SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x ] Preliminary Proxy Statement--Revised
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PEASE OIL AND GAS COMPANY
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(Name of Registrant as Specified in its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY COPY
PEASE OIL AND GAS COMPANY
751 Horizon Court, Suite 203
Grand Junction, Colorado 81506
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 31, 1997
---------------------------
To Our Stockholders:
The Annual Meeting of Stockholders of Pease Oil and Gas Company, a Nevada
corporation ("Company"), will be held at the Newport Beach Marriott Hotel &
Tennis Club, 900 Newport Center Drive, Newport Beach, California 92660, on
Saturday, May 31, 1997, at 9:00 a.m., Pacific Daylight Time, for the following
purposes:
Matters to be Voted Upon by Holders of Common Stock
(1) The election of three directors to serve on the Company's Board of
Directors totaling eleven directors.
(2) To consider and vote upon a proposal to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock
from 25 million to 40 million shares.
(3) Such other matters as may properly come before the meeting or any
adjournment thereof.
Matters to be Voted Upon by Holders of Preferred Stock
(1) The election of two directors to represent the holders of Preferred Stock
on the Company's Board of Directors totaling eleven directors.
(2) Such other matters as may properly come before the meeting or any
adjournment thereof and which may properly be voted upon by the holders of
Preferred Stock.
Only stockholders of record at the close of business on April 28, 1997, are
entitled to notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
PATRICK J. DUNCAN
Corporate Secretary
Grand Junction, Colorado
April 30, 1997
- --------------------------------------------------------------------------------
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. YOUR VOTE IS
IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE AND SIGN THE ENCLOSED WHITE PROXY CARD (FOR HOLDERS OF COMMON STOCK) OR
THE BLUE PROXY CARD (FOR HOLDERS OF PREFERRED STOCK) AND RETURN THE PROXY
PROMPTLY IN THE ENCLOSED, POSTAGE PREPAID, ADDRESSED ENVELOPE. IF YOU ARE A
HOLDER OF SHARES OF BOTH COMMON STOCK AND PREFERRED STOCK, PLEASE COMPLETE AND
RETURN BOTH CARDS. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ATTEND THE MEETING.
<PAGE>
PRELIMINARY COPY
PEASE OIL AND GAS COMPANY
751 Horizon Court, Suite 203
Grand Junction, Colorado 81506
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 31, 1997
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of Pease Oil and Gas Company ("Company") for use at the Company's Annual Meeting
of Stockholders to be held at 9:00 a.m. Pacific Daylight Time, at the Newport
Beach Marriott Hotel & Tennis Club, 900 Newport Center Drive, Newport Beach,
California 92660, on Saturday, May 31, 1997, and at any adjournment thereof. It
is planned that this Proxy Statement and the accompanying Proxy will be mailed
to the Company's stockholders on or about April 30, 1997.
Any person signing and mailing the enclosed Proxy may revoke it at any time
before it is voted by (i) giving written notice of the revocation to the
Company's corporate secretary; (ii) voting in person at the Meeting; or (iii)
voting again by submitting a new proxy card. Only the latest dated proxy card,
including one which a person may vote in person at the Meeting, will count.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
AND SECURITY OWNERSHIP OF MANAGEMENT
All voting rights, except the special voting rights granted to the holders
of Series A Cumulative Convertible Preferred Stock ("Preferred Stock"), are
vested exclusively in the holders of the Company's $0.10 par value common stock
("Common Stock") with each share entitled to one vote. Holders of Common Stock
are entitled to vote at the Meeting for the election of three directors to the
Company's Board of Directors; on the proposal to amend the Company's Certificate
of Incorporation; and on other matters which may properly come before the
Meeting.
Holders of the Company's outstanding Preferred Stock are entitled to vote
at the meeting to elect two directors to represent them on the Company's Board
of Directors pursuant to the terms of the Certificate of Designation of the
Series A Cumulative Convertible Preferred Stock ("Designation") and any other
matters which may properly come before the Meeting upon which the holders of
Preferred Stock may vote. Each share of Preferred Stock is entitled to one vote.
Only stockholders of record at the close of business on April 28, 1997 (the
"Record Date"), are entitled to notice of and to vote at the meeting or any
adjournments thereof. On April 28, 1997, the Company had --------- shares of
Common Stock and ------- shares of Preferred Stock outstanding. Cumulative
voting in the election of directors is not permitted. Persons who hold both
Common Stock and Preferred Stock should receive both a White Proxy card and a
Blue Proxy card with the Proxy Statement.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date, by (i) each
person who is known to the Company to own beneficially more than 5% of the
outstanding Common Stock with the address of each such person, (ii) each of the
Company's directors and officers, and (iii) all officers and directors as a
group:
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<PAGE>
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner or Amount and Nature of
Name of Officer or Director Beneficial Ownership(1) Percent of Class
--------------------------- ---------------------- ----------------
<S> <C> <C>
Steve A. Antry
901 Dove Street, Suite 230
Newport Beach, CA 92660 ............................................. 626,317 Shares (2) 4.8%
James N. Burkhalter
P.O. Box 60219
Grand Junction, CO 81506 ............................................ 165,710 Shares (3) 1.3%
Patrick J. Duncan
P.O. Box 60219
Grand Junction, CO 81506 ............................................ 170,625 Shares (4) 1.3%
Richard A. Houlihan
650 Town Center Drive, Suite 550
Costa Mesa, CA 92625 ................................................ 276,483 Shares (5) 2.2%
Homer C. Osborne
1200 Preston Road #900
Dallas, TX 75230 .................................................... 49,407 Shares (6) 0.4%
Willard H. Pease, Jr.
