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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 Date of Report (Date
of earliest event reported): May 2, 1996
SNYDER OIL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-10509 75-2306158
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
777 Main Street
Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 338-4043
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
As announced on May 2, 1996, the merger (the "Merger") of Gerrity Oil &
Gas Corporation ("Gerrity") into a wholly-owned subsidiary of Patina Oil & Gas
Corporation ("Patina") occurred on May 2, 1996 following approval of the Merger
by Gerrity's common shareholders. As a result of the Merger, Gerrity became a
wholly-owned subsidiary of Patina. Simultaneously with the Merger, Snyder Oil
Corporation ("SOCO") contributed all its assets and operations, subject to
certain limitations, in the Wattenberg Field of Colorado ("Wattenberg") to
Patina (the "Contribution"). In connection with the Contribution, Patina assumed
$75 million of bank debt from SOCO.
With the closing of the transaction, Patina holds interests in over
3,600 Wattenberg wells. As of December 31, 1995, Patina has net proved reserves
of 82 million barrels of oil equivalent ("BOE"), over two-thirds of which were
natural gas. Patina's production currently exceeds 20,000 BOE per day.
SOCO owns an aggregate of 14,000,000 shares of common stock of Patina,
of which 12,000,000 are common stock, par value $.01 per share ("Patina Common
Stock"), and 2,000,000 shares are Series A Common Stock. The Series A Common
Stock is a special series of common stock of Patina having three votes per
share, and will convert automatically into ordinary Patina Common Stock (i.e.,
shares with one vote per share) upon transfer of those shares by SOCO to a
non-affiliate or if Patina ceases to be included in the consolidated financial
statements of SOCO. Thus, SOCO owns 70% of the outstanding shares of the common
stock of Patina and holds 75% of the voting power of Patina's common stock.
Pursuant to the terms of the Merger, the shares of common stock of
Gerrity issued and outstanding immediately prior to the effective time of the
Merger were converted into an aggregate of 6,000,000 shares of Patina Common
Stock and 3,000,000 five-year warrants initially to purchase one share of Patina
Common Stock at an exercise price of $12.50 per share (the "Patina Warrants").
In addition, pursuant to an exchange offer, approximately 75% of the
depositary shares representing Gerrity's $12 convertible preferred stock were
accepted by Patina for exchange into approximately 1.2 million shares of
Patina's 7 1/8% convertible preferred stock (the "Patina Preferred Stock"). The
Patina Preferred Stock has a liquidation preference of $25.00 per share, pays
quarterly dividends at the rate of 7 1/8% per year and is convertible into
Patina Common Stock at a conversion price of $12.30, which conversion price is
subject to downward adjustment after the Merger to equal 123% of the average
closing price of the Patina Common stock for the ten trading days immediately
following the 60th day after the Merger, subject to a minimum conversion price
of $8.61.
Patina also issued a five-year warrant for 500,000 shares of Patina
Common Stock, at a price equal to the average closing price during the 10-day
period following the Merger, to Robert W. Gerrity, who resigned as an officer
and director of Gerrity in connection with the transaction.
Patina's long-term debt, after all transaction costs, is expected to
approximate $215 initially. Patina has entered into a $240 million credit
facility. The facility will be used to refinance debt to be assumed in the
transaction, including approximately $100 million of bank debt assumed from SOCO
<PAGE>
and Gerrity and up to $100 million of Gerrity's senior subordinated notes if the
holders exercise their right to put the notes to Gerrity. $87 million of the
facility may be used only to repurchase Gerrity's senior subordinated notes. The
balance of the facility will be available for working capital.
Because Patina will be consolidated with SOCO for accounting but not
tax purposes, SOCO believes it will be required to recognize a one time non-cash
charge in the second quarter of approximately $25 to $28 million of deferred tax
expense related to the Merger.
