<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-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): May 15, 1998
UNITED STATES EXPLORATION, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NO. 1-13513
Colorado 84-1120323
- ---------------------------------------------- ------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
1560 Broadway, Suite 1900
Denver, Colorado 80202
---------------------------------------- ----------
(Address of principal executive officer) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 863-3550
(Former name or former address, if changed since last report): N/A
<PAGE> 2
This report amends the Registrant's Current Report dated May 15, 1998 and filed
May 29, 1998, by adding the financial statements, pro forma information and
exhibits set forth in Item 7 below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of businesses acquired. Set forth below.
Page
----
Statements of Combined Oil and Gas Revenues and Direct Operating 3
Expenses for Certain Oil and Gas Properties Acquired from Union
Pacific Resources Company for the Years Ended December 31, 1997
and 1996 and the three months ended March 31, 1998 (unaudited)
-1-
<PAGE> 3
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
United States Exploration, Inc.
We have audited the accompanying statements of combined oil and gas revenues and
direct operating expenses for certain oil and gas producing properties acquired
from Union Pacific Resources Company by United States Exploration, Inc. (the
Company) for the years ended December 31, 1997 and 1996. These statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these 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 accompanying statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the accompanying statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall 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 and are not
intended to be a complete presentation of the revenues and expenses of certain
oil and gas producing properties acquired from Union Pacific Resources Company.
In our opinion, the statements referred to above present fairly, in all material
respects, the operating revenues and direct operating expenses of certain oil
and gas producing properties acquired from Union Pacific Resources Company
by the Company for the years ended December 31, 1997 and 1996, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Fort Worth, Texas
July 9, 1998
-2-
<PAGE> 4
CERTAIN OIL AND GAS PRODUCING PROPERTIES
ACQUIRED FROM UNION PACIFIC RESOURCES COMPANY
BY UNITED STATES EXPLORATION, INC.
STATEMENTS OF COMBINED OIL AND GAS REVENUES
AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, THREE MONTHS
------------------------------------ ENDED
1997 1996 MARCH 31, 1998
----------------- ------------------ ----------------------
(Unaudited)
<S> <C> <C> <C>
Revenues:
Crude and condensate sales $ 2,302,989 $ 2,382,928 $ 987,805
Natural gas sales 4,334,990 2,506,255 634,178
----------------- ------------------ ----------------------
6,637,979 4,889,183 1,621,983
Direct operating expenses:
Lease operating expenses 2,190,151 2,110,706 496,725
Production and property taxes 274,832 263,083 89,410
----------------- ------------------ ----------------------
2,464,983 2,373,789 586,135
----------------- ------------------ ----------------------
Oil and gas revenues in excess of direct
operating expenses $ 4,172,996 $ 2,515,394 $ 1,035,848
================= ================== ======================
</TABLE>
See accompanying notes.
-3-
<PAGE> 5
CERTAIN OIL AND GAS PROPERTIES
ACQUIRED FROM
UNION PACIFIC RESOURCES COMPANY
BY UNITED STATES EXPLORATION, INC.
NOTES TO STATEMENTS OF COMBINED OIL AND GAS REVENUES
AND DIRECT OPERATING EXPENSES
NOTE A - BASIS OF PRESENTATION
On May 15, 1998, United States Exploration, Inc. (the "Company") completed the
acquisition of certain oil and gas producing properties (the "UPR Properties")
located in the Wattenberg area of the Denver-Julesburg Basin in northeastern
Colorado from Union Pacific Resources Company ("UPR"), a subsidiary of Union
Pacific Resources Group, Inc.
The oil and gas revenues and direct operating expenses presented herein relate
only to the interests in the certain oil and gas producing properties acquired
by the Company from UPR and do not represent all of the costs of oil and gas
operations of UPR nor the entirety of the costs of oil and gas operations of the
interests purchased. Direct operating expenses include the actual costs of
maintaining the producing properties and their production, but do not include
charges for depletion, depreciation, amortization and abandonment; federal and
state income taxes; interest; or general and administrative expenses.
