<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------ SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------ SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM TO
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Commission file number 1-8975
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PLAINS PETROLEUM COMPANY
------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-0928792
- ---------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
12596 West Bayaud, P.O. Box 281306, Lakewood, Colorado 80228
- ------------------------------------------------------ ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 969-9325
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 12, 1995
- ------------------------------- ---------------------------
Common Stock, $.01 par value 9,829,118
<PAGE>
PLAINS PETROLEUM COMPANY
INDEX
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<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -
March 31, 1995 and December 31, 1994 1
Consolidated Statements of Earnings -
quarters ended March 31, 1995
and 1994 2
Consolidated Statements of Cash Flows -
quarters ended March 31, 1995 and 1994 3
Notes to Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 6. Exhibits and Reports on Form 8-K 12-13
Signatures 14
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
PLAINS PETROLEUM COMPANY
CONSOLIDATED BALANCE SHEETS
(Successful Efforts Accounting Method)
(Note 1)
March 31 December 31
ASSETS IN THOUSANDS 1995 1994
- -----------------------------------------------------------------------------------------
UNAUDITED
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 2,001 2,331
Accounts receivable 6,266 7,057
Inventory 647 643
Prepaid expenses 622 422
----- -----
Total current assets 9,536 10,453
------ ------
PROPERTY AND EQUIPMENT
Oil and gas properties 224,829 221,337
Undeveloped leases 4,601 4,568
Other equipment and assets 8,832 8,627
Accumulated depreciation, depletion
and amortization (92,733) (88,041)
------ ------
Net property and equipment 145,529 146,491
-------- --------
$155,065 $156,944
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-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $1,338 $2,245
Undistributed production receipts 1,052 2,025
Accrued taxes 2,985 2,069
Accrued lease costs 1,118 994
Other accruals 1,102 1,199
------ ------
Total current liabilities 7,595 8,532
------ ------
LONG-TERM DEBT (Note 2) 34,500 37,000
------ ------
DEFERRED INCOME TAXES (Note 3) 10,692 10,012
------ ------
POSTRETIREMENT BENEFITS 952 927
---- ----
OTHER LONG-TERM LIABILITIES 1,023 1,017
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STOCKHOLDERS' EQUITY
Common stock, 1 CENTS par value; 20 million shares authorized;
9,822,028 and 9,813,055 shares outstanding 98 98
Additional paid-in capital 20,383 20,278
Retained earnings 80,364 79,713
Treasury stock, at cost (542) (633)
------ ------
Total stockholders' equity 100,303 99,456
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$155,065 $156,944
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-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
PLAINS PETROLEUM COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
Quarter Ended March 31
-----------------------
IN THOUSANDS, EXCEPT PER SHARE UNAUDITED 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
REVENUES
Gas sales $12,346 $12,783
Oil sales 6,288 3,393
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18,634 16,176
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OPERATING EXPENSES
Production -
Lease operations 3,519 2,720
Production and property taxes 2,432 1,957
Transportation and processing 821 649
Net profit payments 668 1,288
General and administrative 2,061 1,843
Depreciation, depletion & amortization 4,983 4,467
Exploration 1,694 425
Interest expense, net 584 113
Other income (129) (102)
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16,633 13,360
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EARNINGS BEFORE TAXES 2,001 2,816
------ ------
Provision For Income Taxes
Current 81 140
Deferred 680 648
----- -----
761 788
----- -----
NET EARNINGS $1,240 $2,028
------ ------
------ ------
Average Shares Outstanding 9,822 9,800
------ ------
------ ------
NET EARNINGS PER SHARE $ .13 $ .21
----- -----
----- -----
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
PLAINS PETROLEUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarter Ended March 31
------------------------
IN THOUSANDS UNAUDITED 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $1,240 $2,028
Adjustments to reconcile earnings
to cash provided by operations:
Depreciation, depletion and amortization 4,983 4,467
Deferred income taxes 680 648
Exploration expense 1,694 425
Postretirement benefits 25 25
Changes in Components of Working Capital:
Accounts receivable 791 443
Prepaid expenses (201) 145
Accounts payable (907) (664)
Undistributed production receipts (973) (694)
Other liabilities 943 447
----- -----
Cash provided by operating activities 8,275 7,270
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INVESTING ACTIVITIES
Capital expenditures
- Exploration and Production (5,225) (1,429)
- Other (116) (718)
Acquisition of oil and gas properties (383) (1,738)
Proceeds from sale of properties 5 519
------ -------
Cash used in investing activities (5,719) (3,366)
------ -----
FINANCING ACTIVITIES
Repayments of long-term debt (2,500) (3,000)
Dividends paid (589) (588)
Exercised stock options 100
Treasury stock issued (purchased) 96 (1)
Other 7
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Cash used in financing activities (2,886) (3,589)
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(Decrease) increase in cash and equivalents (330) 315
Cash and equivalents at beginning of period 2,331 2,660
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Cash and equivalents at end of period $2,001 $2,975
------ ------
------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PLAINS PETROLEUM COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
Unaudited
- ------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Plains
Petroleum Company and its wholly-owned subsidiaries, which are hereinafter
referred to collectively in these Notes to Consolidated Financial Statements as
the "Company". All significant intercompany transactions have been eliminated
in consolidation. Certain reclassifications have been made to 1994 amounts to
conform to the 1995 presentation. The unaudited March 31, 1995 and 1994
financial statements contain all adjustments (including normal recurring
accruals) which, in the opinion of management, are necessary for a fair
presentation of the results for the interim periods.
The Company considers all short-term, highly liquid investments with a
maturity of three months or less to be cash equivalents. During the first
quarter ended March 31, 1995 and 1994, cash payments made for interest were
$579,000 and $225,000, respectively, and no cash payments were made for income
taxes in either quarter. The Company has not held during the first quarter, or
in any previous periods, any accounts which included derivative securities.
The Company follows the successful efforts method of accounting for its oil
and gas exploration and development activities. Gains or losses from disposal
of properties are recognized currently. Reference should be made to the
Company's 1994 Form 10-K for additional information concerning all other
significant accounting policies, operations and financial condition.
