DELTA PETROLEUM CORPORATION
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Aleron H.
Larson, Jr. and Roger A. Parker, or each of them, lawful
attorneys and proxies of the undersigned, with full power of
substitution, for and in the name, place and stead of the
undersigned, to attend the Annual Meeting of Shareholders of
Delta Petroleum Corporation, to be held in the corporate offices
of the Company at 555 17th Street, Suite 3310, Denver, Colorado
80202 on Tuesday, November 25, 1997, at 10:00 a.m. (local time),
and any adjournment(s) thereof, with all powers the
undersigned would possess if personally present and to vote
thereat, as provided below, the number of shares the undersigned
would be entitled to vote if personally present.
(Check One)
For Against Abstain
Proposal 1: To approve the four
nominees to the
Board of Directors [ ] [ ] [ ]
Proposal 2: To ratify the
appointment of
KPMG Peat Marwick LLP
as independent auditors [ ] [ ] [ ]
In accordance with their discretion, said attorneys and
proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment(s) thereof.
Every properly signed proxy will be voted in accordance with the
specifications made thereon.
IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2. All prior proxies are revoked. This Proxy
will also be voted in accordance with the discretion of the
proxies or proxy on any other business. Receipt is hereby
acknowledged of the Notice of Annual Meeting and Proxy Statement.
Signature Signature (if jointly held)
Print Name Print Name
Dated Dated
(Please sign exactly as name appears hereon. When signing
as attorney, executor, administrator, trustee, guardian, etc.,
give full title as such. For joint accounts, each joint
owner should sign.)
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY FORM PROMPTLY USING
THE ENCLOSED ENVELOPE.
October 23, 1997
Dear Delta Shareholders:
On behalf of the Board of Directors, it is a pleasure to
invite you to attend the 1997 Annual Meeting of Stockholders at
10:00 a.m. on Tuesday, November 25, 1997 in Denver,
Colorado at the Company's corporate offices.
Business matters expected to be acted upon at the meeting
are described in detail in the accompanying Notice of the Annual
Meeting and Proxy Statement. Members of management
will report on the Company's operations, followed by a period for
questions and discussion.
We hope you can attend the meeting. Regardless of the
number of shares you own, your vote is very important. Please
ensure that your shares will be represented at the meeting by
signing and returning your proxy now, even if you plan to attend
the meeting.
Thank you for your continued support of the Company.
Sincerely,
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman of the Board
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 25, 1997
TO THE SHAREHOLDERS OF DELTA PETROLEUM CORPORATION:
As a shareholder of Delta Petroleum Corporation, a
Colorado corporation, (the Company"), you are invited to be
present in person or to be represented by proxy at the Annual
Meeting of Shareholders, to be held at the Company's corporate
offices, 555 17th Street, Suite 3310, Denver, Colorado 80202, on
Tuesday, November 25, 1997 at 10:00 a.m. (local time) for
the following purposes:
1) To elect four directors;
2) To consider and vote upon the ratification of the
appointment of KPMG Peat Marwick LLP as independent auditors for
the Company for the fiscal year ending June 30, 1998; and
3) To transact such other business as may be properly
brought before the meeting and any adjournments thereof.
Shareholders of the Company of record at the close of
business on October 15, 1997, are entitled to vote at the meeting
and all adjournments thereof.
A majority of the outstanding shares of Common Stock of
the Company must be represented at the meeting to constitute a
quorum. Therefore, all shareholders are urged either
to attend the meeting or to be represented by proxy. If a quorum
is not present at the meeting, a vote for adjournment will be
taken among the shareholders present or represented by proxy.
If a majority of the shareholders present or represented by proxy
vote for adjournment, it is the Company's intention to adjourn
the meeting until a later date and to vote proxies received at
such adjourned meeting(s).
If you do not expect to attend the meeting in person,
please complete, sign, date and return the accompanying proxy
card in the enclosed business reply envelope. If you later find
that you can be present or for any other reason desire to revoke
your proxy, you may do so at any time before the voting.
By order of the Board of Directors
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman\Secretary
October 23, 1997
PROXY STATEMENT
OF
DELTA PETROLEUM CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, NOVEMBER 25, 1997
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors (the "Board of Directors")
of Delta Petroleum Corporation ("Delta" or the "Company") of
proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Tuesday, November 25, 1997, at
the Company's corporate offices, 555 17th Street, Suite 3310,
Denver, Colorado 80202, at 10:00 a.m., M.S.T., and at any
adjournment thereof. Each shareholder of record at the close of
business on October 15, 1997 of shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), will be
entitled to one vote for each share so held. As of September 16,
1997, there were 5,230,631 shares of Common Stock issued and
outstanding.
Shares represented by properly executed proxy cards received
by the Company at or prior to the Annual Meeting will be voted
according to the instructions indicated on the proxy card.
Unless contrary instructions are given, the persons named on the
proxy card intend to vote the shares so represented for (i) the
election of the nominees for directors, and (ii) the ratification
of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending June 30, 1998.
As to any other business which may properly come before the
meeting, the persons named on the proxy card will vote according
to their judgement. The enclosed proxy may be revoked prior to
the meeting by written notice to the Secretary of the Company at
555 17th Street, Suite 3310, Denver, Colorado 80202, or by
written or oral notice to the Secretary at the Annual Meeting
prior to being voted. This Proxy Statement and the Proxy
Card enclosed herewith are expected to be first sent to
shareholders of the Company on or about October 24, 1997.
