<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________TO________
Commission file number 1-10389
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WESTERN GAS RESOURCES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1127613
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12200 N. Pecos Street, Denver, Colorado 80234-3439
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 452-5603
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
No Changes
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report).
Indicate by check mark whether the registrant (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
----- -----
On November 1, 1996, there were 25,780,087 shares of the registrant's Common
Stock outstanding.
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1
<PAGE>
WESTERN GAS RESOURCES, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - Financial Information Page
- ------------------------------ ----
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet - September 30, 1996 and December 31, 1995 ........................................... 3
Consolidated Statement of Cash Flows - Nine months ended September 30, 1996 and 1995 ............................ 4
Consolidated Statement of Operations - Three and Nine months ended September 30, 1996 and 1995 .................. 5
Consolidated Statement of Changes in Stockholders' Equity - Nine months ended September 30, 1996 ................ 6
Notes to Consolidated Financial Statements ...................................................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................... 9
PART II - Other Information
- ---------------------------
Item 1. Legal Proceedings ............................................................................................... 17
Item 5. Other Item ...................................................................................................... 18
Item 6. Exhibits and Reports on Form 8-K ................................................................................ 18
Signatures .................................................................................................................. 19
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
WESTERN GAS RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(000s)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- -------------
ASSETS (Unaudited)
------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 4,043 $ 5,795
Trade accounts receivable, net............................................... 197,928 204,426
Product inventory............................................................ 30,514 28,154
Parts inventory.............................................................. 1,967 2,427
Other........................................................................ 2,107 1,524
---------- ----------
Total current assets........................................................ 236,559 242,326
---------- ----------
Property and equipment:
Gas gathering, processing, storage and transmission.......................... 906,175 882,801
Oil and gas properties and equipment......................................... 143,186 140,691
Construction in progress..................................................... 36,808 26,314
---------- ----------
1,086,169 1,049,806
Less: Accumulated depreciation, depletion and amortization.................. (240,607) (200,203)
---------- ----------
Total property and equipment, net........................................... 845,562 849,603
---------- ----------
Other assets:
Gas purchase contracts (net of accumulated amortization of $23,386 and
$19,273, respectively)...................................................... 49,936 54,637
Other........................................................................ 42,493 47,431
---------- ----------
Total other assets.......................................................... 92,429 102,068
---------- ----------
Total assets.................................................................. $1,174,550 $1,193,997
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable............................................................. $ 230,599 $ 199,513
Short-term debt.............................................................. 75,000 75,000
Accrued expenses............................................................. 27,382 19,204
Dividends payable............................................................ 3,899 3,898
---------- ----------
Total current liabilities.................................................. 336,880 297,615
Long-term debt................................................................ 380,500 454,500
Deferred income taxes payable................................................. 78,362 69,973
---------- ----------
Total liabilities........................................................... 795,742 822,088
---------- ----------
Commitments and contingent liabilities........................................ - -
Stockholders' equity:
Preferred stock, par value $.10; 10,000,000 shares authorized:
$2.28 cumulative preferred stock; 1,400,000 shares issued and outstanding
($35,000 aggregate liquidation preference)................................. 140 140
$2.625 cumulative convertible preferred stock; 2,760,000 shares issued and
outstanding ($138,000 aggregate liquidation preference).................... 276 276
Common stock, par value $.10; 100,000,000 shares authorized; 25,803,789 and
25,794,728 shares issued, respectively...................................... 2,580 2,580
Additional paid-in capital................................................... 301,289 301,234
Retained earnings............................................................ 77,197 70,348
Treasury stock, at cost, 25,016 shares in treasury........................... (788) (788)
Notes receivable from key employees secured by common stock.................. (1,886) (1,881)
---------- ----------
Total stockholders' equity.................................................. 378,808 371,909
---------- ----------
Total liabilities and stockholders' equity.................................... $1,174,550 $1,193,997
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
WESTERN GAS RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(000s)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Reconciliation of net income to net cash provided by operating activities:
Net income.................................................................... $ 18,546 $ 2,000
Add income items that do not affect working capital:
Depreciation, depletion and amortization..................................... 47,134 50,128
Deferred income taxes........................................................ 8,389 2,677
Gain on the sale of property and equipment................................... (2,165) (939)
Distributions in excess of equity income, net................................ 4,360 804
Other non-cash items......................................................... 76 (1,426)
--------- ---------
76,340 53,244
--------- ---------
Adjustments to working capital to arrive at net cash provided by
operating activities:
Decrease in trade accounts receivable........................................ 6,498 15,502
(Increase) decrease in product inventory..................................... (2,360) 14,465
Decrease (increase) in parts inventory....................................... 460 (133)
Increase in other current assets............................................. (583) (928)
Increase in other assets and liabilities, net................................ (21) (384)
Increase (decrease) in accounts payable...................................... 31,086 (14,552)
Increase in accrued expenses................................................. 7,828 9,842
Decrease in income taxes payable............................................. - (843)
--------- ---------
Total adjustments........................................................... 42,908 22,969
--------- ---------
Net cash provided by operating activities..................................... 119,248 76,213
--------- ---------
Cash flows from investing activities:
Payments for business acquisitions........................................... (866) (2,286)
Payments for additions to property and equipment............................. (37,602) (38,092)
Proceeds from the dispositions of property and equipment..................... 3,953 8,737
Contributions to equity investees............................................ (335) (5,623)
Gas purchase contracts acquired.............................................. - (3,037)
--------- ---------
Net cash used in investing activities......................................... (34,850) (40,301)
--------- ---------
Cash flows from financing activities:
Net proceeds from exercise of common stock options........................... 50 108
Debt issue costs paid........................................................ (503) (1,424)
Payments on revolving credit facility........................................ (786,350) (428,400)
Borrowings under revolving credit facility................................... 724,850 400,400
Payments on long-term debt................................................... (12,500) -
Proceeds from the issuance of long-term debt................................. - 50,000
Dividends paid to holders of common stock.................................... (3,868) (3,862)
Dividends paid to holders of preferred stock................................. (7,829) (9,037)
Redemption of 7.25% Cumulative Senior Perpetual Convertible Preferred Stock.. - (42,032)
--------- ---------
Net cash used in financing activities......................................... (86,150) (34,247)
--------- ---------
Net increase (decrease) in cash and cash equivalents.......................... (1,752) 1,665
Cash and cash equivalents at beginning of period.............................. 5,795 8,708
--------- ---------
Cash and cash equivalents at end of period.................................... $ 4,043 $ 10,373
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
WESTERN GAS RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(000s, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Sale of residue gas................................. $ 316,104 $ 194,711 $ 979,771 $ 614,711
Sale of natural gas liquids......................... 127,996 79,748 361,571 243,516
Processing, transportation and storage revenue...... 10,647 9,918 32,421 31,340
Other, net.......................................... 12,974 2,328 20,895 5,247
----------- ----------- ----------- -----------
Total revenues..................................... 467,721 286,705 1,394,658 894,814
----------- ----------- ----------- -----------
Costs and expenses:
Product purchases................................... 413,260 234,784 1,213,955 735,040
Plant operating expense............................. 18,367 18,009 53,402 53,013
Oil and gas exploration and production expense...... 1,110 1,181 3,640 4,000
Selling and administrative expense.................. 6,415 6,645 21,552 20,183
Depreciation, depletion and amortization............ 15,709 16,213 47,134 50,128
Interest expense.................................... 8,497 9,617 26,646 27,708
Restructuring charges............................... - - - 2,065
----------- ----------- ----------- -----------
Total costs and expenses........................... 463,358 286,449 1,366,329 892,137
----------- ----------- ----------- -----------
Income before taxes.................................. 4,363 256 28,329 2,677
Provision (benefit) for income taxes:
Current............................................. 416 (2,353) 1,394 (2,000)
Deferred............................................ 1,066 2,147 8,389 2,677
----------- ----------- ----------- -----------
1,482 (206) 9,783 677
----------- ----------- ----------- -----------
Net income........................................... 2,881 462 18,546 2,000
Preferred stock requirements......................... (2,610) (2,610) (7,829) (12,821)
----------- ----------- ----------- -----------
Net income (loss) attributable to common stock....... $ 271 $ (2,148) $10,717 $ (10,821)
=========== =========== =========== ===========
Net income (loss) per share of common stock.......... $ .01 $ (.08) $ .42 $ (.42)
=========== =========== =========== ===========
Weighted average shares of common stock outstanding.. 25,776,871 25,760,595 25,774,446 25,750,401
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
WESTERN GAS RESOURCES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(000s, except share amounts)
<TABLE>
<CAPTION>
Shares of
Shares of $2.625 $2.625
$2.28 Cumulative Shares $2.28 Cumulative
Cumulative Convertible Shares of Common Cumulative Convertible Additional
Preferred Preferred of Common Stock Preferred Preferred Common Paid-In Retained
Stock Stock Stock in Treasury Stock Stock Stock Capital Earnings
--------- ----------- ---------- ----------- ---------- ----------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995...................... 1,400,000 2,760,000 25,769,712 25,016 $ 140 $ 276 $ 2,580 $ 301,234 $ 70,348
Net income................. - - - - - - - - 18,546
Stock options exercised.... - - 9,061 - - - - 55 -
Dividends declared on
common stock.............. - - - - - - - - (3,868)
Dividends declared on
$2.28 cumulative preferred
stock.................... - - - - - - - - (2,395)
Dividends declared on
$2.625 cumulative
convertible preferred
stock................... - - - - - - - - (5,434)
--------- ----------- ---------- ----------- ---------- ----------- ------- ---------- --------
Balance at September 30,
1996...................... 1,400,000 2,760,000 25,778,773 25,016 $ 140 $ 276 $ 2,580 $ 301,289 $ 77,197
=========== =========== ========== =========== ========== =========== ======= ========== ========
Notes Total
Receivable Stock-
Treasury from Key holder's
Stock Employees Equity
-------- ----------- ----------
<S> <C> <C> <C>
Balance at December 31,
1995...................... $ (788) $ (1,881) $ 371,909
Net income................. - - 18,546
Stock options exercised.... - (5) 50
Dividends declared on
common stock.............. - - (3,868)
Dividends declared on
$2.28 cumulative preferred
stock.................... - - (2,395)
Dividends declared on
$2.625 cumulative
convertible preferred
stock................... - - (5,434)
-------- ----------- ----------
Balance at September 30,
1996...................... $ (788) $ (1,886) $ 378,808
======== =========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
WESTERN GAS RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
GENERAL
The interim consolidated financial statements presented herein should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
included in the Company's Form 10-K for the year ended December 31, 1995. The
interim consolidated financial statements as of September 30, 1996 and for the
three and nine month periods ended September 30, 1996 and 1995 included herein
are unaudited but reflect, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
results for such periods.
Certain prior year amounts in the Consolidated Financial Statements and Notes
have been reclassified to conform to the presentation used in 1996.
ASSET SALE
In May 1996, the Company sold its Temple facility for $2.3 million, which
resulted in the recognition of a pre-tax gain of $1.9 million, net of a $400,000
reclamation reserve. The carrying value of the Temple facility had been reduced
to zero in connection with the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of," during the year ended December 31,
1995.
In August 1996, the Company sold its Crockett Gathering System for $275,000,
which resulted in the recognition of a small pre-tax gain.
RESTRUCTURING CHARGES
In May 1995, the Company implemented a cost reduction program to reduce
operating and selling and administrative expenses. As a result of this
program, a $2.1 million restructuring charge was incurred, primarily related to
employee severance costs. This cost reduction program has not adversely
affected the overall operations of the Company.
