SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
April 24, 1997
DELTA PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 0-16203 84-1060803
(State of Commission (I.R.S. Employer
Incorporation) File No. identification No.)
Suite 3310
555 17th Street
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 293-9133
ITEM 5. OTHER EVENTS
On April 24, 1997 Delta Petroleum Corporation ("Delta"
or "the Company"), doing business in Wyoming as Delta Exploration
Company, Inc., and KCS Resources, Inc., a subsidiary of KCS
Energy and doing business as KCS Mountain Resources, Inc. ("KCS")
entered into a letter agreement ("Letter Agreement") a copy of
which is attached hereto, without exhibits, as Exhibit 99.1.
Under the Letter Agreement, KCS will pay $450,000 to
Delta for an 80% interest in Delta's Moneta Hills project located
in the Wind River Basin of Wyoming. KCS will also drill two
wells to the Fort Unionformation at approximately 10,000 feet
prior to September 7, 1997. KCS will carry Delta for a 20% back
in after payout interest in each of the two wells. The Letter
Agreement contains certain contingencies and provisions relating
to due diligence, title and other matters and contemplates that
the Letter Agreement will be superceded by a formal
Purchase and Sale Agreement to be drafted and finalized as soon
as possible following the execution of the Letter Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
99.1 Letter agreement (without exhibits) with KCS Resources,
Inc., a subsidiary of KCS Energy and doing business as
KCS Mountain Resources, Inc.
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
DELTA PETROLEUM CORPORATION
(Registrant)
Date: April 29, 1997 By: s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman/C.E.O.
INDEX TO EXHIBITS
(1) Underwriting Agreement. Not applicable.
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession. Not applicable.
(3) (i) Articles of Incorporation. Not applicable.
(ii) Bylaws. Not applicable.
(4) Instruments Defining the Rights of Security Holders,
including Indentures. Not applicable.
(5) Opinion: re: Legality. Not applicable.
(6) Opinion: Discount on Capital Shares. Not applicable.
(7) Opinion: re: Liquidation Preference. Not Applicable.
(8) Opinion: re: Tax Matters. Not Applicable.
(9) Voting Trust Agreement. Not Applicable.
(10) Material Contracts. Not Applicable.
(11) Statement re: Computation of Per Share Earnings.
Not Applicable.
(12) Statement re: Computation of Ratios. Not Applicable.
(13) Annual Report to Security Holders, etc. Not Applicable.
(14) Material Foreign Patents. Not Applicable.
(15) Letter re: Unaudited Interim Financial Information.
Not Applicable.
(16) Letter re: Change in Certifying Accountant.
Not applicable.
(17) Letter re: Director Resignation. Not applicable.
(18) Letter re: Change in Accounting Principles. Not Applicable.
(19) Report Furnished to Security Holders. Not Applicable.
(20) Other Documents or Statements to Security Holders.
Not applicable.
(21) Subsidiaries of the Registrant. Not Applicable.
(22) Published Report Regarding Matters Submitted to Vote of
Security Holders. Not Applicable.
(23) Consents of Experts and Counsel. Not applicable.
(24) Power of Attorney. Not applicable.
(25) Statement of Eligibility of Trustee. Not Applicable.
(26) Invitations for Competitive Bids. Not Applicable.
(27) Financial Data Schedule. Not Applicable.
(99) Additional Exhibits.
99.1 Letter agreement (without exhibits) with KCS Resources,
Inc., a subsidiary of KCS Energy and doing business as KCS
Mountain Resources, Inc.
April 23, 1997
Delta Petroleum Corporation
Suite 3100
555 17th Street
Denver, Colorado 80202
Attention: Roger A. Parker, President
Re: Participation Agreement Moneta Hills Prospect T37-38N,
R89-91W, 6th P.M. Fremont and Natrona Counties, Wyoming
Dear Mr. Parker:
Delta Petroleum Corporation, doing business in Wyoming as
Delta Exploration Company, Inc. (hereinafter referred to as
"Delta"), represents that it is the owner of oil and gas leases,
rights-of-way and a pipeline covering the portion of the
captioned lands previously encompassed within the Moneta Hills
federal exploratory unit. Said leases and lands are more
specifically described in the Exhibit "A" attached hereto and by
this reference made a part hereof, and are hereafter referred to
as the "Subject Leases" and the "Subject Lands". The Subject
Leases, Subject Lands and pipeline (herein the "Subject
Pipeline") shall collectively hereinafter be referred to as
"Leasehold Position"). Along with this "Leasehold Position,
Delta owns and operates six wells which are more specifically
described in the Exhibit "B" attached hereto and by this
reference made a part hereof, said wells being hereafter referred
to as "Existing Wells".