If a quorum is not present at the meeting, a vote for
adjournment will be taken among the shareholders present or
represented by proxy. If a majority of the shareholders present
or represented by proxy vote for adjournment, it is the Company's
intention to adjourn the meeting until a later date and to vote
proxies received at such adjourned meeting(s).
ELECTION OF DIRECTORS
Directors of the Company are elected annually by the
shareholders to serve until the next Annual Meeting of
shareholders and until their respective successors are duly
elected. The Bylaws of the Company provide that the number of
directors comprising the whole Board shall from time to time be
fixed and determined by resolution adopted by the Board of
Directors. The Board of Directors has established the size of
the Board for the ensuing year at four directors. Accordingly,
the Board of Directors is recommending that the four current
directors of the Company be re-elected. If any nominee becomes
unavailable for any reason, a substitute nominee may be proposed
by the Board of Directors and the shares represented by proxy
will be voted for any substitute nominee, unless the Board
reduces the number of directors. The Board of Directors has no
reason to expect that any nominee will become unavailable.
Assuming the presence of a quorum, the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock
represented in person or by proxy at the Annual Meeting is
required for the election of directors.
At the Annual Meeting the shares of Common Stock represented
by proxies will be voted in favor of the election of the nominees
named below unless otherwise directed.
The Board of Directors recommends a vote for these nominees.
NOMINEES FOR ELECTION AS DIRECTORS TO SERVE
UNTIL NEXT ANNUAL MEETING
The following table sets forth the names, ages and positions
held with respect to each Director and Executive Officer of the
Company along with the period served as a Director.
Name Age Position(s) Period of
Service
Aleron H. Larson, Jr. 52 Chairman of the May 1987
Board, Chief to Present
Executive Officer
Secretary, Treasurer,
and a Director
Roger A. Parker 35 President and May 1987
Chief Operating to Present
Officer and
a Director
Terry D. Enright 48 Director November 1987
to Present
Jerrie F. Eckelberger* 53 Director September 1996
to Present
* Mr. Eckelberger was appointed as a director on September
27, 1996 to fill the vacancy created by the death of Don Mettler
on September 3, 1996.
The following is biographical information as to the business
experience of each current officer and director of the Company.
Aleron H. Larson, Jr., age 52, has operated as an
independent in the oil and gas industry individually and through
public and private ventures since 1978. From July of 1990
through March 31, 1993, Mr. Larson served as the Chairman,
Secretary, C.E.O. and a Director of Underwriters Financial Group,
Inc. ("UFG") (formerly Chippewa Resources Corporation), a public
company then listed on the American Stock Exchange which owns
approximately 18.74% of the outstanding equity securities of
Delta as of the date of this Proxy Statement. Subsequent to a
change of control, Mr. Larson resigned from all positions with
UFG effective March 31, 1993. Mr. Larson serves as Chairman,
CEO, Secretary, Treasurer and Director of Amber, a public oil and
gas company which is a majority-owned subsidiary of Delta.
He has also served, since 1983, as the President and Board
Chairman of Western Petroleum Corporation, a public Colorado oil
and gas company which is now inactive. Mr. Larson
practiced law in Breckenridge, Colorado from 1971 until 1974.
During this time he was a member of a law firm, Larson &
Batchellor, engaged primarily in real estate law, land use
litigation, land planning and municipal law. In 1974, he formed
Larson & Larson, P.C., and was engaged primarily in areas of law
relating to securities, real estate, and oil and gas until
1978. Mr. Larson received a Bachelor of Arts degree in Business
Administration from the University of Texas at El Paso in 1967
and a Juris Doctor degree from the University of
Colorado in 1970.
Roger A. Parker, age 35, served as the President, a Director
and Chief Operating Officer of Underwriters Financial Group from
July of 1990 through March 31, 1993. Mr. Parker resigned from
all positions with UFG effective March 31, 1993. Mr. Parker also
serves as President, Chief Operating Officer and Director of
Amber. He also serves as a Director and Executive Vice President
of P & G Exploration, Inc., a private oil and gas company
(formerly Texco Exploration, Inc.). Mr. Parker has also been the
President, a Director and sole shareholder of Apex Operating
Company, Inc. since its inception in 1987. He has operated as
an independent in the oil and gas industry individually and
through public and private ventures since 1982. He was at
various times, from 1982 to 1989, a Director, Executive Vice
President, President and shareholder of Ampet, Inc. He received
a Bachelor of Science in Mineral Land Management from the
University of Colorado in 1983. He is a member of the Rocky
Mountain Oil and Gas Association and the Independent Producers
Association of the Mountain States (IPAMS).
Terry D. Enright, age 48, has been in the oil and gas
business since 1980. Mr. Enright was a reservoir engineer until
1981 when he became Operations Engineer and Manager
for Tri-Ex Oil & Gas. In 1983, Mr. Enright founded and is
President and a Director of Terrol Energy, a private, independent
oil company with wells and operations primarily in the Central
Kansas Uplift and D-J Basin. In 1989, he formed and became
President and a Director of a related company, Enright Gas & Oil,
Inc. Since then, he has been involved in the drilling of
prospects for Terrol Energy, Enright Gas & Oil, Inc., and for
others in Colorado, Montana and Kansas. He has also participated
in brokering and buying of oil and gas leases and has been
retained by others for engineering, operations, and general oil
and gas consulting work. Mr. Enright received a B.S. in
Mechanical Engineering with a minor in Business Administration
from Kansas State University in Manhattan, Kansas in 1972, and
did graduate work toward an MBA at Wichita State University in
1973. He is a member of the Society of Petroleum
Engineers and a past member of the American Petroleum Institute
and the American Society of Mechanical Engineers.
