perkins Exploration, Inc., a Texas
corporation, whose address is 6363 Woodway, Suite 1100, Houston, Texas 77057,
("Seller") and DDD Energy, Inc., a Delaware corporation, whose address is 50
Briarhollow West, 7th Floor, Houston, Texas 77027 ("Purchaser").
WITNESSETH THAT:
1. PURCHASE AND SALE.
-----------------
For a total purchase price of Twenty-Six Million, Five Hundred Thousand
Dollars ($26,500,000), but subject to the terms, provisions, covenants, and
conditions herein contained, Seller hereby sells and agrees to assign and
convey and Purchaser hereby purchases and agrees to pay for the properties
described hereinafter. The effective date of the sale shall be April 1,
1996, at 7:00 A.M. Houston, Texas time (sometimes hereinafter referred to
as "Effective Date").
2. DESCRIPTION OF PROPERTIES.
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A. Attached hereto as Exhibit "A" is the description of the leases in
which the undivided leasehold interests as listed in Exhibit "B"
hereto and related rights will be assigned by Seller to Purchaser by
valid assignment. The interests to be assigned are intended to cover
the working interests (collectively, the "Interests") as listed in
Exhibit "B" hereto, but with only such warranties as are hereinafter
stated. The same undivided ownership out of the interest of Seller in
all improvements, wells, buildings, fixtures, facilities, equipment
and personal property located thereon or thereunder and used or held
for use thereon or thereunder will also be included in the transfer.
B. The sale will also cover Seller's right, title and interest
attributable to the interest herein conveyed in any and all contracts
(including but not limited to operating agreements, unit agreements,
production sale agreements, enhanced recovery agreements, disposal
agreements, farm-out and farm-in agreements), easements, rights-of-way
and other rights, interests and appurtenances, which are necessary for
the ownership and operation of the properties and/or the sale of
production from the properties and the properties conveyed hereby
shall be subject to all of these prior contracts and agreements.
C. All items to be transferred hereunder as mentioned in Subsections "A"
and "B" above of this Section 2 are sometimes hereinafter collectively
called the "Property".
D. Notwithstanding anything herein to the contrary, the Property shall
not include (i) the remaining undivided interest held by Seller in the
leases and all other assets described in Sections 2(A) and (B) above;
(ii) Seller's right to act as the operator pursuant to the terms of
the Operating Agreement currently in effect with respect to the
Property; (iii) all claims of Seller arising or occurring prior to the
Effective Date; (iv) all proceeds, income or revenues attributable to
the Property for any period prior to the Effective Date.
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3. CLOSING.
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A. The closing ("Closing") of this Agreement shall be held on or before
June 24, 1996.
B. At the Closing, Seller shall deliver to Purchaser a valid Assignment
and Bill of Sale in the form of Exhibit "C" hereto, and possession of
the oil and gas properties conveyed hereunder shall pass to Purchaser.
C. At the Closing, Purchaser shall deliver to Seller the Purchase Price
(payable by wire transfer), reduced by the proceeds paid, if any, for
production from, or attributable to, the Property occurring after the
Effective Date but before Closing (except for sales already made for
which the revenue has not been received by Seller but will be
redirected by Seller to Purchaser when received); and increased by the
amount of operating costs incurred by Seller for the operation of the
Property between Effective Date and Closing (except for such costs, if
any, as are the obligation of Seller pursuant to other provisions of
this Agreement). The Purchase Price is to be paid at Closing by wire
transfer in the amount of $26,500,000 (subject to adjustments as
provided in this agreement) into a Cox Perkins Exploration, Inc. bank
account to be designated by Cox & Perkins Exploration, Inc. Seller
agrees and authorizes Purchaser to make the payment in said manner.
D. Oil in tanks, attributable to Seller's interest herein conveyed, at or
above pipeline connection (other than such oil, if any, as is
determined by the oil buyer not to be merchantable) at Effective Date
shall be credited to Seller at the oil buyer's price in effect at
Effective Date, and the appropriate sum will be credited so as to be
paid to Seller at Closing, in addition to the purchase price. All oil
in tanks at Closing attributable to the interest herein conveyed shall
be the property of Purchaser. The parties shall arrange for
appropriate readings close in time to the Effective Date. Each party
will promptly forward to the other any revenue received by it for
production belonging to the other party for which proper adjustment is
not made at Closing.
E. Seller has heretofore provided Purchaser with the opportunity to
review Seller's data and records concerning the Property. These files,
data and records include, but are not limited to, pertinent lease
files, abstracts of title, title opinions, title curative documents,
division of interest files, contract files, logs, samples, drilling,
completion and rework records and reports, production and reservoir
information, and records and files pertaining to compliance with
applicable laws, rules and regulations.