In determining crude and condensate and natural gas sales, revenues are
recognized on the sales method. Presentation of complete historical financial
statements is not practicable because these properties were not accounted for as
a separate entity during the periods presented. The oil and gas revenues and
direct operating expenses for the periods presented may not be indicative of the
results of future operations of the properties acquired.
NOTE B - SUPPLEMENTARY OIL AND NATURAL GAS DATA (UNAUDITED)
OIL AND NATURAL GAS OPERATIONS
During the years ended December 31, 1997 and 1996, no exploration or incremental
general and administrative costs were incurred. Development costs of
approximately $772,000 were incurred in 1997. Development costs in 1996 were
insignificant.
RESERVE QUANTITY INFORMATION
The following table presents the Company's estimate of the proved oil and
natural gas reserves of the UPR Properties, all of which are located in the
United States. The Company emphasizes that reserve estimates are inherently
imprecise and that estimates of new discoveries are more imprecise than those of
producing oil and natural gas properties. Accordingly, the estimates are
expected to change as future information becomes available. These estimates have
been prepared by Questa Engineering Corporation, Golden, Colorado, independent
petroleum engineers.
-4-
<PAGE> 6
CERTAIN OIL AND GAS PROPERTIES
ACQUIRED FROM
UNION PACIFIC RESOURCES COMPANY
BY UNITED STATES EXPLORATION, INC.
NOTES TO STATEMENTS OF COMBINED OIL AND GAS REVENUES
AND DIRECT OPERATING EXPENSES
(CONTINUED)
<TABLE>
<CAPTION>
OIL NATURAL GAS
(BBLS) (MCF)
---------------- -----------------
(in thousands)
<S> <C> <C>
Proved reserves:
Balance at January 1, 1996 2,092 42,800
Reserve additions 1,419 18,546
Production (116) (2,197)
---------------- -----------------
Balance at December 31, 1996 3,395 59,149
Reserve additions 682 2,056
Production (91) (1,597)
================ =================
Balance at December 31, 1997 3,986 59,608
================ =================
Proved developed reserves:
Balance at December 31, 1996 1,155 29,604
================ =================
Balance at December 31, 1997 1,038 27,313
================ =================
</TABLE>
The Company, through its independent engineers, has recently completed a revised
estimate of proved oil and natural gas reserves as of December 31, 1997. This
revised estimate was designed to incorporate certain recent changes in the well
density and production commingling rules of the Colorado Oil and Gas
Conservation Commission as though these rules had been in effect on December 31,
1997. The revised estimates of proved producing oil and natural gas reserves
are 899 Mbbl of oil and 27,080 Mmcf. The revised estimates of total proved oil
and natural gas reserves are 3,807 Mbbl of oil and 116,203 Mmcf of natural gas.
On a Bcf equivalent basis, using a factor of 6 Mcf per 1 Bbl of oil, the proved
oil and natural gas reserves approximate 140 Bcf.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES
The Standardized Measure of Discounted Future Net Cash Flows Relating to Proved
Oil and Gas Reserves ("Standardized Measure") is a disclosure requirement under
Statement of Financial Accounting Standards No. 69.
The Standardized Measure does not purport to be, nor should it be interpreted to
present, the fair value of the oil and gas reserves of the UPR Properties. An
estimate of fair value would also take into account, among other things, the
recovery of reserves not presently classified as proved, the value of unproved
properties, and consideration of expected future economic and operating
conditions.
Under the Standardized Measure, future cash flows are estimated by applying
year-end prices, adjusted for fixed and determinable escalations, to the
estimated future production of year-end proved reserves. Future cash flows are
reduced by estimated future production costs, based on period-end costs, and
projected future development costs to determine net cash inflows. The UPR
Properties are not a separate tax paying entity. Accordingly, the Standardized
Measure for the UPR Properties is presented before deduction of income taxes.
Future net cash flows are discounted using a 10% annual discount rate to arrive
at the Standardized Measure.
