SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
December 5, 1996
Date of Report (Date of earliest event reported)
GULFWEST OIL COMPANY
(Exact name of registrant as specified in its charter)
Texas
(State or other jurisdiction of incorporation)
33-13760-LA 87-0444770
(Commission File Number) (IRS Employer
Identification Number)
2644 Sherwood Forest Plaza, Suite 229, Baton Rouge, Louisiana 70816
(Address of principal executive offices)
Registrant's telephone number, including area code: (504) 293-1100
<PAGE>
This Current Report on Form 8-K/A-2 is intended to amend and restate in
their entirety Items 2, 7(a) and 7(b) of the Company's Current Report on
Form 8-K dated December 5, 1996 as amended by the Company's Current Report
on Form 8-K/A dated February 19, 1997, in order to ensure that the
information contained in the report is true, accurate and complete as of
the date of the filing of this Current Report on Form 8-K/A-2, July 15,
1997. Item 7(c) Exhibits remains as previously filed with the Commission in
the Company's Form 8-K dated December 5, 1996 and is incorporated by
reference herein.
During the fourth quarter of 1996, the Company acquired significant oil and
gas reserves from an unrelated entity in two separate transactions.
In the first transaction ("Phase I") on October 10, 1996, the Company
acquired various properties for $3,000,000. The acquisition was reported in
a Current Report on Form 8-K, dated October 10, 1996 and filed with the
Commission on October 28, 1996. The report was amended on December 20, 1996
to present financial information on the acquired properties available to
the Company at that time.
In the second transaction ("Phase II") on December 5, 1996, the Company
acquired various properties for $7,654,000. The acquisition was reported in
a Current Report on Form 8-K dated December 5, 1996 and filed with the
Commission on December 18, 1996. The report was amended on February 19,
1997 to present financial information on the acquired properties available
to the Company at that time.
In this Current Report on Form 8-K/A-2 the Company is presenting the
Audited Statements of Revenues and Direct Operating Expenses with notes for
Phase II above. An Unaudited Pro Forma Statement of Operations for the year
ended December 31, 1996 which combines the Phase I and Phase II
acquisitions is presented in order to provide the reader a clear picture of
the impact the acquisitions would have had on the Company's financial
statements had they both occurred on January 1, 1996.
ITEM 2. ACQUISITION OF ASSETS
On December 5, 1996, GulfWest Permian Company, a wholly owned subsidiary of
Gulf West Oil Company (collectively, the "Company"), purchased
substantially all of the working interests in four of the five oil fields
it agreed to purchase from Pharaoh Oil & Gas, Inc., Taylor Link Operating
Co. and Gary O. Bolen, Individually and d/b/a Badger Oil Company
(collectively, "Pharaoh"), pursuant to a Purchase and Sale Agreement dated
November 6, 1996 with an Addendum dated December 5, 1996 (the "Agreement").
The five oil fields are located on approximately 5,000 acres in Pecos,
Howard, Sterling and Lynn Counties, Texas and have estimated proved
reserves totaling 3.1 million barrels of oil.
This purchase represents the second phase of the company's expansion into
the West Texas area, following a $3,000,000 acquisition which was completed
in October 1996. With the addition of these properties, the company's total
proved reserves will have increased from 1.6 million to 6 million barrels
of oil equivalent (BOE) since the end of 1995.
<PAGE>
The four fields were acquired for a purchase price of $7,654,000.00 and the
purchase of the fifth field, which is scheduled for closing no later than
March 31, 1997, will bring the total purchase price for the five field
acquisition to $11 million. Terms of the purchase include $150,000.00 cash
at closing and the balance financed by the seller in the form of two term
notes:
1) A promissory note in the principal amount of $5.9 million, together with
interest thereon at a variable rate of interest equal to the Prime Rate of
the Texas Commerce Bank National Association of Midland, Texas plus 1.5%
per annum. The note is due and payable in thirty six (36) monthly
installments with the first thirty five (35) in the amount of $49,249.05,
plus accrued interest and the final installment in the amount of the unpaid
balance plus accrued and unpaid interest due on or before December 22,
1999, unless extended. The properties are encumbered by a first mortgage
held by the Texas Commerce Bank, who has agreed to release the mortgage
upon receipt of $5.9 million in principal, plus accrued interest.
2) A promissory note in the principal amount of $1,604,000.00 without
interest, payable in four installments as follows:
a) First installment of $250,000.00 due and payable on or before December
20, 1996.
b) Second installment of $141,000.00 due and payable on or before January
20, 1997.
c) Third installment of $281,000.00 due and payable on or before February
10, 1997.
d) Balance of principal of $932,000.00 due and payable on or before March
31, 1997, unless extended as provided for therein.
