March 1, 2000
Dear Delta Shareholders:
On behalf of the Board of Directors, it is a pleasure to
invite you to attend the 1999 Annual Meeting of Shareholders at
10:00 a.m. on Thursday, March 30, 2000 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 our 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.
Sincerely,
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman of the Board
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 30, 2000
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 Thursday,
March 30, 2000 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 LLP as independent auditors for the
Company for the fiscal year ending June 30, 2000; 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 February 25, 2000, 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 our 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
March 1, 2000
PROXY STATEMENT
OF
DELTA PETROLEUM CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 30, 2000
This Proxy Statement is furnished in connection with the
solicitation by our Board of Directors (our "Board" or our "Board
of Directors") of Delta Petroleum Corporation ("us", "our" or
"we") of proxies to be voted at our Annual Meeting of
Shareholders (the "Annual Meeting") to be held on March 30, 2000
at our 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
February 25, 2000 of shares of our Common Stock, par value $0.01
per share (the "Common Stock"), will be entitled to one vote for
each share so held. As of January 5, 2000 there were 7,551,902
shares of Common Stock issued and outstanding.
Shares represented by properly executed proxy cards received
by us 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 LLP as our independent auditors for the
fiscal year ending June 30, 2000.
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 our Secretary 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 enclosed proxy card are
expected to be first sent to our shareholders on or about March
1, 2000.
Votes cast in favor and against proposed actions (whether in
person or by proxy) will be counted for us by our Secretary at
the Meeting, but this count may be at least partially based upon
information tabulated for us by our transfer agent or others.
Abstentions and broker non-votes represented at the Meeting will
be counted as being present for the purpose of determining
whether or not a quorum is present, but will not be counted as
votes for or against particular agenda items.
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 our intention
to adjourn the meeting until a later date and to vote proxies
received at such adjourned meeting(s).
ELECTION OF DIRECTORS
(Proposal 1 of the Proxy)
Our Directors are elected annually by the shareholders to
serve until the next Annual Meeting of Shareholders and until
their respective successors are duly elected. Our bylaws provide
that the number of directors comprising the whole Board shall
from time to time be fixed and determined by resolution adopted
by our Board of Directors. Our Board has established the size of
the Board for the ensuing year at four directors. Accordingly,
our Board is recommending that our four current directors be re-
elected. If any nominee becomes unavailable for any reason, a
substitute nominee may be proposed by our Board and the shares
represented by proxy will be voted for any substitute nominee,
unless the Board reduces the number of directors. We have 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.
We recommend a vote for these nominees.
NOMINEES FOR ELECTION AS DIRECTORS TO SERVE
UNTIL NEXT ANNUAL MEETING
The following information with respect to Directors and
Executive Officers is furnished pursuant to Item 401(a) of
Regulation S-B.
Name Age Positions Period of Service
Aleron H. Larson, Jr.* 54 Chairman of the Board, May 1987
Chief Executive Officer, to Present
Secretary, Treasurer,
and a Director
Roger A. Parker* 38 President and a Director May 1987
to Present
Terry D. Enright* 50 Director November 1987
to Present
Jerrie F. Eckelberger* 55 Director September 1996
to Present
Kevin K. Nanke 34 Chief Financial December 1999
Officer to Present
* nominees for re-election as directors.
The following is additional biographical information as to
the business experience of each of our current officers and
directors.
Aleron H. Larson, Jr., age 54, 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, CEO and a Director of Underwriters Financial Group,
Inc. ("UFG") (formerly Chippewa Resources Corporation), a public
company then listed on the American Stock Exchange which
presently owns approximately 12.11% of the outstanding equity
securities of Delta. 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 Resources Company ("Amber"), a public oil
and gas company which is our majority-owned subsidiary. 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 38, 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 50, 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 55, is an investor, real estate
developer and attorney who has practiced law in the State of
Colorado for 28 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. From 1982 to 1992 Mr. Eckelberger was the senior
partner of Eckelberger & Feldman, a law firm with offices in
Englewood, Colorado. In 1992, Mr. Eckelberger founded
Eckelberger & Associates of which he is still the principal
member. Mr. Eckelberger previously served as an officer,
director and corporate counsel for Roxborough Development
Corporation. Since March 1996, Mr. Eckelberger has acted as
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 and has been since June, 1996.