2. LONG-TERM DEBT
On February 17, 1995, a new credit agreement was entered into which
replaced the previous $60 million unsecured, revolving line of credit with a
$150 million bank line. The new bank line has an initial borrowing base
limitation of $110 million, which is to be redetermined annually. Under the new
agreement, outstanding borrowings at the end of the revolving period in January
1997 convert to a six-year term loan. The new agreement also permits the
Company to repurchase its stock in an amount not to exceed $75 million during
the eighteen-month period following the effective date. Subsequent to that
period, aggregate treasury stock purchases and cash dividends for any four
fiscal quarters may not exceed 50% of net earnings for the preceding two years.
The Company is required to pay only interest during the revolving period;
thereafter, principal is to be repaid over six years in equal quarterly
installments beginning in April 1997. Interest accrues, at the Company's
option, at rates equal to the agent bank's prime rate, the domestic certificate
of deposit rate or the London interbank eurodollar rate (LIBOR), in each case
plus a spread ranging from five-eighths of one percent (.625%) to two percent
(2.0%) per annum, depending on the amount of treasury stock the Company has
purchased and the level of the Company's borrowings relative to its borrowing
base. LIBOR was elected for the entire $34 1/2 million outstanding balance at
quarterend at an effective rate of 6.90% per annum.
4
<PAGE>
LONG-TERM DEBT (Continued)
In April, 1995, the Company repaid $1 1/2 million under the credit
agreement, reducing the outstanding principal balance of loans to $33 million.
3. INCOME TAXES
Statement of Financial Accounting Standards No. 109 provides that a
deferred tax liability or asset is determined based on the timing differences
between the bases used for financial versus tax reporting of assets and
liabilities as measured by the effective tax rates. For the quarter ended March
31, 1995, the income tax expense equals the amounts computed by applying the
statutory Federal and state income tax rates, totaling 38%.
For the prior year's first quarter, the income tax expense differs from the
amounts computed by applying the statutory rates to earnings before income
taxes. The reasons for these differences are shown as a percent of earnings as
follows:
Statutory income tax rate 34%
State income tax rate 3
Change in valuation allowance (7)
Other items (2)
-------
Effective tax rate 28%
-----
-----
4. COMMITMENTS AND CONTINGENCIES
On October 20, 1994, the Company issued a press release stating that it had
authorized its financial advisors to help the Company study strategic
alternatives in light of a recent Schedule 13-D filing by Cross Timbers Oil
Company. The press release stated that, as part of the study, the financial
advisors would seek indications of interest from certain possible merger
partners. The press release also indicated that the Company's board had amended
its shareholder rights plan.
On November 2, 1994, a putative class action was filed in Delaware Chancery
Court. In that case, entitled MILLER V. CODY, et al., the plaintiff has alleged
that certain named directors and the Company have, among other things, breached
their fiduciary duties by unreasonably amending the Company's shareholder rights
plan and otherwise acting to entrench themselves in office. Plaintiff seeks
various forms of injunctive relief, damages and an award of plaintiff's costs
and disbursements.
The Company and the named directors deny the allegations of wrongdoing in
the complaint and intend to pursue a vigorous defense. A putative class action
entitled BEHRENS V. MILLER, et al., that was filed on October 21, 1994, was
voluntarily dismissed without prejudice by the plaintiff. The allegations and
relief sought in the BEHRENS case were similar to those in the MILLER action,
described above.
5
<PAGE>
COMMITMENTS AND CONTINGENCIES (Continued)
On May 3, 1995, the Company announced it had executed a definitive merger
agreement with Barrett Resources Corporation (Barrett) and a subsidiary thereof.
Also on May 3, 1995, a putative class action, entitled CRANDON CAPITAL PARTNERS
V. JAMES A. MILLER, ET AL., was filed in Delaware Chancery Court against the
Company and the members of its Board of Directors. In this suit it is alleged
that, among other things, the consideration to be paid the Company's
shareholders pursuant to such merger agreement is inadequate and "substantially
below the fair or inherent value of the Company." Plaintiff seeks various forms
of declaratory and injunctive relief, damages and an award of plaintiff's costs
and disbursements. The Company and the directors deny the allegations of
wrongdoing in the complaint and intend to pursue a vigorous defense.
In addition, at March 31, 1995, the Company was party to certain other
legal proceedings which have arisen out of the ordinary course of business.
Based on the facts currently available, in management's opinion the liability,
individually or in the aggregate, if any, to the Company resulting from the
other actions will not have a material adverse effect on the Company's
consolidated financial position and results of operations.
ENVIRONMENTAL CONTROLS
Currently, there are no known environmental or other regulatory matters
related to the Company's operations which are reasonably expected to result in a
material liability to the Company. Compliance with environmental laws and
regulations has not had, and is not expected to have, a material adverse effect
on the Company's capital expenditures, earnings or competitive position.
5. SUBSEQUENT EVENT
On May 2, 1995, Barrett, a subsidiary thereof and the Company executed a
definitive merger agreement pursuant to which the Company will merge with a
subsidiary of Barrett and, thereby, become a wholly-owned subsidiary of Barrett.
The terms of the merger agreement provide that each outstanding share of the
Company's common stock will be converted into the right to receive 1.3 shares of
Barrett common stock.
The merger will take the form of a tax-free exchange and will be accounted
for as a pooling of interests. The merger has been approved by the Boards of
Directors of Barrett and the Company and is subject to approval by their
respective stockholders as well as other customary conditions and approvals. At
the conclusion of the merger, Barrett will expand its Board of Directors to
include four members of the Company's Board.
6
<PAGE>
Part I - Item 2 PLAINS PETROLEUM COMPANY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 31, 1995
- ------------------------------------------------------------------------------
Record oil production in the first quarter, in addition to a 36% higher
average oil price, resulted in significantly (85%) increased oil revenues for
the quarter. Natural gas revenues were below the prior year's first quarter due
to lower gas prices realized for increased gas volumes sold. The current
quarter's total revenues were the highest in the Company's history. Exploration
expense was substantially above last year's first quarter principally due to an
unsuccessful exploratory Louisiana well. In addition to the higher exploration
costs and increased production costs associated with acquired wells by the
Company, other expenses which increased, including interest expense on higher
debt balances and increased depletion charges related to property additions,
offset the higher revenues and resulted in lower earnings for the quarter.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of March 31, 1995, the Company's working capital was $1.9 million, with
a ratio of current assets to current liabilities of 1.25 to 1. Cash provided by
operating activities during the first quarter of 1995 was used to fund drilling
programs, reduce debt, pay dividends and acquire properties.