P.O. Box 60219
Grand Junction, CO 81506 ............................................ 786,139 Shares (7) 6.2%
James C. Ruane
5010 Market St.
San Diego, CA 92102 ................................................. 281,838 Shares (8) 2.2%
Leroy W. Smith
P.O. Box 10040
Santa Ana, CA 92711-0040 ............................................ 181,280 Shares (9) 1.4%
Robert V. Timlin
1989 South Balsam
Lakewood, CO 80277 .................................................. 63,490 Shares (10) 0.5%
Clemons F. Walker
748 Rising Star Drive
Henderson, NV 89104 ................................................. 362,763 Shares (11) 2.8%
William F. Warnick
2022 Broadway
Lubbock, TX 79401 ................................................... 84,193 Shares (12) 0.7%
All Officers and Directors as a
group (eleven persons) ............................................... 3,106,260 Shares (13) 21.0%
</TABLE>
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<PAGE>
- ----------------------
(1) Beneficial owners listed have sole voting and investment power with respect
to the shares unless otherwise indicated.
(2) Includes 2,680 shares that are owned directly by Mr. Antry, 5,000 shares
that are owned by Mr. Antry's wife, 7,500 shares underlying options that
become exercisable on July 27, 1997, 61,137 shares underlying presently
exercisable warrants, 515 shares underlying convertible Preferred Stock and
550,000 shares underlying presently exercisable warrants that are held by
Mr. Antry's wife.
(3) Includes 15,710 shares owned directly by Mr. Burkhalter, 115,000 shares
underlying presently exercisable options, and 35,000 shares underlying
options that become exercisable on July 27, 1997.
(4) Includes 20,625 shares owned directly by Mr. Duncan, 105,000 shares
underlying presently exercisable options, and 45,000 shares underlying
options that become exercisable on July 27, 1997.
(5) Includes 151,150 shares owned directly by Mr. Houlihan, 7,500 shares
underlying options that become exercisable on July 27, 1997, 85,000 shares
underlying presently exercisable options, 8,333 shares underlying a
convertible debenture, and 24,500 shares owned by a trust that Mr. Houlihan
has sole voting and investment power.
(6) Includes 6,607 shares owned directly by Mr. Osborne, 35,300 shares
underlying presently exercisable options, and 7,500 shares underlying
options that become exercisable on July 27, 1997.
(7) Includes 121,173 shares that are owned directly by Mr. Pease, 364,966
shares are owned by entities affiliated with Mr. Pease over which shares
Mr. Pease has sole voting and investment power, 148,500 shares underlying
presently exercisable options, 50,000 shares underlying options that become
exercisable on July 24, 1997, and 101,500 shares underlying presently
exercisable warrants.
(8) Includes 107,528 shares owned directly by Mr. Ruane, 4,560 shares held by
Mr. Ruane as trustee for two trusts, over which shares Mr. Ruane may be
deemed to have shared voting and investment power, 12,500 shares underlying
presently exercisable warrants, 70,000 shares underlying presently
exercisable options, and 7,500 shares underlying options that become
exercisable on July 27, 1997.
(9) Includes 1,280 shares owned directly by Mr. Smith, 10,000 shares, 100,000
shares underlying presently exercisable warrants, and 22,500 shares
underlying convertible Preferred Stock owned by trusts of which Mr. Smith
is the Trustee and of which he is therefore deemed to have beneficial
ownership, 5,000 shares owned by his wife, 10,000 shares underlying
presently exercisable options, 7,500 shares underlying options that become
exercisable on July 27, 1997, 12,500 shares underlying convertible
Preferred Stock owned directly by Mr. Smith; and 12,500 shares underlying
convertible Preferred Stock held by his wife.
(10) Includes 5,990 shares owned directly by Mr. Timlin, 26,693 shares
underlying presently exercisable options, and 7,500 shares underlying
options that become exercisable on July 27, 1997.
(11) Includes 142,062 shares owned directly by Mr. Walker, 212,686 shares
underlying presently exercisable warrants, 7,500 shares underlying options
that become exercisable on July 27, 1997, and 515 shares underlying
convertible Preferred Stock.
(12) Includes 26,693 shares owned directly by Mr. Warnick, 50,000 shares
underlying presently exercisable options, and 7,500 shares underlying
options that become exercisable on July 27, 1997.
-3-
<PAGE>
(13) Includes 583,800 shares underlying presently exercisable options, 190,000
shares underlying options that become exercisable on July 27, 1997,
1,185,073 shares underlying presently exercisable warrants, 48,530 shares
underlying convertible Preferred Stock, and 8,333 shares underlying a
convertible debenture.
The following table sets forth certain information regarding the ownership
of the Company's Preferred Stock by (i) each person who is known to the Company
to own beneficially more than five percent (5%) of the outstanding Preferred
Stock with the address of each such person, (ii) each of the Company's officers
and directors who holds Preferred Stock, and (iii) all officers and directors as
a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- -------------------- -------------------- --------
<S> <C> <C>
Steve Antry.......................................... 100 %
901 Dove Drive, Suite 230 ---
Newport Beach, CA 92660
Leroy W. Smith....................................... 7,600(1) %
P.O. Box 10040 ---
Santa Ana, CA 92711-0040
Clemons F. Walker.................................... 100 %
748 Rising Star Drive ---
Henderson, NV 89104
All Officers and Directors as a group................ 7,800 %
(eleven persons) ---
- -------------------
</TABLE>
(1) Includes 3,600 owned by trusts of which Mr. Smith is the Trustee and of
which he is therefore deemed to have beneficial ownership, 2,000 owned
directly by Mr. Smith and 2,000 shares held by his wife.
ACTIONS TO BE TAKEN AT MEETING
The meeting is called by the Board of Directors to consider and act upon
the following matters:
Action To Be Taken By The Holders of Common Stock
(1) The election of three Class A directors to serve on the Board of
Directors for a three year term;
(2) To consider and vote upon a proposal to amend the Company Certificate
of Incorporation to increase the number of authorized shares of Common
Stock from 25 million to 40 million shares.
(3) Such other matters as may properly come before the meeting or any
adjournment thereof.
To vote on these matters, please mark, sign and date the WHITE Proxy and
return it in the enclosed envelope.