EARNINGS PER SHARE OF COMMON STOCK
Earnings (loss) per share of common stock is computed by dividing net income
(loss) attributable to shares of common stock by the weighted average number of
shares of common stock outstanding. Net income (loss) attributable to shares of
common stock is net income less preferred stock requirements. The Company
declared preferred stock dividends of $2.6 million and $7.8 million for the
three and nine month periods ended September 30, 1996, respectively, and $2.6
million and $9.0 million for the three and nine month periods ended September
30, 1995, respectively. In addition, the net loss attributable to common stock
for the nine months ended September 30, 1995, was increased by the $2.0 million
redemption premium and up-front cost of $1.8 million paid on the 7.25%
Cumulative Senior Perpetual Convertible Preferred Stock. The computation of
fully diluted earnings per share of common stock for the three and nine month
periods ended September 30, 1996 and 1995 was not dilutive; therefore, only
primary earnings per share of common stock is presented.
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid was $26.7 million and $26.0 million, respectively, for the nine
months ended September 30, 1996 and 1995.
Income taxes paid were $4.2 million and $1.6 million, respectively, for the nine
months ended September 30, 1996 and 1995.
STOCK COMPENSATION
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," with an effective date for fiscal
years beginning after December 15, 1995. As permitted under SFAS No. 123, the
Company has elected to continue to measure compensation costs for stock-based
employee compensation plans as prescribed by Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." The Company will comply
with the pro forma disclosure requirements of SFAS No. 123 in December 1996 as
required under the pronouncement.
7
<PAGE>
WESTERN GAS RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (CONTINUED)
LEGAL PROCEEDINGS
Reference is made to Item 1. Legal Proceedings, of Part II, Other Information,
of this Form 10-Q.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
The following discussion and analysis relates to factors which have affected the
consolidated financial condition and results of operations of the Company for
the three and nine month periods ended September 30, 1996 and 1995. Certain
prior year amounts have been reclassified to conform to the presentation used in
1996. Reference should also be made to the Company's Consolidated Financial
Statements and Notes thereto included elsewhere in this document.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1995 (000S, EXCEPT PER SHARE AMOUNTS AND OPERATING
DATA).
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ Percent ---------------------- Percent
1996 1995 Change 1996 1995 Change
------------- --------- -------------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS:
Revenues................................. $467,721 $286,705 63 $1,394,658 $894,814 56
Gross profit............................. 19,275 16,518 17 76,527 52,633 45
Net income............................... 2,881 462 524 18,546 2,000 827
Income (loss) per share of common stock.. .01 (.08) - .42 (.42) -
Net cash provided by operating
activities............................. $ 6,996 $ 11,483 (39) $ 119,248 $ 76,213 56
OPERATING DATA:
Average gas sales (MMcf/D)............... 1,711 1,512 13 1,755 1,553 13
Average NGL sales (MGal/D)............... 3,595 2,832 27 3,562 2,867 24
Average gas prices ($/Mcf)............... $ 2.01 $ 1.40 44 $ 2.04 $ 1.45 41
Average NGL prices ($/Gal)............... $ .39 $ .30 30 $ .37 $ .31 19
</TABLE>
Revenues from the sale of residue gas increased approximately $121.4 million for
the quarter ended September 30, 1996 compared to the same period in 1995.
Average gas sales volumes increased 199 MMcf per day to 1,711 MMcf per day for
the quarter ended September 30, 1996 compared to the same period in 1995,
largely as a result of an increase of approximately 250 MMcf per day in the sale
of residue gas purchased from third parties, partially offset by decreased sales
at the Company's Black Lake facility. Average gas prices increased $.61 per Mcf
to $2.01 per Mcf for the quarter ended September 30, 1996 compared to the same
period in 1995. Revenues from the sale of residue gas increased approximately
$365.1 million for the nine months ended September 30, 1996 compared to the same
period in 1995. Average gas sales volumes increased 202 MMcf per day to 1,755
MMcf per day for the nine months ended September 30, 1996 compared to the same
period in 1995, due to an increase of approximately 240 MMcf per day in the sale
of residue gas purchased from third parties, partially offset by decreased sales
at the Company's Black Lake facility. Average gas prices increased $.59 per Mcf
to $2.04 per Mcf for the nine months ended September 30, 1996 compared to the
same period in 1995. The effect of the increases in residue gas prices on the
Company's net margin was partially offset by approximately $630,000 and $11.9
million, respectively, of loss recognized in the three and nine month periods
ended September 30, 1996 related to futures positions. See further discussion
in "Liquidity and Capital Resources - Hedging."
Revenues from the sale of NGLs increased approximately $48.2 million for the
quarter ended September 30, 1996 compared to 1995. Average NGL sales volumes
increased 763 MGal per day to 3,595 MGal per day, primarily due to an
approximate 735 MGal per day increase in the sale of NGLs purchased from third
parties. Average NGL prices increased $.09 per gallon to $.39 per gallon for the
quarter ended September 30, 1996 compared to 1995. Revenues from the sale of
NGLs increased approximately $118.1 million for the nine months ended September
30, 1996 compared to 1995. Average NGL sales volumes increased 695 MGal per day
to 3,562 MGal per day, primarily due to an approximate 580 MGal per day increase
in the sale of NGLs purchased from third parties for this same period and
increased production at the Company's facilities most notably from increases in
ethane production at the Granger facility. Average NGL prices increased $.06 per
gallon to $.37 per gallon for the nine months ended September 30, 1996 compared
to 1995. The effect of the increase in NGL prices on the Company's net margin
was partially offset by approximately $3.4 million and $5.9 million,
respectively, of loss recognized in the three and nine month periods ended
September 30, 1996 related to futures positions. See further discussion in
"Liquidity and Capital Resources - Hedging."
Other net revenue increased $10.6 million and $15.6 million, respectively, for
the three and nine months ended September 30, 1996 compared to the same periods
in 1995. The increases for the three and nine months ended September 30, 1996
were largely due to the
9
<PAGE>
recognition of $10.1 million and $11.4 million, respectively, of revenue
associated with electric power marketing (substantially offset by a
corresponding increase in electric power purchases reflected in product
purchases). Partnership income increased $390,000 and $1.8 million,
respectively, for the three and nine months ended September 30, 1996, as
compared to the same periods in 1995. The increase for the nine month period is
also attributable to a $1.9 million gain recognized on the sale of the Temple
facility.
The increase in product purchases corresponds to the increase in third-party
product sales. Combined product purchases (excluding electric power purchases)
as a percentage of residue gas and NGL sales increased five percentage points to
91% and four percentage points to 90% for the three and nine months ended
September 30, 1996, respectively, as compared to 1995. The increased product
purchase percentage is a continuing trend based upon the growth of third-party
sales, which typically have lower margins than sales of the Company's equity
production. Until recently, the Company had experienced narrowing margins
related to third-party sales due to the increasing availability of pricing
information in the natural gas industry. The Company believes, by targeting end-
use markets, these margins will continue to stabilize. These markets are highly
competitive and there is no assurance that the Company will be able to expand
its current end-use business.
Selling and administrative expense remained constant and increased $1.4 million
for the three and nine months ended September 30, 1996, respectively, compared
to the prior year periods, primarily as a result of growth in the Company's
marketing operations and higher benefit accruals.
Depreciation, depletion and amortization decreased $504,000 and $3.0 million,
respectively, for the three and nine months ended September 30, 1996 compared to
the prior year's corresponding periods. The decreases were attributable to
decreases in production related to the Company's oil and gas properties which
resulted in lower depletion expense. In addition, the Company recorded a $17.6
million write-down of certain oil and gas assets and plant facilities in the
fourth quarter of 1995 in connection with its adoption of SFAS No.
121,"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." The lower asset values contributed to the reduction
in depreciation, depletion and amortization expense for the three and nine month
periods ended September 30, 1996. These decreases were partially offset by
increases related to property additions, primarily the Northern acquisition in
December 1995.
The provision for income taxes for the three and nine months ended September 30,
1996 increased $1.7 million and $9.1 million, respectively, primarily due to the
increases in pre-tax income for the periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of liquidity and capital resources historically have been
net cash provided by operating activities, funds available under its financing
facilities and proceeds from offerings of equity securities. In the past, these
sources have been sufficient to meet its needs and finance the growth of the
Company's business. The Company can give no assurance that the historical
sources of liquidity and capital resources will be available for future
development and acquisition projects, and it may be required to investigate
alternative financing sources. Net cash provided by operating activities is
primarily affected by product prices and sales of inventory, the Company's
success in increasing the number and efficiency of its facilities and the
volumes of natural gas processed by such facilities, as well as the margin on
third-party product purchased for resale. The Company's continued growth will
be dependent upon success in the areas of marketing, additions to dedicated
plant reserves, acquisitions and new project development.
The Company believes that the amounts available to be borrowed under the
Revolving Credit Facility, together with proceeds of the public offering of
5,000,000 shares of common stock that the Company is currently undertaking and
cash provided by operating activities, will provide it with sufficient funds to
connect new reserves, maintain its existing facilities and complete its current
capital improvement projects. In the event this offering is not completed by
December 31, 1996, the Company would violate the debt to capitalization covenant
in most of its debt agreements because of the scheduled reduction in such ratio
at January 1, 1997. The Company believes, however, that it could successfully
negotiate amendments to the agreements to extend the date at which the debt to
capitalization ratio is to be reduced. Depending on the timing of the Company's
future projects, it may be required to seek additional sources of capital. The
Company's ability to secure such capital is restricted by its credit facilities,
although it may request additional borrowing capacity from the banks, seek
waivers from its lenders to permit it to borrow funds from third parties, seek
replacement credit facilities from other lenders, use stock as a currency for an
acquisition, sell existing assets or a combination of such alternatives. While
the Company believes that it would be able to secure additional financing, if
required, no assurance can be given that it will be able to do so or as to the
terms of any such financing. The Company also believes that cash provided by
operating activities will be sufficient to meet its debt service and preferred
stock dividend requirements in 1997.
10
<PAGE>
The Company's sources and uses of funds for the nine months ended September 30,
1996 are summarized as follows (000s):
<TABLE>
<CAPTION>
SOURCES OF FUNDS:
<S> <C>
Borrowings under long-term debt agreements..... $ 724,850
Net cash provided by operating activities...... 119,248
Other.......................................... 4,003
----------
Total sources of funds....................... $ 848,101
==========
USES OF FUNDS:
Payments related to long-term debt agreements.. $ 799,353
Capital expenditures........................... 38,803
Payment of preferred stock dividends........... 7,829
Payment of common stock dividends.............. 3,868
----------
Total uses of funds.......................... $ 849,853
==========
</TABLE>
An additional source of liquidity available to the Company is its stored volumes
of residue gas and NGLs. The Company stores residue gas and NGLs primarily to
ensure an adequate supply for long-term sales contracts and for resale during
periods when prices are favorable. The Company held residue gas in storage for
such purposes of approximately 13.4 Bcf at an average cost of $1.81 per Mcf at
September 30, 1996 as compared to 12.8 Bcf at an average cost of $1.65 per Mcf
at December 31, 1995, primarily at the Katy Facility. At September 30, 1996, the
Company had hedging contracts in place for anticipated sales of approximately
12.5 Bcf of stored gas at a weighted average price of $2.01 per Mcf. The Company
also held NGLs in storage of approximately 18,460 MGal at an average cost of
$.33 per gallon and approximately 15,816 MGal at an average cost of $.31 per
gallon at September 30, 1996 and December 31, 1995, respectively, at various
third-party storage facilities.
