<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant To Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 8, 1995
KCS Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11698 22-2889587
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
379 Thornall Street, Edison, New Jersey 08837
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(908) 632-1770
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Registrant's telephone number, including area code
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
The undersigned registrant, KCS Energy, Inc. ("KCS Energy") or
("Registrant"), hereby amends Item 7. "Financial Statements, Pro Forma Financial
Information and Exhibits" of its Current Report on Form 8-K, dated November 8,
1995 and filed November 22, 1995, as follows:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of business acquired
Attached hereto as Schedule A are the Statements of Revenues and Direct
Operating Expenses for the Oil and Gas Properties of Natural Gas Processing Co.
sold to KCS Resources, Inc. for the years ended June 30, 1994 and 1995, and the
related notes thereto, together with the of Report of Independent Public
Accountants of KPMG Peat Marwick LLP concerning the Statements and related
notes.
Attached hereto as Schedule B are the Unaudited Statements of Revenues
and Direct Operating Expenses for the Oil and Gas Properties of Natural Gas
Processing Co. sold to KCS Resources, Inc. for the three month periods ended
September 30, 1995 and 1994.
(b) Pro forma financial information
Attached hereto as Schedule C are the Unaudited Pro Forma Condensed
Statement of Consolidated Income of KCS Energy, Inc. and Subsidiaries, for the
year ended September 30, 1995, the Unaudited Pro Forma Consolidated Balance
Sheet of KCS Energy, Inc. and Subsidiaries, as of September 30, 1995, and the
related notes thereto, which reflect the pro forma effects of Registrant's
acquisition of the oil and gas properties of Natural Gas Processing Co. (the
"Rocky Mountain Acquisition") and its recently acquired oil and gas reserves in
the northern and southern Niagaran Reef trend in Michigan (the "Michigan
Acquisition").
(c) Exhibits
2.1 Purchase and Sale Agreement dated September 8, 1995 by and
between natural Gas Processing Co., a Wyoming corporation, and KCS Resources,
Inc., a Delaware corporation (without exhibits) incorporated by reference to
Exhibit 2.1 to Registrant's Current Report on Form 8-K, dated November 8, 1995
and filed November 22, 1995.
23.1 Consent of KPMG Peat Marwick LLP - filed herewith.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment on Form 8-K/A to be signed on its
behalf by the undersigned hereunto duly authorized.
KCS ENERGY, INC.
Dated: January 22, 1996 By: /s/ Henry A. Jurand
---------------------------------
Henry A. Jurand, Secretary
<PAGE> 4
SCHEDULE A
<PAGE> 5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To KCS Resources, Inc.:
We have audited the accompanying Statements of Revenues and Direct Operating
Expenses for the Oil and Gas Properties of Natural Gas Processing Co. Sold to
KCS Resources, Inc. for the years ended June 30, 1994 and 1995. These financial
statements are the responsibility of the management of KCS Resources, Inc. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statements of Revenues and Direct
Operating Expenses for the Oil and Gas Properties of Natural Gas Processing Co.
Sold to KCS Resources, Inc. are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
The accompanying statements were prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission for inclusion in
Form 8-K of KCS Energy, Inc. and are not intended to be a complete financial
presentation of properties described above.
In our opinion, the statements referred to above present fairly, in all material
respects, the Revenues and Direct Operating Expenses for the Oil and Gas
Properties of Natural Gas Processing Co. Sold to KCS Resources, Inc. for the
years ended June 30, 1994 and 1995, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
Billings, Montana
October 6, 1995
A-1
<PAGE> 6
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE OIL AND GAS PROPERTIES OF NATURAL
GAS PROCESSING CO. SOLD TO KCS RESOURCES, INC.