The Standardized Measure of discounted future net cash flows relating to proved
oil and gas reserves of the UPR Properties at December 31, 1997 and 1996
follows:
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
(in thousands)
<S> <C> <C>
Future cash inflows $ 182,412 $ 229,524
Future costs and expenses:
Production expenses (48,527) (58,899)
Development expenses (26,377) (25,002)
---------------- -----------------
Future net cash flows 107,508 145,623
10% annual discount (60,440) (87,191)
================ =================
Standardized measure $ 47,068 $ 58,432
================ =================
</TABLE>
The weighted average prices of oil and natural gas at December 31, 1997 and 1996
used in the calculation of the Standardized Measure were $16.43 and $22.33 per
barrel and $2.29 and $2.93 per Mcf, respectively.
-5-
<PAGE> 7
CERTAIN OIL AND GAS PROPERTIES
ACQUIRED FROM
UNION PACIFIC RESOURCES COMPANY
BY UNITED STATES EXPLORATION, INC.
NOTES TO STATEMENTS OF COMBINED OIL AND GAS REVENUES
AND DIRECT OPERATING EXPENSES
(CONTINUED)
Changes in the Standardized Measure of discounted future net cash flows relating
to proved oil and gas reserves for the years ended December 31, 1997 and 1996
are as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
(in thousands)
<S> <C> <C>
Balance beginning of year $ 58,432 $ 14,485
Net change in prices and costs (12,617) 44,979
Accretion of discount 5,426 1,223
Sales of oil and gas produced, net of production expenses (4,173) (2,255)
================ =================
Balance end of year $ 47,068 $ 58,432
================ =================
</TABLE>
Estimates of economically recoverable oil and gas reserves and of future net
revenues are based upon a number of variable factors and assumptions, all of
which are to some degree speculative and may vary considerably from actual
results. Therefore, actual production, revenues, taxes, development and
operating expenditures may not occur as estimated. The reserve data are
estimates only, are subject to many uncertainties and are based on data gained
from production histories and on assumptions as to geologic formations and other
matters. Actual quantities of gas and oil may differ materially from the amounts
estimated.
-6-
<PAGE> 8
(b) Pro Forma financial information. Set forth below.
INDEX TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998........................ 8
Pro Forma Condensed Consolidated Statement of Operations for the Three
Months Ended March 31, 1998........................................................... 9
Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended December 31, 1997......................................................... 10
Notes to Pro Forma Condensed Consolidated Statement of Operations......................... 11
Supplemental Pro Forma Consolidated Oil and Gas Reserve Information....................... 12
</TABLE>
-7-
<PAGE> 9
UNITED STATES EXPLORATION, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1998
<TABLE>
<CAPTION>
--Historical--
United States
Exploration, Pro Forma
Inc. Adjustments Pro Forma
----------------- ------------------- -----------------
<S> <C> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 15,586,196 $(11,750,000) A $ 3,836,196
OTHER CURRENT ASSETS 494,199 - 494,199
PROPERTY AND EQUIPMENT, AT COST, NET
Oil and gas property and equipment 3,308,420 40,750,000 A 44,058,420
Natural gas gathering system and other 1,772,569 - 1,772,569
----------------- ------------------- -----------------
5,080,989 40,750,000 45,830,989
OTHER ASSETS 1,313,742 290,000 C 1,603,742
----------------- ------------------- -----------------
TOTAL ASSETS $ 22,475,126 $ 29,290,000 $ 51,765,126
================= =================== =================
LIABILITIES
CURRENT LIABILITIES $ 692,024 $ 290,000 C $ 928,024
BANK DEBT - 29,000,000 A 29,000,000
STOCKHOLDERS' EQUITY
Preferred Stock-$.01 par value
Authorized -100,000,000 shares
Issued and outstanding Series C Cumulative
Convertible-3,820,000 shares at March 31, 1998
(liquidation preference of $22,920,000) 22,920,000 - 22,920,000
Common Stock-$.0001 par value
Authorized -500,000,000 shares
Issued and outstanding-8,825,946 shares
at March 31, 1998 883 - 883
Capital in excess of par 12,614,979 - 12,614,979
Accumulated Deficit (13,752,760) - (13,752,760)
----------------- ------------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 21,783,102 - 21,783,102
----------------- ------------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 22,475,126 $ 29,290,000 $ 51,765,126
================= =================== =================
</TABLE>
See the accompanying notes to the unaudited pro forma condensed consolidated
financial statements
-8-
<PAGE> 10
\
UNITED STATES EXPLORATION, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
-Historical- -Historical-
United States
Exploration, Union Pacific Pro Forma
Inc. Resources Co. Adjustments Pro Forma
----------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Sale of purchased gas $ 377,044 $ - $ - $ 377,044
Sale of Company produced oil and gas 367,935 1,621,983 (49,151) E 1,940,767