The Company has effective shelf registration statements filed with the
Securities and Exchange Commission for an aggregate of: (i) $200 million of
debt securities and preferred stock (along with the shares of common stock, if
any, into which such securities are convertible); (ii) four million shares of
common stock; and (iii) $100 million of debt securities, preferred stock or
common stock. The Company is currently undertaking a common stock offering of
5,000,000 shares which, upon completion, will result in a reduction of the
amounts available under these shelf registrations.
Hedging
In order to reduce the impact of commodity price fluctuations on its operating
results, the Company enters into futures contracts and basis positions to hedge
a portion of its equity production. The Company has entered into weighted
average futures positions for approximately 60% of its equity residue gas and
45% of its equity NGL production for the remainder of 1996 at prices chosen
by management because they are in excess of the Company's 1996 operating budget
and further price increases were not expected. The following table summarizes
the Company's hedged equity positions at September 30, 1996:
<TABLE>
<CAPTION>
Residue Gas NGLs
- --------------------------------------------- -------------------------------------------
MMBtu Weighted Average Volumes Weighted Average
Basin Hedged Price (1) Product Hedged Price (2)
- -------------- -------- ---------------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Permian 15,000/D $1.88/MMBtu Ethane 140 MGal/D $ .20/Gal
Rocky Mountain 1,700/D 1.50/MMBtu Propane 160 MGal/D .34/Gal
Gulf Coast 17,300/D 1.99/MMBtu Butane - -
Mid-Continent 6,700/D $1.78/MMBtu Crude 4,900 Bbl/D $19.72/Bbl (3)
</TABLE>
(1) The prices shown represent the actual price to be received by the Company
and represent a net price to the producing area, which approximates the
Henry Hub price less the basis differential for such basin.
(2) This price approximates the average Mont Belvieu price for NGLs and a
West Texas Intermediate price for crude oil.
(3) As of September 30, 1996, the Company held a notional quantity of
approximately 300,000 barrels long of over-the-counter call options with
a strike price of $22.00 per barrel.
11
<PAGE>
Property and Equipment
In May of 1996, the Company sold its Temple facility for $2.3 million which
resulted in the recognition of a pre-tax gain of $1.9 million, net of a $400,000
reclamation reserve. The carrying value of the Temple facility had been reduced
to zero in connection with the adoption of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of," during
the year ended December 31, 1995. In August of 1996, the Company sold its
Crockett Gathering System for $275,000 which resulted in the recognition of a
small pre-tax gain. The Company continually monitors the economic performance of
each of its operating facilities to ensure that a desired cash flow objective is
achieved. If an operating facility is not generating desired cash flows or does
not fit in with the Company's strategic plans, the Company will explore various
options, such as consolidation with other Company-owned facilities,
dismantlement, asset swap or outright sale.
The Company has experienced unexpected water production in one of the wells at
its Black Lake field. In August 1996, the Company retained Williamson Petroleum
Consultants, Inc., an independent petroleum consultant, to perform an evaluation
of the Black Lake field reserves as of June 30, 1996. Williamson Petroleum
Consultants, Inc. estimated total proved reserves as of June 30, 1996 to be 89
Bcf (53 Bcf net to the Company's revenue interests), which is consistent with
the Company's own internal estimates as of June 30, 1996. Reserve estimates are
subject to numerous uncertainties inherent in the estimation of quantities of
proved reserves and in the projection of future rates of production and the
timing of development expenditures. The accuracy of such estimates is a
function of the quality of available data and of engineering and geological
interpretation and judgment. Estimates of economically recoverable reserves and
of future net cash flows expected therefrom prepared by different engineers or
by the same engineers at different times may vary substantially. Results of
subsequent drilling, testing and production may cause either upward or downward
revisions of previous estimates. Further, the volumes considered to be
commercially recoverable fluctuate with changes in prices and operating costs.
Any significant revision of reserve estimates could materially adversely affect
the Company's financial condition and results of operations.
Capital Investment Program
Capital expenditures related to existing operations are expected to be
approximately $82 million during 1996, consisting of the following: capital
expenditures related to gathering, processing and pipeline assets are expected
to be $58 million, of which $44 million will be used for new connects, system
expansions and asset consolidations, $10 million (out of a projected $62
million) for construction of the Bethel facility and $14 million for maintaining
existing facilities. The Company expects capital expenditures on the Katy
Facility, exploration and production activities and miscellaneous items to be
approximately $14 million. For the nine months ended September 30, 1996, the
Company had expended $38.8 million consisting of the following: (i) $22.0
million for new connects, system expansions and asset consolidations; (ii) $5.3
million for maintaining existing facilities; (iii) $3.6 million for exploration
and production activities; (iv) $500,000 related to the Katy Facility; and (v)
$7.4 million of miscellaneous expenditures.
The Company is currently constructing the Bethel facility in East Texas that
will gather gas from the Cotton Valley Pinnacle Reef trend. Based upon current
gas compositions, this facility could treat up to approximately 350 MMcf per
day. The Bethel facility has been designed to accommodate incremental
expansions, depending upon the success of continued development in the trend.
Construction of the Bethel facility began in September 1996, and the facility is
expected to commence operations in the second quarter of 1997. This facility is
expected to cost approximately $62 million. Long-term gathering and treating
agreements have been signed with several producers, including Sonat Exploration
Company, UMC Petroleum Corporation and Broughton Associates Joint Venture,
relating to their interests in the Cotton Valley Pinnacle Reef trend. The
agreements cover specified areas of dedication aggregating approximately 500,000
acres of previously undedicated interests. However, due to uncertainties
related to construction costs, possible delays in permitting and other
conditions outside the Company's control, there can be no assurance that this
project will develop as currently anticipated. In addition, the production that
is anticipated to be gathered and treated at the Bethel facility is primarily
expected to be produced from prospects that have not yet been drilled, and there
can be no assurance of successful completion of wells in these prospects.
The Company plans to expand its Powder River basin (Wyoming) coal seam gas
gathering system and develop its own coal seam gas reserves. The Company has
acquired drilling rights in the vicinity of known coal seam production on
approximately 120,000 gross acres. The Company and other operators in the area
have established production from wells drilled to depths of 200 to 700 feet,
with a completed cost per well of approximately $25,000. The Company will
utilize its existing dry gas gathering system and interstate pipelines to
transport this pipeline quality gas to market. The Company anticipates that
capital expenditures will be approximately $73 million during the next five
years, primarily for compression equipment, including $9 million for drilling
costs and production equipment. However, because of drilling and other
uncertainties, there can be no assurance that this project will develop as
currently anticipated.
12
<PAGE>
Financing Facilities
Revolving Credit Facility. The Company's variable rate Revolving Credit
Facility, as restated on September 2, 1994 and subsequently amended, with a
syndicate of eight banks, provides for a maximum borrowing base of $300 million,
of which $76 million was outstanding at September 30, 1996. If the facility is
not renewed, its commitment period will terminate on October 1, 1997. Any
outstanding balance thereunder at such time will convert to a three-year term
loan, which will be payable in 12 equal quarterly installments, commencing
January 1, 1998. The Revolving Credit Facility bears interest, at the Company's
option, at certain spreads over the Eurodollar rate, at the Federal Funds rate
plus .50%, or at the agent bank's prime rate. The interest rate spreads are
adjusted based on the Company's debt to capitalization ratio. At September 30,
1996, the spread was 1.25% over the Eurodollar rate, resulting in an interest
rate of 6.90%. Upon the placement of at least $50 million of common or
preferred equity, the interest rate paid by the Company on borrowings under the
Revolving Credit Facility will decrease by .125%.
The Company pays a commitment fee on the unused commitment ranging from .15% to
.375% based on the debt to capitalization ratio. At September 30, 1996, the
Company's debt to capitalization ratio was .56 to 1 resulting in a commitment
fee rate of .375%.
Term Loan Facility. The Company also has a Term Loan Facility with four banks
with aggregate principal outstanding as of September 30, 1996 of $12.5 million
which bears interest at 9.87%. The final payment on the Term Loan Facility of
$12.5 million is due in September 1997.
The agreements governing the Company's Revolving Credit and Term Loan Facilities
(the "Credit Facilities Agreement") contain certain mandatory prepayment terms.
If funded debt of the Company, which has a final maturity on or before October
1, 2000, exceeds four times (4.0 to 1.0) the sum of the Company's last four
quarters' cash flow (as defined in the agreement) less preferred stock dividends
projected to be paid during the next four quarters, the overage must be repaid
in no more than six monthly payments, commencing 90 days from notification.
This mandatory prepayment threshold will be reduced to 3.5 to 1.0 at September
1, 1998. At September 30, 1996, taking into account all the covenants contained
in the Credit Facilities Agreement and expected maturities of long-term debt
during 1996, the Company had approximately $90 million of available borrowing
capacity.
The Credit Facilities Agreements are unsecured. Pursuant to the Credit
Facilities Agreement, the Company is required to maintain a current ratio (as
defined therein) of at least 1.0 to 1.0, a minimum tangible net worth equal to
the sum of $345.0 million plus 50% of consolidated net income earned after June
30, 1995 plus 75% of the net proceeds received after June 30, 1995 from the sale
of equity securities, a debt to capitalization ratio (as defined therein) of no
more than 60% through December 31, 1996 and 55% thereafter, and an EBITDA to
interest ratio of not less than 3.00 to 1.0 through October 31, 1996, 3.25 to
1.0 from November 1, 1996 through October 31, 1997 and 3.75 to 1.0 thereafter.
The Company is prohibited from declaring or paying dividends on any capital
stock on or after December 31, 1995, that in the aggregate exceed the sum of $10
million plus 50% of consolidated net income earned after December 31, 1995 plus
50% of the cumulative net proceeds received by the Company after December 31,
1995 from the sale of any equity securities. The dividends declared in the
fourth quarter of 1995 and paid in 1996 were excluded per the agreement from
this calculation. At September 30, 1996, $8 million was available under this
limitation, which is sufficient to pay required preferred stock dividends in
1996. The Company generally utilizes excess daily funds to reduce any
outstanding revolving credit balances and associated interest expense and it
intends to continue such practice. The $4.0 million cash balance at September
30, 1996 is due to the timing of cash receipts and the balance is considered
temporary.