(dollars in thousands)
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1994 1995
-------------------
<S> <C> <C>
Revenues:
Oil and gas sales to unaffiliated enterprises . . . . . . . . . . . . . . . $4,355 $4,177
Oil and gas sales to Natural Gas Processing Co.'s other operations . . . . . 1,316 1,492
Gathering system and contract operating . . . . . . . . . . . . . . . . . . 1,951 1,865
-------------------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,622 7,534
-------------------
Direct operating expenses:
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,761 2,748
Gathering system and contract operating . . . . . . . . . . . . . . . . . . 1,618 1,209
-------------------
Total direct operating expenses . . . . . . . . . . . . . . . . . . . . 4,379 3,957
-------------------
Excess of Revenues Over Direct Operating Expenses . . . . . . . . . . . . . . . . $3,243 $3,577
===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
A-2
<PAGE> 7
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE OIL AND GAS PROPERTIES OF NATURAL GAS PROCESSING CO.
SOLD TO KCS RESOURCES, INC.
(1) THE PROPERTIES
Effective July 1, 1995, Natural Gas Processing Co. (NGP) sold certain
oil and gas properties and gas gathering systems (the properties) located in
Montana, Wyoming, New Mexico and Colorado to KCS Resources, Inc. (KCS) for $33
million.
(2) BASIS FOR PRESENTATION
During the periods presented, the above properties were not accounted
for or operated as a separate entity by NGP. Certain costs, such as
depreciation, depletion and amortization; general and administrative expenses;
and corporate income taxes were not allocated to the individual properties.
Accordingly, full separate financial statements prepared in accordance with
generally accepted accounting principles do not exist.
Revenues and direct operating expenses included in the accompanying
statements represent NGP's net working interest in the properties and NGP's
revenue and direct operating expenses from the gas gathering systems operations.
The amounts are presented on the accrual basis of accounting. Depreciation,
depletion and amortization, allocated general and administrative expenses and
corporate income taxes have been excluded.
(3) COMMITMENTS AND CONTINGENCIES
Pursuant to the terms of the Purchase and Sale Agreement dated
September 8, 1995, any claims, litigation or disputes pending as of the
effective date or any matters arising in connection with ownership of the
properties prior to the effective date are retained by NGP.
(4) CAPITAL EXPENDITURES (UNAUDITED)
Direct operating expenses do not include oil and gas property
acquisition, exploration and development expenditures capitalizable under the
full cost method of accounting related to the properties which amounted to
$2,298,900 and $2,172,463 for the years ended June 30, 1994 and 1995,
respectively.
(5) SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)
The following data which is presented pursuant to FASB Statement No. 69
is based on estimates of year-end oil and gas reserve quantities and forecasts
of future development costs and production schedules. These estimates and
forecasts are inherently imprecise and subject to substantial revision as a
result of changes in estimates or remaining volumes, prices, costs and
production rates:
A-3
<PAGE> 8
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE OIL AND GAS PROPERTIES OF NATURAL GAS PROCESSING CO.
SOLD TO KCS RESOURCES, INC.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
<TABLE>
<CAPTION>
June 30,
-----------------------
1994 1995
-----------------------
(dollars in thousands)
<S> <C> <C>
Future cash inflows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $138,444 $132,775
Future costs:
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,365 40,617
Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,900 11,431
-----------------------
Net cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,179 80,727
Discount for estimated timing of future cash flows . . . . . . . . . . . . . 36,888 35,457
-----------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,291 $ 45,270
=======================
</TABLE>
CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------
1994 1995
----------------------
(dollars in thousands)
<S> <C> <C>
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $42,993 $46,291
Sales, net of production costs . . . . . . . . . . . . . . . . . . . . . . . (2,910) (2,921)
Net change in prices, net of production costs . . . . . . . . . . . . . . . . (821) (3,432)
Extensions, discoveries and improved recovery, less related costs . . . . . . 2,242 234
Development costs incurred during the period . . . . . . . . . . . . . . . . 488 469
Accretion of discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,299 4,629
---------------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,291 $45,270
=====================
</TABLE>
RESERVE INFORMATION
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------
1994 1995
------------------------------------------------
Gas Oil Gas Oil
MMcf Mbbl MMcf Mbbl
------------------------------------------------
<S> <C> <C> <C> <C>
Proved developed and undeveloped reserves
Balance, beginning of year 41,741 4,426 42,358 4,494
Production (1,696) (172) (1,936) (174)
Discoveries, extensions and improved recovery 2,313 240 512 -
----------------------------------------------
Balance, end of year 42,358 4,494 40,934 4,320
==============================================
Proved developed reserves
Balance, end of year 31,789 1,756 29,853 1,582
==============================================
</TABLE>
A-4
<PAGE> 9
SCHEDULE B
<PAGE> 10
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE OIL AND GAS PROPERTIES OF NATURAL GAS PROCESSING CO.