The Amended and Restated Agreement and Plan of Merger dated as of
January 16, 1996 as amended and restated as of March 20, 1996 (the "Merger
Agreement"), which was negotiated between representatives of SOCO and Gerrity,
provides that any contracts or transactions (other than transactions
contemplated by the Merger Agreement) involving Patina or any of its
subsidiaries in which SOCO or any of its subsidiaries has any interest (other
than an interest solely as a stockholder of Patina) shall be approved by either
(a) a majority of the disinterested directors of Patina or (b) a majority of any
committee established by the Patina Board of Directors that consists solely of
directors that are disinterested. In addition, in accordance with the Merger
Agreement, SOCO and Patina have entered into certain agreements, including a
Business Opportunity Agreement, Corporate Services Agreement,
Cross-Indemnification Agreement and Registration Rights Agreement, that will
govern the relationship between SOCO and Patina following the Merger.
The descriptions of the Merger Agreement, Business Opportunity
Agreement, Corporate Services Agreement, Cross-Indemnification Agreement and
Registration Rights Agreement included in this Report are summaries and are
qualified in their entirety by the respective terms of such agreements, which
are filed as exhibits to this Report and are incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The following financial statements of Gerrity Oil & Gas Corporation are
hereby incorporated by reference from the Amendment No. 2 to the Registration
Statement on Form S-4 of Patina Oil & Gas Corporation (Registration No.
333-572):
(i) Report of Independent Public Accountants
(ii) Report of Independent Accountants
(iii) Consolidated Balance Sheets as of December 31, 1994 and 1995
(iv) Consolidated Statements of Operations for the Years Ended
December 31, 1993, 1994 and 1995
(v) Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 1993, 1994 and 1995
<PAGE>
(vi) Consolidated Statements of Cash Flows for the Years Ended
December 31, 1993, 1994 and 1995
(vii) Notes to Consolidated Financial Statements
The following financial statements of Gerrity Oil & Gas Corporation are
hereby incorporated by reference from the Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996 of Gerrity Oil & Gas Corporation
(Commission file number 0-18667):
(i) Consolidated Balance Sheet as of March 31, 1996
(ii) Consolidated Statements of Operations for the Three Months Ended
March 31, 1995 and 1996
(iii) Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1995 and 1996
(iv) Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial
statements of SOCO are hereby incorporated by reference from Exhibit 99.1 filed
herewith:
(i) Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1996
(ii) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Year ended December 31, 1995
(iii) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Three Months ended March 31, 1996
(iv) Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements
(c) Exhibits.
---------
2.1 Amended and Restated Agreement and Plan of Merger dated as of
January 16, 1996 as amended and restated as of March 20, 1996 --
incorporated by reference to Exhibit 2.1 to Amendment No. 1 to
the Registration Statement on Form S-4 of Patina Oil & Gas
Corporation Registration No. 333-572)
<PAGE>
2.2 Business Opportunity Agreement -- incorporated by reference to
Exhibit 2.2 to the Current Report on Form 8-K dated May 17, 1996
of Patina Oil & Gas Corporation (Commission File No. 1-14344)
2.3 Corporate Services Agreement -- incorporated by reference to
Exhibit 2.3 to the Registration Statement on Form S-4 of Patina
Oil & Gas Corporation (Registration No. 333-572)
2.4 Registration Rights Agreement -- incorporated by reference to
Exhibit 2.4 to the Current Report on Form 8-K dated May 17, 1996
of Patina Oil & Gas Corporation (Commission File No. 1-14344)
2.5 Cross Indemnification Agreement -- incorporated by reference to
Exhibit 2.5 to the Current Report on Form 8-K dated May 17, 1996
of Patina Oil & Gas Corporation (Commission File No. 1-14344)
99.1 Unaudited Pro Forma Condensed Consolidated Financial Statements
of SOCO
99.2 Audited Consolidated Financial Statements of Gerrity Oil & Gas
Corporation as of December 31, 1994 and 1995 and for the years
ended December 31, 1993, 1994 and 1995 -- incorporated by
reference to Amendment No. 2 to the Registration Statement on
Form S-4 of Patina Oil & Gas Corporation (Registration No.
333-572)
99.3 Unaudited Consolidated Financial Statements of Gerrity Oil & Gas
Corporation as of March 31, 1996 and for the three months ended
March 31, 1995 and 1996 -- incorporated by reference to the
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996 of Gerrity Oil & Gas Corporation (Commission File
No. 0-18667)
<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.