Jerrie F. Eckelberger, age 53, is an investor, real estate
developer and attorney who has practiced law in the State of
Colorado for 26 years. He graduated from Northwestern
University with a Bachelor of Arts degree in 1966 and received
his Juris Doctor degree in 1971 from the University of Colorado
School of Law. From 1972 to 1975, Mr. Eckelberger was a staff
attorney with the eighteenth Judicial District Attorney's Office
in Colorado. After spending two years in the litigation
department of a Denver law firm, he founded Eckelberger &
Associates of which he is still the principal member. From 1982
to 1992 Mr. Eckelberger was the senior partner of Eckelberger &
Feldman, a law firm with offices in Englewood, Colorado. Mr.
Eckelberger previously served as an officer, director and
corporate counsel for Roxborough Development Corporation. He is
presently the President and Chief Executive Officer of 1998,
Ltd., a Colorado corporation actively engaged in the development
of real estate in Colorado. He is the Managing Member of The
Francis Companies, L.L.C., a Colorado limited liability
company, which actively invests in real estate. Additionally,
Mr. Eckelberger is the General Partner of 2003 Limited, a
Colorado limited partnership specializing in real estate
development.
There is no family relationship among or between any of the
Directors.
Messrs. Enright and Mettler served as the audit committee
and as the compensation committee. Messrs. Enright and Mettler
also constituted the Incentive Plan Committee for the Delta 1993
Incentive Plan for the Company. Upon appointment of Mr.
Eckelberger as a director subsequent to Mr. Mettler's death, Mr.
Eckelberger was also appointed to the Audit, Compensation and
Incentive Plan Committees to serve with Mr. Enright.
All directors will hold office until the next annual meeting
of shareholders. There are no arrangements or understandings
among or between any director of the Company and any
other person or persons pursuant to which such director was or is
to be selected as a director.
All officers of the Company will hold office until the next
annual directors' meeting of the Company. There is no
arrangement or understanding among or between any such
officer or any person pursuant to which such officer is to be
selected as an officer of the Company.
There is no employee who is not a designated officer or
director who is expected to make any significant contribution to
the business of the Company.
BOARD OF DIRECTORS AND COMMITTEES
During fiscal year 1997 the Board of Directors met on 23
occasions either in person or by phone or in lieu thereof acted
by consent. The Board of Directors has appointed
three committees: the Audit, Compensation, and Incentive Plan
Committees. The non-employee directors, Messrs. Eckelberger and
Enright, currently serve on all three committees and both are
necessary to constitute a quorum. During fiscal year 1997 the
Compensation Committee met on one occasion, the Audit Committee
on one occasion, and the Incentive Plan Committee on
six occasions, either in person or by phone or, in lieu thereof,
acted by consent.
The Compensation Committee makes recommendations to the
Board of Directors in the area of executive compensation. The
Audit Committee is appointed for the purpose of
overseeing and monitoring the Company's independent audit
process. It is also charged with the responsibility for
reviewing all related party transactions for potential conflicts
of interest. The Incentive Plan Committee is charged with the
responsibility for selecting individual employees to be issued
options and other grants under Delta's 1993 Incentive Plan, as
amended. Members of the Incentive Plan Committee, as
non-employee directors, are automatically
awarded options on an annual basis under a fixed formula under
the 1993 Incentive Plan, as amended. (See "Compensation of
Directors").
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
SHAREHOLDERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners:
The following table presents information concerning persons
known by management to own beneficially 5% or more of the issued
and outstanding voting securities of the Company at August 5,
1997.
Name and Address Amount and Nature
Title of of Beneficial of Beneficial Percent
Class(1) Owner Ownership of Class(2)
Common Stock Aleron H. Larson, Jr. 1,584,158 27.84%
555 17th St., #3310 shares (5)
Denver, CO 80202
Common Stock Roger A. Parker 1,526,695 27.34%
555 17th St., #3310 shares (4)
Denver, CO 80202
Common Stock Aleron H. Larson, Jr. 2,105,195 34.84%
& Roger A. Parker shares (5)
(as a group)
555 17th St., #3310
Denver, CO 80202
Common Stock Underwriters Financial 980,180 18.74%
Group, Inc. shares (6)
80 Maiden Lane
New York, NY 10038
Common Stock Burdette A. Ogle 761,891 14.29%
1224 Coast Village shares (7)
Rd, #24
Santa Barbara, CA 93108
(1) Delta has an authorized capital of 300,000,000 shares of $.01
par value Common Stock of which 5,230,631 shares were issued and
outstanding as of August 5, 1997. Delta also has an authorized
capital of 3,000,000 shares of $.10 par value preferred stock of
which no shares were outstanding at June 30, 1997. As of August
5, 1997, Delta had outstanding warrants and options to purchase
639,500 shares of Common Stock at prices ranging from $1.25 per
share to $8.50 per share. Additionally, Delta had outstanding
options which were granted to officers and employees to
purchase up to 1,262,077 shares of Common Stock at prices ranging
from $1.25 to $9.75 per share.
(2) The percentage set forth after the shares listed for each
beneficial owner is based upon total shares outstanding of
5,230,631. The percentage set forth after each beneficial
owner is calculated as if any warrants and/or options owned
had been exercised by such beneficial owner and as if no other
warrants and/or options owned by any other beneficial
owner had been exercised. Warrants and options are
aggregated without regard to the class of warrant or option.