Master Shelf Agreement. In December 1991, the Company entered into a Master
Shelf Agreement (the "Master Shelf") with The Prudential Insurance Company of
America ("Prudential") pursuant to which Prudential agreed to quote, from time-
to-time, an interest rate at which Prudential or its nominee would be willing to
purchase up to $100 million of the Company's senior promissory notes (the
"Master Notes"). Any such Master Notes will mature in no more than 12 years,
with an average life not in excess of 10 years, and are unsecured. The Master
Shelf contains certain financial covenants which substantially conform with
those contained in the Credit Facilities Agreement, as restated and amended. In
July 1993 and July 1995, Prudential and the Company amended the Master Shelf to
provide for additional borrowing capacity (for a total borrowing capacity of
$200 million) and to extend the term
13
<PAGE>
of the Master Shelf to October 31, 1995. The Master Shelf Agreement, as restated
and amended, is fully utilized, as indicated in the following table (000s):
<TABLE>
<CAPTION>
Interest Final
Issue Date Amount Rate Maturity Principal Payments Due
- ------------------ ------- -------- ------------------ -----------------------------------------------
<S> <C> <C> <C> <C>
October 27, 1992 $ 25,000 7.51% October 27, 2000 $8,333 on each of October 27, 1998 through 2000
October 27, 1992 25,000 7.99% October 27, 2003 $8,333 on each of October 27, 2001 through 2003
September 22, 1993 25,000 6.77% September 22, 2003 single payment at maturity
December 27, 1993 25,000 7.23% December 27, 2003 single payment at maturity
October 27, 1994 25,000 9.05% October 27, 2001 single payment at maturity
October 27, 1994 25,000 9.24% October 27, 2004 single payment at maturity
July 28, 1995 50,000 7.61% July 28, 2007 $10,000 on each of July 28, 2003 through 2007
--------
$200,000
========
</TABLE>
1993 Senior Notes. On April 28, 1993 the Company sold $50 million of 7.65%
Senior Notes ("1993 Senior Notes") due 2003 to a group of insurance companies.
Annual principal payments of $7.1 million on the 1993 Senior Notes are due on
April 30 of each year from 1997 through 2002, with any remaining principal and
interest outstanding due on April 30, 2003. The Company intends to finance the
$7.1 million payment due in 1997 through amounts available under the Revolving
Credit Facility. The 1993 Senior Notes contain certain financial covenants that
substantially conform with those contained in the Master Shelf Agreement, as
restated and amended.
1995 Senior Notes. The Company sold $42 million of 1995 Senior Notes to a
group of insurance companies in the fourth quarter of 1995, with an interest
rate of 8.16% per annum and principal due in a single payment in December 2005.
The 1995 Senior Notes contain certain financial covenants that conform with
those contained in the Master Shelf Agreement, as restated and amended.
Receivables Facility. In April 1995, the Company entered into an agreement
with Receivables Capital Corporation ("RCC"), as purchaser, and Bank of America
National Trust and Savings Association ("BA"), as agent, pursuant to which the
Company will sell to RCC at face value on a revolving basis an undivided
interest in certain of the Company's trade receivables. As part of the sale,
the Company granted to RCC a security interest in such receivables. The Company
may sell up to $75 million of trade receivables under the Receivables Facility,
at a rate equal to RCC's commercial paper rate plus .375%, of which $75 million
was funded at a rate of 5.81% as of September 30, 1996. The Receivables
Facility has a 364-day term and contains financial covenants similar to those in
the Credit Facilities Agreement, as restated and amended, along with certain
covenants regarding the quality of the trade receivables pool. The parties have
renewed the facility through May 29, 1997.
Covenant Compliance. At September 30, 1996, the Company was in compliance
with all covenants in its loan agreements. The Company is currently undertaking
a public offering of 5,000,000 shares of common stock. In the event this
offering is not completed by December 31, 1996, the Company would violate the
debt to capitalization covenant in most of its debt agreements because of the
scheduled reduction in such ratio at January 1, 1997. The Company believes,
however, that it could successfully negotiate amendments to the agreements to
extend the date at which the debt to capitalization ratio is to be reduced.
14
<PAGE>
PRINCIPAL FACILITIES
The following table provides information concerning the Company's principal
facilities. The Company also owns and operates several smaller treating and
processing facilities located in the same areas as its other facilities.
<TABLE>
<CAPTION>
Average for the nine months ended
September 30, 1996
Gas Gas ------------------------------------------
Gathering Throughput Gas Gas NGL
Year Placed Systems Capacity Throughput Production Production
Facility (1) In Service Miles(2) (MMcf/D)(2) (MMcf/D)(3) (MMcf/D)(4) (MGal/D)(4)
- -------------------------------- ----------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
SOUTHERN REGION:
Texas
Midkiff /Benedum.............. 1955 2,080 150 141 94 865
Giddings Gathering System..... 1979 653 80 67 57 87
Edgewood(5)(8)................ 1964 93 65 29 11 77
Perkins....................... 1975 2,566 40 22 12 145
MiVida (5).................... 1972 287 150 58 55 -
Gomez......................... 1971 302 280 159 155 -
Mitchell Puckett.............. 1972 86 140 78 77 -
Crockett Gathering System (6). 1973 - - 12 11 -
Rosita Treating System........ 1973 - 60 49 49 -
Katy(7)....................... 1994 18 - - - -
Louisiana
Black Lake.................... 1966 56 75 35 23 84
Toca(8)(9).................... 1958 - 160 95 - 59
NORTHERN REGION:
Oklahoma
Chaney Dell/Lamont............ 1966 2,009 180 80 62 236
Arkoma........................ 1985 51 8 3 2 -
Westana System(10)............ 1986 253 45 59 53 58
Wyoming
Granger(9).................... 1987 241 210 117 101 302
Red Desert(9)................. 1979 111 42 24 21 39
Lincoln Road(11).............. 1988 146 50 29 28 35
Hilight Complex(5)(9)......... 1969 617 80 35 29 86
Kitty/Amos Draw(9)............ 1969 304 17 11 8 46
Newcastle(9).................. 1981 145 5 2 1 18
Reno Junction(12)............. 1991 - - - - 53
Coal Seam Gathering........... 1990 6 28 22 21 -
New Mexico
San Juan River(5)............. 1955 127 60 30 27 1
North Dakota
Williston(13)................. 1981 381 - 7 5 25
Temple(14).................... 1984 - - 1 1 4
Teddy Roosevelt(13)........... 1979 332 - 3 2 12
Utah
Four Corners.................. 1988 104 15 4 3 9
Montana
Baker(5)(9)(15)............... 1981 8 3 1 1 10
------ ----- ----- --- -----
Total....................... 10,976 1,943 1,173 909 2,251
====== ===== ===== === =====
</TABLE>
- ----------------------------
Footnotes on following page
15
<PAGE>
(1) The Company's interest in all facilities is 100% except for Midkiff/Benedum
(72%); Black Lake (69%); Lincoln Road (72%); Williston (50%); Westana (50%)
and Newcastle (50%). All facilities are operated by the Company and all
data include interests of the Company, other joint interest owners and
producers of gas volumes dedicated to the facility.
(2) Gas gathering systems miles and gas throughput capacity are as of September
30, 1996.
(3) Aggregate wellhead natural gas volumes collected by a gathering system.
(4) Volumes of residue gas and NGLs are allocated to a facility when a well is
dedicated to that facility; volumes exclude NGLs fractionated for third
parties.
(5) Sour gas facility (capable of processing gas containing hydrogen sulfide).
(6) The Crockett Gathering System was sold effective August 1, 1996.
(7) Hub and gas storage facility.
(8) Straddle plant (a plant located near a transmission pipeline which
processes gas dedicated to or gathered by the pipeline company or another
third-party).
(9) Fractionation facility (capable of fractionating raw NGLs into end-use
products).
(10) Gas throughput and gas production in excess of gas throughput capacity is
unprocessed gas delivered directly to an unaffiliated pipeline.
(11) Commencing in March 1996, the Company and its joint venture partner at the
Lincoln Road gas plant temporarily suspended processing operations at the
Lincoln Road plant and began processing the related gas at the Company's
Granger facility. If volumes increase substantially beyond Granger's
capacity, the Lincoln Road plant might be re-started. The Company
anticipates that this consolidation will result in lower overall plant
operating expenses for the combined systems.
(12) NGL production represents conversion of third-party feedstock to iso-
butane.
(13) Processing facility has been shut-in since August 1993. The gas dedicated
to these facilities is processed by a third-party under a contractual
arrangement. In January 1996, Koch Hydorcarbon Company, which operates the
Teddy Roosevelt and Williston Gas Company's assets under a lease agreement,
exercised its option to purchase certain gas gathering assets located in
North Dakota from the Company and Williston. The closing of the sale is
expected to occur on or before January 1, 1997.
(14) The Temple facility was sold effective May 1, 1996.
(15) During the second quarter of 1997, the Company anticipates ceasing
operations at this facility.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Katy Condemnation
Commencing in March 1993 and continuing through July 1993, Western Gas Resources
Storage, Inc. ("Storage"), a wholly-owned subsidiary of the Company, filed a
total of 165 condemnation actions in the County Court at Law No. 1 and No. 2 of
Fort Bend County, Texas, to obtain certain storage rights and rights-of-way
relating to its Katy Gas Storage Facility and the related underground reservoir
("Katy"). The County Court appointed panels of Special Commissioners which
awarded compensation to the owners whose rights were condemned. Condemnation
awards are a capital cost of the Katy project.
A majority of the land and mineral owners involved in the condemnation
proceedings appealed to County Court, seeking a declaration that Storage did not
possess the right to condemn or, in the alternative, that they should be awarded
more compensation than previously awarded by the Special Commissioners. In all
of those appeals, the right to condemn issue has now been resolved in favor of
Storage, although factual issues in individual cases remain as to whether that
right was exercised properly.
Trials in four of the appeals to County Court have now been concluded. The
first trial involved a parcel adjacent to the 82 acre site where the compression
facilities are located, the second trial involved a parcel within 1,000 feet of
the 82 acre site, and the third and fourth trials involved parcels further than
one mile from the 82 acre site. The jury verdicts compared with the awards of
the Special Commissioners were, respectively, as follows: $214,000 versus
$2,000; $38,000 versus $600; $553 versus $553; and $1,000 versus $500. The
Company believes that several reversible errors were committed in the first two
trials and appeals of those cases are now pending in the Texas Court of Appeals.
On November 5, 1996, the Company entered into a Settlement Agreement covering
all but three of the remaining appeals. The Settlement Agreement includes all
four appeals for which trials had been held. Pursuant to the Settlement
Agreement, the Company has agreed to pay a total of $2,469,000 in exchange for
the property rights it is seeking and various releases, indemnities, and
warranties. The Settlement Agreement is subject to certain conditions which the
Company reasonably anticipates will be fulfilled. The Company believes that any
decision in the remaining three appeals would have no material adverse effect on
the Company.
JN Exploration and Production Litigation
JN Exploration and Production ("JN") is a producer of oil and natural gas that
sold unprocessed natural gas to the Company on a percentage-of-proceeds basis.
The Company processed the gas at its Teddy Roosevelt Plant, which is no longer
in operation. In JN Exploration and Production v. Western Gas Resources, Inc.
------------------------------------------------------------
United States District Court for the District of North Dakota, Southwestern
Division, Civil Action Nos. A1-93-53 and 903-CV-60, JN sued the Company,
alleging that JN was entitled to a portion of a $15 million amendment fee the
Company received in the years 1987 through 1989 from Williston Basin Interstate
Pipeline Company ("WBI"), which had an agreement with the Company to purchase
natural gas. On April 15, 1996, the Court issued a Memorandum and Order granting
JN's summary judgment motion on the issue of liability. On July 11, 1996, the
Court issued a Memorandum and Order setting forth the manner in which damages
are to be calculated. On September 17, 1996, the court entered a final judgement
against the Company in the amount of $421,000 (including pre-judgment interest).
The Company intends to appeal the decision. If JN were to prevail on appeal,
other producers who sold natural gas which was processed at the Teddy Roosevelt
Plant during the time period in question may be able to assert similar claims.
At the present time, it is not possible to predict the outcome of this
litigation or any other producer litigation which might raise similar issues or
to estimate the amount of potential damages.
