SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
September 15, 1998
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)
16800 Dallas Parkway, Suite 250, Dallas, Texas 75248
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 250-4440
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ITEM 2. ACQUISITION OF ASSETS
On September 15,1998, GulfWest Oil Company (the "GulfWest" or "Company")
acquired all of the membership interests of Southeast Texas Oil & Gas Company,
L.L.C. ("SETEX LLC"), pursuant to an Interest Purchase Agreement ("Agreement")
dated to be effective as of September 1, 1998. The aggregate purchase
consideration for all of the membership interests consisted of 4,000 shares of
the Series C Preferred Stock of GulfWest, par value $.01 per share and
liquidation value $500 per share (the "Series C Stock") and Warrants to purchase
100,000 shares of GulfWest common stock (the "Warrants"). In this transaction,
the Company acquired working interests in proved undeveloped oil and gas
properties located in six (6) counties in South and East Texas with estimated
proved reserves of approximately 3 billion cubic feet of natural gas equivalent
net to the Company's interest. The consideration was determined through
negotiations based upon third party engineering reports.
On September 15, 1998, Thomas R. Kaetzer, the president of SETEX LLC, was
appointed Senior Vice President and Chief Operating Officer of GulfWest. Mr.
Kaetzer has 17 years experience in the oil and gas industry, including 14 years
with Texaco Inc., which involved the evaluation, exploitation and management of
oil and gas assets. He has both onshore and offshore based experience in
operations and production management, asset acquisition, development, drilling
and workovers in the continental U.S., Gulf of Mexico, North Sea, Colombia,
Saudi Arabia, China and West Africa. Mr. Kaetzer has a Masters Degree in
Petroleum Engineering from Tulane University and a Bachelor of Science Degree in
Civil Engineering from the University of Illinois. He is a member of the Society
of Petroleum Engineers, the American Petroleum Institute and various honorary
and engineering organizations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
None
(b) Pro Forma Financial Information
Unaudited pro forma consolidated balance sheets at June 30,
1998.
c) Exhibits
3.1 Statement of Resolution Establishing and Designating
the Company's Series C Preferred Stock, filed with the
Secretary of State of Texas as an amendment to the
Company's Articles of Incorporation on September 15,
1998.
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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: September 24, 1998 By: /s/Jim C. Bigham
Jim C. Bigham
Executive Vice President\Secretary
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<TABLE>
GULFWEST OIL COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998
ASSETS
<CAPTION>
Historical
The Company Adjustments(1) Pro Forma
<S> <C> <C> <C>
Current Assets:
Cash and Cash Equivalents $ - $ $ -
Accounts Receivable - Trade 588,290 588,290
Prepaid Expenses 137,192 137,192
------------ ----------- -----------
Total Current Assets 725,482 725,482
------------ ----------- -----------
Oil & Gas Properties, Using the Successful
Efforts Method of Accounting:
Undeveloped Properties 4,585 2,512,000 2,516,585
Developed Properties 21,283,230 21,283,230
Other Property and Equipment 1,310,430 1,310,430
Less - Accumulated Depreciation, Depletion,
and Amortization (3,435,655) (3,435,655)
----------- ---------- -----------
Net Oil and Gas Properties and
Other Property and Equipment 19,162,590 2,512,000 21,674,590
----------- ---------- -----------
Deposits on Developed Oil & Gas Properties 18,744 18,744
----------- ----------- -----------
Total Assets $19,906,816 $2,512,000 $22,418,816
=========== ========== ===========
</TABLE>
(1)See accompanying notes to the unaudited pro forma consolidated balance
sheets.
<PAGE>
<TABLE>
GULFWEST OIL COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
Historical
The Company Adjustments(1) Pro Forma
<S> <C> <C> <C>
Current Liabilities:
Payable to Financial Institutions $ 90,449 $ 85,000 $ 175,449
Notes Payable 300,000 300,000
Notes Payable - Related Party 150,000 150,000
Current Portion of Long-Term Debt 9,741,716 9,741,716
Current Portion of Long-Term Debt - Related Parties 245,000 245,000
Accounts Payable - Trade 1,681,805 427,000 2,108,805
Accrued Expenses 295,929 295,929
----------- --------- ------------
Total Current Liabilities 12,504,899 512,000 13,016,899
----------- --------- ------------
Long-Term Debt 5,381,664 5,381,664
Stockholders' Equity:
Preferred Stock, Par Value at $.01 52 40 92
Common Stock, Par Value at $.001 2,958 2,958
Additional Paid-in Capital 9,319,270 1,999,960 11,319,230
Retained Deficit (7,149,553) (7,149,553)
Long-Term Accounts and Notes Receivable -
Related Parties (152,474) (152,474)
Total Stockholders' Equity 2,020,253 2,000,000 4,020,253
------------ ---------- ------------
Total Liabilities and Stockholders' Equity $ 19,906,816 $2,512,000 $ 22,418,816
============ ========== ============
</TABLE>
(1)See accompanying notes to the unaudited pro forma consolidated balance
sheets.