Action To Be Taken By The Holders of Preferred Stock
(1) The election of two additional directors to represent the holders of
Preferred Stock of the Company on the Company's Board of Directors;
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<PAGE>
(2) Such other matters as may properly come before the meeting or any
adjournment thereof and which may properly be voted on by the holders
of Preferred Stock.
To vote on these matters, please mark, sign and date the BLUE Proxy and
return it in the enclosed envelope. If you hold both Common and Preferred Stock,
please return BOTH proxies in the enclosed envelopes.
The holders of a majority of the outstanding shares of the Company,
including both Common Stock and Preferred Stock taken together, present at the
meeting in person or represented by proxy, shall constitute a quorum. Directors
shall be elected by a plurality of the vote with respect to each class of stock
voting, i.e., the candidates for each class of stock receiving the highest
number of votes cast in favor of their election will be elected to the Board of
Directors, assuming a quorum is present. Where brokers or other nominees who
hold shares for beneficial owners have not received any instruction from their
clients on how to vote on a particular proposal, the brokers or nominees are
permitted to vote on routine proposals but not on non-routine matters. The
absence of votes on non-routine matters are "broker non-votes." Abstentions and
broker non-votes will be counted as present for purposes of establishing a
quorum, but will have no effect on the election of directors. Abstentions and
broker non-votes on proposals other than the election of directors will be
counted as present for purposes of establishing a quorum AND will have the
effect of a vote against the proposals. There are no dissenters' rights
applicable to the election of directors or for the proposal to amend the
Certificate of Incorporation.
MATTERS TO BE VOTED ON BY STOCKHOLDERS ARE SET FORTH BELOW. EACH PROPOSAL
IS MARKED TO INDICATE WHICH CLASS OF STOCKHOLDERS IS ENTITLED TO VOTE ON THE
PROPOSAL. PLEASE REVIEW EACH PROPOSAL CAREFULLY TO DETERMINE WHICH PROPOSALS
REQUIRE THE VOTE OF THE HOLDERS OF COMMON STOCK AND WHICH PROPOSALS REQUIRE THE
VOTE OF THE HOLDERS OF PREFERRED STOCK.
PROPOSAL ONE
ELECTION OF DIRECTORS
The number of directors on the Company's Board of Directors has been
established by the Bylaws of the Company and by resolution of the Board of
Directors as eleven directors, including three directors in each of classes A, B
and C elected by the holders of Common Stock and two directors elected by the
holders Preferred Stock. The number of directors on the Board will be eleven
following the Meeting. Accordingly, holders of both Common and Preferred Stock
will elect directors at this Meeting. With respect to the three classes of
directors elected by the holders of Common Stock, the terms of the Class A
directors expire at this annual meeting, the terms of the Class B directors
expire in 1998 and the terms of the Class C directors expire in 1999. Each
director is elected for a term of three years, with the result that each year
the holders of Common Stock will elect one class of directors. Directors elected
by the holders of Preferred Stock will serve a term as set forth below. See
"Directors--Preferred Stock."
Directors--Common Stock
Unless otherwise directed, the persons named as Proxies on the WHITE
enclosed form of Proxy will vote the shares of Common Stock represented by such
Proxy FOR the election of the three persons named below nominated by the Board
of Directors. If, at the time of the meeting, any of these nominees shall become
unavailable for any reason, which event is not expected to occur, the persons
entitled to vote the Proxy will vote for such substitute nominee or nominees, if
any, as they determine in their sole discretion. The directors elected will be
designated as Class A directors and will hold office until the annual meeting of
stockholders to be held in 1999. The nominees for directors, each of whom has
consented to serve if elected, are as follows:
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<PAGE>
<TABLE>
<CAPTION>
Director
Name of Nominee Since Age Principal Occupation for Last Five Years
- --------------- -------- --- ----------------------------------------
<S> <C> <C>
Robert V. Timlin 1981 66 Mr. Timlin has been self-employed as a consulting
(Class A Director) petroleum engineer since 1989. Mr. Timlin has been
involved in the oil and gas industry for over 30 years
and has served in a managerial capacity with several
companies, including HMT Management Inc., an oil and
gas management firm, from 1983 to 1988; T&M Casing
Service, Inc., from 1975 to 1983; Dowell Studer, Inc.,
and Husky Oil Company. Mr. Timlin received an
Associates Degree in petroleum engineering in 1957.
James N. Burkhalter 1993 61 Mr. Burkhalter has been Vice President of Engineering
(Class A Director) and Production of the Company since 1993, and is
responsible for the Company's engineering, production,
regulatory compliance, and gas plant operations. Prior
to joining the Company Mr. Burkhalter was owner and
president of Burkhalter Engineering, an engineering
firm which he formed in 1975. Mr. Burkhalter has been
Chairman of the Colorado Board of Registration for
Professional Engineers and Surveyors, serving eight
years. From 1959 to 1975 Mr. Burkhalter worked for
Amoco and Rocky Mountain Natural Gas as a petroleum
engineer. Mr. Burkhalter received a B.S. degree in
petroleum engineering in 1959 from the Colorado School
of Mines.
Patrick J. Duncan 1995 34 Mr. Duncan has been the Chief Financial Officer of the
(Class A Director) Company since September, 1994, the Company's Corporate
Secretary since April 1995 and the Company's Treasurer
since March 1996. Mr. Duncan is responsible for all the
financial, accounting and administrative reporting and
compliance required by his individual job titles. Mr.
Duncan was an Audit Manager with HEIN + ASSOCIATES LLP,
Certified Public Accountants, from 1991 until joining
the Company as the Company's Controller in April 1994.
From 1988 until 1991, Mr. Duncan was an Audit
Supervisor with Coopers & Lybrand, Certified Public
Accountants. Mr. Duncan received a B.S. degree from the
University of Wyoming in 1985.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ELECTION OF THE THREE
(3) NOMINEES LISTED ABOVE. PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED WHITE
PROXY TO VOTE FOR YOUR CHOICE OF NOMINEES. ONLY YOUR LATEST DATED PROXY COUNTS.