Contracting, drilling and oil field supplies 14,501 - - 14,501
----------------- ----------------- --------------- --------------
759,480 1,621,983 (49,151) 2,332,312
COSTS AND EXPENSES
Gas acquisition costs 194,916 - - 194,916
Gas transportation costs 154,812 - - 154,812
Production costs - oil and gas 333,585 586,135 - 919,720
Depreciation, depletion and amortization 261,264 - 451,704 D 712,968
General and administrative 291,883 - - 291,883
----------------- ----------------- --------------- --------------
1,236,460 586,135 451,704 2,274,299
Income (loss) from operations (476,980) 1,035,848 (500,855) 58,013
OTHER INCOME (EXPENSE)
Interest income 204,044 - (154,000) F 50,044
Interest expense - - (552,813) B
(10,375) C (563,188)
Other (2,575) - - (2,575)
----------------- ----------------- --------------- --------------
201,469 - (717,188) (515,719)
----------------- ----------------- --------------- --------------
NET INCOME (LOSS) (275,511) 1,035,848 (1,218,043) (457,706)
Preferred stock dividends applicable to period (460,037) - - (460,037)
----------------- ----------------- --------------- --------------
Net income (loss) applicable to common stockholders $ (735,548) $ 1,035,848 $(1,218,043) $ (917,743)
================= ================= =============== ==============
Basic and Diluted Loss per common share $ (0.08) $ (0.10)
================= ==============
Weighted average common shares outstanding 8,797,775 8,797,775
================= ==============
</TABLE>
See the accompanying notes to the unaudited pro forma condensed consolidated
financial statements
-9-
<PAGE> 11
UNITED STATES EXPLORATION, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
--Historical-- -Historical-
United States
Exploration, Union Pacific Pro Forma
Inc. Resources Co. Adjustments Pro Forma
----------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
REVENUES
Sale of purchased gas $ 1,153,372 $ - $ - $ 1,153,372
Sale of Company produced oil and gas 2,805,478 6,637,979 (201,151) E 9,242,306
Contracting, drilling and oil field supplies 185,670 - - 185,670
----------------- ----------------- --------------- ----------------
4,144,520 6,637,979 (201,151) 10,581,348
COSTS AND EXPENSES
Gas acquisition costs 768,027 - - 768,027
Gas transportation costs 429,536 - - 429,536
Production costs - oil and gas 1,623,222 2,464,983 - 4,365,016
Depreciation, depletion and amortization 2,228,098 - 1,679,213 D 3,907,311
Provision for impairment of assets 6,641,798 - - 6,641,798
General and administrative 986,832 - - 986,832
----------------- ----------------- --------------- ----------------
12,954,324 2,464,983 1,679,213 17,098,520
Income (loss) from operations (8,809,804) 4,172,996 (1,880,364) (6,517,172)
OTHER INCOME (EXPENSE)
Interest income 901,333 - (662,000) F 239,333
Interest expense (2,492) - (2,211,250) B
(41,500) C (2,255,242)
Other 117,003 - - 117,003
----------------- ----------------- --------------- ----------------
1,015,844 - (2,914,750) (1,898,906)
----------------- ----------------- --------------- ----------------
NET INCOME (LOSS) (7,793,960) 4,172,996 (4,795,114) (8,416,078)
Preferred stock dividends applicable to period (1,901,226) - - (1,901,226)
----------------- ----------------- --------------- ----------------
Net income (loss) applicable to common stockholders $ (9,695,186) $ 4,172,996 $(4,795,114) $(10,317,304)
================= ================= =============== ================
Basic and Diluted Loss per common share $ (1.17) $ (1.24)
================= ================
Weighted average common shares outstanding 8,309,691 8,309,691
================= ================
</TABLE>
See the accompanying notes to the unaudited pro forma condensed financial
statements
-10-
<PAGE> 12
UNITED STATES EXPLORATION, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying Unaudited Pro Forma Condensed Consolidated Financial Statements
reflect the historical financial position and results of operations of United
States Exploration, Inc. (the "Company") adjusted to give effect to the
acquisition of certain properties of Union Pacific Resources Company ("UPR" or
"UPR Properties"), a subsidiary of Union Pacific Resources Group, Inc.,
including the incurrence of acquisition indebtedness of approximately $29
million (collectively, the "Borrowings") and the application of the net proceeds
therefrom. The Unaudited Pro Forma Condensed Consolidated Financial Statements
are based on the historical financial statements of the Company and the
Statements of Combined Oil and Gas Revenues and Direct Operating Expenses of
UPR.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1998 assumes the acquisition of UPR Properties and the Borrowings had been
completed on that date. The Unaudited Pro Forma Condensed Consolidated
Statements of Operations for the three months ended March 31, 1998 and the year
ended December 31, 1997 have been prepared assuming the acquisitions of the
Union Pacific properties and the Borrowings had been completed at the beginning
of the periods presented.