Other
The Company is involved in various other litigation and administrative
proceedings arising in the normal course of business. In the opinion of
management, any liabilities that may result from these claims, will not,
individually or in the aggregate, have a material adverse effect on the
Company's financial position or results of operations.
17
<PAGE>
Item 5. Other Item
----------
On November 1, 1996, the Company's Board of Directors declared quarterly
dividends of $0.05 per share of common stock, $.0573125 per share on the $2.28
Cumulative Preferred Stock and $.065625 per share on the $2.625 Cumulative
Convertible Preferred Stock to stockholders of record on November 30, 1996 and
payable on February 14, 1997.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
3.9 Amended and restated By-laws of Western Gas Resources, Inc. as adopted
by the Board of Directors on September 6, 1996.
10.58 Amendment No. 3 to Receivables Purchase Agreement dated as of October
16, 1996, by and among Western Gas Resources, Inc., as Seller,
Receivables Capital Corporation, as Purchaser, and Bank of America
National Trust and Savings Association, as Agent.
10.59 Eighth Amendment to Third Restated Loan Agreement (Term) dated
October 16, 1996 by and among Western Gas Resources, Inc. and
NationsBank of Texas, N.A., as agent, and the Lenders.
10.60 Sixth Amendment to First Restated Loan Agreement (Revolver) dated
October 16, 1996 by and among Western Gas Resources, Inc. and
NationsBank of Texas, N.A., as agent, and the Lenders.
23.1 Consent of Williamson Petroleum Consultants, Inc.
(b) Report on Form 8-K:
A report on Form 8-K was filed on November 1, 1996 to file certain consents
related to the Company's shelf registrations.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTERN GAS RESOURCES, INC.
---------------------------
(Registrant)
Date: November 8, 1996 By: /s/ LANNY F. OUTLAW
-------------------------------------
Lanny F. Outlaw
President and Chief Operating Officer
Date: November 8, 1996 By: /s/WILLIAM J. KRYSIAK
--------------------------------------------
William J. Krysiak
Vice President - Finance
(Principal Financial and Accounting Officer)
19
<PAGE>
Exhibit 3.9
AMENDED AND RESTATED BYLAWS
OF
WESTERN GAS RESOURCES, INC.
- - - - - - - - - - - - - - - - - - -
ARTICLE I.
OFFICES
-------
Section 1. The registered office of the corporation shall be in the
City of Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places, both within and without the State of Delaware, as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. All meetings of the stockholders for the election of
directors shall be held at such place either within or without the State of
Delaware as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. (a) Annual meetings of stockholders, commencing with the
year 1990, shall be held on the second Wednesday in May, if not a legal holiday,
and if a legal holiday, then on the next secular day following, at ten o'clock
a.m., or at such other date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which they
shall elect a class of Directors and transact such other business as may
properly be brought before the meeting.
(b) At each meeting of stockholders, the Chairman of the Board, or,
in the absence of the Chairman of the Board, the President, shall act as
chairman. The order of business at each such meeting shall be as determined by
the chairman of the meeting. The chairman of the meeting shall have the right
and authority to prescribe such rules, regulations and procedures and to do
all such acts and things as are necessary or desirable for the proper conduct of
the meeting, including, without limitation, the establishment of procedures for
the maintenance of order and safety, limitations on the time allotted to
questions or comments on the affairs of the corporation, restrictions on entry
to such meeting after the time prescribed for the commencement thereof, and the
opening and closing of the voting polls. The chairman of the meeting shall
announce at each such meeting the date and time of the opening and closing of
the voting polls for each matter upon which the stockholders will vote at such
meeting.
1
<PAGE>
(c) In order for business to be properly brought before the meeting by
a stockholder, the business must be legally proper and written notice thereof
must have been filed with the Secretary of the corporation not less than 60 nor
more than 120 days prior to the meeting. Each such notice shall set forth: (i)
the name and address of the stockholder who intends to make the proposal as the
same appear in the corporation's records; (ii) the class and number of shares of
stock of the corporation that are beneficially owned, directly or indirectly, by
such stockholder, and if such stockholder is not the record holder of such
shares, the name, based upon the best knowledge of such stockholder, of the
record holder thereof; and (iii) a clear and concise statement of the proposal
and the stockholder's reasons for supporting it. The filing of a stockholder
notice as required above shall not, in and of itself, constitute the making of
the proposal described therein. If the chairman of the meeting determines that
any proposed business has not been properly brought before the meeting, he shall
declare such business out of order; and such business shall not be conducted at
the meeting.
(d) Either the Board of Directors or, in the absence of an appointment
of inspectors by the Board, the Chairman of the Board or the President shall, in
advance of each meeting of the stockholders, appoint one or more inspectors to
act at such meeting and make a written report thereof. In connection with any
such appointment, one or more persons may, in the discretion of the body or
person making such appointment, be designated as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act
at any meeting of stockholders, the chairman of such meeting shall appoint one
or more inspectors to act at such meeting. Each such inspector shall perform
such duties as are required by law and as shall be specified by the Board, the
chairman of the board, the president or the chairman of the meeting. Each such
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality
and according to the best of his ability. Inspectors need not be stockholders.
No director or nominee for the office or director shall be appointed such an
inspector.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than sixty days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before each annual meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of sixty percent of the
directors, or at the request in writing of stockholders owning twenty-five
percent of the entire capital stock of the corporation issued and outstanding
and entitled to vote. Such
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request shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question (other than the election of
directors) brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the certificate of incorporation a
different vote is required, in which case such express provision shall govern
and control the decision of such question. Directors shall be elected by
plurality vote.
Section 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless the proxy provides for a
longer period.
ARTICLE III.
DIRECTORS
---------
Section 1. The business and affairs of the corporation shall be
managed by or under the direction of the Board of Directors, which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by law or by the certificate of incorporation or these bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Except as otherwise provided in any resolution or
resolutions adopted by the Board of Directors pursuant to the provisions of
Article IV of the certificate of incorporation
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relating to the rights of holders of any class or series of stock having a
preference over the common stock as to dividends or upon liquidation, the number
of directors of the corporation shall be eight (8); that the additional member
of the Board of Directors resulting from such amendment shall be a Class Two
director; and that the vacancy thus created shall be filled by vote of the
stockholders at the annual meeting of stockholders to be held on May 1, 1991,
but the
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number thereof may be increased without limit or decreased to not less than
three (two of whom shall not be officers or employees of the corporation) by
amendment to this Section 2.
Section 3. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by the
directors then in office, or by a sole remaining director, and the directors so
chosen shall hold office until the expiration of the terms of the directorships
whose vacancy is being filled and until their successors are duly elected and
qualified, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute.
Section 4. Subject to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to dividends or upon
liquidation, nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Any stockholder entitled to vote for the election of directors at a
meeting may nominate persons for election as directors only if written notice of
such stockholder's intent to make such nomination is given, either by personal
delivery or by postage prepaid, certified United States mail, return receipt
requested, to the secretary of the corporation not later than (i) with respect
to an election to be held at an annual meeting of stockholders, ninety days in
advance of such meeting and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to stockholders. Each such notice shall set forth: (a) the name
and address of the stockholder who intends to make the nomination of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or entity (naming such person or entity) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated by the
Securities and Exchange commission thereunder, had each nominee been nominated,
or intended to be nominated, for election as a director by the Board of
Directors; and (e) the consent of each nominee to serve as a director of the
corporation if so elected. The chairman of the meeting may refuse to acknowledge
and place upon the ballot the nomination of any person not made in strict
compliance with the foregoing procedure.
Section 5. The Board of Directors may adopt and from time to time
amend and repeal such rules and regulations not inconsistent with the applicable
provisions of law, the certificate of incorporation or these bylaws for the
conduct of its meetings and the management of the affairs of the corporation as
the Board may deem proper.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
Section 6. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 7. An annual meeting of the Board of Directors shall be held
immediately
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following and at the same place as the annual meeting of stockholders and no
notice of such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be present. In
the event such meeting is not held at such time and place, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as shall
be specified in a written waiver signed by all of the directors.
Section 8. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 9. Special meetings of the Board of Directors may be called by
the chairman of the board or the president on two days' notice to each director,
either personally or by mail or telegram; special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of two directors.
Section 10. At all meetings of the Board of Directors the presence of
sixty percent of the directors shall constitute a quorum for the transaction of
business and only the act of sixty percent of all of the directors then in
office shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the certificate of incorporation, by any
resolution adopted by the Board of Directors in accordance with Article IV of
the certificate of incorporation or by these bylaws. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 11. Unless otherwise restricted by the certificate of
incorporation or these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if sixty percent of the members of the Board or a majority of
the members of the committee, as the case may be, consent thereto in writing,
the writing is filed with the minutes of proceedings of the Board or committee,
and prompt notice of the action so taken is given to each director who did not
consent thereto in writing.
Section 12. The members of the Board of Directors or any committee
thereof may participate in a meeting of the Board or committee utilizing
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and such participation
shall constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
-----------------------
Section 13. There shall be an Executive Committee of the Board of
Directors of the Corporation consisting of at least two (2) but not more than
four (4) members of the Board of Directors, elected to such committee by the
Board on an annual basis. The Executive Committee shall have and may exercise,
between meetings of the Board of Directors, all the power and authority of the
board in the management of the business affairs of the corporation; provided,
however, that the Executive Committee shall not have the power or authority to
do any of the following:
(a) amend the certificate of incorporation of the corporation;
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(b) adopt an agreement of merger or consolidation involving the
corporation;
(c) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the property and assets of the
corporation;
(d) recommend to the stockholders a dissolution of the corporation
or a revocation of a dissolution;
(e) adopt, amend or repeal any bylaw;
(f) fill vacancies on the Board of Directors or on any committee
of the Board, including the Executive Committee;
(g) amend or repeal any resolution of the Board of Directors;
(h) declare a dividend; or
(i) authorize the issuance of stock of the corporation.
Section 14. The Executive Committee shall, subject to the provisions
of law and any other provisions of these bylaws, have full authority and power
to cause the corporation to do the following:
(a) To deal in real and personal property of the corporation; to
create and/or contribute property of the corporation to any
entity or business organization formed by the corporation,
either alone or with third parties; to pay rom the
corporation's funds any and all expenses and fees; to obtain
and maintain insurance coverage concerning the property of the
corporation.
(b) To execute and deliver on behalf of the corporation all leases,
bills of sales, assignments, deeds, unitization agreements,
contracts, farm-outs and other instruments of transfer; all
checks, drafts and other orders for the payment of corporation
funds; all contracts or instruments concerning the acquisition,
construction, management, operation or disposition of corporate
assets; all bonds, promissory notes, mortgages, deeds of trust,
security agreements and other similar documents; and all other
instruments, documents, contracts or agreements of any kind or
character relating to the affairs of the corporation; and to
delegate in writing to the officers of the corporation the
authority to sign such instruments, notes, deeds, contracts,
agreements and documents.
(c) To exercise all rights, powers and authority as is necessary or
prudent in the operation and maintenance of the business of the
corporation.
(d) To directly, or by delegation of authority to the officers of
the corporation, appoint, employ, remove, suspend and discharge
any of the following:
(1) Managers, assistants, independent contractors, geologists,
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geophysicists, land men, employees and agents as from time to
time may be deemed advisable and to determine the duties and
fix and change the salaries and other terms of employment of
such persons.
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(2) Qualified technical personnel temporarily employed or to be
employed on specific problems incident to the operation of
the corporation and its businesses.