(3) Includes 111,000 shares owned by Mr. Larson's wife and 2,000
shares owned by each of his four children (119,000 in aggregate);
7,000 options to purchase shares of Common Stock at $2.50 per
share until July 25, 2005; 100,000 options exercisable at a price
of $3.25 per share until June 9, 2003; 177,500 options
exercisable at a price of $1.25 per share until September 21,
2004; 75,000 options exercisable at a price of $3.25 per share
until August 30, 2005; and 100,000 options exercisable at a
price of $3.25 per share until November 14, 2006. Also includes
980,180 shares owned by Underwriters Financial Group, Inc.;
5,178 shares owned by Willie Lee Lipsey; 13,000 shares owned by
the Woolworth Fund, Inc.; and 7,300 shares owned by the
Gaylord-Woolworth Trust, for which Mr. Larson has shared voting
power with Mr. Parker but for which he has no investment power.
The durations of the voting agreements affecting the
aforementioned shares voted by Messrs. Larson and Parker (unless
the shares are sold to non-affiliates) are as follows:
Underwriters Financial Group, Inc. - until December 31, 2002;
Willie Lee Lipsey - until December 31, 1997; Woolworth Fund, Inc.
- -until December 31, 1997; Gaylord-Woolworth Trust - until
December 31, 1997.
(4) Includes 168,060 shares owned by Mr. Parker directly; 7,000
options to purchase shares of Common Stock at $2.50 per share
until July 25, 2005; 78,427 options exercisable at
a price of $3.25 per share until June 9, 2003; 92,550 options
exercisable at a price of $1.25 per share until September 21,
2004; 75,000 options exercisable at a price of $3.25
per share until August 30, 2005; and 100,000 options
exercisable at a price of $3.25 per
share until November 14, 2006. Also includes 980,180 shares
owned by Underwriters Financial Group, Inc.; 5,178 shares owned
by Willie Lee Lipsey; 13,000 shares owned by the Woolworth Fund,
Inc., and 7,300 shares owned by the Gaylord-Woolworth Trust,
for which Mr. Parker has shared voting power with Mr. Larson
but for which he has no investment power. The durations of the
voting agreements affecting the aforementioned shares voted by
Messrs. Larson and Parker (unless the shares are sold to
non-affiliates) are as follows: Underwriters Financial Group,
Inc. - until December 31, 2002; Willie Lee Lipsey - until
December 31, 1997; Woolworth Fund, Inc. - until December 31,
1997; Gaylord-Woolworth-Trust - until December 31, 1997.
(5) Includes all warrants, options and shares referenced in
footnotes (3) and (4) above as if all warrants and options were
exercised and as if all resulting shares, including shares
covered by the above referenced voting agreements, were voted
as a group.
(6) These shares are subject to a voting agreement referenced in
footnotes (3) and (4) above.
(7) Includes 635,264 shares owned by Mr. Ogle directly, 26,627
shares owned beneficially by Sunnyside Production Company, and
warrants to purchase 100,000 shares of Common Stock at $8.00 per
share until August 31, 1999 with a call provision whereby the
Company may repurchase any unexercised warrants for an
aggregate sum of $1,000 after the Company stock has traded for
$10.00 per share or greater for 30 consecutive trading days.
(b) Security Ownership of Management:
Amount and Nature
Title of Name of Beneficial of Beneficial Percent of
Class (1) Owner Ownership Class (2)
Common Stock Aleron H. Larson, Jr. 1,584,158 27.84%
shares (3)
Common Stock Roger A. Parker 1,526,695 27.34%
shares (4)
Common Stock Terry D. Enright 30,000 00.57%
shares (5)
Common Stock Jerrie F. Eckelberger 1,875 00.04%
shares (6)
Common Stock Officers and Directors 2,137,070 30.18%
as a Group (4 persons) shares (7)
(1) See Note (1) to preceding table
(2) See Note (2) to preceding table
(3) See Note (3) to preceding table
(4) See Note (4) to preceding table
(5) Includes 5,000 Class D Warrants to purchase shares of common
stock at $1.25 per share until the underlying shares are
registered; 10,000 Class I warrants to purchase stock at
$3.50 per share until June 9, 2003; 7,500 options to purchase
shares of Common Stock at $3.30 per share until November 11,
2006; and 7,500 options to purchase shares of Common Stock at
$3.15 per share until December 31, 2006.
(6) Includes 1,875 options to purchase shares of Common Stock at
$2.98 per share until December 31, 2006.
(7) Includes 980,180 shares owned by UFG; 5,178 shares owned by
Willie Lee Lipsey; 13,000 shares owned by the Woolworth Fund,
Inc.; and 7,300 shares owned by the Gaylord-Woolworth-Trust as of
August 5, 1997 which are voted by Messrs. Larson and
Parker under voting agreements described in footnotes (3) and
(4) above and includes all warrants and options referenced in
footnotes (3), (4), (5) and (6) above.
(c) Change in Control. Not applicable.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
ANNUAL COMPENSATION
NAME AND
PRINCIPAL POSITION PERIOD SALARY BONUS
Aleron H. Larson, Jr. Year Ended
Chairman, CEO, 6/31/97 $198,000 $55,000
Secretary, Treasurer,
and a Director Year Ended
6/30/96 189,000 55,000
Year Ended
6/30/95 180,000 -0-
LONG TERM
COMPENSATION
AWARDS
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION PERIOD SARS COMPENSATION
Aleron H. Larson, Jr. Year Ended
Chairman, CEO, 6/31/97 100,000(2) -0-
Secretary, Treasurer, 100,000(3)
and a Director Year Ended
6/30/96 75,000(4) -0-
Year Ended
6/30/95 177,500(5) -0-
ANNUAL COMPENSATION
NAME AND
PRINCIPAL POSITION PERIOD SALARY BONUS
Roger A. Parker Year Ended
President, Chief 6/31/97 $198,000 $55,000
Operating Officer,
and a Director Year Ended
6/30/96 189,000 55,000
Year Ended
6/30/95 180,000 -0-
LONG TERM
COMPENSATION
AWARDS
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION PERIOD SARS COMPENSATION
Roger A. Parker Year Ended
President, Chief 6/31/97 100,000(2) -0-
Operating Officer, 78,427(3)
and a Director Year Ended
6/30/96 75,000(4) -0-
Year Ended
6/30/95 177,500(5) $6,338(6)
(1) Includes reimbursement of certain expenses.
