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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-KSB/A
AMENDMENT NO. 1
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 2000.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________.
Commission File No. 0-16203
DELTA PETROLEUM CORPORATION
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(Exact name of registrant as specified in its charter)
Colorado 84-1060803
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
555 17th Street, Suite 3310
Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 293-9133
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.01 par value
Check whether issuer (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [ X ] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statement incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
The issuer's revenues for the fiscal year ended June 30, 2000 total
$3,665,781.
The aggregate market value as of August 7, 2000 of voting stock held by non-
affiliates of the registrant was $53,292,569.
As of August 7, 2000, 8,989,125 shares of registrant's Common Stock $.01 par
value were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The following information with respect to Directors and Executive
Officers is furnished pursuant to Item 401(a) of Regulation S-K.
Name Age Positions Period of Service
Aleron H. Larson, Jr. 55 Chairman of the Board, May 1987
Chief Executive Officer, to present
Secretary, Treasurer,
and a Director
Roger A. Parker 38 President and May 1987
a Director to present
Terry D. Enright 51 Director November 1987
to Present
Jerrie F. Eckelberger 56 Director September 1996
to Present
Kevin K. Nanke 35 Chief Financial Officer December 1999
to Present
The following is biographical information as to the business experience
of each current officer and director of the Company.
Aleron H. Larson, Jr., age 55, 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 4.97%
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
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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 51, 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 56, 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 35, 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 officers and/or
the 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.
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All of our officers 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.
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.
ITEM 10. EXECUTIVE COMPENSATION.
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<CAPTION>
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 6/30/00 $198,000 $ 75,000 100,000(2) -0-
Year Ended
6/30/99 198,000 105,000 559,500(3) -0-
Year Ended
6/30/98 198,000 -0- 275,000(5) -0-
Roger A. Parker
President, Chief
Operating Year Ended
Officer and Director 6/30/00 $198,000 $ 75,000 100,000(2) -0-
Year Ended
6/30/99 198,000 105,000 510,663(4) -0-
Year Ended
6/30/98 198,000 -0- 253,427(5) -0-
Kevin K. Nanke Year Ended
Chief Financial Officer 6/30/00 $105,417 $ 15,000 100,000(6) -0-
---------------------------------
</TABLE>
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(1) Includes reimbursement of certain expenses.
(2) Option to purchase 100,000 shares of common stock at $1.75 per share
until November 5, 2009.
(3) 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.
(4) 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.
(5) 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.
(6) Represents option to purchase 75,000 shares of common stock at $1.75 per
share until November 5, 2009 and option to purchase 25,000 shares of common
stock at $.01 per share until December 31, 2009.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<CAPTION>
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SAR'S MARKET
UNDERLYING GRANTED TO EXERCISE PRICE ON
OPTIONS/SAR's EMPLOYEES OR BASE DATE OF EXPIRATION
NAME GRANTED IN FISCAL YEAR PRICE($/sh) GRANT($/sh) DATE
<S> <C> <C> <C> <C> <C>
Aleron H. Larson, Jr. 100,000 28.57% $1.75 $1.75 11/05/09
Roger A. Parker 100,000 28.57% $1.75 $1.75 11/05/09
Kevin K. Nanke 75,000 21.43% $1.75 $1.75 11/05/09
25,000 7.14% .01 .01 12/31/09
</TABLE>
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<TABLE>
AGGREGATED OPTIONS/EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES AT AT
ACQUIRED JUNE 30, 2000(#) JUNE 30, 2000 ($)
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) $ UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Aleron H. Larson, Jr. 40,000 $101,120 619,500/0 $2,233,660/0
CEO
Roger A. Parker 260,427 513,501 350,336/0 $1,188,915/0
President
Kevin K. Nanke 25,000 53,750 298,900/0 718,102/0
Chief Financial Officer
</TABLE>
Compensation of Directors.
As a result of elections made by non-employee directors under the
formulas provided in our 1993 Incentive Plan, as amended, we granted options
to non-employee directors as follows:
Number Exercise Expiration
Director Of Options Price Date
Terry D. Enright 10,000 $1.30 1/20/2010
Jerrie F. Eckelberger 10,000 1.30 1/20/2010
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, 2000.
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.
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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, 2000, we contributed
$17,565 under the Plan.
ITEM 11. 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 August 7, 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. 1,462,244 shares(3) 14.80%
(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 1,414,144 shares(4) 14.76%
(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. 2,396,444 shares(5) 22.89%
(includes options & Roger A. Parker
for common stock (as a group)
and common stock 555 17th St., #3310
of others voted Denver, CO 80202
under voting
agreements)
Common stock Burdette A. Ogle 761,891 shares(6) 8.38%
(includes options 1224 Coast Village Rd, #24
for common stock) Santa Barbara, CA 93108
Common stock Bank Leu AG 686,621 shares(7) 7.64%
Bahnhofstrasse 32
8022 Switzerland
Common stock Evergreen Resources, Inc 526,394 shares 5.86%
1401 17th Street
Suite 1200
Denver, CO 80202
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Options for GlobeMedia AG 550,000 shares(8) 5.80%
common stock Immanuel Hohlbauch
Strasse 41
Goppingen/Germany
Options for Swartz Private Equity 500,000 shares(9) 5.27%
common stock 200 Roswell Summit, #285
1080 Holcomb Bridge Rd
Roswell, GA 30076
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(1) We have an authorized capital of 300,000,000 shares of $.01 par value
common stock of which 8,989,125 shares were issued and outstanding as of
August 7, 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 August 7,
2000.
