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
October 10, 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 October 10, 1996 as amended by the Company's Current Report
on Form 8-K/A dated December 20, 1996, 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 October 10, 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 I 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 October 10, 1996, GulfWest Texas Company, a wholly owned subsidiary of
GulfWest Oil Company (the "Company"), purchased from Gary O. Bolen,
individually and d/b/a Badger Oil Company, and Pharaoh Oil and Gas, Inc.,
unrelated parties (collectively "Pharaoh"), 100% working interest in 279
oil wells on 5,100 acres in the Vaughn Field, Crockett County, Texas, for
$3,000,000, pursuant to a Purchase and Sale Agreement (the "Agreement")
dated June 12, 1996.
Currently, 82 of the oil wells acquired are active, producing an aggregate
of 235 barrels of oil per day. The Company plans to place 80 of the
inactive wells back in production over the next six months through
enhancement and recompletions, increasing production to approximately 420
barrels per day. The properties have proved developed producing and
non-producing oil reserves estimated at 1.3 million barrels. The field has
numerous infield drilling locations as well as secondary recovery
potential.
<PAGE>
Under the terms of the Agreement, the Company paid $1.5 million in cash,
using substantially all of the proceeds of the Company's recent Private
Offering of preferred stock, and the balance was financed by the seller.
The Company executed a term note to Pharaoh for $1.5 million, together with
interest thereon, at a variable rate of interest per annum equal to the
Prime Rate of the Texas Commerce Bank National Association of Midland,
Texas plus 1.5% per annum, but in no event to exceed the highest lawful
rate. The note is due and payable in thirty-six (36) monthly installments
with the first thirty-five (35) in the amount of $14,342.88 plus accrued
interest due and payable on or before the 22nd day of each and every month,
beginning on November 22, 1996, and one final installment of the entire
unpaid balance of principal and accrued interest due on or before October
22, 1999, unless otherwise 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 $1,274,000 in principal, plus accrued
interest.
Management of the Company negotiated the purchase price based upon a report
on the property provided by the independent engineering firm of Ryder Scott
Company, Denver, Colorado.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
(b) Pro Forma Financial Information
(c) Exhibits
2.1 Purchase and Sale Agreement, with amendments, between
Pharaoh Oil and Gas, Inc., as Seller, and WestCo Producing
Company, as Purchaser, dated June 12, 1996.
2.2 Addendum of Purchase and sale Agreement by and between Gary
O. Bolen, Individually and d/b/a Badger Oil Company, Pharaoh
Oil and Gas, Inc. and GulfWest Texas Company.
2.3 Assignment of Purchase and Sale Agreement by and between
Gary O. Bolen, Individually and d/b/a Badger Oil Company,
Pharaoh Oil and Gas, Inc., GulfWest Texas Company and WestCo
Producing Company.
2.4 Assignment and Bill of Sale by and between Gary O. Bolen,
Individually and d/b/a Badger Oil Company and Pharaoh Oil
and Gas, Inc. as Assignor and GulfWest Texas Company as
Assignee.
3.1 Articles of Incorporation of the Company and Amendments
thereto previously filed with the Company's Registration
Statement (on Form S-1, Reg. No. 33-53526), filed with the
Commission on October 21, 1992.
<PAGE>
3.2 Statement of Resolution Establishing and Designating the
Company's Class AA Preferred Stock, filed with the Secretary
of State of Texas as an amendment to the Company's Articles
of Incorporation on September 23, 1996.
3.3 Statement of Resolution Establishing and Designating the
Company's Class AAA Preferred Stock, filed with the
Secretary of State of Texas as an amendment to the Company's
Articles of Incorporation on September 23, 1996.
4.1 Term Note in the amount of $1,500,000.00 payable to the
order of Pharaoh Oil and Gas, Inc and to be executed by
GulfWest Texas Company.
<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 I Acquired Properties (see Note 1) for the
nine months ended September 30, 1996 and year ended December 31, 1995.
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 I Acquired Properties (see Note
1), for the nine months ended September 30, 1996 and year ended December
31, 1995, 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 PHASE I ACQUIRED PROPERTIES
Statements of Revenues and Direct Operating Expenses
For the Nine Months Ended September 30, 1996 and
For the Year Ended December 31, 1995
<CAPTION>
Nine Months
Ended Year Ended
Sept. 30, 1996 Dec. 31, 1995
<S> <C> <C>
REVENUES:
Oil and Gas Sales $ 711,507 $ 698,904
EXPENSES:
Production Taxes 32,846 32,294
Lease Operating Expenses 389,846 503,170
Total Expenses 422,692 535,464
REVENUES LESS DIRECT
OPERATING EXPENSES $ 288,815 $ 163,440
</TABLE>
The accompanying Notes are an integral
part of these statements.
<PAGE>
THE PHASE I ACQUIRED PROPERTIES
NOTES TO STATEMENTSOF 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 I
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 I 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 I Acquired Properties. Reliable historical financial
information prior to 1995 is not available.
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 reserves (there are no gas reserves) of the Phase I
Acquired Properties as of October 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 I Acquired
Properties are located in the United States.
<TABLE>
Estimated Quantities of Proved Oil Reserves:
<CAPTION>
Nine Months
Ended Year Ended
September 30, 1996 December 31, 1995
Oil Bbls Oil Bbls
<S> <C> <C>
Proved Reserves -
Beginning of Year 1,436,031 1,479,281
Production (36,721) (43,250)
1,399,310 1,436,031
Proved Reserves -
Proved Developed 782,720 819,441
Proved Undeveloped 616,590 616,590
1,399,310 1,436,031
</TABLE>
<PAGE>
THE PHASE I 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>
September 30, December 31,
1996 1995
<S> <C> <C>
Future Cash Inflows $ 29,396,993 $ 23,683,201
Future Production and Development Costs (15,554,162) (15,628,920)
Future Net Cash Flows 13,842,831 8,054,281
10% Annual Discount for Estimated
Timing of Cash Flows (8,172,271) (4,657,597)
Discounted Future Income Taxes (1,313,841) (645,496)
Standardized Measure of Discounted
Future Net Cash Flows $ 4,356,719 $ 2,751,188
Changes in Standardized Measures:
Beginning of Year: $ 2,751,188 $ 1,697,745
Changes From:
Sale of Oil and Gas Produced
Net of Production Cost (288,815) (163,440)
Accretion of Discount 339,668 197,108
Revisions 2,223,023 1,391,936
Change in Income Taxes (668,345) (372,161)
End of Year $ 4,356,719 $ 2,751,188
</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