SNYDER OIL CORPORATION
By: /s/Peter E. Lorenzen
----------------------
Peter E. Lorenzen
Vice President
May 17, 1996
<PAGE>
Exhibit 99.1
PRO FORMA FINANCIAL INFORMATION OF
SNYDER OIL CORPORATION
The unaudited pro forma condensed consolidated financial statements set
forth the financial position of the Company as of March 31, 1996, and the
results of operations for the three months ended March 31, 1996, and the year
ended December 31, 1995, adjusted for certain significant transactions discussed
below. The pro forma financial statements are based upon the assumptions set
forth in the accompanying notes to such statements. The pro forma adjustments
are based upon available information and assumptions that management believes
are reasonable under the circumstances.
The pro forma financial statements comprise historical financial data that
have been retroactively adjusted or combined to reflect the effect of the
transactions discussed below on the historical financial statements of the
Company. The pro forma condensed consolidated balance sheet at March 31, 1996,
and the related pro forma condensed consolidated statement of operations for the
three months then ended and the year ended December 31, 1995, were prepared as
if the transactions were consummated on March 31, 1996, January 1, 1996, and
January 1, 1995, respectively. The pro forma financial statements should be read
in conjunction with the related historical financial statements and are not
necessarily indicative of the results that would have actually occurred had the
transactions been consummated on the dates or for the periods indicated or the
results which may occur in the future.
Pro Forma Divested Interests:
During 1995, the Company sold the majority of its Wattenberg gas
facilities in two separate transactions and sold certain oil and gas properties
in West Texas for a total of approximately $96.3 million. In May 1996, the
Company sold a 45% interest in the Company's Piceance Project for $22 million
and a joint venture to further develop the properties was agreed upon. These
transactions have been reflected in the accompanying unaudited pro forma
condensed consolidated financial statements as "pro forma divested interests."
Pro Forma Acquired Interests:
Between September and December 1995, the Company consummated several
transactions in which 18,220 additional common shares of DelMar Petroleum, Inc.
("DelMar") were acquired (raising the Company's interest from approximately 50%
to 65%) primarily in exchange for the Company's common stock. The Company also
purchased additional interests in oil and gas properties operated by DelMar,
again primarily in exchange for the Company's common stock. In total, the
Company issued 1,083,271 shares of common stock at an average price of $12.03
per share. These transactions have been reflected in the accompanying unaudited
pro forma condensed consolidated financial statements as "pro forma acquired
interests."
Pro Forma GOG Acquisition:
On May 2, 1996, SOCO consolidated (the "Merger") its Wattenberg operations
with Gerrity Oil & Gas Corporation ("GOG"). As a result, SOCO will own 70% of
the common stock and the former GOG shareholders will own 30% of the common
stock of a new public company which will be known as Patina Oil & Gas
Corporation. The Merger will be accounted for by the Company as a purchase of
GOG. The Merger has been reflected in the accompanying unaudited pro forma
condensed consolidated financial statements as "pro forma GOG acquisition."
<PAGE>
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1996
(In thousands)
<CAPTION>
Pro Forma Pro Forma GOG Acquisition
Divested Interests ---------------------------------------
------------------------ GOG
Historical Adjustments Combined(1) Historical Adjustments Combined(2)
---------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets $ 87,924 $ $ 87,924 $ 15,308 $ 103,232
Investments 34,119 34,119 - 34,119
Oil and gas properties, net 431,285 (17,400)(a) 413,885 293,630 (64,417)(b) 623,033
(20,065)(d)
Gas processing and transportation
facilities, net 18,362 (2,800)(a) 15,562 - 15,562
Other assets, net - - 6,480 (730)(b) 5,750
---------- ---------- ----------- ----------
$ 571,690 $ 551,490 $ 315,418 $ 781,696
========== ========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 78,707 $ 78,707 $ 18,689 (7,604)(c) $ 89,792
Long-term debt 240,161 (22,000)(a) 218,161 117,500 15,884 (b) 359,149
7,604 (c)
Other noncurrent liabilities 13,947 13,947 19,058 (9,465)(b) 23,540
Minority interest 3,951 3,951 - 88,605 (b) 92,556
Stockholders' equity
Preferred stock, $.01 par value 10 10 4 (4)(b) 10
Common stock, $.01 par value 316 316 138 (138)(b) 316
Capital in excess of par value 264,645 264,645 160,524 (160,524)(b) 264,645
Retained earnings (deficit) (28,777) 1,800 (a) (26,977) (495) 495 (b) (47,042)
(20,065)(d)
Common stock held in treasury (2,715) (2,715) - (2,715)
Foreign currency translation adjustment 1,212 1,212 - 1,212
Unrealized gain (loss) on investments 233 233 - 233
---------- ---------- ---------- ----------
Total stockholders' equity 234,924 236,724 160,171 216,659
---------- ---------- ---------- ----------
$ 571,690 $ 551,490 $ 315,418 $ 781,696
========== ========== ========== ==========
<FN>
(1) Combined represents historical plus pro forma divested interests.
