<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - DECEMBER 15, 1997
(DATE OF EARLIEST EVENT REPORTED)
HS RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NO. 0-18886
<TABLE>
<S> <C>
DELAWARE 94-303-6864
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
ONE MARITIME PLAZA, 15TH FLOOR, SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 433-5795
<PAGE> 2
FORM 8-K
HS RESOURCES, INC.
This report amends the Company's Current Report dated December 15,
1997, and filed December 23, 1997, by adding the financial statements, pro
forma financial information, and exhibits set forth in Item 7 below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
INDEX TO STATEMENTS OF REVENUES AND
DIRECT OPERATING EXPENSES
AMOCO PROPERTIES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants......................................................... 3
Statements of Revenues and Direct Operating
Expenses for the Amoco Properties.............................................................. 4
Notes to Statements of Revenues and Direct
Operating Expenses for the Amoco Properties.................................................... 5
</TABLE>
2
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To HS Resources, Inc.:
We have audited the accompanying statements of revenues and direct
operating expenses for the oil and gas properties acquired from Amoco Production
Company (the "Amoco Properties") for the nine months ended September 30, 1997
and the year ended December 31, 1996. These statements are the responsibility of
HS Resources, Inc.'s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The statements of revenue and direct operating expenses for the Amoco
Properties were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission as described in Note 1,
and are not intended to be a complete presentation of revenues and expenses.
In our opinion, the statements referred to above present fairly, in all
material respects, the revenues and direct operating expenses for the Amoco
Properties for the nine months ended September 30, 1997 and the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado
January 14, 1998
3
<PAGE> 4
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE AMOCO PROPERTIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1997 1996
--------- ---------
<S> <C> <C>
Oil and Gas Revenues $ 32,612 $ 38,024
--------- ---------
Production Taxes 2,283 2,624
Lease Operating Expenses 3,250 4,447
--------- ---------
Total Direct Operating Expenses 5,533 7,071
--------- ---------
Revenues in Excess of Direct Operating Expenses $ 27,079 $ 30,953
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE AMOCO ACQUISITION
1. BASIS OF PRESENTATION
On December 15, 1997, HS Resources, Inc. (the "Company") acquired from
Amoco Production Company ("Amoco"), a wholly owned subsidiary of Amoco
Corporation, Amoco's producing and non-producing properties located in the
Wattenberg Field area of the Denver-Julesburg Basin of the Rocky Mountains. The
transaction closed on December 15, 1997, and was effective December 1, 1997.
The accompanying statements of revenues and direct operating expenses
were derived from the historical accounting records of the acquired properties.
The statements do not include depreciation, depletion and amortization, general
and administrative, income tax or interest expenses as these costs may not be
comparable to the expenses expected to be incurred.
2. SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)
Supplemental oil and gas reserve information related to the Amoco
Acquisition is reported in compliance with FASB Statement No. 69, "Disclosures
about Oil and Gas Producing Activities." Net proved oil and gas reserves and the
discounted future net cash flows related to those reserves were estimated by the
Company's petroleum engineers as of December 31, 1997. Information presented in
that report was the basis for the net proved oil and gas reserve and
5
<PAGE> 6
standardized measure disclosures presented below. Since reserve evaluations for
the periods ending September 30, 1997, and December 31, 1996, had not been
prepared, it was necessary to make certain assumptions and adjustments to
prepare the following disclosures for such periods. However, the Company
believes that the disclosures presented are adequate and are not misleading.
The following tables set forth information for the nine months ended
September 30, 1997 and the year ended December 31, 1996, with respect to changes
in the proved reserves for the Amoco Acquisition. Quantities of natural gas are
expressed in this report in terms of thousand cubic feet (Mcf). Oil is
quantified in terms of barrels (Bbls).
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1997 1996
---------------------- ----------------------
Oil Gas Oil Gas
Bbls Mcf Bbls Mcf
-------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C>
Total proved reserves:
Beginning of year 14,810 336,679 15,471 353,191
Production (433) (12,948) (661) (16,512)
Revisions of previous estimates 585 12,548 --- ---
Extensions, discoveries and other additions --- --- --- ---
Purchases of reserves in place --- --- --- ---
Sales of reserves in place --- --- --- ---
------ ------- ------ -------
End of year 14,962 336,279 14,810 336,679
====== ======= ====== =======
</TABLE>
At September 30, 1997 and December 31, 1996, proved developed reserves
were estimated to be 5,854 and 5,660, respectively, barrels of oil and 196,169
and 195,624, respectively, Mcf of gas.
6
<PAGE> 7
Information with respect to the estimated discounted future net cash
flows for the Amoco Acquisition for the nine months ended September 30, 1997 and
the year ended December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1997 1996
----------------- ------------
(In Thousands)
<S> <C> <C>
Future cash inflows $ 1,035,901 $ 1,674,449
Future production costs (216,242) (282,820)
Future development costs (193,916) (193,916)
----------- -----------
Undiscounted future pre-tax cashflows 625,743 1,197,713
Undiscounted future income tax expense (152,594) (343,011)
----------- -----------
Undiscounted future pre-tax cash flows, net of future income taxes 473,149 854,702
10% discount factor (262,342) (498,291)
----------- -----------
Standardized measure of discounted future net cash flows $ 210,807 $ 356,411
=========== ===========
</TABLE>
As of September 30, 1997 and December 31, 1996, the oil and gas prices
used in the determination of future cash flows were $15.82 and $24.55 and $2.38
and $3.89, per barrel and per Mcf, respectively.