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<PAGE>
Directors--Preferred Stock
The shares of Preferred Stock normally have no voting rights except those
required by law or as set forth in the Certificate filed by the Company with
respect to the rights and preferences of the Preferred Stock.
Section 4.2 of the Certificate provides that whenever dividends from the
Preferred Stock have not been paid in an amount equal to at least six quarterly
dividends, the holders of the Preferred Stock shall have the right to elect two
additional directors to the Company's Board of Directors. Because the Company
has not paid the last ten quarterly dividends on the Preferred Stock, the
holders of Preferred Stock have the right to elect two directors to the
Company's Board of Directors.
The persons nominated by the Board of Directors to be elected by the
holders of Preferred Stock, are identified below. Each person to be nominated
has consented to serve if elected, and both nominees were nominated and elected
as directors by holders of Preferred Stock at the Company's Annual Meeting of
Stockholders held in August 1996. Holders of outstanding Preferred Stock may
also nominate other persons for service as directors of the Company at the
Annual Meeting of Stockholders. Two directors will be elected. The holders of
shares of Common Stock will not vote on the following nominees.
<TABLE>
<CAPTION>
Name of Nominee Age Principal Occupation for Last Five Years
- --------------- --- ----------------------------------------
<S> <C> <C>
Steve Antry 41 Mr. Antry is founder and president of Beta Capital
Group, Inc., a financial consulting firm located in
Newport Beach, California. Beta specializes in advising
emerging oil and gas exploration companies that have
both capital needs and market support requirements.
Prior to forming Beta in 1992, Mr. Antry was an
executive officer of Benton Oil & Gas Company from 1989
to 1992 and a Marketing Director for Swift Energy's
income funds from 1987 to 1989. Mr. Antry is also a
registered representative with Signal Securities, Inc.,
a registered broker/dealer, and has B.B.A. and M.B.A.
degrees from Texas Christian University.
LeRoy Smith 68 Mr. Smith was president and owner of Doctors' Financial
Management Co., Inc. from 1956 through 1994 with
offices in Burbank and Santa Ana, California, which
provided accounting and business management services
for professionals. Since retiring in 1994 Mr. Smith has
served as trustee and managed three retirement trusts
with total market value of approximately $5.5 million.
Mr. Smith is also an Enrolled Agent before the Internal
Revenue Service.
</TABLE>
If no direction is given on the Proxy with respect to voting for the
Preferred Stock nominees for director, the persons named as proxies on the BLUE
Proxy card will vote the shares represented by such Proxy FOR the two persons
nominated and identified above. Directors will be elected by a plurality, i.e.,
the two persons receiving the most votes will be elected without regard to any
abstentions. If, at the time of the Meeting, any of these nominees shall become
unavailable for any reason and there are less than two nominees, which event is
not expected to occur, the persons entitled to vote the Proxy will vote any
proxies so marked for the remaining nominee and any other person nominated by
holders of Preferred Stock, if any. The Certificate provides that the Board of
Directors may then appoint a director to fill any vacancy which may occur. The
directors elected or appointed will hold office until all past dividends have
been paid, or until re-elected or replaced at the next annual meeting of the
Company's stockholders, and at each annual meeting thereafter, until their
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<PAGE>
successors have been elected and qualified or until the past due dividends on
the Preferred Stock have been paid.
THE BOARD OF DIRECTORS MAKES NO RECOMMENDATION IN FAVOR OR AGAINST THE
ELECTION OF THE NOMINEES LISTED ABOVE. PLEASE VOTE FOR UP TO TWO NOMINEES BY
MARKING, SIGNING, AND DATING THE ENCLOSED BLUE PROXY TO VOTE FOR YOUR CHOICE OF
NOMINEES. ONLY YOUR LATEST DATED PROXY COUNTS.
Information concerning the other directors of the Company whose terms
extend beyond this Meeting is as follows.
<TABLE>
<CAPTION>
Director
Name Since Age Principal Occupation for Last Five Years
- ---- -------- --- ----------------------------------------
<S> <C> <C> <C>
James C. Ruane 1980 63 Mr. Ruane has owned and operated Goodall's Charter
(Class B Director) Bus Service, Inc., a bus chartering business
representing Grey Line in the San Diego area, since
1958. Mr. Ruane has been an oil and gas investor for
over 20 years.
Homer C. Osborne 1994 68 Mr. Osborne was an officer and director of Garrett
(Class B Director) Computing System, Inc., a petroleum engineering and
computing firm, from 1967 until 1976, at which time he
organized Osborne Oil Company as a wholly-owned
subsidiary of Garrett Computing Systems, Inc. Mr.
Osborne has operated Osborne Oil Company as a separate
entity since 1976.
Richard A. Houlihan 1996 57 Mr. Houlihan is a Certified Public Accountant, Senior
(Class B Director) Member of the American Society of Appraisers and a
Certified General Appraiser in Nevada and Utah. He has
been a principal of Houlihan Valuation Advisors since
1986, Mr. Houlihan also was founder and president of
Solitude Ski Resort, founder and president of Houlihan,
Lokey, Howard & Zukin, Inc., one of the largest
business valuation firms in the United States, was
financial vice president of Carr-Sigoloff Industries
Corporation specializing in mergers and acquisitions,
and MAS Manager at Price Waterhouse & Company
Management Advisory Services. Mr. Houlihan has a B.S.
degree from Brigham Young University and a M.V.S.
degree from Lindenwood College.
-8-
<PAGE>
<CAPTION>
Director
Name Since Age Principal Occupation for Last Five Years
- ---- -------- --- ----------------------------------------
<S> <C> <C> <C>
Willard H. Pease, Jr. 1988 37 Mr. Pease has been President and Chief Executive
(Class C Director) Officer of the Company since 1990. Mr. Pease was
Executive Vice President and Chief Operating Officer of
the Company from 1983 to 1990. Mr. Pease is responsible
for the Company's corporate finance, managing the
day-to-day operations of the Company and is principally
responsible for the Company's oil and gas exploration
and production activities. Mr. Pease has worked in the
oil field business for over 17 years. Mr. Pease
received a B.A. degree in management with additional
educational focuses in geology in 1983.