(3) Attorneys, architects, engineers, accountants, contractors,
consultants, advertising agencies, sales representatives and
all such other agents or independent contractors as such
officers shall deem necessary or advisable for the
furtherance of the corporation's purposes and operations.
Notwithstanding the above, in no event shall the Executive Committee
have the authority to approve: (i) with respect to gas purchase and sale
agreements, any agreement that provides for the sale or purchase in any single
year of gas in excess of Thirty-Five Million Dollars ($35,000,000); (ii) with
respect to the purchase of operating supplies, capital expenditures or general
and administrative expenditures, any single expenditure or group of related
expenditures in excess of Ten Million Dollars ($10,000,000); or (iii) any
business transaction with an affiliate of the corporation, without the approval
of the Board of Directors. The term "affiliate" as used herein shall mean a
person or entity, of any kind or nature, controlling, controlled by or under
common control with the corporation and shall include, without limitation, any
subsidiaries of the corporation and any person or entity owning, directly or
indirectly, five percent or more of the capital stock of the corporation.
Section 15. There shall be an Audit Committee of the Board of
Directors of the corporation consisting of at least two members of the Board of
Directors elected to such committee by the board on an annual basis. The initial
members of the Audit Committee shall be the two directors named in the
certificate of incorporation who are not officers or employees of the
corporation or of any party to a subscription agreement with the corporation.
The members of the audit committee elected hereafter shall be eligible to serve
thereon under the rules of the New York Stock Exchange as in effect from time to
time.
Section 16. The Board of Directors may designate one or more
additional committees, each committee to consist of two or more directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors.
Section 17. Regular meetings of the Executive Committee or any other
committee of the Board of Directors, of which no notice shall be necessary, may
be held at such times and places as shall be fixed by resolution adopted by a
majority of the members thereof. Special meetings of the Executive Committee or
any other committee of the Board shall be called at the request of any member
thereof. Any special meeting of the Executive Committee or any other committee
of the Board shall be a legal meeting, without any notice thereof having been
given,
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if all of the members thereof shall be present or if notice thereof shall have
been given to each member on the day prior to the day on which the meeting is to
be held. The Executive Committee or any other committee may adopt such rules and
regulations not inconsistent with the provisions of law, the certificate of
incorporation or these bylaws for the conduct of its meetings as such committee
may deem proper. The majority of the Executive Committee or any other committee
of the Board shall constitute a quorum for the transaction of business at any
meeting, and the vote of the majority of the members thereof present at any
meeting at which a quorum is present shall be the act of such committee. The
Executive Committee or any other committee of the Board of Directors shall keep
written minutes of its proceedings and shall report on such proceedings to the
Board.
COMPENSATION OF DIRECTORS
-------------------------
Section 18. The Board of Directors shall have the authority to adopt
resolutions fixing the compensation to be paid to directors for service as a
director of the corporation. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as a director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV.
NOTICES
-------
Section 1. Whenever, under statutory provisions or pursuant to the
certificate of incorporation or these bylaws, notice is required to be given to
any director or stockholder, it shall not be construed to require personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by prepaid telegram.
Section 2. Whenever any notice is required to be given under
statutory provisions or pursuant to the certificate of incorporation or these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V.
OFFICERS
--------
Section 1. The officers of the corporation shall be chosen by the
Board of Directors and shall consist of: (i) a chairman of the board and chief
executive officer (who shall be a member of the Board of Directors); (ii) a
president and chief operating officer; (iii) one or more vice presidents; (iv) a
secretary; (v) a treasurer; and (vi) such other officers, with such duties, as
the
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Board of Directors shall direct.
Section 2. The Board of Directors, at its first meeting after each
annual meeting of stockholders, shall elect or appoint the officers of the
corporation. The Board of Directors, the
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chairman of the board or the president at any time may also appoint one or more
assistant secretaries and assistant treasurers.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
Section 4. The salaries of the chairman of the board, of the
president, and of any senior vice president of the corporation shall be fixed by
the Board of Directors.
Section 5. Except as may be otherwise provided by the Board of
Directors or in these bylaws, each officer of the corporation shall hold office
until the first meeting of directors after the next annual meeting of
stockholders following his election or appointment and until his successor is
chosen and qualified. Any officer elected or appointed by the Board of Directors
may be removed at any time by the Board of Directors. If the office of any
officer becomes vacant for any reason, the vacancy shall be filled by the Board
of Directors.
THE CHAIRMAN OF THE BOARD
-------------------------
Section 6. The chairman of the board and chief executive officer shall
be the chief executive officer of the corporation. Subject to the provisions of
these bylaws, the chairman of the board shall have general supervision of the
affairs of the corporation and shall have general and active control of all its
business. He shall see that all orders and resolutions of the Board of Directors
are carried into effect. He shall have the power and general authority to
exercise all the powers usually appertaining to the office of chief executive
officer of a corporation, except as otherwise provided by statute, the
certificate of incorporation or these bylaws. He shall report as to the
operations of the corporation to the Board of Directors and, with the president,
to the stockholders at or prior to each annual meeting of the stockholders, and
he shall from time to time report to the Board of Directors matters within his
knowledge which the interest of the corporation may require to be so reported.
THE PRESIDENT
-------------
Section 7. The president and chief operating officer shall be the
chief operating officer of the corporation and, subject to the direction of the
Board of Directors and the chairman of the board, shall have and exercise direct
charge of and general supervision over the business affairs and employees of the
corporation. He shall also perform such other duties as may be prescribed by the
Board of Directors or the chairman of the board. In the event of the absence or
disability of the chairman of the board, the president shall preside when
present at meetings of the Board of Directors and of the stockholders and shall
perform the duties and exercise the powers of the chairman of the board. The
president shall have power and general authority to exercise all the powers
usually appertaining to the office of chief operating officer of a corporation,
except as otherwise provided by statute, the certificate of incorporation or
these bylaws.
THE SENIOR VICE PRESIDENT,
--------------------------
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VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS
---------------------------------------------
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the senior vice president (or in the event there be
more than one senior vice president, the senior vice presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The senior vice presidents shall perform such other duties and have
such other powers as the Board of Directors may from time to time prescribe.
Section 9. The vice president or any assistant vice president, or if
there be more than one, the vice presidents and assistant vice presidents in the
order determined by the Board of Directors (or if there be no such
determination, then in the order of their election), shall in the absence of any
senior vice president or in the event of the inability or refusal to act of any
senior vice president, perform the duties and exercise the powers of such senior
vice president and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
---------------------------------------
Section 10. The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the stockholders and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors, the
president or the chairman of the board, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed it may be attested by his signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 11. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
--------------------------------------
Section 12. The treasurer shall have custody of the corporate funds
and securities of the corporation and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors.
Section 13. The treasurer shall disburse the funds of the corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the
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president and the Board of Directors, at its regular meetings, or when the Board
of Directors so requires, an account of all his transactions as treasurer and of
the financial condition of the corporation.
Section 14. If required by the Board of Directors, the treasurer
shall give the corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his office and for
the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 15. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
ARTICLE VI.
CERTIFICATES OF STOCK
---------------------
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed in the name of the corporation, by the chairman of
the board, the president or a vice president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary, certifying the number of
shares owned by him in the corporation.
Section 2. Where a certificate is countersigned (1) by a transfer
agent other than the corporation or its employee, or (2) by a registrar other
than the corporation or its employee, any signature on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
-----------------
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have
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been lost, stolen or destroyed.
TRANSFERS OF STOCK
------------------
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
------------------
Section 5. In order that the corporation may determine the
stockholders entitled to notice of and to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of and to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
-----------------------
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII.
GENERAL PROVISIONS
------------------
INDEMNIFICATION OF OFFICERS AND DIRECTORS
-----------------------------------------
Section 1. (a) The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or
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proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contenders or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsection (a) or (b), or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys, fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsection (a) or (b) (unless ordered by
a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees incurred in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section.
(f) The indemnification and advancement of expenses provided by or
granted pursuant to this section shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the certificate of incorporation or any agreement, vote of
stockholders or disinterested directors or otherwise, both
16
<PAGE>
as to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(g) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions or this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this section with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
INTERESTED DIRECTORS AND OFFICERS; QUORUM
-----------------------------------------
Section 2. No contract or transaction between the corporation and one
or more of its directors or officers, or between the corporation and any other
corporation, partnership, association or other organization in which one or more
of its directors or officers are directors or officers or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if (i) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board or the
committee, and the Board or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(ii) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the corporation as of the time it is authorized, approved or ratified
by the Board, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board or of a committee which authorizes the contract or transaction.
DIVIDENDS
---------
Section 3. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in
17
<PAGE>
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 4. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
------
Section 5. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as authorized by these bylaws or the Board of Directors may from time to
time designate.
FISCAL YEAR
-----------
Section 6. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
SEAL
----
Section 7. The corporate seal shall have inscribed thereon the name
of the corporation and shall be in such form as may be approved from time to
time by the Board of Directors. The seal may be used by causing it or a
facsimile thereof to be impressed, affixed, imprinted or in any manner
reproduced.
ARTICLE VIII.
AMENDMENTS
----------
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the Board of Directors at any regular meeting
of the stockholders or of the Board of Directors or at any special meeting of
the stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting.
18
<PAGE>
AMENDMENT OF THE BY-LAWS
Section 1 of Article V of the By-Laws shall be deleted in its entirety
and replaced, in lieu thereof, by the following:
"Section 1. The officers of the corporation shall be chosen by the
Board of Directors and shall consist of: (i) a chairman of the board and chief
executive officer (who shall be a member of the Board of Directors); (ii) a
president and chief operating officer; (iii) one or more vice presidents; (iv) a
secretary; (v) a treasurer; and (vi) such other officers, with such duties, as
the Board of Directors shall direct."
Adopted by the Board of Directors
on September 6, 1996
<PAGE>
EXHIBIT 10.58
AMENDMENT NO. 3 TO
RECEIVABLES PURCHASE AGREEMENT
THIS AMENDMENT NO. 3 TO RECEIVABLES PURCHASE AGREEMENT, dated as of October
16, 1996 (herein called this "Amendment"), is by and among RECEIVABLES CAPITAL
CORPORATION, a Delaware corporation (herein called the "Purchaser"), WESTERN GAS
RESOURCES, INC., a Delaware corporation (the "Seller"), and Bank of America
National Trust and Savings Association, a national banking association, as Agent
for the Purchaser (the "Agent").
W I T N E S S E T H:
-------------------
WHEREAS, the Purchaser, the Seller and the Agent have heretofore entered
into that certain Receivables Purchase Agreement, dated as of February 28, 1995,
as amended by that certain Amendment No. 1 to Receivables Purchase Agreement
dated as of July 1, 1995, as extended by that certain letter agreement dated
April 17, 1996 and as amended by that certain Amendment No.2 to Receivables
Purchase Agreement dated May 31, 1996 (collectively, the "Original Purchase
Agreement");
WHEREAS, the Purchaser, the Seller and the Agent now desire to further
amend the Original Purchase Agreement as hereinafter provided,
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Purchaser, the Seller and the Agent hereby agree as
follows:
SECTION 1. Defined Terms. Terms defined in the Original Purchase Agreement
-------------
are used herein with the meanings given them therein, unless otherwise defined
or the context otherwise requires.