<PAGE>
GULFWEST OIL COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
1. Basis of Presentation
The accompanying unaudited pro forma consolidated balance sheets present
the assets and liabilities of the Company for the quarter ended June 30, 1998,
as if the acquisition of Southeast Texas Oil and Gas Company, L.L.C. (the
"Acquistion") had occurred as of June 30, 1998.
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 Quarterly Report on Form 10-Q for the period ended June
30, 1998 should be read in conjunction with these pro forma statements.
2. Pro Forma Adjustments
The accompanying unaudited pro forma consolidated balance sheets reflect
the following adjustments:
(a) To adjust Oil and Gas Properties to reflect the working interests
acquired as a result of the Acquisition.
(b) To adjust Current Liabilities as a result of the Acquisition.
(c) To adjust Stockholder's Equity to give effect to the issuance of 4,000
shares of the Company's Series C Preferred Stock, par value $.01 per
share and liquidation value $500 per share, as consideration for the
Acquisition.
<PAGE>
EXHIBIT 3.1
STATEMENT OF RESOLUTION
ESTABLISHING AND DESIGNATING A SERIES OF SHARES
OF
GULFWEST OIL COMPANY
Series C Preferred Stock, par value $.01 per share
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, and pursuant to Article 4.1 of its Articles of Incorporation,
the undersigned, GulfWest Oil Company (the "Issuer"), hereby submits the
following statement for the purposes of establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof:
I. The name of the Issuer is GulfWest Oil Company.
II. The following resolution establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof
was duly adopted by the Board of Directors of the Issuer on September 10, 1998:
RESOLVED, by the Board of Directors (the "Board") of GulfWest Oil Company,
a Texas corporation (the "Issuer"), that pursuant to authority expressly granted
to and vested in the Board by the provisions of the Articles of Incorporation of
the Issuer, as amended (the "Articles of Incorporation"), the Board hereby
creates a series of the class of authorized Preferred Stock, par value $.01 per
share, of the Issuer (the "Preferred Stock"), and authorizes the issuance
thereof, and hereby fixes the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof, as follows:
SECTION 1. Designation of Series. The shares of such series shall be
designated "Series C Preferred Stock" (hereinafter called "Series C Preferred
Stock").
SECTION 2. Number of Shares. The number of shares of Series C Preferred
Stock shall be 12,000, of which number the Board may decrease (but not below the
number of shares of the series then outstanding).
SECTION 3. Dividends. No dividends will be paid on the Series C Preferred
Stock.
SECTION 4. Redemption Rights. The Series C Preferred Stock is not
redeemable.
SECTION 5. No Sinking Fund. The Series C Preferred Stock shall not be
entitled to the benefits of any retirement or sinking fund.
SECTION 6. Liquidation. The holders of the Series C Preferred Stock shall,
in case of voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Issuer, be entitled to receive in full out of the assets of
the Issuer, including its capital, before any amount shall be paid or
distributed among the holders of the Common Stock, the amount of $500 per share,
plus an amount per share equal to all then accrued and unpaid dividends.
<PAGE>
SECTION 7. Voting Rights. Except as otherwise expressly required by law,
the holders of the Series C Preferred Stock shall not be entitled to vote on any
matters.
SECTION 8. Mandatory Conversion at Option of the Issuer. The Series C
Preferred Stock is not convertible for one year following the date of issuance.