(2) Combined represents historical plus pro forma divested interests plus pro forma GOG acquisition.
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1996
(In thousands except per share data)
<CAPTION>
Pro Forma GOG Acquisition
Pro Forma Divested Interests ------------------------------------
---------------------------- GOG
Historical Adjustments Combined(1) Historical Adjustments Combined(2)
---------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Oil and gas sales $ 36,122 $ (529)(e) $ 35,593 $ 12,154 $ 47,747
Gas processing, transportation
and marketing 4,451 (129)(e) 4,322 - 4,322
Gains on sales of properties (20) (20) - (20)
Other 1,166 1,166 313 1,479
--------- --------- --------- ---------
41,719 41,061 12,467 53,528
--------- --------- --------- ---------
Expenses
Direct operating 10,759 (197)(e) 10,562 2,030 (125)(i) 12,861
394 (j)
Cost of gas and transportation 3,696 (52)(e) 3,644 - 3,644
Exploration 514 514 59 573
General and administrative 3,868 3,868 1,678 (964)(i) 4,188
(394)(j)
Interest and other 4,293 (358)(e) 3,935 3,408 (166)(k) 7,177
Litigation settlement - - - -
Depletion, depreciation
and amortization 16,771 (407)(f) 16,364 6,677 (1,123)(f) 21,918
--------- --------- --------- ---------
39,901 38,887 13,852 50,361
--------- --------- --------- ---------
Income (loss) before taxes and
minority interest 1,818 2,174 (1,385) 3,167
Provision for (benefit from)
income taxes (310) (310) (470) 423 (l) (357)
Minority interest (351) (351) - (573)(m) (924)
--------- --------- --------- ---------
Net income (loss) 1,777 2,133 (915) 2,600
Dividends on preferred stock 1,553 1,553 1,139 (1,139)(m) 1,553
--------- --------- --------- ---------
Net income (loss) applicable
to common shares $ 224 $ 580 $ (2,054) $ 1,047
========= ========= ========= =========
Net income per common
share $ .01 $ .02 $ .03
=========== ========== =========
Weighted average shares
outstanding 31,302 31,302 31,302
=========== ========== =========
<FN>
(1) Combined represents historical plus pro forma divested interests.
(2) Combined represents historical plus pro forma divested interests plus pro forma GOG acquisition.