The Company's 1995 planned capital spending, excluding acquisitions, is
approximately $38 million, up approximately $16 million from the 1994 level.
Approximately two-thirds of the Company's first quarter capital spending of $5
million focused on the exploitation of the Company's existing properties and
production enhancement projects. The balance was utilized in exploration
drilling and the development of new prospects. During the first quarter, the
first of two deep Louisiana exploratory prospects was unsuccessful at a net cost
of approximately $600,000. In the second quarter, the drilling contractor,
operating under a turnkey contract, elected to plug and abandon the second deep
well due to unresolved drilling problems with a net cost to the Company of
approximately $150,000. Drilling of an exploratory well located in the Gulf of
Mexico on Ship Shoal Blocks 275/292 will be commenced in May. The Company has a
one-third working interest in this project at an estimated net drilling cost of
$884,000.
In the first quarter 1995, the Company's secondary recovery program
concentrated on the Cambridge field project located in Wyoming and on the Moss
and Foster Grayburg San Andres Units located in Texas. Development projects
are concentrated in Wyoming, New Mexico and Texas. In Wyoming, a well in the
Meeteetse field producing from the Frontier Muddy formation was placed on
production. Two additional wells are planned for 1995. In the Teague field
located in New Mexico, the Company has three Simpson-McKee producing wells, a
fourth well being drilled and a fifth well in the permitting stage. An enhanced
recovery project for the field is currently being evaluated. Two offset wells
in the Sean Andrew field in Texas, a 1994 discovery, were placed on production.
Another well is being completed and a fourth well is being drilled. Other Texas
projects include a well in the Deckers Prairie field in Montgomery County and
the completion of the Halls Bayou Ranch No. 2 well in Galveston County which was
placed on production.
In Kansas, a new 2,200 horsepower field compressor station has been placed
in operation on the Hugoton field gathering system and will enhance the
Company's ability to increase its rate of production from the field.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (Continued)
-------------------------------
To date the drilling programs have been funded by operating cash flow, and
it is anticipated that the remaining 1995 capital spending plan will be funded
accordingly. Excess funds provided from operations that are not required for
capital expenditures will be utilized to reduce outstanding debt.
On March 31, 1995 a quarterly dividend of 6 CENTS per share was paid. On
May 2, 1995 the Company declared a quarterly dividend of 6 CENTS per share
payable on June 30, 1995 to shareholders of record on June 13.
On May 2, 1995, Barrett, a subsidiary thereof and the Company executed a
definitive merger agreement pursuant to which the Company will merge with a
subsidiary of Barrett and, thereby, become a wholly-owned subsidiary of Barrett.
The terms of the merger agreement provide that each outstanding share of the
Company's common stock will be converted into the right to receive 1.3 shares of
Barrett common stock. The merger will take the form of a tax-free exchange and
will be accounted for as a pooling of interests. The merger has been approved
by the Boards of Directors of Barrett and the Company and is subject to approval
by their respective stockholders as well as other customary conditions and
approvals. At the conclusion of the merger, Barrett will expand its Board of
Directors to include four members of the Company's Board.
RESULTS OF OPERATIONS
- ---------------------
Increased production for the first three months of 1995, accompanied by
higher oil prices, resulted in record first quarter revenues for the Company.
Earnings were down 39% primarily due to higher exploration costs, interest and
depletion charges, income taxes and increased production costs due to expanded
operations.
REVENUES
Revenues for the first quarter were $18.6 million, 15% over first quarter
1994 revenues of $16.2 million. This increase is attributed to a 24% rise in
production, on a barrel of oil equivalent (BOE) basis, and a 36% increase in
average oil prices.
Production and average sales prices during the periods presented were as
follows:
<TABLE>
<CAPTION>
Quarter Ended
March 31
----------------------
1995 1994
---- ----
<S> <C> <C>
Gas production (Bcf) 7.4 6.1
Average price per Mcf $1.67 $2.08
Oil production(MBbls) 405 298
Average price per barrel $15.51 $11.40
<FN>
(Note: Bcf = billion cubic feet; Mcf = thousand cubic feet; MBbls =
thousand barrels)
</TABLE>
8
<PAGE>
REVENUES (Continued)
Gas revenues of $12.3 million for the current quarter were down 3% from the
first quarter of 1994. Average gas prices declined 41 CENTS per Mcf (20%),
offsetting a 1.3 Bcf increase in gas volumes sold. Under a seasonal pricing
contract for natural gas effective for 1995, the Company realized during the
first quarter an average wellhead price of $1.87 per million British Thermal
Unit (MMBtu) from the Company's principal purchaser for 6.6 Bcf sold from the
Hugoton field in southwestern Kansas. The Company will receive $1.60 per MMBtu
at the wellhead from its principal purchaser under the first tier pricing of its
contract for the months of April through September and an anticipated weighted
average of $2.05 per MMBtu for the fourth quarter of 1995. The balance of the
Company's Hugoton field gas production, including production sold to its
principal purchaser under the second tier, will be priced on a spot market
basis. Gas production from the remainder of the Company's gas producing
properties is sold to various purchasers under spot sales and limited-term
contracts of up to one year. Spot market sales are burdened with additional
gathering, processing, transportation and marketing charges, ranging from 15
CENTS to 40 CENTS per MMBtu in the Rocky Mountain and Mid-continent areas.
First quarter oil revenues increased 85% to a record $6.3 million as
compared to $3.4 million for the same period in 1994. A 36% increase in oil
production is directly attributed to the success of the Company's 1994
exploration and exploitation program and acquisitions of oil properties. Oil
revenues were also enhanced by a $4.11 per barrel (36%) increase in average oil
prices for the first quarter of 1995 from 1994.
EXPENSES
Operating expenses for the first quarter of 1995 of $16.6 million increased
24% from $13.4 million, for the same period in 1994. In addition to impacting
revenues, property acquisitions made in 1994 and the first quarter of 1995,
combined with the addition of new wells on production and higher exploration
costs, directly influenced this increase.
Production expenses, including lease operating costs, production and
property taxes, transportation and processing fees and net profits payments,
increased 12% for the first quarter as compared to the same period in 1994. The
increase relates to the producing properties added through acquisitions,
exploration and exploitation activities. Production expenses, or lifting costs,
approximated $4.53 per BOE for the first quarter of 1995 compared to $5.01 per
BOE for 1994. At present, there are no known environmental or other regulatory
matters related to the Company's operations which would result in a material
expense to the Company. No significant environmental costs have been incurred
or accrued through the periods presented in this report.