William F. Warnick 1988 50 Mr. Warnick has been a practicing attorney in Lubbock,
(Class C Director) Texas since 1971. Mr. Warnick serves as the Texas
Attorney General's appointee to the Texas School Board
Land Commission and is a member of the American, Texas,
and Lubbock Bar Associations. He is an oil and gas
investor and has served in various management positions
of private independent oil and gas companies. Mr.
Warnick received a B.A. degree in finance and a J.D.
degree in 1971.
Clemons F. Walker 1996 58 Mr. Walker has been an independent financial consultant
(Class C Director) since August of 1996. Prior to that he was employed as
an investment banker and stockbroker. Between 1978 and
August 1995 Mr. Walker worked for Wilson Davis in Las
Vegas, Nevada when Presidential Brokerage purchased the
Wilson Davis office in Las Vegas and he continued to
work for the surviving entity until August of 1996.
Since 1978 Mr. Walker has focused his efforts in
investment banking by supporting small-cap companies
through assistance in private placements, public
offerings and other capital raising efforts. During his
career, Mr. Walker has organized, advised, facilitated,
sold and participated in numerous debt and equity
transactions (both public and private) in a variety of
industries, including the oil and gas industry. Mr.
Walker has a bachelor of arts degree in Business
Administration from Brigham Young University with a
concentration in Finance.
</TABLE>
The Company's Board of Directors held nine meetings during 1996. Four
meetings were held by unanimous written consent signed by all directors without
an actual meeting and five were actual meetings at which all directors were
present except Messrs. Houlihan, Osborne and Timlin, who were not present at one
meeting each.
The Company has an audit committee, consisting of Patrick J. Duncan,
Willard H. Pease, Jr. and Richard A. Houlihan, which met once 1996. The
functions of the audit committee are to review financial statements, meet with
the Company's independent auditors and address accounting matters or questions
raised by the auditors.
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<PAGE>
The Company has a compensation committee consisting of James C. Ruane,
Homer C. Osborne and William F. Warnick, which met once in 1996 at which meeting
all members were present. The functions of the compensation committee are to
review compensation of officers and employees and administer and award options
under all stock option plans of the Company.
EXECUTIVE OFFICERS
Messrs. Pease, Burkhalter and Duncan are the executive officers of the
Company. The executive officers of the Company are elected annually at the first
meeting of the Company's Board of Directors held after each annual meeting of
stockholders. Each executive officer of the Company holds office until his
successor is duly elected and qualified, his death or resignation or his removal
in the manner provided by the Company's Bylaws.
There are no family relationships between any of the directors or executive
officers.
There was no arrangement or understanding between any executive officer and
any other person pursuant to which any person was selected as an executive
officer.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). Officers, directors and
greater than ten percent stockholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
The following disclosure is based solely upon a review of the Forms 3 and 4
and any amendments thereto furnished to the Company during the Company's fiscal
year ended December 31, 1996, and Forms 5 and amendments thereto furnished to
the Company with respect to such fiscal year, or written representations that no
Forms 5 were required to be filed by such persons. Based on this review the
following persons who were directors, officers and beneficial owners of more
than 10% of the Company's outstanding Common Stock during such fiscal year filed
late reports on Forms 3 and 4.
James C. Ruane filed one late report on Form 4 reporting one transaction.
LeRoy W. Smith filed one late report on Form 4 reporting two transactions.
EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities during each of the last three fiscal years
by the Chief Executive Officer. No executive officer received salary and bonus
in excess of $100,000 in 1996. The following information for the Chief Executive
Officer includes the dollar value of base salaries, bonus awards, the number of
stock options granted and certain other compensation, if any, whether paid or
deferred.
-10-
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards
---------------------------------------------------- -------------------------------
Other
Annual
Compensa- Restricted Securities
Name and Principal Salary Bonus tion Stock Underlying
Position at 12/31/96 Year ($) ($) ($) Awards Options/SARs(#)
- -------------------- ---- --------- -------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Willard H. Pease, Jr.......... 1996 $78,530(1) $5,000(3) $101,250(2) None 110,400
President and Chief 1995 $75,240(1) None None None 139,600
Executive Officer 1994 $75,240(1) None None None None
- ----------------------------
</TABLE>
(1) Includes $240 contributed by the Company to a qualified 401(k)
retirement plan.
(2) At December 31, 1995 the Company owed $60,000 to Willard H. Pease,
Jr., the Company's President and CEO. This loan was unsecured, bore
interest at 8% per annum and was originally cue on January 31, 1996.
On March 9, 1996 the Board of Directors agreed to change the terms of
the note to allow the note to be convertible into the Company's common
stock at $1.00 per share, the then current market rate, in exchange
for a one-year extension on the note. On December 16, 1996 Mr. Pease
elected to convert the note in its entirety, the note was canceled and
Mr. Pease was issued 60,000 shares of the Company's restricted common
stock. The $101,250 shown as other annual compensation represents the
difference between the closing sales price as reported by NASDAQ on
December 16, 1996 and the conversion price of $1.00 per share. No
additional amounts have been shown as Other Annual Compensation
because the aggregate incremental cost to the Company of personal
benefits provided to Mr. Pease did not exceed the lesser of $50,000 or
10% of his annual salary in any given year.
(3) On March 9, 1996 the Board of Directors granted Mr. Pease 5,000 shares
of the Company's common stock for prior services. The shares were
valued at $5,000 or $1.00 per share which represented the market price
of the Company's common stock on the date of grant. The shares are
fully vested.