The pro forma adjustments are based upon available information and assumptions
that management of the Company believes are reasonable. The Unaudited Pro Forma
Condensed Consolidated Financial Statements do not purport to represent the
financial position or results of operations which would have occurred had such
transactions been consummated on the dates indicated or the Company's financial
position or results of operations for any future date or period. These Unaudited
Pro Forma Condensed Consolidated Financial Statements and notes thereto should
be read in conjunction with the Company's historical financial statements, and
the notes thereto, and the Statements of Combined Oil and Gas Revenues and
Direct Operating Expenses.
2. PRO FORMA ADJUSTMENTS
The accompanying Unaudited Pro Forma Condensed Consolidated Financial Statements
reflect the following pro forma adjustments related to the acquisition of the
UPR Properties.
(A) Record cost of the oil and gas properties and additional bank debt
incurred by United States Exploration, Inc. in connection with the UPR
Properties acquisition as follows:
<TABLE>
<CAPTION>
Total Pro Forma
Adjustments
-----------
(In Thousands)
<S> <C>
Acquisition Costs
Purchase price $ 40,550
Transaction costs 200
---------
Total pro forma adjustment $ 40,750
=========
Allocation of Acquisition Costs
Oil and gas properties -- undeveloped properties $ -
Oil and gas properties -- developed properties 40,750
---------
Total pro forma adjustment $ 40,750
=========
Acquisition Funding
Long-term bank debt $ 29,000
Cash 11,750
---------
Total pro forma adjustment $ 40,750
=========
</TABLE>
The purchase price reflected above is subject to reduction upon
completion of a final post-closing accounting for production revenues
and costs in the period between the effective date (January 1, 1998)
and the closing date (May 15, 1998) of the acquisition. 778
-11-
<PAGE> 13
UNITED STATES EXPLORATION, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
2. PRO FORMA ADJUSTMENTS (CONTINUED)
(B) Record interest expense related to debt necessary to finance
acquisition, using the current rate of United States Exploration Inc. debt
to help fund the transaction of 7.625%. Interest was calculated on the
acquisition portion of the debt of $29 million.
(C) Record acquisition debt issuance costs of $290,000 and the related
amortization calculated on a straight line basis over seven years.
(D) Record depreciation, depletion and amortization ("DD&A") expense on the
assets acquired. Pro Forma DD&A expense on proved oil and gas properties is
computed using the units-of-production amortization method based on
estimates of pro forma proved reserves and the net unamortized costs of the
proved properties acquired in the UPR Properties acquisition.
(E) Record decrease in revenue for certain overriding royalty interests,
aggregating 2.5% of revenues from the UPR properties, granted to certain
outside consultants, one of which is currently an officer of United States
Exploration, Inc., for services performed in connection with the
acquisition of the UPR properties.
(F) Record decrease in interest income for cash used to fund acquisition,
calculated using the effective interest rate.