General and administrative expense increased approximately 12% from the
first quarter of 1994. This increase is attributable principally to consulting
and contract services expenses.
Depreciation, depletion and amortization increased by approximately 12% in
the first quarter of 1995 over the prior year primarily due to sales volume
increases. However, reserve increases recognized within the past year favorably
reduced the weighted average depletion rate for the Company's oil and gas
properties from $3.21 per BOE in the first quarter of 1994 to $2.83 per BOE for
1995.
9
<PAGE>
EXPENSES (Continued)
Exploration costs were higher principally due to a $600,000 charge for an
unsuccessful exploratory well in the Patterson Deep Prospect of St. Mary Parish,
Louisiana.
Interest expense increases are the direct result of higher debt balances
associated with the financing of an acquisition in November 1994.
INCOME TAXES
The effective tax rates were 38% and 28% for the first quarter of 1995 and
1994, respectively. The 1994 rate incorporates the benefit of the existing tax
loss carryforwards being utilized in conjunction with the accounting for income
taxes. The current income tax provision is directly attributable to earnings
taxable under the Federal alternative minimum tax and state income taxes.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On October 20, 1994, the Company issued a press release stating
that it had authorized its financial advisors to help the Company
study strategic alternatives in light of a recent Schedule 13-D filing
by Cross Timbers Oil Company. The press release stated that as part
of the study, the financial advisors would seek indications of
interest from certain possible merger partners. The press release
also indicated that the Company's board had amended its shareholder
rights plan.
On November 2, 1994, a putative class action was filed in
Delaware Chancery Court. In that case, entitled MILLER V. CODY, et
al., the plaintiff has alleged that certain named directors and the
Company have, among other things, breached their fiduciary duties by
unreasonably amending the Company's shareholder rights plan and
otherwise acting to entrench themselves in office. Plaintiff seeks
various forms of injunctive relief, damages and an award of
plaintiff's costs and disbursements.
The Company and the named directors deny the allegations of
wrongdoing in the complaint and intend to pursue a vigorous defense.
A putative class action entitled BEHRENS V. MILLER, et al., that was
filed on October 21, 1994, was voluntarily dismissed without prejudice
by the plaintiff. The allegations and relief sought in the BEHRENS
case were similar to those in the MILLER action, described above.
On May 3, 1995, the Company announced it had executed a
definitive merger agreement with Barrett Resources Corporation and a
subsidiary thereof. Also on May 3, 1995, a putative class action,
entitled CRANDON CAPITAL PARTNERS V. JAMES A. MILLER, ET AL., was
filed in Delaware Chancery Court against the Company and the members
of its Board of Directors. In this suit it is alleged that, among
other things, the consideration to be paid the Company's shareholders
pursuant to such merger agreement is inadequate and "substantially
below the fair or inherent value of the Company." Plaintiff seeks
various forms of declaratory and injunctive relief, damages and an
award of plaintiff's costs and disbursements. The Company and the
directors deny the allegations of wrongdoing in the complaint and
intend to pursue a vigorous defense.
Item 2. CHANGES IN SECURITIES
On May 2, 1995, the Company amended its Rights Agreement
(Agreement), dated as of May 12, 1988 and amended as of October 19,
1994, to exclude from the provisions of such agreement Barrett
Resources Corporation (Parent), Vanilla Corporation, a wholly-owned
subsidiary of Parent (Sub), or any Affiliates or Associates of Parent
or Sub, by virtue of (a) the execution and delivery of the Agreement
and Plan of Merger among Parent, Sub and the Company, dated as of May
2, 1995 and any amendments thereto in accordance with its terms (the
Merger Agreement), pursuant to which, among other things, Sub shall
merge with and into the Company (the Merger) or (b) the consummation
of the Merger and the transactions contemplated by the Merger
Agreement.
11
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number
-------
2 (a) Agreement and Plan of Merger dated May 2, 1995 among
Barrett Resources Corporation, Vanilla Corporation and
the Company, incorporated by reference to the Company's
Report on Form 8-K, dated May 2, 1995.
4 (b)-2 Second Amendment to the Rights Agreement dated May 2,
1995 between Plains Petroleum Company and Chemical
Bank, incorporated by reference to the Company's Report
on Form 8-K, dated May 2, 1995.
4 (g) Credit Agreement effective February 17, 1995 between
Plains Petroleum Operating Company and NationsBank of
Texas, N.A., incorporated by reference to the Company's
Report on Form 10-K, dated March 30, 1995.
4 (h) First Amendment to Credit Agreement effective March 31,
1995 by and among Plains Petroleum Company, Plains
Petroleum Operating Company, Nations Bank of Texas,
N.A. and Colorado National Bank
27 Financial Data Schedule for the three months ended
March 31, 1995
(b) Reports on Form 8-K:
The following reports on Form 8-K are incorporated by reference
in this report:
(1) Date of Report: January 12, 1995
Items Reported:
ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
Financial statements of certain producing properties
acquired from Anadarko Petroleum Corporation for the nine
months ended September 30, 1994 and 1993 and for the year
ended December 31, 1993, and pro forma financial information
of Plains Petroleum Company and Acquired Properties as of
September 30, 1994 and December 31, 1993.
12
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 6 (Continued)
(2) Date of Report: May 2, 1995
Items Reported:
Item 5 - Other Events
---------------------
a) Agreement and Plan of Merger dated May 2, 1995 among
Barrett Resources Corporation, Vanilla Corporation and
Plains Petroleum Company.
b) Second Amendment to Plains Petroleum Company's Rights
Agreement.
c) Press Release dated May 3, 1995 re: Barrett Resources
Corporation and Plains Petroleum Company announce the
execution of a definitive merger agreement.
13
<PAGE>
PLAINS PETROLEUM COMPANY
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: May 12, 1995 /s/ James A. Miller
------------- ----------------------------------------
James A. Miller
Chairman
(Chief Executive Officer)
DATE: May 12, 1995 /s/ Darrel Reed
------------- ----------------------------------------
Darrel Reed
Vice President
(Chief Accounting Officer)
14
<PAGE>
PLAINS PETROLEUM COMPANY
EXHIBIT INDEX
-------------
No.Exhibit
- ----------
2 (a) Agreement and Plan of Merger dated May 2, 1995 among Barrett
Resources Corporation, Vanilla Corporation and the Company,
incorporated by reference to the Company's Report on Form 8-K,
dated May 2, 1995.