Option Grants in the Last Fiscal Year
Set forth below is information relating to grants of stock options to the
Chief Executive Officer pursuant to the Company's Stock Option Plans during the
fiscal year ended December 31, 1996
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/ Employees in Exercise or Base Expiration
Name SARs Granted(#) Fiscal Year Price ($/Sh) Date
- ---- -------------- ------------ ---------------- ----------
<S> <C> <C> <C> <C>
Willard H. Pease, Jr.......... 110,400(1) 33.9% $ 1.00(3) 03/08/01
President and Chief 60,000(2) 18.4% $ 1.00(3) 01/31/97
Executive Officer
- ------------------------
</TABLE>
-11-
<PAGE>
(1) Consists of 8,900 shares underlying options issued under one of the
Company's qualified stock option plans and 101,500 shares underlying
warrants to purchase common stock. All these Options and Warrants became
exercisable on September 8, 1996.
(2) At December 31, 1995 the Company owed $60,000 to Willard H. Pease, Jr., the
Company's President and CEO. This loan was unsecured, bore interest at 8%
per annum and was originally due on January 31, 1996. On March 9, 1996 the
Board of Directors agreed to change the terms of the note to allow the note
to be convertible into the Company's common stock at $1.00 per share, the
then current market price, in exchange for a one-year extension on the
note. On December 16, 1996 Mr. Pease elected to convert the note in its
entirety, the note was canceled and Mr. Pease was issued 60,000 shares of
the Company's restricted common stock. The $101,250 shown as other annual
compensation represents the difference between the closing sales price as
reported by NASDAQ on December 16, 1996 and the conversion price of $1.00
per share.
(3) The exercise price listed above was 100% of the market price of the Common
Stock on the date the options, warrants or convertible notes were granted
or approved by the Company's Board of Directors.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Set forth below is information with respect to the unexercised options to
purchase the Company's Common Stock held by Willard H. Pease, Jr. at December
31, 1996. No options were exercised during fiscal 1996.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End(#) at FY-End($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercisae(#) ($) Unexercisable Unexercisable
- ---- --------------- ----- ------------- -------------
<S> <C> <C> <C> <C>
Willard H. Pease, Jr.............. 60,000(1) $101,250(1) 250,000/-0- $544,557/-0-(2)
President and Chief
Executive Officer
- ----------------------
</TABLE>
(1) On December 16, 1996, Mr. Pease converted a $60,000 promissory note into
60,000 shares of the Company's common stock pursuant to the terms of the
underlying promissory note. The $101,250 shown as other annual compensation
represents the difference between the closing sales price as reported by
NASDAQ on December 16, 1996 and the conversion price of $1.00 per share.
(2) The value of the unexercised In-the-Money Options 1996 was determined by
multiplying the number of unexercised options by the closing sales of the
Company's common stock on December 31,1996 as reported by NASDAQ and from
that total, subtracting the total exercise price.
Employment Contract with President
The Company has entered into an employment agreement with Willard Pease,
Jr., the Company's President and Chief Executive Officer and a director. The
employment agreement was entered into in 1993 and may be terminated by the
Company without cause on 30 days notice provided the Company continues to pay
the salary of Mr. Pease for 36 months. The salary must be paid in a lump sum if
the termination occurs after a change in control of the Company as defined in
the employment agreement. Mr. Pease may terminate the employment agreement on 90
days written notice. The salary of Mr. Pease under the employment agreement was
increased to a base of $95,000 per year effective October 1, 1996.
-12-
<PAGE>
Compensation of Directors
Directors who are employees do not receive additional compensation for
service as directors. Other directors each receive a $1,000 annual retainer fee,
$750 per meeting attended and $100 per meeting conducted via telephone
conference. Directors may elect to receive the compensation either in cash or
stock. All the compensation paid to the outside directors in 1995 and 1996 was
in the form of stock.
CERTAIN TRANSACTIONS
From time to time, various officers and directors of the Company and their
affiliates have participated in the drilling of oil and gas wells which were
drilled and operated by the Company. All such persons and entities have taken
working interests in the wells and have paid the drilling, completion and
related costs of the wells on the same basis as the Company and all other
working interest owners. On occasions of such participation the Company retained
the maximum interest in the well that it could justify, given its cash
availability and the risk involved.
In August 1996, Richard A. Houlihan, a director of the Company purchased a
$25,000 10% collateralized debenture that included warrants to purchase 25,000
shares of Common Stock at $1.25 per share in a private placement on the same
terms as nonaffiliated purchasers in the placement.
At December 31, 1996 the Company owed certain affiliates of Willard H.
Pease, Jr. $116,719 principal, plus $31,398 in accrued interest, for oil and gas
revenue attributable to interests in wells operated by the Company that are
owned by the individuals and related entities. Of the principal amount, $2,877
was incurred in 1994, $4,603 was incurred in 1993, $20,992 was incurred in 1992,
$85,518 was incurred in 1991 and $2,729 was incurred in 1990.
At December 31, 1995 the Company owed $60,000 to Willard H. Pease, Jr., the
Company's President and CEO. This loan was unsecured, with interest at 8% per
annum and was originally due in January 1996. In March 1996 the Board of
Directors agreed to change the terms of the note to allow the note to be
convertible into the Company's common stock at $1.00 per share, the then current
market price, in exchange for a one-year extension of the note. In December 1996
Mr. Pease elected to convert the note in its entirety, the note was canceled and
Mr. Pease was issued 60,000 shares of the Company's restricted common stock.
Until June 1993, Willard H. Pease, Jr. owned an oil well servicing
business, Grand Junction Well Services, Inc. ("GJWS"), which operated a workover
and completion rig. In June 1993, the Company acquired GJWS from Mr. Pease by
merging GJWS into a newly-formed subsidiary of the Company. In the merger, the
Company issued Mr. Pease 46,667 shares of Common Stock and the Company's 6%
secured convertible promissory note in the principal amount of $175,000, for a
total value of $350,000, which was the estimated fair market value of the GJWS
assets and business. The note was originally payable in three annual principal
installments of $45,000 on October 1, 1994, $65,000 on April 1, 1995 and $65,000
on April 1, 1996. The October 1, 1994 principal payment of $45,000 was paid and
the remaining installments were extended to October 1, 1997 and October 1, 1998,
respectively. The unpaid principal portion of $130,000 is convertible at the
election of Mr. Pease into Common Stock at $5.00 per share. The transaction was
approved unanimously by the disinterested directors of the Company.