Additionally, since November, 1997, Mr. Eckelberger has served as
the Managing Member of the Woods at Pole Creek, a Colorado
limited liability company, specializing in real estate
development.
Kevin K. Nanke, age 34, Chief Financial Officer, joined
Delta in April 1995. Since 1989, he has been involved in public
and private accounting with the oil and gas industry. Mr. Nanke
received a Bachelor of Arts in Accounting from the University of
Northern Iowa in 1989. Prior to working with Delta, he was
employed by KPMG LLP. He is a member of the Colorado Society of
CPA's and the Council of Petroleum Accounting Society. Mr. Nanke
is not a nominee for election as a director.
There is no family relationship among or between any of our
Directors.
Messrs. Enright and Eckelberger serve as the audit committee
and as the compensation committee. Messrs. Enright and
Eckelberger also constitute our Incentive Plan Committee for the
Delta 1993 Incentive Plan.
All directors will hold office until the next annual meeting
of shareholders.
All of our officers will hold office until the next annual
directors' meeting. 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 one of our officers.
BOARD OF DIRECTORS AND COMMITTEES
During fiscal year 1999 our Board of Directors met on nine
occasions either in person or by phone or in lieu thereof acted
by consent. Our Board 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 1999 our Compensation Committee met
on one occasion, our Audit Committee on one occasion, and our
Incentive Plan Committee on three occasions, either in person or
by phone or, in lieu thereof, acted by consent.
Our Compensation Committee makes recommendations to our
Board in the area of executive compensation. Our Audit Committee
is appointed for the purpose of overseeing and monitoring our
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 our 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 our 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 us to own beneficially 5% or more of our issued
and outstanding voting securities at January 5, 2000.
Name and Address Amount and Nature
of Beneficial of Beneficial Percent
Title of Class (1) Owner Ownership of Class (2)
Common Stock Aleron H. Larson, Jr. 1,870,180 shares(3) 22.77%
(includes options 555 17th St., #3310
for common stock Denver, CO 80202
and common stock
of others voted under
voting agreements)
Common Stock Roger A. Parker 1,859,130 shares(4) 22.76%
(includes options 555 17th St., #3310
for common stock Denver, CO 80202
and common stock
of others voted under
voting agreements)
Common Stock Aleron H. Larson, Jr. 2,604,430 shares(5) 29.52%
(includes options & Roger A. Parker
for common stock (as a group)
and common stock 555 17th Street, #3310
of others voted Denver, CO 80202
under
voting agreements)
Common Stock Underwriters Financial 914,880 shares(6) 12.11%
Group, Inc.
C/O Eva Poseman, Trustee
230 Park Avenue, #2525
New York, NY 10169
Common Stock Burdette A. Ogle 761,891 shares(7) 9.95%
(includes options 1224 Coast Village Rd, #24
for common stock) Santa Barbara, CA 93108
Options for GlobeMedia AG 570,000 shares(8) 7.02%
common stock Immanuel Hohlbauch
Strasse 41
Goppingen/Germany
Common Stock Evergreen Resources, Inc. 526,394 shares 6.97%
1401 17th Street, Suite 1200
Denver, CO 80202
Common Stock Bank Leu AG 428,000 shares(9) 5.67%
Bahnhofstrasse 32
8022 Switzerland
(1) We have an authorized capital of 300,000,000 shares of
$.01 par value Common Stock of which 7,551,902 shares
were issued and outstanding as of January 5, 2000. We
also have an authorized capital of 3,000,000 shares of
$.10 par value preferred stock of which no shares were
outstanding at January 5, 2000.