SECTION 2. Amendment Relating to Debt to Capitalization Ratio. Section
--------------------------------------------------
7.03(e) of the Original Purchase Agreement is hereby deleted in its entirety and
replaced, in lieu thereof, by the following:
"(e) Debt to Capitalization Ratio. Permit Seller's Debt to Capitalization
----------------------------
Ratio to be greater than (i) 0.60 to 1.0 at any time until and including
December 31, 1996 and (ii) 0.55 to 1.00 at any time thereafter."
<PAGE>
SECTION 3. Certain Representations and Warranties of Seller. The Seller
------------------------------------------------
hereby represents and warrants as follows:
a. The representations and warranties contained in Section 6.01 of
the Original Purchase Agreement are correct on and as of the date hereof as
though made on and as of the date hereof and shall be deemed to have been
made on the date hereof;
b. No event has occurred and is continuing that constitutes a
Termination Event or an Unmatured Termination Event;
c. Seller (i) has all necessary power, authority and legal right to
execute, deliver and perform this Amendment and (ii) has duly authorized by
all necessary corporate action the execution, delivery and performance of
this Amendment.
d. This Amendment and the Original Purchase Agreement, as amended
hereby, when duly executed and delivered by Purchaser and the Agent,
constitute the legal, valid and binding obligations of Seller enforceable
in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
e. The consummation of the transaction contemplated by this
Amendment and the fulfillment of the terms hereof will not (i) conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default
under, the certificate of incorporation or by-laws of Seller, or any
indenture, loan agreement, receivables purchase agreement, mortgage, deed
of trust, or other agreement or instrument to which Seller is a party or by
which it or any of its properties is bound, (ii) result in the creation or
imposition of any Adverse Claim upon any of Seller's properties pursuant to
the terms of any such indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument, or
(iii) violate any law or any order, rule, or regulation applicable to
Seller of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over Seller or any of its properties.
f. There are no proceedings pending or to the best of Seller's
knowledge threatened and to the best of Seller's knowledge there are no
2
<PAGE>
investigations pending, or threatened, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality
asserting the invalidity of this Amendment or seeking any determination or
ruling that might materially and adversely affect the performance by Seller
of its obligations under this Amendment or the validity or enforceability
of this Amendment.
g. No authorization or approval or other action by, and no notices
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by Seller of this
Amendment.
SECTION 4. References. All references to the "Receivables Purchase
----------
Agreement" or to the "Agreement" in the Original Purchase Agreement or any other
document, instrument, agreement or writing shall hereafter be deemed to refer to
the Original Purchase Agreement as amended hereby.
SECTION 5. Effectiveness. This Amendment shall be effective as of the date
hereof; provided, however, that its effectiveness is conditioned upon: (i)
-------- -------
Seller having amended the Revolving Loan Agreement and the Term Loan Agreement
to contain covenants regarding the debt to capitalization ratio comparable to
those set forth in this Amendment; and (ii) the General Counsel for the Seller
having delivered an opinion to the Agent substantially in the form of Exhibit A
attached hereto and incorporated herein by reference.
SECTION 6. GOVERNING LAW; COUNTERPARTS. THIS AMENDMENT SHALL BE GOVERNED
---------------------------
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any party
hereto may execute this Amendment by signing one or more counterparts.
SECTION 7. Ratification. Except as expressly amended hereby, the Original
------------
Purchase Amendment shall remain in full force and effect as heretofore entered
into. The parties hereby ratify and confirm the Original Purchase Agreement as
hereby amended.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PURCHASER:
---------
RECEIVABLES CAPITAL CORPORATION
By:/s/ Receivables Capital Corporation
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SELLER:
------
WESTERN GAS RESOURCES, INC.
By: /s/ John C. Walter
-----------------------------------
Name: John C. Walter
--------------------------------
Title: Executive Vice President
--------------------------------
AGENT:
-----
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By: /S/ Mark Wegener
-----------------------------------
Name: Mark Wegener
--------------------------------
Title: Attorney-in-Fact
-------------------------------
4
<PAGE>
EXHIBIT 10.59
EIGHTH AMENDMENT TO THIRD RESTATED LOAN AGREEMENT
(TERM)
THIS EIGHTH AMENDMENT TO THIRD RESTATED LOAN AGREEMENT (TERM) (herein
called the "Amendment") made as of the 16th day of October, 1996, by and among
Western Gas Resources, Inc., a Delaware corporation ("Borrower"), NationsBank of
Texas, N.A., a national banking association, as Agent ("Agent"), and NationsBank
of Texas, N.A., Bankers Trust Company, Bank of Montreal and CIBC Inc. (herein,
collectively referred to as "Lenders"),
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Lenders have entered into that certain Third
Restated Loan Agreement (Term) dated as of August 31, 1993, as amended by that
certain First Amendment to Third Restated Loan Agreement (Term) dated as of
December 31, 1993, that certain Second Amendment to Third Restated Loan
Agreement (Term) dated as of September 2, 1994, that certain Third Amendment to
Third Restated Loan Agreement (Term) dated as of December 2, 1994, that certain
Fourth Amendment to Third Restated Loan Agreement (Term) dated as of February
23, 1995, that certain Fifth Amendment to Third Restated Loan Agreement (Term)
dated as of July 19, 1995, among Borrower, Agent and Lenders, that certain Sixth
Amendment to Third Restated Loan Agreement (Term) dated as of November 29, 1995,
among Borrower, Agent and Lenders, and that certain Seventh Amendment to Third
Restated Loan Agreement (Term) dated as of March 22, 1996, among Borrower, Agent
and Lenders (as amended to the date hereof, the "Original Agreement") for the
purpose and consideration therein expressed, whereby Lenders became obligated to
make and made loans to Borrower as therein provided; and
WHEREAS, Borrower, Agent and Lenders desire to amend the Original Agreement
as expressly set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement and in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I. -- Definitions and References
--------------------------
Section 1.1. Terms Defined in the Original Agreement. Unless the context
---------------------------------------
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise requires,
-------------------
the following terms when used in this Amendment shall have the meanings assigned
to them in this Section 1.2.
<PAGE>
"Amendment" means this Eighth Amendment to Third Restated Loan
---------
Agreement (Term).
"Loan Agreement" shall mean the Original Agreement as amended hereby.
--------------
ARTICLE II. -- Amendments
----------
Section 2.1. Debt to Capitalization Ratio. Section 5.2(m) of the Original
----------------------------
Agreement is hereby amended in its entirety to read as follows:
"(m) Debt to Capitalization Ratio. Borrower's Debt to
----------------------------
Capitalization Ratio will never be greater than (i) 0.60 to 1.0 at any time
until and including December 31, 1996 and (ii) 0.55 to 1.0 at any time
thereafter."
ARTICLE III. -- Conditions of Effectiveness
---------------------------
Section 3.1. Effective Date. This Amendment shall become effective as of
--------------
the date first above written, except as otherwise provided herein, when, and
only when, Agent shall have received, at Agent's office, all of the following:
(a) Amendment. A counterpart of this Amendment executed and
---------
delivered by Borrower and all Lenders.
(b) Officer's Certificate. A certificate of a duly authorized
---------------------
officer of Borrower, dated the date of receipt thereof by Agent, duly
authorized, executed and delivered, and in form and substance satisfactory
to Agent, to the effect that all of the representations and warranties set
forth in Article IV hereof are true and correct at and as of the time of
such effectiveness.
ARTICLE IV. -- Representations and Warranties
------------------------------
Section 4.1. Representations and Warranties of Borrower. In order to
------------------------------------------
induce each Lender to enter into this Amendment, Borrower represents and
warrants to each Lender that:
(a) The representations and warranties contained in each subsection
of Section 5.1 of the Original Agreement are true and correct at and as of
the time of the effectiveness hereof.
(b) Borrower is duly authorized to execute and deliver this
Amendment and is and will continue to be duly authorized to borrow monies
and to perform its obligations under the Loan Agreement. Borrower has duly
taken all corporate action necessary to authorize the execution and
delivery of this Amendment and to authorize the performance of the
obligations of Borrower hereunder.
(c) The execution and delivery by Borrower of this Amendment, the
performance by Borrower of its obligations hereunder and the consummation
of the
<PAGE>
transactions contemplated hereby do not and will not conflict with any
provision of law,statute, rule or regulation or of the certificate of
incorporation and bylaws of Borrower, or of any material agreement,
judgment, license, order or permit applicable to or binding upon Borrower,
or result in the creation of any lien, charge or encumbrance upon any
assets or properties of Borrower. Except for those which have been
obtained, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with the
execution and delivery by Borrower of this Amendment or to consummate the
transactions contemplated hereby.
(d) When duly executed and delivered, each of this Amendment and
the Loan Agreement will be a legal and binding obligation of Borrower,
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or similar laws of general application relating to the
enforcement of creditors' rights and by equitable principles of general
application.
(e) The unaudited quarterly Consolidated financial statements of
Borrower dated as of June 30, 1996 fairly present Borrower's Consolidated
financial position at such date and the Consolidated results of Borrower's
operations and changes in Borrower's Consolidated cash flow for the period
thereof. Copies of such financial statements have heretofore been delivered
to each Lender. Since June 30, 1996, no material adverse change has
occurred in the financial condition or businesses or in the Consolidated
financial condition or businesses of Borrower.
ARTICLE V. -- Miscellaneous
-------------
Section 5.1. Ratification of Agreements. The Original Agreement as hereby
--------------------------
amended and each other Loan Document affected hereby are ratified and confirmed
in all respects. Any reference to the Loan Agreement in any Loan Document shall
be deemed to be a reference to the Original Agreement as hereby amended. The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein or therein, operate as a waiver of any right, power or
remedy of Agent or Lenders under the Loan Agreement, or any other Loan Document
nor constitute a waiver of any provision of the Loan Agreement, or any other
Loan Document.
Section 5.2. Survival of Agreements. All representations, warranties,
----------------------
covenants and agreements of Borrower herein shall survive the execution and
delivery of this Amendment and the performance hereof, including without
limitation the making or granting of the Loans, and shall further survive until
all of the Obligations are paid in full. All statements and agreements
contained in any certificate or instrument delivered by Borrower or any Related
Person hereunder or under the Loan Agreement to any Lender shall be deemed to
constitute representations and warranties by, and/or agreements and covenants
of, Borrower under this Amendment and under the Loan Agreement.
Section 5.3. Loan Documents. This Amendment is a Loan Document, and all
--------------
provisions in the Loan Agreement pertaining to Loan Documents apply hereto.
<PAGE>
Section 5.4. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.
Section 5.5. Counterparts. This Amendment may be separately executed in
------------
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above by their duly authorized officers.
WESTERN GAS RESOURCES, INC.
By: /s/ John C. Walter
-----------------------------------
John C. Walter
Executive Vice President
NATIONSBANK OF TEXAS, N.A.
By:/s/ Malcolm Turner
-----------------------------------
Malcolm Turner
Senior Vice President
BANKERS TRUST COMPANY
By:/s/ Mary Jo Jolly
-----------------------------------
Mary Jo Jolly
Assistant Vice President
BANK OF MONTREAL
By: /s/ Don Skipper
-----------------------------------
Don Skipper
Director
CIBC INC.