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(In thousands except per share data)
<CAPTION>
Pro Forma Pro Forma Pro Forma GOG Acquisition
Divested Interests Acquired Interests ------------------------------------
------------------------ ------------------------ GOG
Historical Adjustments Combined(1) Adjustments Combined(2) Historical Adjustments Combined(3)
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Oil and gas sales $ 144,608 $ (6,449)(e) $ 138,159 $ 4,258(g) $ 142,417 $ 51,513 $ 193,930
Gas processing, transportation
and marketing 38,256 (23,463)(e) 14,793 14,793 - 14,793
Gains on sales of properties 12,254 (8,730)(e) 3,524 3,524 - 3,524
Other 7,042 7,042 7,042 2,347 9,389
--------- --------- --------- --------- ---------
202,160 163,518 167,776 53,860 221,636
--------- --------- --------- --------- ---------
Expenses
Direct operating 52,486 (3,528)(e) 48,958 903(g) 49,861 8,366 (500)(i) 59,302
1,575 (j)
Cost of gas and transportation 29,374 19,514)(e) 9,860 9,860 - 9,860
Exploration 8,033 (265)(e) 7,768 7,768 285 8,053
General and administrative 17,680 (1,622)(e) 16,058 16,058 7,731 (4,705)(i) 17,509
(1,575)(j)
Interest and other 27,001 (6,321)(e) 20,680 20,680 15,333 (1,877)(k) 34,136
Litigation settlement 4,400 4,400 4,400 - 4,400
Depletion, depreciation
and amortization 103,790 (8,880)(f) 94,910 1,975(g) 96,885 30,333 (7,054)(f) 120,164
--------- --------- --------- -------- ---------
242,764 202,634 205,512 62,048 253,424
--------- --------- --------- -------- ---------
Income (loss) before taxes and
minority interest (40,604) (39,116) (37,736) (8,188) (31,788)
Provision for (benefit from)
income taxes (1,345) (1,345) (1,345) (215) 879 (l) (681)
Minority interest (572) (572) 125(h) (447) - (2,763)(m) (3,210)
--------- --------- --------- -------- ---------
Net income (loss) (39,831) (38,343) (36,838) (7,973) (34,317)
Dividends on preferred stock 6,210 6,210 6,210 4,554 (4,554)(m) 6,210
--------- --------- --------- -------- ---------
Net income (loss) applicable
to common shares $ (46,041) $ (44,553) $ (43,048) $ (12,527) $ (40,527)
========= ========= ========= ========= =========
Net income (loss) per
common share $ (1.53) $ (1.48) $ (1.38) $ (1.30)
========= ========= ========= =========
Weighted average shares
outstanding 30,186 30,186 31,269 31,269
========= ========= ========= =========
<FN>
(1) Combined represents historical plus pro forma divested interests.
(2) Combined represents historical plus pro forma divested interests plus pro forma acquired interests.
(3) Combined represents historical plus pro forma divested interests plus pro forma acquired interests
plus pro forma GOG acquisition.
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated financial statements reflect the
adjustments described below:
BALANCE SHEET
(a) To reflect the sale of a 45% interest in the Company's Piceance Project
with proceeds being used to reduce long-term debt.
(b) To reflect the acquisition of GOG, including the elimination of GOG's
capital stock and retained earnings and the recognition of minority
interests.
(c) To reflect the refinancing of certain current liabilities under Patina's
bank credit facility.
(d) To reflect the excess of fair market value received over the historical
value of minority interest sold of approximately $4.7 million and related
non-cash tax effects of approximately $24.8 million recognized as a result
of the Merger.
STATEMENTS OF OPERATIONS
Certain items have been excluded in the accompanying pro forma condensed
consolidated statements of operations due to their non-recurring nature. These
items are adjustments to reflect the excess of fair market value received over
the historical value of minority interest sold of approximately $4.7 million and
related non-cash tax effects of approximately $24.8 million recognized as a
result of the Merger.
(e) To reflect the revenue and expense items attributable to the divested
interests.
(f) To adjust depletion, depreciation and amortization to the amount which
would have been provided.
(g) To reflect the revenue, direct operating expenses and depletion,
depreciation and amortization attributable to the acquired interest.
(h) To reflect the earnings attributable to the purchase of additional common
shares of a consolidated subsidiary.
(i) To reflect the reduction in direct operating and general and administrative
expenses that result from the elimination of redundant personnel, lease
space and other corporate services.
(j) To conform the financial statement presentation by GOG of various overhead
charges and recoveries on a basis consistent with that of SOCO.
(k) To adjust interest expense to reflect the refinancing or payment of $33.3
million of GOG's 11.75% Senior Subordinated Notes and certain other
obligations. Under the terms of GOG's Senior Subordinated Notes, GOG is
obligated to purchase any Notes put to GOG at a price of 101% of the
principal amount thereof upon certain asset sales or dispositions. For each
$10 million change in the amount of Notes refinanced, pro forma interest
expense and income from continuing operations would change by $119,000 and
$77,000 for the three months ended March 31, 1996 and by $475,000 and
$308,000 for the year ended December 31, 1995, respectively.
(l) To record the estimated consolidated provision for income taxes to reflect
the anticipated effective income tax rates of both the Company and its
subsidiary which will be consolidated for financial reporting purposes but
not for tax purposes.
(m) To reflect minority interests of Patina's (formerly GOG's) minority
shareholders.
<PAGE>