4 (b)-2 Second Amendment to the Rights Agreement dated May 2, 1995
between Plains Petroleum Company and Chemical Bank,
incorporated by reference to the Company's Report on Form 8-K,
dated May 2, 1995.
4 g Credit Agreement effective February 17, 1995 between Plains
Petroleum Operating Company and NationsBank of Texas, N.A.,
incorporated by reference to the Company's Report on Form 10-K,
dated March 30, 1995.
4 (h) First Amendment to Credit Agreement effective March 31, 1995 by
and among Plains Petroleum Company, Plains Petroleum Operating
Company, Nations Bank of Texas, N.A. and Colorado National Bank
27 Financial Data Schedule for the three months ended March 31,
1995
15
<PAGE>
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this "Amendment")
made as of the 31st day of March, 1995 by and among Plains Petroleum Operating
Company ("Borrower"), Plains Petroleum Company ("Parent"), NationsBank of Texas,
N.A. ("NationsBank"), as Agent ("Agent"), and NationsBank and Colorado National
Bank ("CNB"), as Lenders ("Lenders").
W I T N E S S E T H:
WHEREAS, Borrower, Parent and NationsBank, individually and as Agent, have
entered into that certain Credit Agreement dated as of February 17, 1995 (the
"Original Agreement") for the purposes and consideration therein expressed,
pursuant to which NationsBank became obligated to make and has made loans to
Borrower as therein provided; and
WHEREAS, pursuant to that certain Assignment and Assumption of even date
herewith, NationsBank has assigned to CNB a Percentage Share under the Credit
Agreement equal to twenty percent (20%) of the commitment and Loans outstanding
on the date hereof; and
WHEREAS, Borrower, Agent and Lenders desire to amend the Original Agreement
to amend the definition of "Majority Lenders";
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to Borrower, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I. -- DEFINITIONS AND REFERENCES
Section 1.1 TERMS DEFINED IN THE ORIGINAL AGREEMENT. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
Section 1.2. OTHER DEFINED TERMS. Unless the context otherwise requires,
the following terms when used in this Amendment shall have the meanings assigned
to them in this Section 1.2.
"AMENDMENT" means this First Amendment to Credit Agreement.
"CREDIT AGREEMENT" means the Original Agreement as amended hereby.
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<PAGE>
ARTICLE II. -- AMENDMENT TO ORIGINAL AGREEMENT
Section 2.1. DEFINED TERMS. The definition of "Majority Lenders" in
Section 1.1. of the Original Agreement is hereby amended in its entirety to read
as follows:
"'MAJORITY LENDERS' means at any time two or more Lenders collectively
having Percentage Shares totaling in the aggregate at least sixty-six and
two-thirds percent (66 2/3%)."
ARTICLE III. -- CONDITIONS OF EFFECTIVENESS
Section 3.1. EFFECTIVE DATE. This Amendment shall become effective as of
the date first above written when and only when (i) Agent shall have received,
at Agent's office, a counterpart of this Amendment executed and delivered by
Borrower, Parent and each Lender and (ii) Agent shall have additionally received
duly authorized, executed and delivered, and in form and substance satisfactory
to Agent, such supporting documents as Agent may reasonably request.
ARTICLE IV. -- REPRESENTATIONS AND WARRANTIES
Section 4.1. REPRESENTATIONS AND WARRANTIES OF BORROWER AND PARENT. In
order to induce Agent and Lenders to enter into this Amendment, each of Borrower
and Parent represents and warrants to Agent and Lenders that:
(a) Each of Borrower and Parent is duly authorized to execute and
deliver this Amendment and is and will continue to be duly authorized to
perform its obligations under the Credit Agreement. Borrower is and will
continue to be duly authorized to borrow under the Credit Agreement. Each
of Borrower and Parent has duly taken all corporate action necessary to
authorize the execution and delivery of this Amendment and to authorize the
performance of its obligations hereunder.
(b) The execution and delivery by each of Borrower and Parent of this
Amendment, the performance by each of them of their obligations hereunder
and the consummation of the transactions contemplated hereby do not and
will not conflict with any provision of law, statute, rule or regulation or
of either of their certificates of incorporation or bylaws, or of any
material agreement, judgment, license, order or permit applicable to or
binding upon either of them, or result in the creation of any lien, charge
or encumbrance upon any of their assets or properties. Except for those
which have been duly obtained, no consent, approval, authorization or order
of any court or governmental authority or third party is required in
connection with the execution and delivery by either Borrower or Parent of
this Amendment or to consummate the transactions contemplated hereby.
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<PAGE>
(c) When duly executed and delivered, each of this Amendment and the
Credit Agreement will be a legal and binding instrument and agreement of
each of Borrower and Parent, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency and similar laws applying to
creditors' rights generally and by principles of equity applying to
creditors' rights generally.
ARTICLE V. -- MISCELLANEOUS
Section 5.1. RATIFICATION OF AGREEMENTS. The Original Agreement as hereby
amended is hereby ratified and confirmed in all respects. Any reference to the
Credit Agreement in any Loan Document shall be deemed to refer to this Amendment
also. The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of Agent or any Lender under the Credit Agreement or any other Loan
Document nor constitute a waiver of any provision of the Credit Agreement or any
other Loan Document.
Section 5.2. SURVIVAL OF AGREEMENTS. All representations, warranties,
covenants and agreements of Borrower and Parent herein shall survive the
execution and delivery of this Amendment and the performance hereof, including
without limitation the making or granting of the Loan, and shall further survive
until all of the Obligations are paid in full.
Section 5.3. LOAN DOCUMENTS. This Amendment is a Loan Document, and all
provisions in the Credit Agreement pertaining to Loan Documents apply hereto.
Section 5.4. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.
Section 5.5. COUNTERPARTS. This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.