The seller has an option up to the close of business at March 31, 1997 to
accept up to $1 million in the Company's Common Stock as a principal
reduction on the note due that date. The Company currently plans to obtain
the funds to meet the financing commitment through a public offering of its
Common Stock during the first quarter of 1997.
Management of the Company negotiated the purchase price based upon an
independent third party engineering report on the properties.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
(b) Pro Forma Financial Information
<PAGE>
c) Exhibits
2.1 Purchase and Sale Agreement between Pharaoh, as Seller, and WestCo
Producing Company, as Purchaser, dated November 6, 1996.
2.2 Addendum of Purchase and sale Agreement by and between Pharaoh and
WestCo Producing Company, dated December 5, 1996.
2.3 Assignment of Purchase and Sale Agreement by and between Pharaoh,
GulfWest Permian Company and WestCo Producing Company, dated December
5, 1996.
2.4 Form of Assignment and Bill of Sale by and between Pharaoh as Assignor
and GulfWest Permian Company as Assignee.
4.1 Term Note in the amount of $5,900,000.00 payable to the order of
Pharaoh Oil and Gas, Inc. and executed by GulfWest Permian Company,
dated December 5, 1996.
4.2 Term note in the amount of $1,604,000.00 payable to the order of
Pharaoh Oil and Gas, Inc. and executed by GulfWest Permian Company,
dated December 5, 1996.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
GULFWEST OIL COMPANY AND SUBSIDIARIES
We have audited the accompanying statements of revenues and direct
operating expenses of the Phase II Acquired Properties (see Note 1) for the
eleven months ended November 30, 1996 and years ended December 31, 1995 and
1994. These financial statements are the responsibility of GulfWest Oil
Company's management. Our responsibility is to express an opinion on these
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of revenues and
direct operating expenses are free of material misstatement. An audit
incudes examining, on a test basis, evidence supporting the amounts and
disclosures in the statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the statements of revenues and direct operating expenses
referred to above present fairly, in all material respects, the revenues
and direct operating expenses of the Phase II Acquired Properties (see Note
1), for the eleven months ended November 30, 1996 and years ended December
31, 1995 and 1994, in conformity with generally accepted accounting
principles.
/s/Weaver and Tidwell, L.L.P.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
July 10, 1997
<PAGE>
<TABLE>
THE ACQUIRED PROPERTIES - PHASE II
Statements of Revenues and Direct Operating Expenses
For the Eleven Months Ended November 30, 1996 and
For the Years Ended December 31, 1995 and 1994
<CAPTION>
Eleven Months
Ended Year Ended Year Ended
Nov. 30, 1996 Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C> <C>
REVENUES:
Oil and Gas Sales $ 2,267,994 $ 1,979,185 $ 1,859,775
EXPENSES:
Production Taxes 102,568 90,870 84,076
Lease Operating Expenses 896,268 1,364,393 1,574,089
Total Expenses 998,836 1,455,263 1,658,165
REVENUES LESS DIRECT
OPERATING EXPENSES $ 1,269,158 $ 523,922 $ 201,610
</TABLE>
The accompanying Notes are an integral
part of these statements.
<PAGE>
THE PHASE II ACQUIRED PROPERTIES
NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
Note 1. Summary of Significant Accounting Policies
The accompanying statement presents the revenues and direct operating
expenses applicable to the oil and gas properties acquired (the "Phase
II Acquired Properties") from Pharaoh Oil & Gas, Inc., Taylor Link
Operating Co. and Gary O. Bolen, Individually and d/b/a Badger Oil
Company.
Full historical financial statements, including general and
administrative expenses and other indirect expenses, have not been
presented due to the fact that management of the Phase II Acquired
Properties cannot make a practicable determination of the portion of
their general and administrative expenses or other indirect expenses
which are attributable to the Phase II Acquired Properties.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
direct operating expenses during the reporting period. Actual results
could differ from those estimates.
Note 2. Supplemental Oil and Gas Information (UNAUDITED)
Total proved oil and gas reserves of the Phase II Acquired Properties
as of December 1, 1996 were estimated in accordance with guidelines
established by the Securities and Exchange Commission and the
Financial Accounting Standard Board which require that reserve reports
be prepared using existing economic and operating conditions with no
provision for price and cost escalation except under contractual
arrangements. The Company emphasizes that reserve estimates are
inherently imprecise. Accordingly, the estimates are expected to
change as more current information becomes available. All of the
reserves of the Phase II Acquired Properties are located in the United
States.