(2) Options to purchase 100,000 shares of Common Stock at
$3.25/share until August 30, 2006 under the Delta 1993 Incentive
Plan.
(3) Previously granted options to purchase shares until June 9,
2003 with exercise price repriced from $3.75 to $3.25 per share
during fiscal year 1997.
(4) Options to purchase 75,000 shares of Common Stock at
$3.25/share until August 30, 2005 under the Delta 1993 Incentive
Plan. Exercise price of these options was repriced from
$5.375 to $3.25 per share during fiscal year 1997.
(5) Options to purchase 177,500 shares each of Common Stock at
$1.25/share until September 21, 2004 were granted to Aleron H.
Larson, Jr. and Roger A. Parker on September 21, 1994 under the
Delta 1993 Incentive Plan. On that date, the same parties each
surrendered for cancellation an equal number of Class D
warrants to purchase shares at $1.25 per share until August 8,
1995.
(6) This amount represents imputed interest on a non interest
bearing advance to this officer with interest imputed at eight
percent (8%) per annum.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL
SECURITES OPTIONS/SAR'S
UNDERLYING GRANTED TO
OPTIONS/SAR'S EMPLOYEES
NAME GRANTED IN FISCAL YEAR
Aleron H. Larson, Jr. 100,000 19.37%
100,000(1) 19.37%
75,000(2) 14.53%
EXERCISE
OR BASE EXPIRATION
NAME PRICE ($/sh) DATE
Aleron H. Larson, Jr. $3.25 11/14/06
3.25 6/09/03
3.25 8/30/05
NUMBER OF % OF TOTAL
SECURITES OPTIONS/SAR'S
UNDERLYING GRANTED TO
OPTIONS/SAR'S EMPLOYEES
NAME GRANTED IN FISCAL YEAR
Roger A. Parker 100,000 19.27%
78,427(1) 15.20%
75,000(2) 14.53%
EXERCISE
OR BASE EXPIRATION
NAME PRICE ($/sh) DATE
Roger A. Parker $3.25 11/14/06
3.25 6/09/03
3.25 8/30/05
(1) Previously granted options to purchase shares until June 9,
2003 with exercise price repriced from $3.75 to $3.25 during
fiscal year 1997.
(2) Previously granted options to purchase shares until August
30, 2005 with exercise price repriced from $5.375 to $3.25 during
fiscal year 1997.
AGGREGATED OPTIONS/EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARE AT FY-END (#) AT FY-END ($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) $ UNEXERCISABLE UNEXERCISABLE
Aleron H.
Larson, Jr. -0- -0- 459,500 (1)/0 $532,563/0
CEO
Roger A.
Parker 84,950(2) $405,459(2) 352,977 (1)/0 $322,717/0
President
(1) Includes as of 6/30/97, 177,500 options for Mr. Larson and
92,550 options for Mr. Parker to purchase Common Stock
exercisable at $1.25 per share until September 21, 2004; 7,000
options to purchase Common Stock exercisable at $2.50 per share
until August 8, 1995; 100,000 options for Mr. Larson and 78,427
options for Mr. Parker to purchase Common Stock exercisable at
$3.25 per share until June 9, 2003; 75,000 options
to purchase Common Stock exercisable at $3.25 per share until
August 30, 2005; and 100,000 options to purchase Common Stock
exercisable at $3.25 per share until November 14, 2006.
(2) Mr. Parker acquired 84,950 shares through the exercise of
options to purchase shares at $1.25 per share. Mr. Parker has
not sold any of these shares. Mr. Parker also returned
options to purchase 21,573 shares at $3.75 per share to the
Company.
Compensation of Directors.
Effective November 1, 1996, the Board of Directors of
the Company amended its Incentive Plan to include non-employee
directors. Under a formula contained in the Plan,
as amended, the Company grants on an annual basis to each
non-employee director options to purchase, on a pro rata basis,
7,500 shares of the Company's Common Stock for services
performed during the previous 12 months at 50% of the average
market price for the year or lesser portion of the year served.
During the fiscal year 1997, the Company granted options
under the above referenced formula as contained in the Plan to
purchase the Company's Common Stock to non- employee directors as
follows:
Number of Exercise Expiration
Options Price Date
Terry Enright 7,500 $ 3.15/share 12/31/06
Don E. Mettler 5,625 3.21/share 11/11/06
Jerrie F.
Eckelberger 1,875 2.98/share 12/31/06
In addition, the outside non-employee directors are each
paid $500 per month. Don E. Mettler, Jerrie F. Eckelberger and
Terry D. Enright were paid $1,500, $4,000 and $6,000,
respectively, during the year ended June 30, 1997.
Employment Contracts and Termination of Employment and
Change-in-Control Agreement.