SOLD TO KCS RESOURCES, INC.
(Unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
----------------------------
1994 1995
------------ --------------
<S> <C> <C>
Revenues......................................................................... $ 1,681 $ 1,389
Direct Operating Expenses........................................................ 676 652
------------ --------------
Excess of Revenues Over Direct Operating Expenses................................ $ 1,005 $ 737
============ ==============
</TABLE>
B-1
<PAGE> 11
SCHEDULE C
<PAGE> 12
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information is derived from
the historical financial statements of the Company incorporated by reference to
the Registrant's Annual Report on Form 10-K for the fiscal year ended September
30, 1995.
The unaudited Pro Forma Condensed Statement of Consolidated Income for
the year ended September 30, 1995 reflects the Rocky Mountain and Michigan
Acquisitions as if such transactions had occurred on October 1, 1994. The
unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30,
1995 reflects the Rocky Mountain and Michigan Acquisitions as if such
transactions had occurred on September 30, 1995. The unaudited pro forma
financial data should be read in conjunction with the notes thereto and the
Registrant's Annual Report of Form 10-K for the fiscal year ended September 30,
1995, which is incorporated by reference.
The unaudited pro forma financial data do not purport to be indicative
of the financial position or results of operations that would actually have
occurred if the transactions described had occurred as presented in such
statements or that may be obtained in the future. In addition, future results
may vary significantly from the results reflected in such statements due to
normal crude oil and natural gas production declines, changes in prices received
for crude oil and natural gas, future acquisitions and dispositions of reserves,
changes in estimates of reserves and of the future net revenues therefrom and
other factors.
C-1
<PAGE> 13
KCS ENERGY, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 1995
(UNAUDITED, DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------------------
Rocky Pro Forma
Historical Mountain Michigan Combined
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue................................................. $ 423,580 $ 7,534 $ 8,231 $ 439,345
Operating costs and expenses
Cost of gas sales.................................. 330,600 330,600
Other operating and administrative
expenses....................................... 18,173 3,957 605 23,515
780(b)
Depreciation, depletion and amortization................ 36,858 2,546(c) 2,782(c) 42,186
-------------------------------------------------------------------
Operating costs and expenses....................... 385,631 7,283 3,387 396,301
-------------------------------------------------------------------
Operating income................................... 37,949 251 4,844 43,044
Interest and other income, net.......................... 2,419 2,419
Interest expense........................................ (6,036) (2,541)(d) (2,387)(d) (10,964)
-------------------------------------------------------------------
Income (loss) before income taxes (benefit)............ 34,332 (2,290) 2,457 34,499
Federal and state income taxes (benefit)................ 11,555 (802)(e) 860(e) 11,613
-------------------------------------------------------------------
Net income (loss)............................. $ 22,777 $ (1,488) $ 1,597 $ 22,886
===================================================================
Earnings per share of common stock and
common stock equivalents............................ $ 1.94 $ (0.13) $ 0.14 $ 1.95
===================================================================
Average shares of common stock and
common stock equivalents outstanding................. 11,759,372 11,759,372 11,759,372 11,759,372
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
C-2
<PAGE> 14
KCS ENERGY, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1995
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------------------
Rocky Pro Forma
Historical Mountain Michigan Combined
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 4,187 $ 4,187
Trade accounts receivable, net 44,094 44,094