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<PAGE>
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
PLAINS PETROLEUM OPERATING COMPANY
By:/s/ William F. Wallace
----------------------------------------------
William F. Wallace
President and Chief Operating Officer
PLAINS PETROLEUM COMPANY
By:/s/ James A. Miller
----------------------------------------------
James A. Miller
President and Chief Executive Officer
NATIONSBANK OF TEXAS, N.A.,
individually and as Agent
By:/s/ Franklyn L. Muscara
----------------------------------------------
Franklyn L. Muscara
Senior Vice President
COLORADO NATIONAL BANK
By:/s/ Monte Deckerd
----------------------------------------------
Monte Deckerd
Vice President
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<PAGE>
AGREEMENT TO BE BOUND
March 31, 1995
PLAINS PETROLEUM OPERATING COMPANY
12596 West Bayaud, Suite 400
Lakewood, Colorado 80228
Attention: William F. Wallace
NATIONSBANK OF TEXAS, N.A.
901 Main Street, 49th Floor
Dallas, Texas 75202
Attention: Energy Banking Group
Re: Assignment to Colorado National Bank of certain of the commitment and
Loans of NationsBank of Texas., N.A.
Ladies and Gentlemen:
We refer to Section 9.10(a) of the Credit Agreement, dated as of February
17, 1995 (as from time to time supplemented, amended, or restated, the "CREDIT
AGREEMENT"), by and among Plains Petroleum Operating Company ("BORROWER"),
Plains Petroleum Company, NationsBank of Texas, N.A., as Agent ("AGENT"), and
the Lenders as are, or may from time to time become, party thereto. Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.
This Agreement constitutes notice to each of you, pursuant to Section
9.10(a) of the Credit Agreement, of the assignment to Colorado National Bank
("ASSIGNEE") of (i) an undivided twenty percent (20%) (the "DESIGNATED
PERCENTAGE"), ($30,000,000), of the commitment and Loans of NationsBank of
Texas, N.A. ("ASSIGNOR") in effect on the date hereof.
Assignee hereby acknowledges and confirms that it has received a copy of
the Credit Agreement and the exhibits related thereto, together with a copy of
the documents which were required to be delivered under the Credit Agreement as
a condition to the making of the Loans thereunder. Assignee further confirms
and agrees that in becoming a Lender and in making its Loans under the Credit
Agreement, such actions have and will be made without recourse to, or
representation or warranty by, Assignor, except as expressly set forth in the
Assignment and Assumption of even date herewith between Assignor and Assignee.
The assignment shall become effective on the date which is five (5)
Business Days after the later of (i) the receipt by the Agent of this document
and (ii) the receipt of the processing fee referred to in the preceding
paragraph.
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<PAGE>
Upon the effective date of this Agreement each Lender:
(a) shall have all the rights and benefits of a "Lender" under the Credit
Agreement as if it were an original signatory thereto; and
(b) agrees to be bound by the terms and conditions set forth in the Credit
Agreement and be obligated thereunder as if it were an original signatory
thereto.
Assignee hereby advises each of you of the following administrative details
with respect to the assigned commitment and Loans.
(A) Addresses for Notice: 950 17th Street, 3rd Floor
Denver, Colorado 80231
Telephone: (303) 585-4212
Telecopy: (303) 585-4362
Institution Name: Colorado National Bank
Attention: Monte Deckerd, Vice President
(B) Payment Instructions:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
This Agreement may be executed by Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
executed by its official, officer or agent thereunto duly authorized.
NATIONSBANK OF TEXAS, N.A., COLORADO NATIONAL BANK,
As Assignor As Assignee
By:/s/ Franklyn L. Muscara By:/s/ Monte Deckerd
--------------------------- -----------------------
Franklyn L. Muscara Monte Deckerd
Senior Vice President Vice President
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<PAGE>
The foregoing Agreement to be Bound and related assignment from Assignee to
Assignor is hereby CONSENTED TO this 31st day of
March, 1995. Agent hereby agrees to waive the processing fee referred to in
Section 9.10(a) of the Credit Agreement.
NATIONSBANK OF TEXAS, N.A., as Agent
By:/s/ Franklyn L. Muscara
----------------------------------
Franklyn L. Muscara
Senior Vice President
PLAINS PETROLEUM OPERATING COMPANY
By:/s/ William F. Wallace
---------------------------------
William F. Wallace
President and Chief Operating Officer
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<PAGE>
ASSIGNMENT AND ASSUMPTION
Dated March 31, 1995
Reference is made to the Credit Agreement dated as of February 17, 1995
(the "CREDIT AGREEMENT"), by and among Plains Petroleum Operating Company
("BORROWER"), Plains Petroleum Company, NationsBank of Texas, N.A., as Agent
("AGENT"), and the Lenders as are, or may from time to time become, party
thereto. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement.
NationsBank of Texas, N.A. ("ASSIGNOR") and Colorado National Bank
("ASSIGNEE") agree as follows:
1. As of the Effective Date (as defined below), Assignor hereby sells and
assigns to Assignee, and Assignee hereby purchases and assumes from Assignor, a
Percentage Share under the Credit Agreement equal to twenty percent (20%) of the
commitment in effect as of the date hereof and twenty percent (20%) of the
commitment and Loans outstanding on the Effective Date; excluding, however,
interest with respect to such Loans accrued to the Effective Date.
2. Contemporaneously herewith, Assignee has made payment to Assignor of an
amount equal to 20% of the principal amount of Loans outstanding on the
Effective Date.
3. Assignor (i) represents that as of the date hereof, the outstanding
balance of the Loans is $34,500,000; (ii) makes no representation or warranty,
and assumes no responsibility with respect to any statements, warranties or
representations made by the Company, in or in connection with the Credit
Agreement or with the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) represents and warrants
that it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (iv)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Company or the performance or observance by
the Company of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (v) requests that the
Agent exchange such Note for a new Note payable to Assignee in a principal
amount equal to $30,000,000 and a new Note payable to Assignor in a principal
amount equal to $120,000,000.
4. Assignee (i) represents and warrants that it is legally authorized to
enter into this Assignment and Assumption; (ii) confirms that it has received a
copy of the Credit Agreement, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision
-23-
<PAGE>
to enter into this Assignment and Assumption; (iii) agrees that it will,
independently and without reliance upon the Agent or Assignor and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iv) appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all the obligations of Assignor under the Credit Agreement
assumed by it under this Assignment and Assumption, which by the terms of the
Credit Agreement are required to be performed by it as a Lender; and (vi) agrees
that it will keep confidential all information with respect to the Company
furnished to it by the Company or Assignor as set forth in Section 5.1(c) of the
Agreement.