(2) The percentage set forth after the shares listed for
each beneficial owner is based upon total shares of
common stock outstanding at January 5, 2000 of
7,551,902. 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 81,800 shares owned by Mr. Larson's wife and
4,000 shares owned by his children (85,800 in
aggregate); and 559,500 options to purchase 559,500
shares of Common Stock at $0.05 per share until
September 1, 2008 for 459,500 of the options and until
December 1, 2008 for 100,000 of the options. Also
includes options to purchase 100,000 shares of common
stock at $1.75 until November 5, 2009. Also includes
914,880 shares owned by Underwriters Financial Group,
Inc. and 210,000 shares owned by the previous
shareholders of Ambir Properties, Inc. for which Mr.
Larson has shared voting power with Mr. Parker but for
which he has no investment power. The duration of the
voting agreements affecting the aforementioned shares
voted by Messrs. Larson and Parker (unless the shares
are sold to non-affiliates) are until December 31,
2002.
(4) Includes 123,587 shares owned by Mr. Parker directly
and 510,663 options to purchase 510,663 shares of
Common Stock at $0.05 per share until September 1, 2008
for 320,977 of the options, until December 1, 2008 for
100,000 of the options and until May 20, 2009 for
89,686 of the options. Also includes options to
purchase 100,000 shares of common stock at $1.75 until
November 5, 2009. Also includes 914,880 shares owned
by Underwriters Financial Group, Inc. and 210,000
shares owned by the previous shareholders of Ambir
Properties, Inc. for which Mr. Parker has shared voting
power with Mr. Larson but for which he has no
investment power. The duration of the voting
agreements affecting the aforementioned shares voted by
Messrs. Larson and Parker (unless the shares are sold
to non-affiliates) are until December 31, 2002.
(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 the voting agreements
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 $3.00 per share until August
31, 2004, with a call provision whereby we may
repurchase any unexercised warrants for an aggregate
sum of $1,000 after our stock has traded for $6.00 per
share or greater for 30 consecutive trading days.
(8) Consists of options to purchase 70,000 shares of Common
Stock at $1.75 per share until April 29, 2000; options
to purchase Common Stock for periods beginning with the
effective date of a registration statement covering the
common shares underlying the options as follows:
100,000 shares at $2.00 per share for six months;
100,000 shares at $2.50 per share for six months;
100,000 shares at $3.00 per share for nine months;
100,000 shares at $3.50 per share for twelve months;
and 100,000 shares at $4.00 per share for twelve
months.
(9) Shares are held by Bank Leu AG as nominee for various
beneficial owners, none of which owns beneficially greater than
5% of our stock. Bank Leu AG holds record title only and does not
have voting or investment power for the shares.
(b) Security Ownership of Management:
Amount and Nature
Title of Name of Beneficial of Beneficial Percent
Class (1) Owner Ownership of Class(2)
Common Stock Aleron H. Larson, Jr. 1,870,180 shares(3) 22.77%
Common Stock Roger A. Parker 1,859,130 shares(4) 22.76%
Common Stock Kevin K. Nanke 323,900 shares(5) 4.11%
Common Stock Terry D. Enright 46,250 shares(6) 0.61%
Common Stock Jerrie F. Eckelberger 18,125 shares(7) 0.24%
Common Stock Officers and Directors 2,992,705 shares(8) 32.49%
as a Group (5 persons)
(1) See Note (1) to preceding table; includes options and
common stock of others voted under voting agreements.
(2) See Note (2) to preceding table
(3) See Note (3) to preceding table
(4) See Note (4) to preceding table
(5) Consists of options to purchase 98,900 shares of common
stock at $1.125 per share until September 1, 2008;
options to purchase 25,000 shares of Common Stock at
$1.5625 per share until December 12, 2008; options to
purchase 100,000 shares of Common Stock at $1.75 per
share until May 12, 2009; options to purchase 75,000
shares of Common Stock at $1.75 per share until
November 5, 2009; and options to purchase 25,000 shares
of Common Stock at $.01 per share until December 30,
2009.