KCS Resources, Inc., doing business as KCS Mountain
Resources, Inc. (herein after referred to as "KCS") desires to
acquire an interest in the Leasehold Position and the Existing
Wells owned and operated by Delta. Subject to the terms,
conditions, requirements and performance obligations set forth
below, this letter, when executed by you, shall evidence the
agreement by which Delta shall sell, and KCS shall purchase, the
following interests in the Leasehold Position and Existing Wells:
1. Coincident with your execution of this letter, Delta
shall make available to KCS all of its leasehold and title data,
including, but not limited to, leasehold take-offs, ownership
reports, title memoranda, title opinions and abstracts, operating
agreements, unit agreements, unit operating agreements,
communitization agreements, and other contracts, if any,
pertaining to the Leasehold Position and Existing Wells. In
addition, KCS shall have the right to access any and all
geological or geophysical data 'which Delta (or its predecessors
in interest, including Melange Associates,
Inc.) now has in its possession, or may hereafter acquire,
covering the Leasehold Position and Existing Wells. Such data
shall include, but not be limited to, any mud logs, electrical
logs, surveys, pressure data, geologic prognoses, formation
analysis, core data, other wells records, drilling reports,
production reports, environmental records, tax,, accounting or
financial records, processing or transportation agreements, or
other contracts. KCS shall also have physical access
to the Existing Wells for purposes of examination of the same for
physical condition of the equipment thereon and for evaluation of
readily identifiable, possible environmental hazards
and/or problems.
2. KCS shall have thirty (30) days from the date of
execution of this letter to complete its examination of the data
set forth above in paragraph 1, (said period being hereafter
referred to as the "Due Diligence Period"). On or before the
expiry date of the Due Diligence Period, KCS shall supply Delta
with a list of material defects, if any, which would:
(a) operate in any way to prevent KCS from re-forming the
Moneta Hills Unit Area, or obtaining approval from the Bureau of
Land Management for the reformation of the Unit
Area;
(b) prevent KCS from timely receiving assignment of
sufficient lands to constitute effective control of the proposed
Unit Area (being eighty-five percent of the lands
encompassed within the unit boundary;
(c) deliver to KCS less than twenty-eight thousand (28,000) acres
of leasehold; or
(d) subject KCS to any readily evident environmental assessments
or penalties.
Failure to timely submit the list of material defects shall be
considered to be a waiver of any such defects by KCS.
3. Within five (5) business days of receipt of KCS' notice
of material defect(s), Delta shall either agree to (a) cure any
such defect so that KCS shall not be delayed in any manner in re-
forming the subject unit, and (b) clean up any environmental
problems to the satisfaction of KCS; or (c) concur with the
termination of this agreement.
4. As soon as it is practicable, but not later than ten
(10) days following the conclusion of the Due Diligence Period,
Delta shall tender to KCS an assignment, (without warranty,
except by, through and under Delta) of eighty percent (80.00%) of
Delta's right, title and interest in the Leasehold Position as
well as in the Existing Wells. To the extent practicable,
assignment of the Subject Leases covering federal
lands shall include both Record Title and Operating Rights.
5. The purchase price for the acquisition of the interests
hereunder is the sum of Four Hundred Fifty Thousand and no/ I 00
Dollars ($450,000.00) which shall be payable coincident
with tender of the assignment by Delta. This price is subject to
adjustment, however, should title to all or any part of the
Leasehold Position or Existing Wells fail as set forth below. In
addition, KCS shall carry Delta's interest in the drilling of one
(1) well in the East side of the Subject Leases and one (1) well
in the West side of the Subject Leases (the exact line between
East side and West side to be determined by mutual agreement ).