On May 29, 1996, the Company's Compensation Committee
authorized the Company to enter into employment agreements with
the Company's Chairman and President which employment agreements
replaced and superseded the prior employment agreements with
such persons. (See Form 8-K dated June 27, 1996). Under the
employment agreements the Chairman and President each receive a
salary of $198,000 per year. The employment agreements have five
year terms and include provisions for cars, parking and health
insurance. Terms of the employment agreements also provide that
the employees may be terminated for cause but that in the event
of termination without cause or in the event of a change in
control of the Company, as defined in Delta's 1993 Incentive
Plan, then the employees will continue to receive the
compensation provided for in the employment agreements for the
remaining terms of the employment agreements. Also in the event
of a change of control and irrespective of any
resulting termination, the Company will immediately cause all of
each employee's then outstanding unexercised options to be
exercised by the Company on behalf of the employee with
the Company paying the employee's federal, state and local taxes
applicable to the exercise of the options and warrants.
Report on Repricing of Options.
The Compensation Committee/Incentive Plan Committee
reported that options to purchase shares which were previously
awarded under the Company's Incentive Plan were
repriced as indicated in the accompanying tables and footnotes
thereto in this section. Options for other employees were also
repriced coincident with the repricing of options for the named
executive officers. New prices for all options were set at or
above the market price for the underlying Common Stock. Options
were repriced to provide additional incentive to officers and
employees to continue to improve Company performance and value
and as a reward for past employee contributions.
Retirement Savings Plan.
During 1997 the Company began sponsoring a qualified tax
deferred savings plan in the form of a Savings Incentive Match
Plan for Employees ("SIMPLE") IRA plan available to companies
with fewer than 100 employees. Under the SIMPLE IRA plan, the
Company employees may make annual salary reduction contributions
of up to three percent (3%) of an employee's base salary up to a
maximum of $6,000 (adjusted for inflation) on a pre-tax basis.
The Company will make matching contributions on behalf of
employees who meet certain eligibility requirements. During the
fiscal year ended June 30, 1997, the Company contributed
$4,491 under the Plan.
REPORT OF THE COMPENSATION AND INCENTIVE PLAN COMMITTEES
REGARDING COMPENSATION ISSUES
The objective of the Compensation Committee is to design
the Company's executive compensation program to enable the
Company to attract, retain and motivate executive
personnel deemed necessary to maximize return to shareholders.
The fundamental concept of the program is to align the amount of
an executive's total compensation with his contribution to
the success of the Company in creating shareholder value.
In furtherance of this objective, the Compensation
Committee has determined that the program should have the
following components:
Base Salaries: The Committee believes that the Company
should offer competitive base salaries to enable it to attract,
motivate and retain capable executives. The Committee has
in the past determined levels of the base compensation using
published compensation surveys and other information for energy
and similar sized companies. The Committee may or may not use
such surveys or other information to determine levels of base
compensation in the future.
Long-Term Incentives: The Committee believes that
long-term compensation should comprise a substantial portion of
each executive officer's total compensation. Long-term
compensation provides incentives that encourage the executive
officers to own and hold Company stock and tie their long-term
economic interests directly to those of the Company's
shareholders. Long-term compensation can be provided in the form
of restricted stock or stock options or others grants under the
Company's 1993 Incentive Plan, as amended.
With specific reference to the Chairman/Chief Executive
Officer and the President, the Committee attempts to exercise
great latitude in setting salary and bonus levels
and granting stock options. Philosophically, the Committee
attempts to relate executive compensation to those variables over
which the individual executive generally has control.
These officers have the primary responsibility for improving
shareholder value for the whole Company.
The Committee believes that its objectives of linking
executive compensation to corporate performance results in
alignment of compensation with corporate goals and shareholder
interest. When performance goals are met or exceeded,
shareholder value is increased and executives are rewarded
commensurately. Corporate performance includes circumstances
that will result in long-term increases in shareholder value
notwithstanding that such circumstances may not be reflected in
the immediate increase in Company profits or share price. It is
the Committee's objective to emphasize and promote long-term
growth of shareholder value over short-term, quarter to quarter
performance whenever these two concepts are in conflict. The
Committee believes that compensation levels during 1997
adequately reflect the Company's compensation goals and policies.
In 1993, the Internal Revenue Code was amended to add
section 162(m), which generally disallows a tax deduction for
compensation paid to a company's senior executive officers in
excess of $1 million per person in any year. Excluded from the
$1 million limitation is compensation which meets pre-established
performance criteria or results from the exercise of stock
options which meet certain criteria. While the Company
generally intends to qualify payment of compensation under
section 162(m), the Company reserves the right to pay
compensation to its executives from time to time that may not be
tax deductible.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's executive officers, directors and
persons who beneficially own more than ten percent (10%)
of a registered class of the Company's equity securities, to file
initial reports of securities ownership of the Company and
reports of changes in ownership of equity securities of the
Company with the Securities and Exchange Commission ("SEC").
Such persons also are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, during the fiscal year ended
June 30, 1997, the Company's officers and directors complied with
all applicable Section 16(a) filing requirements. These
statements are based solely on a review of the copies of
such reports furnished to the Company by its officers and
directors and their written representations that such reports
accurately reflect all reportable transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) On May 23, 1997, Delta entered into a settlement
agreement with Snyder Oil Corporation ("SOCO") and the Trustee in
Bankruptcy for Underwriters Financial Group, Inc.
("UFG"). The agreement was subsequently approved by the
Bankruptcy Court. Under the settlement agreement: 1) UFG granted
a lien to SOCO upon 888,063 shares of Common Stock
which UFG owned in Delta; 2) SOCO released its lien upon
3,357,000 shares of Common Stock of Amber Resources Company
("Amber") owned by Delta; and 3) Delta released its lien upon the
888,063 shares of Common Stock of Delta owned by UFG.