By: /s/ Gary C. Gaskill
-----------------------------------
Gary C. Gaskill
Vice President
<PAGE>
CONFIRMATION, ACKNOWLEDGEMENT AND CONSENT OF GUARANTORS
Each of the undersigned (collectively "Guarantors") hereby (i) acknowledges
and consents to the foregoing Eighth Amendment to Third Restated Loan Agreement
(Term) of even date herewith by and among Western Gas Resources, Inc.,
NationsBank of Texas, N.A., as Agent ("Agent"), Bankers Trust Company, Bank of
Montreal, and CIBC Inc.; (ii) confirms the Restated Guaranty dated as of
September 2, 1994 executed by such Guarantor in favor of Agent and the Lenders
pursuant to the Original Agreement; and (iii) agrees that each of such
Guarantor's obligations and covenants with respect to such Restated Guaranty
shall remain in full force and effect after the execution of such Amendment.
William J. Krysiak, Vice President-Finance of Western Gas Resources
Oklahoma, Inc., Western Gas Resources Texas, Inc., Western Gas Resources
Storage, Inc., Mountain Gas Resources, Inc., MGTC, Inc. and MIGC, Inc., is
executing this Confirmation, Acknowledgment and Consent of Guarantors in his
capacity of officer of each such corporation.
Dated as of the 16th day of October, 1996.
WESTERN GAS RESOURCES OKLAHOMA, INC.
WESTERN GAS RESOURCES TEXAS, INC.
WESTERN GAS RESOURCES STORAGE, INC.
MOUNTAIN GAS RESOURCES, INC.
MGTC, INC.
MIGC, INC.
By: /s/ William J. Krysiak
----------------------------------------------
William J. Krysiak, Vice President-Finance
<PAGE>
EXHIBIT 10.60
SIXTH AMENDMENT TO FIRST RESTATED LOAN
AGREEMENT (REVOLVER)
THIS SIXTH AMENDMENT TO FIRST RESTATED LOAN AGREEMENT (REVOLVER) (herein
called the "Amendment") made as of the 16th day of October, 1996, by and among
Western Gas Resources, Inc., a Delaware corporation ("Borrower"), NationsBank of
Texas, N.A., a national banking association, as Agent ("Agent"), and NationsBank
of Texas, N.A., Bank of Montreal, CIBC Inc., Societe Generale, Southwest Agency,
The First National Bank of Boston, Colorado National Bank, Bank of America
National Trust and Savings Association and Credit Lyonnais Cayman Island Branch,
(herein, collectively referred to as "Lenders").
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Lenders have entered into that certain First
Restated Loan Agreement (Revolver) dated as of September 2, 1994, as amended by
that certain First Amendment to First Restated Loan Agreement (Revolver) dated
as of December 2, 1994, that certain Second Amendment to First Restated Loan
Agreement (Revolver) dated as of February 23, 1995, that certain Third Amendment
to First Restated Loan Agreement (Revolver) dated as of July 19, 1995, that
certain Fourth Amendment to First Restated Loan Agreement (Revolver) dated as of
November 29, 1995, and that certain Fifth Amendment to First Restated Loan
Agreement (Revolver) dated as of March 22, 1996 (as amended to the date hereof,
the "Original Agreement") for the purpose and consideration therein expressed,
whereby Lenders became obligated to make and made loans to Borrower as therein
provided; and
WHEREAS, Borrower, Agent and Lenders desire to amend the Original Agreement
as expressly set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement and in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I. -- Definitions and References
--------------------------
Section 1.1. Terms Defined in the Original Agreement. Unless the context
---------------------------------------
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
-------------------
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.
1
<PAGE>
"Amendment" means this Sixth Amendment to First Restated Loan
---------
Agreement (Revolver).
"Loan Agreement" shall mean the Original Agreement as amended
--------------
hereby.
ARTICLE II. -- Amendments
----------
Section 2.1. Debt to Capitalization Ratio. Section 6.2(m) of the
----------------------------
Original Agreement is hereby amended in its entirety to read as follows:
"(m) Debt to Capitalization Ratio. Borrower's Debt to
----------------------------
Capitalization Ratio will never be greater than (i) 0.60 to 1.0 at any
time until and including December 31, 1996 and (ii) 0.55 to 1.0 at any
time thereafter."
ARTICLE III. -- Conditions of Effectiveness
---------------------------
Section 3.1. Effective Date. This Amendment shall become effective
--------------
as of the date first above written, except as otherwise provided herein, when,
and only when, Agent shall have received, at Agent's office, all of the
following:
(a) Amendment. A counterpart of this Amendment executed and
---------
delivered by Borrower and all Lenders.
(b) Officer's Certificate. A certificate of a duly
---------------------
authorized officer of Borrower, dated the date of receipt thereof by
Agent, duly authorized, executed and delivered, and in form and
substance satisfactory to Agent, to the effect that all of the
representations and warranties set forth in Article IV hereof are true
and correct at and as of the time of such effectiveness.
ARTICLE IV. -- Representations and Warranties
------------------------------
Section 4.1. Representations and Warranties of Borrower. In order to
------------------------------------------
induce each Lender to enter into this Amendment, Borrower represents and
warrants to each Lender that:
(a) The representations and warranties contained in each
subsection of Section 5.1 of the Original Agreement are true and
correct at and as of the time of the effectiveness hereof.
(b) Borrower is duly authorized to execute and deliver this
Amendment and is and will continue to be duly authorized to borrow
monies and to perform its obligations under the Loan Agreement.
Borrower has duly taken all corporate action necessary to authorize
the execution and delivery of this Amendment and to authorize the
performance of the obligations of Borrower hereunder.
2
<PAGE>
(c) The execution and delivery by Borrower of this Amendment,
the performance by Borrower of its obligations hereunder and the
consummation of the transactions contemplated hereby do not and will
not conflict with any provision of law, statute, rule or regulation or
of the certificate of incorporation and bylaws of Borrower, or of any
material agreement, judgment, license, order or permit applicable to
or binding upon Borrower, or result in the creation of any lien,
charge or encumbrance upon any assets or properties of Borrower.
Except for those which have been obtained, no consent, approval,
authorization or order of any court or governmental authority or third
party is required in connection with the execution and delivery by
Borrower of this Amendment or to consummate the transactions
contemplated hereby.
(d) When duly executed and delivered, each of this Amendment
and the Loan Agreement will be a legal and binding obligation of
Borrower, enforceable in accordance with its terms, except as limited
by bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors' rights and by equitable
principles of general application.
(e) The unaudited quarterly Consolidated financial statements
of Borrower dated as of June 30, 1996 fairly present Borrower's
Consolidated financial position at such date and the Consolidated
results of Borrower's operations and changes in Borrower's
Consolidated cash flow for the period thereof. Copies of such
financial statements have heretofore been delivered to each Lender.
Since June 30, 1996, no material adverse change has occurred in the
financial condition or businesses or in the Consolidated financial
condition or businesses of Borrower.
ARTICLE V. -- Miscellaneous
-------------
Section 5.1. Ratification of Agreements. The Original Agreement as
--------------------------
hereby amended and each other Loan Document affected hereby are ratified and
confirmed in all respects. Any reference to the Loan Agreement in any Loan
Document shall be deemed to be a reference to the Original Agreement as hereby
amended. The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein or therein, operate as a waiver of any
right, power or remedy of Agent or Lenders under the Loan Agreement, or any
other Loan Document nor constitute a waiver of any provision of the Loan
Agreement, or any other Loan Document.
Section 5.2. Survival of Agreements. All representations,
----------------------
warranties, covenants and agreements of Borrower herein shall survive the
execution and delivery of this Amendment and the performance hereof, including
without limitation the making or granting of the Loans, and shall further
survive until all of the Obligations are paid in full. All statements and
agreements contained in any certificate or instrument delivered by Borrower or
any Related Person hereunder or under the Loan Agreement to any Lender shall be
deemed to constitute representations and warranties by, and/or agreements and
covenants of, Borrower under this Amendment and under the Loan Agreement.
3
<PAGE>
Section 5.3. Loan Documents. This Amendment is a Loan Document, and
--------------
all provisions in the Loan Agreement pertaining to Loan Documents apply hereto.
Section 5.4. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.
Section 5.5. Counterparts. This Amendment may be separately executed
------------
in counterparts and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to constitute one and the same
Amendment.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first written above by their duly authorized
officers.
WESTERN GAS RESOURCES, INC.
By: /s/ John C. Walter
-------------------------------
John C. Walter
Executive Vice President
NATIONSBANK OF TEXAS, N.A.,
as Agent, Issuing Bank and Lender
By: /s/ Malcolm Turner
--------------------------------
Malcolm Turner
Senior Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Gary M. Tsuyuki
------------------------------
Gary M. Tsuyuki
Vice President
BANK OF MONTREAL
By: /s/ Don Skipper
--------------------------------
Don Skipper
Director
5
<PAGE>
THE FIRST NATIONAL BANK
OF BOSTON
By: /s/ Michael Kane
--------------------------------
Michael Kane
Managing Director
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By: /s/ Pascal Poupelle
--------------------------------
Pascal Poupelle
Senior Vice President
CIBC INC.
By: /s/ Gary C. Gaskill
--------------------------------
Gary C. Gaskill
Vice President
COLORADO NATIONAL BANK
By: /s/ Kathryn S. Gaiter
--------------------------------
Kathryn S. Gaiter
Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ Richard A. Erbert
--------------------------------
Richard A. Erbert
Vice President
6
<PAGE>
CONFIRMATION, ACKNOWLEDGEMENT AND CONSENT OF GUARANTORS
Each of the undersigned (collectively "Guarantors") hereby (i) acknowledges
and consents to the foregoing Sixth Amendment to First Restated Loan Agreement
(Revolver) of even date herewith by and among Western Gas Resources, Inc.,
NationsBank of Texas, N.A., as Agent ("Agent"), Bank of Montreal, CIBC Inc.,
Societe Generale, Southwest Agency, The First National Bank of Boston, Colorado
National Bank, Bank of America National Trust and Savings Association and Credit
Lyonnais Cayman Island Branch; (ii) confirms the Restated Guaranty dated as of
September 2, 1994 executed by such Guarantor in favor of Agent and the Lenders
pursuant to the Original Agreement; and (iii) agrees that each of such
Guarantor's obligations and covenants with respect to such Restated Guaranty
shall remain in full force and effect after the execution of such Amendment.
William J. Krysiak, Vice President-Finance of Western Gas Resources
Oklahoma, Inc., Western Gas Resources Texas, Inc., Western Gas Resources
Storage, Inc., Mountain Gas Resources, Inc., MGTC, Inc. and MIGC, Inc., is
executing this Confirmation, Acknowledgment and Consent of Guarantors in his
capacity of officer of each such corporation.
Dated as of the 16th day of October, 1996.
WESTERN GAS RESOURCES OKLAHOMA, INC.
WESTERN GAS RESOURCES TEXAS, INC.
WESTERN GAS RESOURCES STORAGE, INC.
MOUNTAIN GAS RESOURCES, INC.
MGTC, INC.
MIGC, INC.
By: /s/ William J. Krysiak
----------------------------------------
William J. Krysiak, Vice President-Finance
7
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ENGINEERS
Williamson Petroleum Consultants, Inc. (Williamson) hereby consents to the
reference to Williamson and our report entitled "Evaluation of Oil and Gas
Reserves to the Interests of Western Gas Resources, Inc. in the Black Lake
Field, Natchitoches Parish, Louisiana, Effective June 30, 1996, for Disclosure
to the Securities and Exchange Commission, Williamson Project 6.8418" in the
Western Gas Resources, Inc. Form 10-Q for the quarterly report ended September
30, 1996 to be filed on November 8, 1996.
WILLIAMSON PETROLEUM CONSULTANTS, INC.
Houston, Texas
November 7, 1996
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