(2) The percentage set forth after the shares listed for each beneficial
owner is based upon total shares of common stock outstanding at August 7, 2000
of 8,989,125. 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 7,000 shares owned by Mr. Larson directly; 81,800 shares owned
by Mr. Larson's wife and 4,000 shares owned by his children (85,800 in
aggregate); and 489,500 options to purchase 489,500 shares of common stock at
$0.05 per share until September 1, 2008 for 389,500 of the options and until
December 10, 2008 for 100,000 of these options. Also includes options to
purchase 100,000 shares of common stock at $1.75 per share until November 5,
2009 and options to purchase 300,000 shares of common stock at $3.75 per share
until July 14, 2010. Also includes 446,733 shares owned by Underwriters
Financial Group, Inc. and 33,211 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 344,514 shares owned by Mr. Parker directly and 189,686 options
to purchase 189,686 shares of common stock at $0.05 per share (until December
10, 2008 for 100,000 of these options and until May 20, 2009 for 89,686 of
these options). Also includes options to purchase 100,000 shares of common
stock at $1.75 until November 5, 2009 and options to purchase 300,000 shares
of common stock at $3.75 per share until July 14, 2010. Also includes 446,733
shares owned by Underwriters Financial Group, Inc. and 33,211 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) 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
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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.
(7) 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.
(8) Consists of 50,000 shares owned directly by GlobeMedia AG; options to
purchase 200,000 shares of common stock at $2.50 per share until April 10,
2002; options in the name of Pegasus Finance Limited, an affiliate of
GlobeMedia AG, 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 $2.50 per share for one
year; 100,000 shares at $3.00 per share for one year; 100,000 shares at $6.00
per share for one year.
(9) Consists of warrants to purchase 500,000 shares of common stock at $3.00
until May 31, 2005.
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. 1,462,244 shares(3) 14.80%
Common stock Roger A. Parker 1,414,144 shares(4) 14.76%
Common stock Kevin K. Nanke 448,900 shares(5) 4.77%
Common stock Terry D. Enright 25,000 shares(6) 0.28%
Common stock Jerrie F. Eckelberger 18,125 shares(7) 0.20%
Common stock Officers and Directors 2,888,469 shares(8) 26.41%
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 25,000 shares of common stock owned directly by Mr. Nanke;
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 125,000 shares of common stock at $3.75 per share until
July 14, 2010.
(6) Includes 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; and 7,500 options to
purchase shares of common stock at $3.15 per share until December 31, 2006.
(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
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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 446,733 shares owned by UFG and 33,211 shares owned by the
previous shareholders of Ambir Properties, Inc. as of August 7, 2000 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.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(1) 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. Subsequent to
December 1, 1999 we have retained Messrs Ogle and Heck on a month to month
basis at the same monthly rate. At August 7, 2000, Messrs. Ogle and Heck own
beneficially 8.38% and 2.78%, 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.
(2) 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
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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, 2000, we have paid a total of $1,900,000 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.
(3) Our Board of Directors has granted our officers 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.
(4) 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.
(5) 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.
(6) On January 3, 2000, we and our Compensation Committee authorized our
officers to purchase shares of Bion which were held by us as "securities
available for sale" at the market closing price on that day. On that date,
our officers purchased 47,250 shares for $237,668.
(7) 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.)
(8) On July 30, 1999, we borrowed $2,000,000 from an unrelated entity
which was personally guaranteed by Aleron H. Larson, Jr., Chairman and CEO and
Roger A. Parker, President. The proceeds were applied to the acquisition of
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Whiting's interests in the Point Arguello Unit and adjacent Rocky Point Unit.
As consideration for the guarantee of our indebtedness we agreed to assign a
1% overriding royalty interest to each officer in the properties acquired with
the proceeds of the loan (proportionately reduced to the interest we acquired
in each property). (See Form 8-K dated August 25, 1999.)
(9) On November 1, 1999 we borrowed approximately $2,800,000 from an
unrelated entity which was personally guaranteed by Aleron H. Larson, Jr.,
Chairman and CEO and Roger A. Parker, President. The loan proceeds were used
to purchase eleven producing wells and associated acreage in New Mexico and
Texas. As consideration for the guarantee of our indebtedness we agreed to
assign a 1% overriding royalty interest to each officer in the properties
acquired with the proceeds of the loan (proportionately reduced to the
interest we acquired in each property). (See Form 8-K dated November 1,
1999.)
(10) On December 1, 1999, our Incentive Plan Committee granted Kevin K.
Nanke, our Chief Financial Officer, 25,000 options to purchase our common
stock at $.01 per share.
(11) We operate wells in which our officers or employees or companies
affiliated with one of them own working interests. At June 30, 2000 we had
$129,730 of net receivables from these related parties (including affiliated
companies) primarily for drilling costs and lease operating expenses on wells
operated by us.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, we have caused this Amendment to be signed on our behalf
by the undersigned, who are authorized to do so.
DELTA PETROLEUM CORPORATION
Date: October 27, 2000 By: /s/ Aleron H. Larson, Jr.
Aleron H. Larson, Jr., Secretary,
Chairman of the Board, Treasurer
and Principal Financial Officer
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