(6) Includes 5,000 Class D Warrants to purchase shares of
Common Stock at $1.25 per share until April 26, 2000;
10,000 Class I warrants to purchase shares of Common
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; 7,500 options to
purchase shares of Common Stock at $3.15 per share
until December 31, 2006, 7,500 options to purchase
shares of Common stock at $1.88 per share until
December 31, 2007, and 8,750 options to purchase shares
of Common Stock at $1.36 per share until August 30,
2009.
(7) Includes 1,875 options to purchase shares of Common
Stock at $2.98 per share until December 31, 2006, 7,500
options to purchase shares of Common stock at $1.88 per
share until December 31, 2007 and 8,750 options to
purchase shares of Common Stock at $1.36 per share
until August 30, 2009.
(8) Includes 914,880 shares owned by UFG and 210,000 shares
owned by the previous shareholders of Ambir Properties,
Inc. as of November 10, 1999 which are voted by Messrs.
Larson and Parker under voting agreements described in
footnotes (3) and (4) above and includes all warrants
and options referenced in footnotes (3), (4), (5) and
(6) above.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION PERIOD SALARY(1) BONUS SARS(#) COMPENSATION($)
<S> <C> <C> <C> <C> <C>
Aleron H. Larson, Jr.
Chairman, CEO, Secretary, Year Ended
Treasurer and Director 6/30/99 $198,000 $105,000 559,500(2) -0-
Year Ended
6/30/98 198,000 -0- 275,000(4) -0-
Year Ended
6/30/97 198,000 55,000 100,000(4)(5) -0-
Roger A. Parker
President, Chief
Operating Year Ended
Officer and Director 6/30/99 $198,000 $105,000 510,663(3) -0-
Year Ended
6/30/98 198,000 -0- 253,427(4) -0-
Year Ended
6/30/97 198,000 55,000 100,000(4)(5) -0-
</TABLE>
(1) Includes reimbursement of certain expenses.
(2) Represents all options held by individual at June
30, 1999. Includes 459,500 previously granted
options and 100,000 options granted during fiscal
1999 for which the exercise price was repriced
during fiscal 1999 to $0.05 per share and the
expiration date extended to 9/01/08 for 459,500
options and to 12/01/08 for 100,000 options.
(3) Represents all options held by individual at June
30, 1999. Includes 320,977 previously granted
options and 100,000 options granted during fiscal
1999 for which the exercise price was repriced
during fiscal 1999 to $0.05 per share and the
expiration date extended to 9/01/08 for 320,977
options and to 12/01/08 for 100,000 options. Also
includes a grant of options to purchase 89,686
shares of common stock at $0.05 per share until
5/20/09.
(4) Previously granted options: exercise price
repriced from $3.25 to $1.66 and expiration date
extended until December 8, 2007 during fiscal year
1998 and repriced again in 1999 as described in
Notes 2 and 3 above. These options are included
in the options described in Notes 2 and 3 above.
(5) Options to purchase 100,000 shares of Common Stock
at $3.25 per share during August 30, 2006 granted
under fiscal year 1997 under our 1993 Incentive
Plan. These options are included in the options
described in Notes 2 and 3 above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SAR'S MARKET
UNDERLYING GRANTED TO EXERCISE PRICE ON
OPTIONS/SAR's EMPLOYEES OR BASE DATE OF EXPIRATION
NAME GRANTED IN FISCAL YEAR PRICE($/sh) GRANT($/sh) DATE
<S> <C> <C> <C> <C> <C>
Aleron H. Larson, Jr. 459,500(1) 42.94% $0.05 $2.0625 09/01/08
100,000(1) 9.34% 0.05 2.0625 12/01/08
Roger A. Parker 320,977(2) 29.99% $0.05 $2.0625 09/01/08
100,000(2) 9.34% 0.05 2.0625 12/01/08
89,686(2) 8.38% 0.05 2.0625 05/20/09
</TABLE>
(1) Includes 459,500 previously granted options
and 100,000 options granted during fiscal 1999 for
which the exercise price was repriced during fiscal
1999 to $0.05 per share and the expiration date
extended to 9/01/08 for 459,500 options and to 12/01/08
for 100,000 options. Represents all options held by
individual.