In March 1996 the Company entered into a three-year consulting agreement
with Beta Capital Group, Inc. ("Beta"). Beta's president, Steve Antry, has been
a director of the Company since August 1996. The consulting agreement with Beta
provides for minimum monthly cash payments of $17,500 plus reimbursement for
out-of-pocket expenses. The Company also agreed to pay Beta additional fees from
any warrants that are exercised during the term of the agreement. The amount of
these additional fees are defined in the agreement. During 1996 the Company paid
Beta, or its agents, a total of $424,706 under the terms of the agreement. The
total amount paid consisted of: a.) $162,500 in monthly consulting fees; b.)
$94,700 for the reimbursement of out-of-pocket expenses; c.) $163,000 for fees
related to funds generated from private placements; and d.) $4,506 for fees
related to funds generated from the exercise of warrants. In addition to the
cash compensation, the Company granted Beta warrants to purchase 1.0 million
shares of the Company's common stock for $.75 per share. As allowed under the
-13-
<PAGE>
terms of the agreement, Beta subsequently assigned 400,000 of those warrants to
other parties, including 100,000 warrants assigned to Richard Houlihan, a
director of the Company. All these warrants expire in April 2001.
All existing loans or similar advances to, and transactions with, officers
and their affiliates were approved or ratified by the independent and
disinterested directors. Any future material transactions with officers,
directors and owners of 5% or more of the Company's outstanding Common Stock or
any affiliate of any such person shall be on terms no less favorable to the
Company than could be obtained from independent unaffiliated third parties and
must be approved by a majority of the independent disinterested directors.
PROPOSAL TWO
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED
COMMON STOCK FROM 25 MILLION TO 40 MILLION
To be Voted on by Holders of Common Stock Only
The Board of Directors of the Company has adopted a resolution approving an
Amendment to the Certificate of Incorporation of the Company which will increase
the number of shares of the Company's $0.10 par value Common Stock which the
Company is authorized to issue from 25,000,000 to 40,000,000 shares, without
changing the number of authorized shares of Preferred Stock and recommending to
the stockholders the adoption of the following resolution amending the
Certificate of Incorporation. The Amendment to the Company's Certificate of
Incorporation will become effective upon approval by the holders of a majority
of the shares of Common Stock outstanding on the Record Date and the filing of a
Certificate of Amendment to the Certificate of Incorporation with the Secretary
of State of Nevada which is expected to occur immediately after the meeting of
stockholders.
The Board of Directors recommends that the holders of Common Stock adopt
the following resolution:
RESOLVED, that Article IV of the Articles of Incorporation of
Pease Oil and Gas Company shall be amended to increase the number of
authorized shares of $0.10 par value Common Stock that the Company is
authorized to issue to 40,000,000 shares such that after such
amendment, the first paragraph of Article IV of the Certificate of
Incorporation shall read and provide as follows:
"Article IV. The aggregate number of shares that the
Corporation shall have authority to issue is 42,000,000, of
which 40,000,000 shares shall be common stock, $0.10 par
value ("Common Stock"), and 2,000,000 shall be preferred
stock, $0.10 par value ("Preferred Stock"). Each share of
Common Stock and Preferred Stock of the Corporation shall be
nonassessable. The stockholders shall not possess cumulative
voting rights in voting for directors. The designations,
preferences, limitations and relative rights of shares of
each class are as follows:" [No changes to the other
provisions of Article IV shall be adopted].
Of the 25 million shares of Common Stock (presently authorized for issuance
under the Company's Certificate of Incorporation), approximately 20.2 million
are either: (a) issued and outstanding; or (b) reserved for issuance upon
exercise of outstanding options and warrants or upon conversion of outstanding
Preferred Stock or convertible debentures. Management of the Company believes
that it is important for the Company to have a sufficient reserve of shares of
Common Stock available for the future needs of the Company and that
approximately 4.8 million which are shares presently available is not
sufficient. During the last two fiscal years and through the Record Date, the
Company has issued or committed for issuance, approximately 10 million shares of
its Common Stock. A majority of those shares issued or committed to in the last
two years are related to the conversion of preferred stock into common and the
balance was issued or committed to in connection with capital-raising and other
related activities. Increasing the number of authorized shares of Common Stock
will facilitate acquisition of other businesses or
-14-
<PAGE>
companies or properties and make shares available for other proper corporate
purposes, including future issuances of Common Stock in public or private
financings, payment of stock dividends, or upon subdivision of outstanding
shares through stock splits, or upon conversion of, or exercise of, any
convertible securities, options, warrants or rights which may hereafter be
issued in one or more acquisitions or other transaction.
At the present time, there are no agreements, arrangements, commitments or
understandings with respect to the issuance of additional shares of Common Stock
involving acquisitions of companies or properties, although part of the
Company's strategic plan is to acquire additional oil and gas reserves and the
Company periodically engages in discussions with third parties about the
acquisition of oil and gas properties or companies and such discussions may
involve discussions about the issuance of Company Common Stock. The Company does
intend to issue additional shares of its Common Stock in one or more private
placements during 1997 and may consider other securities offerings as well,
although no specific determination has been made as to the number of shares
which might be offered or sold. Likewise, there is no present intent to issue
shares in stock dividends, stock splits or other issuances not described in this
Proxy Statement. Having additional authorized shares of Common Stock available
for issuance in the future will give the Company greater flexibility and may
result in future acquisitions or issuances of Common Stock being effected
without stockholder approval. Issuance of such shares could dilute the interest
of existing stockholders in the Company. Assuming the Amendment to the
Certificate of Incorporation is approved by holders of Common Stock and becomes
effective, issuances of Common Stock in the future will be subject to the
approval of the Board of Directors.