Delta shall back into such interests on the first day of the
month following that in which each said well pays out.
6. In the Assignment and Bill of Sale anticipated hereunder,
Delta shall make no warranty of title to KCS, except by, through
or under Delta.
7. KCS and Delta shall confirm with the Bureau of Land
Management and the Oil and Gas Conservation Commission of the
State of Wyoming that the Existing Wells operated by Delta
are not subject to any notices requiring remediation of any site
or wellbore. Should any such requirement be imposed on an
Existing Well(s) for operations prior to the closing, Delta shall
be fully responsible for payment of the cost of such reclamation
or remediation and shall indemnify KCS and hold KCS harmless from
and against any and all claims, causes of action, penalties,
liabilities, damages, losses, costs and expenses in connection
with or attributable to the required reclamation or remediation
pertaining to the Subject Leases or Existing Wells.
8. Prior to closing, KCS shall notify Delta in writing of
any title defects affecting any of the Leasehold Position. In
the event that any of the listed title defects are deemed to be
irrevocable and result in a decrease of ten percent (10.00%) or
more between (a) the net acreage actually owned by Delta and
(b) the net acreage which Delta represents that it owns as shown
on the attached Exhibit "A", the purchase price set forth above
in paragraph 5 shall be reduced by the sum of Ten Dollars
($10.00) per net mineral acre of Leasehold Position to be
conveyed to KCS hereunder for which title failed. Should the
quantity of such decrease result in an aggregate total of
Leasehold Position to be conveyed to KCS being
insufficient to meet the minimum necessary to demonstrate
effective control of the Unit Area, KCS shall have the option to
void the agreement in its entirety, or accept the reduction in
purchase price as calculable above. Notwithstanding anything
hereinabove to the contrary, Delta shall retain the option to
terminate this agreement if (a) the purchase price reduction
based on title defects exceeds Fifty Thousand Dollars
($50,000.00), and (b) KCS refuses to pay a minimum of
Four Hundred Thousand Dollars ($400,000.00) for the remaining
assets, including the Existing Wells and any of the Subject
Leases for which title is marketable.
9. KCS shall assume operations of the Existing Wells
effective the first day of the month following receipt of the
assignments hereunder, and shall act as Operator for the
Leasehold Position and Existing Wells under a 610-1982 AAPL Model
Form Joint Operating Agreement covering the Subject Leases and
Subject Lands. By tendering the assignments hereunder, Delta
agrees to accept KCS as Operator under the JOA and also agree to
negotiate in good faith toward completion of a mutually
acceptable Operating Agreement.
10. As an additional consideration hereunder, KCS agrees to use
reasonable efforts in good faith to re-form the Moneta Hills Unit
Area. Both parties recognize that a substantial portion of the
Subject Leases shall expire on or around September 7, 1997
pending approval and certification of a new unit area. Delta
agrees to execute any ratification or instrument of joinder
submitted by KCS, and to assist KCS in any way to obtain the
approval of the regulatory agencies having
jurisdiction over such matters. Should KCS fail to timely
receive approval and certification of the reformed unit area, KCS
shall have no liability to Delta for the expiration of any of the
Subject Leases except where such expiry is the result of KCS'
gross negligence or willful misconduct.
11. This letter shall be superseded by a formal Purchase and Sale
Agreement which will be drafted and finalized as soon as possible
as is practicable following execution of this letter,
Should the foregoing be acceptable to you, please
execute and return one (1) copy of this letter agreement to the
undersigned at the address shown on the letterhead. Any
questions or concerns should be directed to the undersigned or
Jim Bob Byrd at (800) 250-5271. Your patience and cooperation
are much appreciated.
Very truly yours,
KCS Mountain Resources , Inc.
s/H. Edward Kluver
H. Edward Kluver
Assistant Secretary/Land Manager
Agreed to and Accepted this 23rd day of April, 1997.
DELTA PETROLEUM CORPORATION
s/Roger A. Parker
Roger A. Parker, President