(2) Includes 320,977 previously granted options and 100,000
options granted during fiscal 1999 for which the
exercise price was repriced during fiscal 1999 to $0.05
per share and the expiration date extended to 9/01/08
for 320,977 options and to 12/01/08 for 100,000
options. Also includes a grant of options to purchase
89,686 shares of common stock at $0.05 per share until
5/20/09. Represents all options held by individual.
AGGREGATED OPTIONS/EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUES
<TABLE>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES AT AT
ACQUIRED JUNE 30, 1998(#) JUNE 30, 1998 ($)
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) $ UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <S> <C> <C>
Aleron H. Larson, Jr. -0- -0- 559,500/0 $1,370,775/0
CEO
Roger A. Parker -0- -0- 510,663/0 $1,251,124/0
President
</TABLE>
Compensation of Directors.
Effective for calendar year 1999 the shareholders approved
an amendment to our 1993 Incentive Plan which provided a new
formula for the compensation of non-employee directors. As a
consequence non-employee directors were compensated under the old
formula for the first six months of fiscal 1999 (July 1998
through December 1998) and under the new formula for the
remainder of fiscal 1999 (January 1999 through June 1999).
As a result of elections made by non-employee directors
under these formulas we granted options to non-employee directors
as follows:
Number Exercise Expiration
Director Of Options Price Date
Terry D. Enright 8,750 $1.36 8/30/2009
Jerrie F. Eckelberger 8,750 1.36 8/30/2009
In addition, the outside non-employee directors are each
paid $500.00 per month. Jerrie F. Eckelberger and Terry D.
Enright were each paid $6,000 during the year ended June 30,
1999.
Employment Contracts and Termination of Employment and
Change-in-Control Agreement.
On April 10, 1998, our Compensation Committee authorized us
enter into employment agreements with our Chairman and President
which employment agreements replaced and superseded the prior
employment agreements with these persons. Under the employment
agreements our Chairman and President each receive a salary of
$198,000 per year. Their employment agreements have five-year
terms and include provisions for cars, parking and health
insurance. Terms of their 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 we have a
change in control, as defined in our 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, we will
immediately cause all of each employee's then outstanding
unexercised options to be exercised by us on behalf of the
employee and we will pay the employee's federal, state and local
taxes applicable to the exercise of the options and warrants.
Report on Repricing of Options.
Our Compensation Committee/Incentive Plan Committee reported
that options to purchase shares which were previously awarded
under our 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.
Options were repriced to provide additional incentive to officers
and employees to continue to improve our performance and value
and as a reward for past employee contributions and in connection
with a certain loan and personal guarantees by our officers. See
"Certain Relationships and Related Transactions".
Retirement Savings Plan.
During 1997 we 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, our 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. We will make
matching contributions on behalf of employees who meet certain
eligibility requirements. During the fiscal year ended June 30,
1999, we contributed $16,631 under the Plan.
REPORT OF THE COMPENSATION AND INCENTIVE PLAN COMMITTEES
REGARDING COMPENSATION ISSUES
The objective of our Compensation Committee is to design our
executive compensation program to enable us 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 our success in creating shareholder value.
In furtherance of this objective, the Compensation Committee
has determined that the program should have the following
components:
Base Salaries: Our Committee believes that we should offer
competitive base salaries to enable us to attract, motivate and
retain capable executives. Our Committee has in the past
determined levels of the base compensation using published
compensation surveys and other information for energy and similar
sized companies. Our Committee may or may not use such surveys
or other information to determine levels of base compensation in
the future.