Fuel inventories 1,206 1,206
Federal income taxes receivable 296 296
Other current assets 5,586 (2,300)(f) 3,286
---------------------------------------------------------------------
Current assets 55,369 (2,300) 53,069
---------------------------------------------------------------------
Property, plant and equipment, net
Oil and gas properties, full cost
method, net 146,130 28,700(f) 31,000(f) 205,830
Natural gas transportation systems, net 18,897 2,000(f) 20,897
Other property, plant and equipment, net 1,500 1,300(f) 2,800
---------------------------------------------------------------------
Property, plant and equipment, net 166,527 32,000 31,000 229,527
---------------------------------------------------------------------
Other assets
Long-term receivable 46,182 46,182
Investments and other assets 3,904 3,904
---------------------------------------------------------------------
Other assets 50,086 50,086
---------------------------------------------------------------------
$271,982 $29,700 $31,000 $332,682
=====================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 54,362 $ 54,362
Accrued liabilities 3,752 3,752
---------------------------------------------------------------------
Current liabilities 58,114 58,114
---------------------------------------------------------------------
Deferred credits and other liabilities 27,443 27,443
Long-term debt 90,800 29,700(g) 31,000(g) 151,500
Stockholders' equity
Preferred Stock; authorized 5,000,000
shares, none issued
Common Stock, par value $0.01 per
share; authorized 50,000,000 shares,
issued 12,379,058 124 124
Additional paid-in capital 24,240 24,240
Retained earnings 74,533 74,533
Less treasury stock, 892,748 shares, at cost (3,272) (3,272)
---------------------------------------------------------------------
Total stockholders' equity 95,625 95,625
---------------------------------------------------------------------
$271,982 $29,700 $31,000 $332,682
=====================================================================
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements.
C-3
<PAGE> 15
KCS ENERGY, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying pro forma financial statements of the Company have
been prepared to reflect certain adjustments to the historical consolidated
financial statements of the Company incorporated by reference to the
Registrant's Annual Report of Form 10-K for the fiscal year ended September 30,
1995.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME:
a. Pro forma revenue for the volumetric production payment acquired
in the Michigan Acquisition was calculated using the scheduled
volumes to be delivered in the first year of the volumetric
production payment agreement and the prices that would have been
in effect during the pro forma period presented.
b. Adjustment to reflect general and administrative expenses
associated with the Rocky Mountain properties.
c. Adjustment to reflect additional depreciation, depletion and
amortization expense calculated using the future gross revenue
method after giving effect to the Rocky Mountain and Michigan
Acquisitions.
d. Adjustment to reflect incremental interest expense on additional
borrowings made to fund the Rocky Mountain and Michigan
Acquisitions calculated using the rates that would have been in
effect under the borrowing facility used to finance the
acquisition.
e. Adjustment to the provision for income taxes related to the
above adjustments.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
f. Adjustments to record the adjusted purchase price of the assets
acquired in the respective acquisitions as indicated, net of a
$3.3 million deposit on the Rocky Mountain Acquisition made
prior to September 30, 1995.
g. Adjustment to reflect additional borrowings made to fund the
respective acquisitions as indicated.
C-4
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
KCS Resources, Inc.
We consent to the inclusion of our report dated October 6, 1995, with respect
to the Statements of Revenues and Direct Operating Expenses for the Oil and Gas
Properties of Natural Gas Processing Co. Sold to KCS Resources, Inc., for the
years ended June 30, 1995 and 1994, which report appears in the Form 8-K/A,
Amendment No. 1 of KCS Energy, Inc. dated January 22, 1996.
KPMG PEAT MARWICK LLP
Billings, Montana
January 22, 1996
