<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
APRIL 23, 1997
Date of Report
(Date of earliest event reported)
LONE STAR INTERNATIONAL ENERGY, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-17244 87-0434288
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
200 PALO PINTO, SUITE 108
WEATHERFORD, TEXAS 76086
(Address of principal executive offices) (Zip Code)
(817) 598-0542
Registrant's telephone number, including area code
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired.
<PAGE> 3
INDEPENDENT AUDITOR'S REPORT
To Lone Star International Energy, Inc.:
We have audited the accompanying statements of revenues and direct operating
expenses of the Northridge Properties for the years ended December 31, 1996 and
1995. These statements of revenues and direct operating expenses are the
responsibility of Lone Star International Energy, Inc.'s management. Our
responsibility is to express an opinion on these statements of revenues and
direct operating expenses 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 are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements of revenues and direct operating expenses. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
statements of revenues and direct operating expenses. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the statements of revenues and direct operating expenses
referred to above present fairly, in all material respects, the revenues and
direct operating expenses of the Northridge Properties for the years ended
December 31, 1996 and 1995, in conformity with generally accepted accounting
principles.
/s/ DAVIS, KINARD & CO., P.C.
DAVIS, KINARD & CO., P.C.
Abilene, Texas,
May 20, 1997.
-1-
<PAGE> 4
NORTHRIDGE PROPERTIES
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996 AND 1995
AND THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
(UNAUDITED)
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
Oil $ 16,915 $ 71,757 $ 101,671
Gas 33,700 159,790 179,970
---------- ---------- ----------
Total revenues 50,615 231,547 281,641
---------- ---------- ----------
DIRECT OPERATING EXPENSES:
Production and other expenses 71,040 324,986 370,067
Production taxes 3,083 14,103 17,887
---------- ---------- ----------
Total direct operating expenses 74,123 339,089 387,954
---------- ---------- ----------
EXCESS (DEFICIT) OF REVENUES OVER
DIRECT OPERATING EXPENSES (23,508) $ (107,542) $ (106,313)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
this financial statement.
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<PAGE> 5
NORTHRIDGE PROPERTIES
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996 AND 1995
Note 1: BASIS OF PRESENTATION
On April 16, 1997, Lone Star International Energy, Inc. (LSIE) entered
into agreements with Northridge Oil Company, Northridge LLC and Oil Fund
100 LLC, to acquire certain oil and gas producing properties (Northridge
Properties) and certain other assets in exchange for 1,100,000 shares of
LSIE restricted common stock valued at $3,025,000. The shares received by
the respective entities are as follows:
<TABLE>
<S> <C>
Northridge Oil Company 730,489
Northridge LLC 169,511
Oil Fund 100 LLC 200,000
---------
Total 1,100,000
=========
</TABLE>
The Northridge Properties consists of interests in approximately 33
operated leases in Texas.
The accompanying statements of revenues and direct operating expenses do
not include general and administrative expense, interest income or
expense, a provision for depreciation, depletion and amortization or any
provision for income taxes because the property interests acquired
represent only a portion of the respective businesses and the costs
incurred by the respective companies are not necessarily indicative of the
costs to be incurred by LSIE. The accompanying statements of revenues and
direct operating expenses are presented for the calendar years ended
December 31, 1996 and 1995.
Historical financial information reflecting financial position, results of
operations, and cash flows of the Northridge Properties is not presented
because the acquisition cost was assigned to the oil and gas property
interests and other assets acquired. Accordingly, the historical
statements of revenues and direct operating expenses have been presented
in lieu of the financial statements required under Rule 3-05 of Securities
and Exchange Commission Regulation S-X.
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<PAGE> 6
NORTHRIDGE PROPERTIES
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996 AND 1995
Note 2: FIXED ASSETS ACQUIRED
In addition to the oil and gas interests acquired the following assets and
notes payable were also acquired.
<TABLE>
<CAPTION>
Asset Note Payable Net Value
----------- ---------------- --------------
<S> <C> <C> <C>
Building $ 35,000 $ 31,873 $ 3,127
Vehicle 14,505 13,632 873
Inventory 25,000 25,000
----------- ---------------- --------------
Total $ 74,505 $ 45,505 $ 29,000
=========== ================ ==============
</TABLE>
Note 3: SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)
Reserve information presented below has been estimated by management using
January 1, 1997 prices and costs. Proved reserves are estimated quantities
of crude oil and natural gas which, based on geologic and engineering
data, are estimated to be reasonably recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved
developed reserves are those which are expected to be recovered through
existing wells with existing equipment and operating methods. The Company
anticipates reworking the leases to increase the production of the
properties. Because of inherent uncertainties and the limited nature of
reservoir data, such estimates are subject to change as additional
information becomes available.