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4. OBSERVATION AND INSPECTION BY PURCHASER; SURVEY, TITLE OPINIONS AND OTHER
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MATERIALS TO BE FURNISHED TO PURCHASER.
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Prior to Closing, Seller will promptly, from time to time at Purchaser's
request, permit or arrange for Purchaser or its representatives to inspect
any and all equipment, facilities, fixtures and improvements included in or
related to the Property, and to observe the operation of the Property
(including but not limited to testing of all wells, equipment and soil).
Purchaser shall have the right and access at its sole cost and expense to
have a licensed surveyor enter on the Property and survey the location of
any existing wells, and to survey the location of any proposed wells,
and/or potential new wells. Such operations by Purchaser or its
representatives shall be conducted with reasonable care to avoid material
interference or damage to the surface or surface operations. Also, Seller
will promptly make available to Purchaser at Seller's offices or at other
reasonable location designated by Seller, during normal business hours, for
Purchaser's review (and permit Purchaser to copy at Purchaser's expense and
retain for study those items which Purchaser wishes to copy), all of the
original files, data and records covered under Section 3.E. above.
5. CERTAIN CONDITIONS UNDER WHICH PRUCHASER MAY ELECT NOT TO CLOSE.
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Purchaser may elect not to close this transaction and in such event this
Agreement shall terminate, for any of the following reasons occurring prior
to Closing:
A. Purchaser, in its sole good faith judgment, determines that there are
any lien(s) or other encumbrance(s) affecting the Property, actual or
potential claims involving the Property, conflict of any of the
Property or its operations or condition with governmental or lease
requirements, or that title to any of the Property fails or is
defective which circumstance(s), in Purchaser's good faith judgment,
materially and adversely affect the value of the Property or
materially increase the risk of owning or operating the Property.
B. The Property, in whole or in part, is materially damaged or destroyed.
If Purchaser decides to close notwithstanding such loss, Seller will
assign to Purchaser (as Purchaser's sole remedy as a result of such
casualty) all rights of Seller to any insurance proceeds due Seller
for such damage or destruction.
C. Seller, without authority under this Agreement, refuses to close, or
there is a failure of, any material covenant, warranty,
representation, or other obligation of Seller under this Agreement.
D. Seller has not demonstrated to Purchaser's reasonable satisfaction
that Seller is in good standing and is fully authorized to consummate
this transaction in accordance with the provisions of this Agreement.
E. Purchaser has not obtained financing satisfactory to it for the
consummation of the transactions contemplated by this Agreement.
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Prior to any election to terminate this Agreement pursuant to the terms of
this Section 5, Purchaser shall provide written notice to Seller of the
facts that lead Purchaser to believe that it has the right to terminate
this Agreement. Thereafter, Purchaser will, at Seller's request, allow
extension of the date for Closing for as much as fifteen (15) days to
provide Seller the opportunity, at Seller's expense, to cure the problems
which are causing Purchaser not to close, to Purchaser's satisfaction. The
sufficiency of such cure will be determined solely by Purchaser but in good
faith.
6. MISCELLANEOUS UNDERTAKINGS BY SELLER.
------------------------------------
Seller warrants and represents that:
A. If Seller accepts this Agreement, Seller will not make any voluntary
commitments for, or voluntarily approve or incur, any unusual or major
costs for the Property which might wholly or partially be borne by
Purchaser under the provisions of this Agreement, without Purchaser's
prior written consent, which consent will not be unreasonably
withheld.
B. After the closing Seller will forward to Purchaser, with all necessary
endorsements and within ten (10) business days after receipt, all
proceeds and other payments received by such Seller which are
attributable to the Property or to production from the Property from
or after the Effective Date, or which are otherwise allocated to
Purchaser under this Agreement.
C. As of the time of Closing Seller has full right, power and authority
to contract for the sale of the Property and to convey the Property to
Purchaser, upon the terms and conditions of this Agreement, and will
furnish Purchaser written evidence thereof if and when requested by
Purchaser.
D. As of the time of Closing except as has been expressly disclosed to
Purchaser by Seller in writing all real estate, personal property,
severance, ad valorum, income and other taxes due and relating to the
Property have been timely paid or are being contested promptly and in
good faith. This warranty and representation is limited to the best of
the knowledge and belief of Seller except for such taxes normally paid
by, through or under such Seller or normally paid by the Operator.
E. As of the time of Closing all contracts and contract rights included
in or related to the Property are, to the best of Seller's knowledge
and belief, in full force and effect and do not contain any
commitment, obligation or burden which would be considered unusually
burdensome or restrictive under currently accepted oil and gas
industry standards. Seller is not in default under any such contract,
nor is Seller aware of any existing default by any other party
thereto. To the best of Seller's knowledge and belief, all parties to
any operating agreement or other agreement included in or affecting
the Property are current in meeting their payment and other
obligations under all such agreements.