Estimated Quantities of Proved Oil and Gas Reserves:
<TABLE>
<CAPTION>
Eleven Months
Ended Year Ended Year Ended
November 30, 1996 December 31, 1995 December 31, 1994
Oil Bbls Gas Mcf Oil Bbls Gas Mcf Oil Bbls Gas Mcf
<S> <C> <C> <C> <C> <C> <C>
Proved Reserves -
Beginning of Year 1,625,825 10,095 1,754,143 24,077 1,888,466 37,370
Production (113,745) (10,066) (128,318) (13,982) (134,323) (13,293)
1,512,080 29 1,625,825 10,095 1,754,143 24,077
Proved Reserves -
Proved Developed 1,512,080 29 1,625,825 10,095 1,754,143 24,077
Proved Undeveloped - - - - - -
1,512,080 29 1,625,825 10,095 1,754,143 24,077
</TABLE>
<PAGE>
THE PHASE II ACQUIRED PROPERTIES
NOTES TO STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
Note 2. Supplemental Oil and Gas Information (UNAUDITED)- continued
<TABLE>
Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Reserves:
<CAPTION>
November 30, December 31, December 31,
1996 1995 1994
<S> <C> <C> <C>
Future Cash Inflows $ 31,631,866 $ 26,815,037 $ 25,298,486
Future Production and
Development Costs (14,575,612) (15,281,102) (16,643,588)
Future Net Cash Flows 17,056,254 11,533,935 8,654,898
10% Annual Discount for Estimated
Timing of Cash Flows (8,969,170) (5,519,984) (4,275,600)
Discounted Future Income Taxes (1,984,711) (1,331,675) (836,121)
Standardized Measure of Discounted
Future Net Cash Flows $ 6,102,373 $ 4,682,276 $ 3,543,177
Changes in Standardized Measures:
Beginning of Year: $ 4,682,276 $ 3,543,177 $ 1,905,971
Changes From:
Sale of Oil and Gas Produced
Net of Production Cost (1,269,158) (523,922) (201,610)
Accretion of Discount 601,395 437,930 212,912
Revisions 2,740,896 1,720,645 2,238,877
Change in Income Taxes (653,036) (495,554) (612,973)
End of Year $ 6,102,373 $ 4,682,276 $ 3,543,177
</TABLE>
<PAGE>
<TABLE>
GULFWEST OIL COMPANY
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<CAPTION>
Historical Adjustments
The Company Phase I Phase II Pro Forma
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Oil and Gas Sales $ 1,549,069 $ 711,507 $ 2,267,994 $ 4,528,570
Lease Sales 252,333 252,333
Well Servicing Revenues 58,881 58,881
Operating Overhead and Other Income 105,729 105,729
Total Revenues 1,966,012 711,507 2,267,994 4,945,513
COST AND EXPENSES:
Lease Operating Expenses 656,957 422,692 998,836 2,078,485
Cost of Leases Sold 91,831 91,831
Cost of Well Servicing Operations 46,424 46,424
Lease Abandonment 85,696 85,696
Depreciation, Depletion and Amortization 466,097 106,584 592,116 1,164,797
General and Administrative 1,058,870 1,058,870
Total Expenses 2,405,875 529,276 1,590,952 4,526,103
INCOME (LOSS) FROM
OPERATIONS (439,863) 182,231 677,042 419,410
OTHER INCOME AND EXPENSE:
Interest Income 35,211 35,211
Interest Expense (420,083) (121,875) (575,250) (1,117,208)
Total Other Income and Expense (384,872) (121,875) (575,250) (1,081,997)
NET INCOME (LOSS) BEFORE
INCOME TAXES (824,735) 60,356 101,792 (662,587)
INCOME TAXES 0 0 0 0
NET INCOME (LOSS) $ ( 824,735) $ 60,356 $ 101,792 $ (662,587)
INCOME (LOSS) PER SHARE $ (0.71) $ (0.58)
</TABLE>
See accompanying notes to the unaudited pro forma statements.
<PAGE>
GULFWEST OIL COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited pro forma statements of operations present
the results of operations of the Company for the year ended December
31, 1996, as if the purchase of the Phase I and Phase II properties
(collectively the "Acquired Properties") had occurred as of the
beginning of 1996.
The unaudited pro forma information has been prepared and all
calculations have been made by the Company based upon assumptions
deemed appropriate by the Company. Certain of these assumptions are
set forth in the notes below. The accompanying unaudited pro forma
financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information prepared in accordance with generally accepted accounting
principles has been condensed or omitted pursuant to those rules and
regulations. The financial statements of the Company and the related
notes thereto presented in the Annual Report on form 10-K should be
read in conjunction with these pro forma statements.
2. Pro Forma Adjustments
The accompanying unaudited pro forma statements of operations reflect
the following adjustments:
(a) To adjust oil and gas production revenues as a result of the
acquisition of the Acquired Properties.
(b) To adjust depreciation and depletion as a result of the
acquisition of the Acquired Properties.
(c) To adjust interest expense for financing of the Acquired
Properties.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GULFWEST OIL COMPANY
Date: July 15, 1997 By: /s/Jim C. Bigham
Jim C. Bigham
Executive Vice President\Secretary