SUPPLEMENTAL PRO FORMA CONSOLIDATED OIL AND GAS RESERVE INFORMATION (UNAUDITED)
Supplemental oil and gas reserve information related to the Pro Forma Financial
Statements is reported in compliance with FASB Statement No. 69, "Disclosures
about Oil and Gas Producing Activities." Net proved oil and gas reserves and the
discounted future net cash flows related to those reserves were estimated by
United States Exploration's petroleum engineers as of December 31, 1997.
Information presented in that report was the basis for the net proved oil and
gas reserve and standardized measure disclosures presented below. Since reserve
evaluations for the period ending March 31, 1998 had not been prepared,
supplemental pro forma oil and gas reserves are not presented for this period.
The estimates of the Company's proved oil and gas reserves are based upon
evaluations prepared by Questa Engineering Corporation, Golden, Colorado,
independent petroleum engineers. All reserves are located within the United
States. Reserves are estimated in accordance with guidelines established by the
Securities and Exchange Commission and the Financial Accounting Standards Board
which require that reserve estimates be prepared under existing economic and
operating conditions with no provision for price and cost escalation except by
contractual arrangements. Proved reserves are estimated quantities of oil and
natural gas which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs. Proved
developed reserves are those which are expected to be recovered through existing
wells with existing equipment and operating methods. Reserves are stated in
barrels of oil and millions of cubic feet of natural gas.
-12-
<PAGE> 14
UNITED STATES EXPLORATION, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
SUPPLEMENTAL PRO FORMA CONSOLIDATED OIL AND GAS RESERVE INFORMATION (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Oil Gas
bbls mmcf
-------- --------
(In Thousands)
<S> <C> <C>
Total proved reserves:
December 31, 1996 5,192 68,649
Production (879) (2,189)
Revisions of previous estimates (244) (8,040)
Purchases of minerals in place 169 3,706
-------- --------
December 31, 1997 4,238 62,126
======== ========
Proved developed:
December 31, 1996 1,824 33,928
======== ========
December 31, 1997 1,245 28,878
======== ========
</TABLE>
Geological and engineering estimates of proved oil and gas reserves at one point
in time are highly interpretive, inherently imprecise and subject to ongoing
revisions that may be substantial in amount. Although every reasonable effort is
made to ensure that the reserve estimates reported represent the most accurate
assessments possible, these estimates are by their nature generally less precise
than other estimates presented in connection with financial statement
disclosures.
Standardized measure of discounted future net cash flows - The following
- --------------------------------------------------------
schedules present the standardized measure of estimated discounted future net
cash flows from the Company's proved reserves and an analysis of the changes in
these amounts for the twelve months ended December 31, 1997. Estimated future
cash flows are determined by using year-end prices for December 31, 1997,
adjusted only for fixed and determinable increases in natural gas prices
provided by contractual agreements. Estimated future production and development
costs are based on economic conditions at December 31, 1997. The standardized
measure of future net cash flows was prepared using the prevailing economic
conditions existing at December 31, 1997 and such conditions continually change.
Accordingly, such information should not serve as a basis in making any judgment
on the potential value of recoverable reserves or in estimating future results
of operations.
-13-
<PAGE> 15
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
SUPPLEMENTAL PRO FORMA CONSOLIDATED OIL AND GAS RESERVE INFORMATION (UNAUDITED)
(CONTINUED)
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH
FLOWS RELATING TO PROVED RESERVES (UNAUDITED)
<TABLE>
<CAPTION>
1997
------------
(in 000's)
<S> <C>
Future cash inflows $ 192,502
Future production and development costs (80,458)
------------
Future net cash flows before income taxes 112,044
Future income taxes (19,457)
------------
Future net cash flows 92,587
10% annual discount for estimated timing of
cash flows (50,630)
------------
Standardized measure of discounted future
net cash flows $ 41,957
============
</TABLE>
(c) Exhibits
None.
-14-
<PAGE> 16
SIGNATURE
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to its
Current Report on Form 8-K to be signed on its behalf by the undersigned
thereunto duly authorized.
UNITED STATES EXPLORATION, INC.
Date: July 29, 1998 By: /s/ F. Michael Murphy
---------------------------------
F. Michael Murphy, Vice President
-15-