Long-Term Incentives: Our 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 our executive officers to own
and hold our stock and tie their long-term economic interests
directly to those of our shareholders. Long-term compensation
can be provided in the form of restricted stock or stock options
or other grants under our 1993 Incentive Plan, as amended.
With specific reference to our Chairman/Chief Executive
Officer and our President, our Committee attempts to exercise
great latitude in setting salary and bonus levels and granting
stock options. Philosophically, our 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
us.
Our Committee believes that its objective 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 our profits or share price. It is our
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. Our
Committee believes that compensation levels during 1999
adequately reflect our 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 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 we generally intend
to qualify payment of compensation under section 162(m), we
reserve the right to pay compensation to our 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 our executive officers, directors and persons
who beneficially own more than ten percent (10%) of a registered
class of our equity securities, to file initial reports of
securities ownership of the Company and reports of changes in
ownership of our equity securities of the Company with the
Securities and Exchange Commission ("SEC"). Such persons also
are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file.
To our knowledge, during the fiscal year ended June 30,
1999, our 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 us
by our officers and directors and their written representations
that such reports accurately reflect all reportable transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Effective October 28, 1992, we 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. We agreed to extend this agreement for one year
during the 1998 fiscal year and, subsequent to June 30, 1998,
agreed to extend it through December 1, 1999. At January 5,
2000, Messrs. Ogle and Heck own beneficially 9.95% and 3.3%,
respectively, of our outstanding Common Stock. To our 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 our 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 our offshore California
properties. Mr. Ogle also consults with and advises us relative
to properties in areas other than offshore California, relative
to potential property acquisitions and with respect to our
general oil and gas business. It is our 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.
(b) Effective February 24, 1994, at the time Ogle was
the owner of 21.44% of our stock, he granted us an option to
acquire working interests in three undeveloped offshore Santa
Barbara, California, federal oil and gas units. In August 1994,
we issued a warrant to Ogle to purchase 100,000 shares of our
common stock for five years at a price of $8 per share in
consideration of the agreement by Ogle to extend the expiration
date of the option to January 3, 1995. On January 3, 1995, we
exercised the option from Ogle to acquire the working interests
in three proved undeveloped offshore Santa Barbara, California,
federal oil and gas units. The purchase price of $8,000,000 is
represented by a production payment reserved in the documents of
Assignment and Conveyance and will be paid out of three percent
(3%) of the oil and gas production from the working interests
with a requirement for minimum annual payments. We paid Ogle
$1,550,000 through fiscal 1999 and are to continue to pay a
minimum of $350,000 annually 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. Under
the terms of the agreement, we may reassign the working interests
to Ogle upon notice of not more than 14 months nor less than 12
months, thereby releasing us of any further obligations to Ogle
after the reassignment.
On December 17, 1998, we amended our Purchase and Sale
Agreement with Ogle dated January 3, 1995. As a result of this
amended agreement, at the time of each minimum annual payment we
will be assigned an interest in the three undeveloped offshore
Santa Barbara, California, federal oil and gas units
proportionate to the total $8,000,000 production payment.
Accordingly, the annual $350,000 minimum payment is recorded as
an addition to undeveloped offshore California properties. In
addition, pursuant to this agreement, we extended and repriced
the previously issued warrant to purchase 100,000 shares of our
common stock. Prior to fiscal 1999, the minimum royalty payment
was expensed in accordance with the purchase and sale agreement
with Ogle dated January 3, 1995. As of June 30, 1999, we have
paid a total of $1,550,000 in minimum royalty payments.
The terms of the original transaction and the amendment
with Mr. Ogle were arrived at through arms-length negotiations
initiated by our management. We are of the opinion that the
transaction is on terms no less favorable to us 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.