All reserves are proved developed. The proved developed oil and gas
reserves at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Oil (Bbls) Gas (Mcf)
---------- ---------
<S> <C> <C>
Proved developed reserves 178,479 2,537,102
</TABLE>
Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves
The standardized measure of discounted future net cash flows (Standardized
Measure) is prepared using assumptions required by the Financial
Accounting Standards Board. Such assumptions include the use of period end
prices for oil and gas and period end costs for estimated future
development and production expenditures to produce period end estimated
proved reserves. Discounted future cash flows
-4-
<PAGE> 7
NORTHRIDGE PROPERTIES
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996 AND 1995
are calculated using a 10% discount rate.
Note 3: SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED) - (continued)
The Standardized Measure does not represent the Company's estimate of
future net cash flows or the value of proved oil and gas reserves.
Furthermore, period end prices, used to determine the Standardized
Measure, are influenced by seasonal demand and other factors and may not
be the most representative in estimating future revenues or reserve data.
The Standardized Measure at January 1, 1997, is as follows:
<TABLE>
<S> <C>
Future cash inflows $ 8,643,775
Future production costs (2,356,775)
-----------
Future net cash flows 6,287,000
10% annual discount (2,400,399)
-----------
Discounted net cash flows $ 3,886,601
===========
</TABLE>
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<PAGE> 8
ITEM 7.(B) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements give
effect to the April 1, 1997 acquisition by Lone Star International Energy, Inc.
(Company), of certain oil and gas producing properties in exchange for
1,100,000 shares of unregistered Rule 144 Restricted Shares of Lone Star
International Energy, Inc. common stock.
The pro forma combined condensed balance sheet gives effect to the acquisition
of the oil and gas properties as if it had been consummated December 31, 1996.
The pro forma combined condensed statements of operations for the year ended
December 31, 1996 and for the three months ended March 31, 1997, give effect to
all transactions as if all had been consummated at the beginning of each
period.
The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the financial position or operating results that
would have occurred had the transactions been consummated at the dates
indicated, nor are they indicative of future financial position or operating
results.
<PAGE> 9
LONE STAR INTERNATIONAL ENERGY, INC. AND SUBSIDIARY
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Lone Star Northridge Pro Forma
Actual Actual Adjustments Pro Forma
------------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
REVENUES
Oil and gas revenues $ 244,540 $ 231,547 $ $ 476,087
Operating income 41,400 41,400
------------- ------------- ------------- -------------
Total revenue 285,940 231,547 517,487
EXPENSES
Production expenses 242,745 339,089 (109,152)(1) 472,682
Depreciation, depletion and
amortization 66,026 62,518(2) 128,544
General and administrative
expenses 186,978 186,978
------------- ------------- ------------- -------------
Total expenses 495,749 338,999 (46,634) 788,204
Operating income (loss) (209,809) (107,452) 46,634 (270,717)
OTHER INCOME (EXPENSES)
Other income 920 920
Interest expense (31,947) (31,947)
------------- ------------- ------------- -------------
Other income (expense), net (31,027) (31,027)
Net income (loss) before income taxes (240,836) (107,452) 46,634 (301,744)
Provision (benefit) for income taxes
------------- ------------- ------------- -------------
Net income (loss) $ (240,836) $ (107,452) $ 46,634 $ (301,744)
============= ============= ============= =============
Net income (loss) per common share $ (0.0305) $ (0.0335)
============= =============
Weighted average shares outstanding 7,888,000 8,988,000
</TABLE>
Pro Forma Adjustments - Pro Forma Combined Condensed Statements of Operations -
(1) Pro forma entry to decrease lease operating expenses to better reflect
the operational costs that would have been incurred by Lone Star.
(2) Pro forma entry to adjust actual depreciation and depletion expense on
oil and gas properties for the acquired interests to the depreciation and
depletion expense calculated on a consolidated basis.