At any time during the period commencing one year and ending three years
following the date of issuance of the Series C Preferred Stock, provided the
closing price of the Common Stock of the Issuer (the "Common Stock") as reported
by The Nasdaq Stock Market ("Nasdaq"), is at least $10.00 per share for 10
consecutive trading days, the Issuer may, at its sole option, by written notice
(the "Conversion Notice") to the holder thereof automatically convert any or all
of the shares of the Series C Preferred Stock to Common Stock. The number of
shares of Common Stock issuable with respect to each share of Series C Preferred
Stock upon such exchange shall be $500 divided by the greater of (i) $10.00 per
share or (ii) the average closing price of the Common Stock as reported by
Nasdaq for the 10 trading days preceding the date of the Conversion Notice (the
"Conversion Ratio"). Any resulting fractional shares shall be rounded up to the
next whole share. Following the date of the Conversion Notice, all shares of
Series C Preferred Stock specified in the Conversion Notice shall thereafter
cease to exist except to the extent that they evidence a right to receive the
shares of Common Stock upon conversion. The shares of Common Stock issuable upon
conversion shall be issued by the Issuer once the holder of the shares of the
Series C Preferred Stock tenders the certificates evidencing such shares of
Series C Preferred Stock to the Issuer for cancellation. The holders of the
Series C Preferred Stock shall have no right to convert the Series C Preferred
Stock except at the sole discretion of the Issuer. The Issuer shall be under no
obligation under any circumstances to convert the Series C Preferred Stock into
Common Stock.
SECTION 9. Mandatory Exchangeability at Option of the Issuer. At any time
commencing three years after the date of issuance of the Series C Preferred
Stock, if the Series C Preferred Stock has not been converted for Common Stock,
the Issuer may, at its sole option, by written Notice (the "Exchange Notice") to
the holder thereof call for the exchange of the Series C Preferred Stock for
warrants entitling the holder to purchase shares of Common Stock (the "B
Warrants"). In such case, each share of the Series C Preferred Stock will be
exchanged for B Warrants entitling the holder to purchase 25 shares (the
"Exchange Number") of Common Stock at an exercise price equal to 120% of the
average closing price of the Common Stock as reported by Nasdaq for the 10
trading days prior to the date of the Exchange Notice. The terms of the B
Warrants will be substantially as set forth in Exhibit "A" hereto. Following the
date of the Exchange Notice, all shares of Series C Preferred Stock specified in
the Exchange Notice shall thereafter cease to exist except to the extent that
they evidence a right to receive B Warrants upon exchange. The B Warrants
issuable upon exchange shall be issued by the Issuer once the holder of the
shares of the Series C Preferred Stock tenders the certificates evidencing such
shares of Series C Preferred Stock to the Issuer for cancellation. The holders
of the Series C Preferred Stock shall have no right to exchange the Series C
Preferred Stock for B Warrants except at the sole discretion of the Issuer. The
Issuer shall be under no obligation under any circumstances to exchange the
Series C Preferred Stock for B Warrants.
SECTION 10. Antidilution. In case (i) the outstanding shares of the Common
Stock
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shall be subdivided into a greater number of shares, (ii) a dividend in Common
Stock shall be paid in respect of Common Stock, or (iii) the outstanding shares
of Common Stock shall be combined into a smaller number of shares thereof, the
Conversion Ratio and the Exchange Number in effect immediately prior to such
subdivision or combination or at the record date of such dividend or
distribution shall simultaneously with the effectiveness of such subdivision or
combination or immediately after the record date of such dividend or
distribution be proportionately adjusted to equal the product obtained by
multiplying the Conversion Ratio and the Exchange Number, respectively, by a
fraction, the numerator of which is the number of outstanding shares of Common
Stock prior to such combination, subdivision or dividend, and the denominator of
which is that number of outstanding shares of Common Stock after giving effect
to such combination, subdivision or dividend. Any dividend paid or distributed
on the Common Stock in stock or any other securities convertible into shares of
Common Stock shall be treated as a dividend paid in Common Stock to the extent
that shares of Common Stock are issuable upon the conversion thereof.
SECTION 11. Registration Rights. The holders of the Series C Preferred
Stock will have no registration rights with respect to the Series C Preferred
Stock or the underlying Common Stock.
SECTION 12. Preemptive Rights. The holders of the Series C Preferred Stock
will have no preemptive rights whatsoever.
SECTION 13. Action by Consent. Any action required or permitted to be taken
at any meeting of the holders of the Series C Preferred Stock may be taken
without such a meeting if a consent or consents in writing, setting forth the
actions so taken, is signed by the holders of two-thirds of the outstanding
shares of Series C Preferred Stock.
IN WITNESS WHEREOF, this Statement of Resolution is executed on behalf of
the Issuer by its Executive Vice President and Secretary this 15th day of
September, 1998.
GULFWEST OIL COMPANY
By:/s/Jim C. Bigham
Jim C. Bigham
Executive Vice President and Secretary