Principal changes in the estimated discounted future net cash flows for
the Amoco Acquisition for the nine months ended September 30, 1997 and the year
ended December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1997 1996
----------------- ------------
(In Thousands)
<S> <C> <C>
Beginning of year $ 356,411 $ 379,594
Sales and transfers of oil and gas produced, net of production costs (27,079) (30,953)
Sale of reserves in place, net --- ---
Net change in prices and production costs (241,469) ---
Extensions and discoveries less related costs --- ---
Change in future development costs --- ---
Revision of previous quantity estimates 12,959 ---
Purchase of reserves in place, net --- ---
Accretion of discount 50,238 51,874
Net change in income taxes 84,310 (6,821)
Changes in production rates and other (24,563) (37,283)
--------- ---------
End of year $ 210,807 $ 356,411
========= =========
</TABLE>
(b) Pro Forma Financial Information
INDEX TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1997 ......................
Pro Forma Condensed Consolidated Statement of Operations for the Nine
Months Ended September 30, 1997 .........................................................
Notes to Pro Forma Condensed Consolidated Financial Statements ...............................
Supplemental Pro Forma Consolidated Oil and Gas Reserve Information ..........................
Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1996 .......................
Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended December 31, 1996 ............................................................
Notes to Pro Forma Condensed Consolidated Financial Statements ...............................
Supplemental Pro Forma Consolidated Oil and Gas Reserve Information ..........................
</TABLE>
7
<PAGE> 8
HS RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
(Historical)
------------ Pro Forma
HSR Adjustments Pro Forma
------------ --------------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS $ 46,706 $ --- $ 46,706
----------- --------------- -----------
OIL AND GAS PROPERTIES, at cost, using the full
cost method:
Undeveloped acreage 69,911 124,000 A 193,911
Costs subject to depreciation, depletion and amortization 732,970 188,423 A 921,393
Less -- accumulated depreciation, depletion and
amortization (166,926) --- (166,926)
----------- --------------- -----------
Net oil and gas properties 635,955 312,423 948,378
----------- --------------- -----------
Gas gathering and other, net 18,331 --- 18,331
----------- --------------- -----------
TOTAL ASSETS $ 700,992 $ 312,423 $ 1,013,415
=========== =============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 55,083 $ --- $ 55,083
----------- --------------- -----------
ACCRUED AD VALOREM TAXES 8,708 --- 8,708
----------- --------------- -----------
LONG TERM OIL AND GAS PRODUCTION NOTE PAYABLE 734 --- 734
----------- --------------- -----------
MINORITY INTEREST 76 --- 76
----------- --------------- -----------
LONG-TERM BANK DEBT, net of current portion 124,000 292,423 A 416,423
----------- --------------- -----------
9 7/8% SENIOR SUBORDINATED NOTES, net of
unamortized discount 74,639 --- 74,639
----------- --------------- -----------
9 1/4% SENIOR SUBORDINATED NOTES, net of
unamortized discount 149,291 --- 149,291
----------- --------------- -----------
DEFERRED INCOME TAXES 89,110 --- 89,110
----------- --------------- -----------
STOCKHOLDERS' EQUITY 199,351 20,000 A 219,351
----------- --------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 700,992 $ 312,423 $ 1,013,415
=========== =============== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 9
HS RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(Historical)
------------ Pro Forma
HSR Adjustments Pro Forma
------------ ----------- ---------
<S> <C> <C> <C>
REVENUES:
Oil and gas sales $ 97,778 $ 27,486 E $125,264
Trading and transportation 64,361 --- 64,361
Other gas revenues 3,206 2,042 B 5,248
Interest and other income 894 --- 894
-------- ---------- --------
Total revenues 166,239 29,528 195,767
-------- ---------- --------
EXPENSES:
Production taxes 6,893 1,914 E 8,807
Lease operating 18,273 2,607 E 20,880
Cost of trading and transportation 63,365 --- 63,365
Depreciation, depletion and amortization 38,436 11,950 F 50,386
General and administrative 4,872 1,509 G 6,381
Interest 22,945 15,578 C 38,523
-------- ---------- --------
Total expenses 154,784 33,558 188,342
-------- ---------- --------
INCOME (LOSS) BEFORE INCOME TAXES 11,455 (4,030) 7,425
PROVISION (BENEFIT) FOR INCOME TAXES 4,364 (1,535)D 2,829
-------- ---------- --------
NET INCOME (LOSS) $ 7,091 $ (2,495) $ 4,596
======== ========== ========
BASIC EARNINGS PER SHARE $ 0.42 $ 0.25
======== ========
DILUTED EARNINGS PER SHARE $ 0.40 $ 0.25
======== ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 16,991 1,200 A 18,191
======== ========== ========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES ASSUMING DILUTION 17,520 1,200 A 18,720
======== ========== ========
</TABLE>
The accompanying notes are an integral part of these statements.