5. The effective date for this Assignment and Assumption shall be March
31, 1995 (the "EFFECTIVE DATE"). Following the execution of this Assignment and
Assumption, it will be delivered to the Agent for acceptance.
6. Upon such acceptance, from and after the Effective Date, (i) Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Assumption, have the rights and obligations of a Lender
thereunder and (ii) Assignor shall, to the extent provided in this Assignment
and Assumption, relinquish its rights and be released from its obligations under
the Credit Agreement.
7. Upon such acceptance, from and after the Effective Date, the Agent
shall make all payments in respect of the percentage interest assigned hereby
(including payments of principal, plus payments of interest, fees and other
amounts accrued in respect of the percentage interest assigned hereby after the
Effective Date) to Assignee. Agent is hereby instructed to make payment to
Assignor of interest, fees and other amounts accrued to the Effective Date in
respect of the percentage interests assigned hereby.
8. This Assignment and Assumption shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to principles of
conflicts of law. This Assignment and Assumption may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
agreement.
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<PAGE>
NATIONSBANK OF TEXAS, N.A.
By:/s/ Franklyn L. Muscara
------------------------------------------
Franklyn L. Muscara
Senior Vice President
COLORADO NATIONAL BANK
By:/s/ Monte Deckerd
------------------------------------------
Monte Deckerd
Vice President
Accepted this 31st day
of March, 1995
NationsBank of Texas, N.A., as Agent
By:/s/ Franklyn L. Muscara
---------------------------
Franklyn L. Muscara
Senior Vice President
Plains Petroleum Operating Company
By:/s/ William F. Wallace
---------------------------
William F. Wallace
President and Chief Operating Officer
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<PAGE>
PROMISSORY NOTE
$120,000,000 Dallas, Texas March 31, 1995
FOR VALUE RECEIVED, the undersigned, Plains Petroleum Operating Company, a
Delaware corporation (herein called "Borrower"), hereby promises to pay to the
order of NATIONSBANK OF TEXAS, N.A., a national banking association (herein
called "Lender"), the principal sum of ONE HUNDRED TWENTY MILLION AND NO/100
DOLLARS ($120,000,000), or, if greater or less, the aggregate unpaid principal
amount of the Loan made under this Note by Lender to Borrower pursuant to the
terms of the Credit Agreement (as hereinafter defined), together with interest
on the unpaid principal balance thereof as hereinafter set forth, both principal
and interest payable as herein provided in lawful money of the United States of
America at the offices of the Agent under the Credit Agreement, 901 Main Street,
Dallas, Texas 75202 or at such other place within Dallas County, Texas, as from
time to time may be designated by the holder of this Note.
This Note (a) is issued and delivered under that certain Credit Agreement
dated February 17, 1995 among Borrower, Plains Petroleum Company, NationsBank of
Texas, N.A., as Agent, and the lenders (including Lender) referred to therein
(herein, as from time to time supplemented, amended or restated, called the
"Credit Agreement"), and is a "Note" as defined therein, and (b) is subject to
the terms and provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity hereof upon
the happening of certain stated events. Payments on this Note shall be made and
applied as provided herein and in the Credit Agreement. Reference is hereby
made to the Credit Agreement for a description of certain rights, limitations of
rights, obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the first day of each January,
April, July and October of each year, beginning April 1, 1995, and (ii) any
day on which past due interest or principal is owed hereunder and is
unpaid. If the terms hereof or of the Credit Agreement provide that
payments of interest or principal hereon shall be deferred from one Base
Rate Payment Date to another day, such other day shall also be a Base Rate
Payment Date.
"Fixed Rate Payment Date" means, with respect to any Fixed Rate
Portion: (i) the day on which the related Interest Period ends and if such
Interest Period is more than 90 days, the day which is 90 days after the
first day
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<PAGE>
of such Interest Period shall also be a Fixed Rate Payment Date, and (ii)
any day on which past due interest or past due principal is owed hereunder
with respect to such Fixed Rate Portion and is unpaid. If the terms hereof
or of the Credit Agreement provide that payments of interest or principal
with respect to such Fixed Rate Portion shall be deferred from one Fixed
Rate Payment Date to another day, such other day shall also be a Fixed Rate
Payment Date.
The principal amount of this Note shall be due and payable in twenty-four
quarterly installments, each of which shall be equal to one-twenty-fourth
(1/24th) of the aggregate unpaid principal balance of this Note at the end of
the Commitment Period, and shall be due and payable on the first day of January,
April, July, and October of each year, beginning April 1, 1997 and continuing
regularly thereafter until January 1, 2003, at which time the unpaid principal
balance of this Note and all interest accrued hereon shall be due and payable in
full.
The Base Rate Portion of the Loan (exclusive of any past due principal or
interest) from time to time outstanding shall bear interest on each day
outstanding at the Base Rate in effect on such day. On each Base Rate Payment
Date Borrower shall pay to the holder hereof all unpaid interest which has
accrued on the Base Rate Portion to but not including such Base Rate Payment
Date. Each Fixed Rate Portion of the Loan (exclusive of any past due principal
or interest) shall bear interest on each day during the related Interest Period
at the related Fixed Rate in effect on such day. On each Fixed Rate Payment
Date relating to such Fixed Rate Portion Borrower shall pay to the holder hereof
all unpaid interest which has accrued on such Fixed Rate Portion to but not
including such Fixed Rate Payment Date. All past due principal of and past due
interest on the Loan shall bear interest on each day outstanding at the Late
Payment Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the Highest
Lawful Rate, and (b) if at any time the rate at which interest is payable on
this Note is limited by the Highest Lawful Rate (by the foregoing clause (a) or
by reference to the Highest Lawful Rate in the definitions of Base Rate, Fixed
Rate, and Late Payment Rate), this Note shall bear interest at the Highest
Lawful Rate and shall continue to bear interest at the Highest Lawful Rate until
such time as the total amount of interest accrued hereon equals (but does not
exceed) the total amount of interest which would have accrued hereon had there
been no Highest Lawful Rate applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations on
how interest accrues hereon. In the event
-27-
<PAGE>
applicable law provides for a ceiling under Texas Revised Civil Statutes
Annotated article 5069-1.04, that ceiling shall be the indicated rate ceiling
and shall be used in this Note for calculating the Highest Lawful Rate and for
all other purposes. The term "applicable law" as used in this Note shall mean
the laws of the State of Texas or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE FEDERAL LAW.