Previously, under a series of agreements between UFG and
Delta beginning in 1992, Delta acquired 72% of the shares of
Common Stock of Amber from UFG, subject to a promissory note owed
by UFG to SOCO. Delta also held a lien on 888,063 shares of
Delta Common Stock owned by UFG as collateral to assure that UFG
would discharge the promissory note to SOCO. SOCO held a lien on
Delta's Amber shares (representing 72% of Amber), also
as collateral, to assure the repayment of the promissory note by
UFG.
Delta was not obligated to pay the promissory note.
However, because the note encumbered a portion of the shares of
Amber Common Stock owned by Delta, Delta recorded
an aggregate amount representing principal and accrued interest
on the promissory note as a current liability. UFG defaulted on
the promissory note due SOCO and in December of 1995
filed under Chapter 11 in the U.S. Bankruptcy Court of the
Southern District of New York. Monthly accrual of interest was
charged by Delta against income until the UFG bankruptcy
filing.
As a result of the settlement agreement, the liability
for the promissory note was eliminated with a corresponding
increase in Delta's stockholders' equity.
The settlement agreement imposes certain restrictions
upon sales of the Delta Common Stock owned by UFG into the public
market in addition to any restrictions provided by
SEC Rule 144 for affiliates. Included in the agreement is an
amended stock voting agreement whereby Aleron H. Larson, Jr. and
Roger A. Parker, Delta's Chairman and President,
respectively, have the right to vote the Delta shares owned by
UFG. The agreement also contains certain covenants relating to
the issuance of Delta securities.
In connection with the settlement agreement, the parties
have also entered into a stipulation relating to the recession of
an agreement dated February 22, 1995 between Delta and
UFG. Under the stipulation, Delta returned to UFG 92,117 shares
of Delta Common Stock owned by UFG and 491,300 shares of UFG
Common Stock which had previously been issued
to Delta by UFG to satisfy $1,473,864 owed by UFG to Delta.
Under the stipulation, which was approved by UFG's Bankruptcy
Court, Delta was deemed to have an allowed general
unsecured claim in the UFG bankruptcy estate in the amount of
$1,473,864.
(b) Effective October 28, 1992, the Company entered into a
five year consulting agreement with Burdette A. Ogle and Ronald
Heck which provides for an aggregate fee to the
two of them of $10,000 per month. (See Form 8-K dated December
4, 1992; Exhibit 28.2.) The Company has agreed to extend this
agreement for one year. Messrs. Ogle and Heck own
beneficially 14.29% and 4.79%, respectively, of the Company's
outstanding Common Stock. To the Company's best knowledge and
belief, the consulting fee paid to Messrs. Ogle and Heck
is comparable to those fees charged by Messrs. Ogle and Heck to
other companies owning interests in properties offshore
California for consulting services rendered to those other
companies with respect to their own offshore California
interests. It is the Company's understanding that, in the
aggregate, Mr. Ogle represents, as a consultant, a significant
percentage of all of the ownership interests in the various
properties that are located in the same general vicinity of the
Company's offshore California properties. Mr. Ogle also consults
and advises the Company relative to properties in areas other
than offshore California, relative to potential property
acquisitions and with respect to the Company's
general oil and gas business. It is the Company's opinion that
the fees paid to Messrs. Ogle and Heck for the services
rendered are comparable to fees that would be charged by
similarly qualified non-affiliated persons for similar services.
(c) Effective February 25, 1994, Burdette A. Ogle ("Ogle"),
at the time a 21.44% shareholder of Delta, granted Delta an
option ("Option") to acquire working interests in three
proved undeveloped offshore Santa Barbara, California federal oil
and gas units ("Interests"). On August 31, 1994, in an addendum
to the February 25, 1994 Agreement granting the Option,
Ogle agreed to extend the period during which the Option could be
exercised until January 3, 1995 in consideration of the issuance
by Delta to Ogle of warrants to purchase 100,000 shares
of Common Stock at a price of $8.00 per share until August 31,
1999 with a call provision whereby Delta may repurchase any
unexercised warrants for an aggregate sum of $1,000 after
the stock has traded at $10.00 per share or greater for thirty
consecutive trading days. On January 3, 1995, the Company
exercised its option to acquire these properties from Ogle.
Under the Purchase and Sale Agreement and related assignment and
conveyance of the interests, Ogle immediately assigned and
conveyed the Interests to Delta. The purchase price of
$8,000,000 is represented by a production payment reserved in the
documents of Assignment and Conveyance and is payable out of
three percent (3%) of the oil and gas production from the
working interests with a requirement for minimum annual payment.
Delta paid Ogle $250,000 in 1995, $250,000 in 1996, $350,000 in
1997 and is to pay a minimum of $350,000 annually
thereafter until the earlier of: 1) when the production payments
accumulate to the $8,000,000 purchase price; 2) when 80% of the
ultimate reserves of any lease have been produced; or 3)
30 years from the date of the conveyance. Delta already owned
other interests in these same federal units.
The terms of the transaction with Mr. Ogle were arrived
at through arms-length negotiations initiated by management of
the Company. The Company is of the opinion that the
transaction is on terms no less favorable to the Company than
those which could have been obtained from non-affiliated parties.
No independent determination of the fairness and
reasonableness of the terms of the transaction was made by any
outside person. Management believes the terms are comparable to
terms that would have been negotiated in a transaction with
non-affiliates.
(d) On September 5, 1995, the Company acquired certain
leases in Jackson County, Colorado from Sunnyside Production
Company, LLC ("Sunnyside"), a company in which Ogle
is an affiliate owner, for 26,627 shares of the Company's common
stock. This transaction was recorded at Sunnyside's predecessor
cost for the portion attributable to Ogle's interest.