<PAGE> 10
LONE STAR INTERNATIONAL ENERGY, INC. AND SUBSIDIARY
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Lone Star Northridge Pro Forma
Actual Actual Adjustments Pro Forma
------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
REVENUES
Oil and gas revenues $ 55,177 $ 50,615 $ $ 105,762
Operating income 7,000 7,000
------------- ------------- ------------- -------------
Total revenue 62,147 50,615 112,762
EXPENSES
Production expenses 22,377 74,123 (55,898)(1) 40,602
Depreciation, depletion and
amortization 14,147 12,984 (2) 27,131
General and administrative
expenses 513,338 513,338
------------- ------------- ------------- -------------
Total expenses 549,862 74,123 (42,914) 581,071
Operating income (loss) (487,715) (23,508) 42,914 (468,309)
OTHER INCOME (EXPENSES)
Other income 11 11
Interest expense
------------- ------------- ------------- -------------
Other income (expense), net 11 11
Net income (loss) before income taxes (487,704) (23,508) 42,914 (468,298)
Provision (benefit) for income taxes
------------- ------------- ------------- -------------
Net income (loss) $ (487,704) $ (23,508) $ 42,914 $ (468,298)
============= ============= ============= =============
Net income (loss) per common share $ (0.0473) $ (0.0410)
============= =============
Weighted average shares outstanding 10,309,375 11,409,375
</TABLE>
Pro Forma Adjustments - Pro Forma Combined Condensed Statements of Operations -
(1) Pro forma entry to decrease lease operating expenses to better reflect
the operational costs that would have been incurred by Lone Star.
(2) Pro forma entry to adjust actual depreciation and depletion expense on
oil and gas properties for the acquired interests to the depreciation and
depletion expense calculated on a consolidated basis.
<PAGE> 11
LONE STAR INTERNATIONAL ENERGY, INC. AND SUBSIDIARY
PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Lone Star Northridge
Actual Properties Pro Forma
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets $ 392,568 $ $ 392,568
Property and equipment, net 1,545,753 3,025,000(1) 4,570,753
Other assets 525 525
------------- ------------- -------------
Total assets $ 1,938,846 $ 3,025,000 $ 4,963,846
============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 943,960 $ $ 943,960
Stockholders' equity 994,886 3,025,000(1) 4,019,886
------------- ------------- -------------
Total liabilities and stockholders' equity $ 1,938,846 $ 3,025,000 $ 4,963,846
============= ============= =============
</TABLE>
Pro Forma Adjustments - Pro Forma Combined Condensed Balance Sheet -
(1) Pro forma entry to record, as of March 31, 1997, the acquisition of
the Northridge properties in exchange for 1,100,000 shares of Lone
Star common stock. Lone Star has valued these shares Lone Star common
stock to be issued at $3,025,000.
<PAGE> 12
(b) Exhibits
10.1 Purchase and Sale Agreement Between Northridge Oil Company and
Lone Star International Energy, Inc. (Previously filed as the
same exhibit number with the Company's Form 8-K dated April 23,
1997 and incorporated herein by reference.)
10.2 Purchase and Sale Agreement Between Northridge LLC and Lone Star
International Energy, Inc. (Previously filed as the same exhibit
number with the Company's Form 8-K dated April 23, 1997 and
incorporated herein by reference.)
10.3 Purchase and Sale Agreement Between Oil Fund 100 LLC and Lone Star
International Energy, Inc. (Previously filed as the same exhibit
number with the Company's Form 8-K dated April 23, 1997 and
incorporated herein by reference.)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
LONE STAR INTERNATIONAL ENERGY, INC.
(Registrant)
Date: July 18, 1997 /s/ C. E. Justice
President (principal executive officer)
Date: July 18, 1997 /s/ Michael D. Herrington
Chief Financial Officer, Treasurer
(principal accounting officer)
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.1 Purchase and Sale Agreement between Northridge Oil Company and
Lone Star International Energy, Inc. (Previously filed as the
same exhibit number with the Company's Form 8-K dated April 23,
1997 and incorporated herein by reference.)
10.2 Purchase and Sale Agreement between Northridge LLC and Lone Star
International Energy, Inc. (Previously filed as the same exhibit
number with the Company's Form 8-K dated April 23, 1997 and
incorporated herein by reference.)
10.3 Purchase and Sale Agreement Between Oil Fund 100 LLC and Lone Star
International Energy, Inc. (Previously filed as the same exhibit
number with the Company's Form 8-K dated April 23, 1997 and
incorporated herein by reference.)
</TABLE>