F. Seller is currently receiving its share of all production or proceeds
of production attributable or allocable to the Property without any
withholding (except any proper, normal tax withholding by a buyer of
oil or gas or other revenue disburser) or suspension, and without any
indemnification other than customary division orders; and such Seller
is not obligated to pay or refund moneys or to deliver production from
or attributable to the Property for less than current market value
because of any take or pay agreement or any advance payment agreement
or similar arrangement.
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G. As of the time of Closing to the best of Seller's knowledge and
belief, there are no ongoing and material pending claims, demands,
penalties, proceedings or actions involving noncompliance with or
violation of, or alleged noncompliance with or alleged violation of,
any lease, easement, other property right or interest, permit,
contract, governmental law, rule, regulation or order, or involving
any actual or alleged unpaid indebtedness, property damage or personal
injury, in connection with the ownership, operation or condition of
any of the Property.
H. Seller will execute and deliver reasonable documents (including for
example, but not limited to, corrective or supplementing instruments
and transfer orders), and take other reasonable actions, requested by
Purchaser to help effectuate the purposes of this Agreement.
I. Seller has paid, or will pay in due course after receipt of invoices,
all sums due from Seller with respect to vendors, workmen,
materialmen, contractors and other suppliers of goods, materials,
equipment, work or services on or in connection with the Property
provided prior to the Effective Date.
J. Seller will at any reasonable time within one year after Closing make
available for Purchaser's inspection and review at such Seller's
office during normal business hours any books and records reasonably
relating to the Property, within Seller's possession or control,
necessary to verify the allocation of revenues, expenses and other
items made at Closing. Also, subject to events over which Seller has
no reasonable control such as Act of God or governmental requirement,
Seller will retain all such books and records for at least one year
after Closing.
K. To the best of Seller's knowledge and belief, the leases and other
property instruments included in the Property are in full force and
effect and cover the entire estates or rights they purport to cover.
Seller has no knowledge or notice of a default or claimed default
under any such lease or instrument.
L. Seller, for itself and its successors and assigns, hereby warrants and
agrees to forever defend unto Purchaser and its successors and assigns
title to the Property against claims and demands of all persons
whomsoever claim the same or any part thereof by, through or under
Seller, but not otherwise. Seller also grants and transfers to
Purchaser, to the fullest extent so transferable, the benefit of and
the right to enforce the covenants, warranties and other obligations,
if any which Seller is entitled to enforce with respect to the
Property against Seller's predecessors in title to the Property.
M. Seller has not pledged or otherwise created or granted any security
interest or similar right or interest in or to the Property.
N. No gas imbalances or other production imbalances existed on the
Effective Date regarding production from the Properties.
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7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
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Purchaser represents and warrants that:
A. As of the closing Purchaser has full right, power and authority to
contract for the purchase of the Property and deliver the
consideration paid for the Property upon the terms and conditions of
this Agreement, and will furnish Seller written evidence thereof if
and when requested by Seller.
B. Purchaser has been provided with all the information required under
this Agreement and has had the opportunity to review all aspects of
the Property that it deems necessary and relevant and that it has
relied solely on the express representations contained in this
Agreement and its own investigation of the Property.
8. RESPONSIBILITY FOR COST AND RISK OF OWNING AND OPERATING THE PROPERTY.
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Purchaser will be responsible for, and thus will indemnify Seller against,
all expenses and liabilities incurred, accrued or resulting from owning or
operating the Property after the Effective Date, but only to the extent of
the Interests (including but not limited to the costs incurred from the
drilling and completion of the Swanson-Meek No. 1), and Seller will be
responsible for, and thus will indemnify Purchaser against all expenses and
liabilities incurred, accrued or resulting from owning or operating the
Property occurring prior to the Effective Date, but only to the extent of
the Interests. The indemnification provisions provided for in this
Agreement shall be applicable whether or not the losses, costs, expenses
and damages in question arose solely or in part from the gross, active,
passive or concurrent negligence, strict liability or other fault of any
indemnified party. Purchaser and seller acknowledge that this statement
complies with the express negligence rule and is conspicuous.
9. NOTICES.
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Any notice required or permitted herein shall be mailed by Certified Mail
to the following:
Seller: Cox & Perkins Exploration, Inc.
6363 Woodway, Suite 1100
Houston, Texas 77057
Purchaser: DDD Energy, Inc.
50 Briarhollow West, 7th Floor
Houston, Texas 77027
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10. WAIVERS.
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10.1. Waiver of Representations.
10.1.1 The express representations of Seller contained in this Agreement
are exclusive and are in lieu of, any other representation or
warranty with respect to the environmental condition, both
surface and subsurface, or other condition of the properties; or
the ownership or operation of the properties or any part thereof.