(e) On February 12, 1996, the Board of Directors granted
Aleron H. Larson, Jr. and Roger A. Parker, the Company's Chairman
and President, respectively, the right to participate
on a non-promoted basis in up to a five percent (5%) working
interest in any Delta well drilled, re-entered, completed or
recompleted by Delta on its acreage (provided that any well to be
re-entered or recompleted is not then producing economic
quantities of hydrocarbons). Prior to commencement of the work on
any such well, Messrs. Larson and Parker shall pay to the
Company the unpromoted cost thereof as estimated by the Company's
consulting engineers.
(f) On May 29, 1996, the Company's Compensation Committee
authorized the Company to enter into employment agreements with
the Company's Chairman and President, which employment agreements
replaced and superseded the prior employment agreements with
such persons. (See Form 8-K dated June 27, 1996). The
employment agreements have five year terms and include provisions
for cars, parking and health insurance. Terms of the
employment agreements also provide that the employees may be
terminated for cause but that in the event of termination without
cause or in the event of a change in control of the Company,
as defined in Delta's 1993 Incentive Plan, then the employees
will continue to receive the compensation provided for in the
employment agreements for the remaining terms of the
employment agreements. Also in the event of a change of control
and irrespective of any resulting termination, the Company will
immediately cause all of each employee's then outstanding
unexercised options to be exercised by the Company on
behalf of the employee with the Company paying the employee's
federal, state and local taxes applicable to the exercise of
the options and warrants.
(g) During the fiscal year ended June 30, 1997, the Company
made loans to Roger A. Parker, its President, each loan bearing
interest at 6%. As of June 30, 1997, the Company
was owed $46,660 by Mr. Parker. During a portion of the year
ended June 30, 1997, Mr. Parker was indebted to the Company in a
maximum amount of $167,500 plus applicable interest
as a result of borrowing from the Company.
(h) On January 7, 1997, Mr. Parker returned 21,573 options
to purchase shares of Common Stock at $3.75 to the Company. At
that time the market price of the Company's Common Stock was
$6.50 per share. On the same date, the Company wrote off a
receivable in the amount of $59,326 from Apex Operating Company,
Inc., a company affiliated with Mr. Parker by reason of his
position as its President and his ownership of 100% of its common
stock. Mr. Parker's return of the 21,573 options was voluntary
and was done as an attempt to restore an approximately equivalent
value to the Company.
(i) During the fiscal year ended June 30, 1997, Mr. Parker
exercised options to purchase 14,450 shares of the Company's
Common Stock. Payment for these shares of common
stock purchased upon the exercise of an option was made in shares
of the Company's Common Stock owned by Mr. Parker pursuant to the
Company's 1993 Incentive Plan, as amended. As
a result of this transaction, the Company recorded at cost the
4,070 reacquired shares of the Company's Common Stock.
APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders of the
Company, the Board has designated the firm of KPMG Peat Marwick
LLP, Suite 2300, 707 17th Street, Denver, Colorado 80202, as
independent auditors to examine and audit the Company's financial
statements for the fiscal year 1998. This firm has audited the
Company's financial statements for four years and is considered
to be well qualified. The designation of such firm as auditors
is being submitted for ratification or rejection at the Annual
Meeting. Action by shareholders is not required under the law
for the appointment of independent auditors, but the ratification
of their appointment is submitted by the Board in order to give
the shareholders of the Company the final choice in the
designation of auditors. The Board will be governed by the
decision of a majority of the votes entitled to be cast. A
majority of the vote represented at the Annual
Meeting by shares of Common Stock entitled to vote is required to
ratify the appointment of KPMG Peat Marwick LLP.
A representative of KPMG Peat Marwick LLP will be
present at the Annual Meeting with the opportunity to make a
statement if he desires to do so and will also be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR this
proposal.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be included in the Board of
Directors' solicitation of proxies for the 1998 Annual Meeting of
Shareholders must be received by Aleron H. Larson, Jr.,
Secretary, at 555 17th Street, Suite 3310, Denver, Colorado
80202, no later than September 1, 1998.
GENERAL AND OTHER MATTERS
The Board of Directors knows of no matter, other than
those referred to in this Proxy Statement, which will be
represented at the Annual Meeting. However, if any other
matters are properly brought before the meeting or any of its
adjournments, the person or persons voting the proxies will vote
them in accordance with their judgement on such matters.
The cost of preparing, assembling, and mailing this
Proxy Statement, the enclosed proxy card and the Notice of the
Annual Meeting will be paid by the Company. Additional
solicitation by mail, telephone, telegraph or personal
solicitation may be done by directors, officers, and regular
employees of the Company. Such persons will receive no
additional compensation for such services. Brokerage houses,
banks and other nominees, fiduciaries and custodians nominally
holding shares of Common Stock of record will be requested to
forward proxy soliciting material to the beneficial owners of
such shares, and will be reimbursed by the Company for their
reasonable expenses.
Available Information. Upon request of any shareholder,
the Company's Annual Report for the year ended June 30, 1997
filed with the SEC on Form 10-KSB, including financial
statements, the schedules and any amendments thereto,
will be sent to the shareholder without charge by first class
mail within one business day of receipt of such request. All
requests should be addressed to the Secretary of the Company at
555 17th Street, Suite 3310, Denver, Colorado 80202 or by
telephone (303) 293-9133.
You are urged to complete, sign, date and return your
proxy promptly. You may revoke your proxy at any time before it
is voted. If you attend the Annual Meeting, as we hope
you will, you may vote your shares in person.
By order of the Board of Directors
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman/CEO
October 23, 1997