(c) On February 12, 1996, our Board of Directors
granted Aleron H. Larson, Jr. and Roger A. Parker, our Chairman
and President, respectively, the right to participate on a non-
promoted basis in up to a five percent (5%) working interest in
any well drilled, re-entered, completed or recompleted by us on
our 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 are required to pay us the
unpromoted cost thereof as estimated by our consulting engineers.
(d) On April 10, 1998, our Compensation Committee
authorized us to enter into employment agreements with our
Chairman and President, which employment agreements replaced and
superseded the prior employment agreements with such persons.
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 we have a change in control, as defined in
our 1993 Incentive Plan, as amended, 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, we will immediately
cause all of each employee's then outstanding unexercised options
to be exercised by us on behalf of the employee with us paying
the employee's federal, state and local taxes applicable to the
exercise of the options and warrants.
(e) As of June 30, 1998, we were owed $22,306 by our
President, Roger A. Parker, which amount was paid in full during
fiscal 1999.
(f) During the fiscal year ended June 30, 1998, Mr.
Parker exercised options to purchase 32,000 shares of our Common
Stock. The exercise price for the options was $1.25 and the then
current market of our Common Stock was $3.875. Payment for these
shares of Common Stock purchased upon the exercise of an option
was made in shares of our Common Stock previously owned by Mr.
Parker pursuant to our 1993 Incentive Plan, as amended. As a
result of this transaction, we recorded the 10,323 shares of our
common stock reacquired at cost, which shares were subsequently
retired.
(g) On January 6, 1999, we and our Compensation
Committee authorized our officers to purchase shares of the
securities of another company, Bion Environmental Technologies,
Inc. ("Bion"), which were held by us as "securities available for
sale", at the market closing price on that date not to exceed
$105,000 per officer. Our Chairman, Aleron H. Larson, Jr.,
purchased 29,900 shares of Bion from us for $89,032.
(h) Our officers, Aleron H. Larson, Jr., Chairman and
CEO, and Roger A. Parker, President, loaned us $1,000,000 to make
our June 8, 1999 payment to Whiting Petroleum Corporation
("Whiting") required under our agreement with Whiting, also dated
June 8, 1999 to acquire Whiting's interests in the Point Arguello
Unit and the adjacent Rocky Point Unit. In connection with this
loan, Mr. Parker was issued options under our 1993 Incentive
Plan, as amended, to purchase 89,868 shares at $.05 per share and
the exercise prices of the existing options of Messrs. Parker and
Larson were reduced to $.05 per share. (See Form 8-K/A dated
June 9, 1999.)
(i) We operate wells in which our officers or employees
or companies affiliated with one of them own working interests.
At June 30, 1999 we had $116,855 of receivables from these
related parties (including affiliated companies) primarily for
drilling costs and lease operating expenses on wells operated by
us.
APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 2 of the Proxy)
Subject to ratification by our shareholders, the Board has
designated the firm of KPMG LLP, Suite 2300, 707 17th Street,
Denver, Colorado 80202, as independent auditors to examine and
audit our financial statements for the fiscal year 2000. This
firm has audited our financial statements for five 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 our shareholders 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 votes represented at the Annual Meeting by shares
of Common Stock entitled to vote is required to ratify the
appointment of KPMG LLP.
A representative of KPMG 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 2000 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, 2000.
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 judgment 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 us. Additional solicitation by mail,
telephone, telegraph or personal solicitation may be done by our
directors, officers, and regular employees. 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 us for their
reasonable expenses.
Available Information. Upon request of any shareholder, our
Annual Report for the year ended June 30, 1999 filed with the SEC
on Form 10-KSB, including financial statements, 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 our Secretary 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
January 25, 2000
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 Thursday, March 30, 2000, 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:
Aleron H. Larson, Jr. [ ] [ ] [ ]
Roger A. Parker [ ] [ ] [ ]
Terry D. Enright [ ] [ ] [ ]
Jerrie F. Eckelberger [ ] [ ] [ ]
Proposal 2: To ratify the appointment of
KPMG 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.