10.1.2 Seller expressly disclaims and negates, and Purchaser hereby
waives, (i) any representation or warranty with respect to the
quality, quantity or volume of the reserves, if any, of oil, gas
or other hydrocarbons in or under the Properties; (ii) any
warranty or representation, express or implied, as to the
quality, merchantability, fitness for a particular purpose,
conformity to samples, or condition of any of the Properties or
any part thereto; and (iii) all representations and warranties,
express, implied or statutory, other than the express
representations contained in this Agreement.
10.1.3 Except for the express representations contained in this
Agreement the items of personal property, equipment,
improvements, fixtures and appurtenances conveyed as part of the
properties are sold, and Purchaser accepts such items "as is,
with all faults".
10.1.4 There are no warranties that extend beyond the face of this
Agreement.
10.2 Waiver of Consumer Rights. Purchaser hereby waives the provisions
of the Texas Deceptive Trade Practices Act, Chapter 17,
Subchapter E, Sections 17.41 through 17.63, inclusive (other than
Section 17.555, which is not waived), of the Texas Business and
Commerce Code ("The DTPA"), a law that gives consumers special
rights and protections after consultation with an attorney of its
own selection, Purchaser voluntarily consents to this Waiver. To
evidence its ability to grant such waiver, Purchaser represents
to Seller that (i) it is not in a significantly desperate
bargaining position; (ii) it is represented by legal counsel in
entering into this Agreement; and (iii) such legal counsel was
not directly or indirectly identified, suggested, or selected by
Seller or an agent of Seller.
11. MISCELLANEOUS.
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A. The covenants, warranties, representations and other obligations under
this Agreement will survive the Closing and will not be merged into
the Closing, or otherwise merged by virtue of the execution of the
Assignment and Bill of Sale, and will be in addition to and not
reduce, the warranties and other obligations contained in the
Assignment and Bill of Sale.
B. The provisions contained herein shall extend to, inure to the benefit
of, and be obligatory upon the legal representatives, successors and
assigns of the respective parties.
C. Nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
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D. Although Seller and Purchaser believe that this transaction is exempt
from sales tax under the laws of the State of Texas, it is understood
and agreed that Purchaser shall bear and be responsible for any such
tax, and any and all interest and penalties in connection therewith,
severally as regards such Seller's right and interest being
transferred under this Agreement, and will reimburse Seller for any of
the foregoing which Seller is required to pay.
E. Purchaser will be responsible for all costs and liabilities for any
brokerage, finding or similar services which it has caused or created,
regarding the purchase of the Property. Seller will be responsible for
all costs and liabilities for any brokerage, finding or similar
services which it has caused or created regarding the sale of the
Property.
F. Words of any gender used in this Agreement shall be held and construed
to include any other gender, and words of a singular number shall be
held to include the plural, and vice-versa, unless the context
requires otherwise.
G. The captions used in connection with the Sections of this Agreement
are for convenience only and shall not be deemed to construe or to
limit the meaning of the language of the Agreement.
H. The parties will each reasonably cooperate after Closing to effect the
intended allocation and proration of costs and revenues, and to such
end will make such payments between the parties as may be appropriate.
I. This writing embodies the entire agreement of the parties concerning
its subject matter.
J. All real estate, personal property, severance, ad valorum and similar
taxes for the tax year 1996 shall be pro rated between Seller and
Purchaser as of the Effective Date.
In witness whereof, the parties have signed below, this Agreement being dated as
first above written but with Effective Date as hereinabove set out.
PURCHASER
ATTEST: DDD ENERGY, INC.
/s/ Ami Havins By: /s/ Horace A. Calvert
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Horace A. Calvert
President
SELLER
ATTEST: COX & PERKINS EXPLORATION, INC.
/s/ Richard D. Perkins By: /s/ Jerry S. Cox
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Jerry S. Cox
President
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ACKNOWLEDGMENTS
STATE OF TEXAS
COUNTY OF HARRIS
This instrument was acknowledged before me on this 21st day of June, 1996
by Jerry S. Cox, President of COX & PERKINS EXPLORATION, INC., a Texas
corporation, on behalf of said corporation.
/s/Pamela B. Blythe
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Notary Public, in and for
Harris County, Texas
Pamela B. Blythe
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Printed Name of Notary
My Commission Expires: 10/30/99
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STATE OF TEXAS
COUNTY OF HARRIS
This instrument was acknowledged before me on this 24th day of June, 1996
by Horace A. Calvert, President of DDD ENERGY, INC., a Delaware corporation, on
behalf of said corporation.
/s/Kenny N. Koury
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Notary Public, in and for
Harris County, Texas
Kenny N. Koury
-------------------------------
Printed Name of Notary
My Commission Expires: 10/3/98
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