The approval of the proposal to amend the Certificate of Incorporation of
the Company and authorize additional shares of Common Stock requires the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock. Holders of Preferred Stock do not vote on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION.
INDEPENDENT AUDITORS
Representatives of HEIN + ASSOCIATES LLP, the Company's principal
accountants, are expected to be available at the Meeting either in person or
using electronic or telephone conference facilities and will have an opportunity
to make a statement if they desire and are expected to be available to respond
to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Company's proxy materials
relating to the next annual meeting of stockholders must be received by the
Company on or before January 1, 1998.
SOLICITATION OF PROXIES
The cost of soliciting proxies, including the cost of preparing, assembling
and mailing this proxy material to stockholders, will be borne by the Company.
Solicitations will be made only by use of the mails, except that if necessary to
obtain a quorum, officers and regular employees of the Company may make
solicitations of proxies by telephone or electronic facsimile or by personal
calls. Brokerage houses, custodians, nominees and fiduciaries will be requested
to forward the proxy soliciting material to the beneficial owners of the
Company's shares held of record by such persons and the Company will reimburse
them for reasonable charges and expenses in this connection.
-15-
<PAGE>
OTHER BUSINESS
The Company's Board of Directors does not know of any matters to be
presented at the meeting other than the matters set forth herein. If any other
business should come before the meeting, the persons named in the enclosed form
of Proxy will vote such Proxy according to their judgment on such matters.
PATRICK J. DUNCAN
Corporate Secretary
Grand Junction, Colorado
April 30, 1997
-16-
<PAGE>
PRELIMINARY COPY
COMMON STOCK
PROXY
PEASE OIL AND GAS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD May 31, 1997
The undersigned hereby constitute(s) and appoint(s) Willard H. Pease, Jr. and
Patrick J. Duncan, and each of them the true and lawful attorneys and proxies
("Proxies") of the undersigned with full power of substitution and appointment,
for and in the name, place and stead of the undersigned, to act for and to vote
all of the undersigned's shares of Common Stock of Pease Oil and Gas Company
(the "Company") at the Annual Meeting of Stockholders to be held at the Newport
Beach Marriott Hotel & Tennis Club, 900 Newport Center Drive, Newport Beach,
California 92660, on Saturday, May 31, 1997, at 9:00 a.m., Pacific Daylight
Time, and at any and all adjournments thereof, for the following purposes:
(1) Election of Directors
[ ] FOR all Class A director nominees listed below (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
ROBERT V. TIMLIN JAMES N. BURKHALTER PATRICK J. DUNCAN
(2) Amendment to Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 25 million to 40 million shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may lawfully come before the meeting, hereby revoking any
Proxies as to said shares heretofore given by the undersigned and ratifying
and confirming all that said attorneys and proxies may lawfully do by
virtue hereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). UNLESS OTHERWISE INSTRUCTED ABOVE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING FOR ELECTION OF THE
NOMINEES FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS, AND IN FAVOR OF
PROPOSALS (2) AND (3).
It is understood that this Proxy confers discretionary authority in respect of
matters not known or determined at the time of the mailing of the Notice of
Annual Meeting of Stockholders to the undersigned.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith.
Dated and Signed:
, 1997
------------------------------------
------------------------------------------
Signature(s) of Stockholder(s)
Signature(s) should agree with the name(s)
stenciled hereon. Executors,
administrators, trustees, guardians and
attorneys should so indicate when signing.
Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY TO AMERICAN SECURITIES TRANSFER & TRUST, INC., P.O. BOX 1596,
DENVER, COLORADO 80201-9975. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>
PRELIMINARY COPY
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
PROXY
PEASE OIL AND GAS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD May 31, 1997
The undersigned hereby constitute(s) and appoint(s) Willard H. Pease, Jr. and
Patrick J. Duncan, and each of them the true and lawful attorneys and proxies
("Proxies") of the undersigned with full power of substitution and appointment,
for and in the name, place and stead of the undersigned, to act for and to vote
all of the undersigned's shares of Series A Cumulative Convertible Preferred
Stock of Pease Oil and Gas Company (the "Company") at the Annual Meeting of
Stockholders to be held at the Newport Beach Marriott Hotel & Tennis Club, 900
Newport Center Drive, Newport Beach, California 92660, on Saturday, May 31,
1997, at 9:00 a.m., Pacific Daylight Time, and at any and all adjournments
thereof, for the following purposes:
(1) ELECTION OF DIRECTORS [VOTE FOR TWO]:
FOR each Series A Preferred director nominee checked in the list below.
(Vote by marking up to two (2) boxes only.)
[ ] STEVE ANTRY
[ ] LEROY W. SMITH
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
(2) In their discretion, the Proxies are authorized to vote upon such other
business as may lawfully come before the meeting, hereby revoking any
Proxies as to said shares heretofore given by the undersigned and ratifying
and confirming all that said attorneys and proxies may lawfully do by
virtue hereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). UNLESS OTHERWISE INSTRUCTED ABOVE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN FAVOR OF PROPOSAL (2)
AND TREATED AS AN ABSTENTION FOR PURPOSES OF VOTING ON THE SERIES A PREFERRED
STOCK DIRECTORS.
It is understood that this Proxy confers discretionary authority in respect to
matters not known or determined at the time of the mailing of the Notice of
Annual Meeting of Stockholders to the undersigned.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith.
Dated and Signed:
, 1997
------------------------------------
------------------------------------------
Signature(s) of Stockholder(s)
Signature(s) should agree with the name(s)
stenciled hereon. Executors,
administrators, trustees, guardians and
attorneys should so indicate when signing.
Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY TO AMERICAN SECURITIES TRANSFER & TRUST, INC., P.O. BOX 1596,
DENVER, COLORADO 80201-9975. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