PLAINS PETROLEUM OPERATING COMPANY
By:/s/ William F. Wallace
------------------------------------
William F. Wallace
President and Chief Operating Officer
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<PAGE>
PROMISSORY NOTE
$30,000,000 Dallas, Texas March 31, 1995
FOR VALUE RECEIVED, the undersigned, Plains Petroleum Operating Company, a
Delaware corporation (herein called "Borrower"), hereby promises to pay to the
order of COLORADO NATIONAL BANK, a national banking association (herein called
"Lender"), the principal sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000),
or, if greater or less, the aggregate unpaid principal amount of the Loan made
under this Note by Lender to Borrower pursuant to the terms of the Credit
Agreement (as hereinafter defined), together with interest on the unpaid
principal balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of America at
the offices of the Agent under the Credit Agreement, 901 Main Street, Dallas,
Texas 75202 or at such other place within Dallas County, Texas, as from time to
time may be designated by the holder of this Note.
This Note (a) is issued and delivered under that certain Credit Agreement
dated February 17, 1995 among Borrower, Plains Petroleum Company, NationsBank of
Texas, N.A., as Agent, and the lenders (including Lender) referred to therein
(herein, as from time to time supplemented, amended or restated, called the
"Credit Agreement"), and is a "Note" as defined therein, and (b) is subject to
the terms and provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity hereof upon
the happening of certain stated events. Payments on this Note shall be made and
applied as provided herein and in the Credit Agreement. Reference is hereby
made to the Credit Agreement for a description of certain rights, limitations of
rights, obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the first day of each January,
April, July and October of each year, beginning April 1, 1995, and (ii) any
day on which past due interest or principal is owed hereunder and is
unpaid. If the terms hereof or of the Credit Agreement provide that
payments of interest or principal hereon shall be deferred from one Base
Rate Payment Date to another day, such other day shall also be a Base Rate
Payment Date.
"Fixed Rate Payment Date" means, with respect to any Fixed Rate
Portion: (i) the day on which the related Interest Period ends and if such
Interest Period is more than 90 days, the day which is 90 days after the
first day
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<PAGE>
of such Interest Period shall also be a Fixed Rate Payment Date, and (ii)
any day on which past due interest or past due principal is owed hereunder
with respect to such Fixed Rate Portion and is unpaid. If the terms hereof
or of the Credit Agreement provide that payments of interest or principal
with respect to such Fixed Rate Portion shall be deferred from one Fixed
Rate Payment Date to another day, such other day shall also be a Fixed Rate
Payment Date.
The principal amount of this Note shall be due and payable in twenty-four
quarterly installments, each of which shall be equal to one-twenty-fourth
(1/24th) of the aggregate unpaid principal balance of this Note at the end of
the Commitment Period, and shall be due and payable on the first day of January,
April, July, and October of each year, beginning April 1, 1997 and continuing
regularly thereafter until January 1, 2003, at which time the unpaid principal
balance of this Note and all interest accrued hereon shall be due and payable in
full.
The Base Rate Portion of the Loan (exclusive of any past due principal or
interest) from time to time outstanding shall bear interest on each day
outstanding at the Base Rate in effect on such day. On each Base Rate Payment
Date Borrower shall pay to the holder hereof all unpaid interest which has
accrued on the Base Rate Portion to but not including such Base Rate Payment
Date. Each Fixed Rate Portion of the Loan (exclusive of any past due principal
or interest) shall bear interest on each day during the related Interest Period
at the related Fixed Rate in effect on such day. On each Fixed Rate Payment
Date relating to such Fixed Rate Portion Borrower shall pay to the holder hereof
all unpaid interest which has accrued on such Fixed Rate Portion to but not
including such Fixed Rate Payment Date. All past due principal of and past due
interest on the Loan shall bear interest on each day outstanding at the Late
Payment Rate in effect on such day, and such interest shall be due and payable
daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the Highest
Lawful Rate, and (b) if at any time the rate at which interest is payable on
this Note is limited by the Highest Lawful Rate (by the foregoing clause (a) or
by reference to the Highest Lawful Rate in the definitions of Base Rate, Fixed
Rate, and Late Payment Rate), this Note shall bear interest at the Highest
Lawful Rate and shall continue to bear interest at the Highest Lawful Rate until
such time as the total amount of interest accrued hereon equals (but does not
exceed) the total amount of interest which would have accrued hereon had there
been no Highest Lawful Rate applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations on
how interest accrues hereon. In the event
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<PAGE>
applicable law provides for a ceiling under Texas Revised Civil Statutes
Annotated article 5069-1.04, that ceiling shall be the indicated rate ceiling
and shall be used in this Note for calculating the Highest Lawful Rate and for
all other purposes. The term "applicable law" as used in this Note shall mean
the laws of the State of Texas or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE FEDERAL LAW.
PLAINS PETROLEUM OPERATING COMPANY
By:/s/ William F. Wallace
---------------------------------------
William F. Wallace
President and Chief Operating Officer
-31-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the three months ended March 31, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,001
<SECURITIES> 0
<RECEIVABLES> 6,266
<ALLOWANCES> 0
<INVENTORY> 647
<CURRENT-ASSETS> 9,536
<PP&E> 238,262
<DEPRECIATION> 92,733
<TOTAL-ASSETS> 155,065
<CURRENT-LIABILITIES> 7,595
<BONDS> 34,500
<COMMON> 98
0
0
<OTHER-SE> 100,205
<TOTAL-LIABILITY-AND-EQUITY> 155,065
<SALES> 18,634
<TOTAL-REVENUES> 18,634
<CGS> 7,440<F1>
<TOTAL-COSTS> 12,423<F2>
<OTHER-EXPENSES> 4,210<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 584<F4>
<INCOME-PRETAX> 2,001
<INCOME-TAX> 761
<INCOME-CONTINUING> 1,240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,240
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
<FN>
<F1>Lease operations, prod. and prop. taxes, trans. and process., net profit
pmts.
<F2>CGS, plus DD&A
<F3>G&A, exploration, interest and other
<F4>Net of interest income
</FN>
</TABLE>