9
<PAGE> 10
HS RESOURCES, INC.
NOTES TO SEPTEMBER 30, 1997 UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(A) Record cost of the oil and gas properties, additional bank debt incurred and
common stock issued by HSR in connection with the Amoco Acquisition as follows:
<TABLE>
<CAPTION>
Total
Pro Forma
Adjustments
-----------
(In Thousands)
<S> <C>
Acquisition Costs
Purchase price including the issuance of stock $ 333,000
Transfer of properties to Amoco (23,000)
Transaction costs 2,423
---------
Total pro forma adjustment $ 312,423
=========
Allocation of Acquisition Costs
Oil and gas properties -- undeveloped properties $ 124,000
Oil and gas properties -- developed properties 188,423
---------
Total pro forma adjustment $ 312,423
=========
Acquisition Funding and Stock Issued
Long-term bank debt 292,423
Issuance of common stock 20,000
---------
Total pro forma adjustment $ 312,423
=========
</TABLE>
(B) Record estimated income from the monetization of Section 29 tax credits
generated from the assets acquired in the Amoco Acquisition. The annual
estimated qualifying production is approximately 4,851,000 Mcf for the Amoco
Acquisition. The adjustment is based on the monetization of the Section 29 tax
credits available from the Amoco Acquisition pursuant to arrangements the
Company has with two financial institutions under the same terms as currently
apply to the monetization of the Company's other Section 29 tax credits.
(C) Record interest expense related to debt necessary to finance the Amoco
Acquisition, using HSR's average LIBOR rate during 1997 of 7.21%. Interest was
calculated on new debt of approximately $292.4 million for the Amoco
Acquisition. Interest was capitalized on undeveloped property costs as
appropriate.
10
<PAGE> 11
(D) Record the tax effect of the Amoco Acquisition assuming a combined federal
and state effective tax rate of 38.1%.
(E) Record direct revenues and expenses attributable to the Amoco Acquisition
net of revenues and expenses attributable to the properties transferred to
Amoco.
(F) Record DD&A expense on the assets acquired. Pro forma DD&A expense on proved
oil and gas properties is computed using the units-of-production amortization
method based on estimates of pro forma proved reserves and the net unamortized
costs of the proved properties acquired in the Amoco Acquisition. The DD&A rate
per Boe for the assets acquired and transferred was $5.36.
(G) Record incremental estimated general and administrative expenses necessary
to manage the acquired assets.
SUPPLEMENTAL PRO FORMA CONSOLIDATED OIL AND GAS RESERVE INFORMATION (UNAUDITED)
Supplemental oil and gas reserve information related to the Pro Forma
Financial Statements is reported in compliance with FASB Statement No. 69,
"Disclosures about Oil and Gas Producing Activities." Net proved oil and gas
reserves and the discounted future net cash flows related to those reserves were
estimated by HSR's petroleum engineers as of December 31, 1997. Information
presented in that report was the basis for the net proved oil and gas reserve
and standardized measure disclosures presented below. Since reserve evaluations
for the periods ending September 30, 1997, and December 31, 1996, had not been
prepared, it was necessary to make certain assumptions and adjustments to
prepare the following disclosures for such periods. However, HSR believes that
the disclosures presented are adequate and are not misleading.
11
<PAGE> 12
The following tables set forth pro forma information for the nine months
ended September 30, 1997, with respect to changes in proved reserves. Quantities
of natural gas are expressed in this report in terms of thousand cubic feet
(Mcf). Oil is quantified in terms of barrels (Bbls).
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997
----------------------
Oil Gas
Bbls Mcf
-------- --------
(In Thousands)
<S> <C> <C>
Total proved reserves:
Beginning of year 49,265 948,658
Production (2,224) (43,824)
Revisions of previous estimates (1,965) (23,803)
Extensions, discoveries and other additions 2,099 42,623
Purchases of reserves in place 4 138
Sales of reserves in place (1,068) (29,372)
-------- --------
End of year 46,111 894,420
======== ========
</TABLE>
At the nine months ended September 30, 1997, proved developed reserves were
estimated to be 26,781 MBbls and 625,764 MMcf.
For standardized measure purposes, future income taxes are estimated using
the "year-by-year" method. However, for ceiling test purposes, future income
taxes are estimated using the "short-cut" method.
12
<PAGE> 13
Information with respect to the estimated discounted future net cash
flows for the Pro Forma Financial Statements for the nine months ended
September 30, 1997 is as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997
-----------
(In Thousands)
<S> <C>
Future cash inflows $ 2,820,163
Future production costs (692,711)
Future development costs (371,836)
-----------
Undiscounted future pre-tax cash flows 1,755,616
Undiscounted future income tax expense (420,567)
-----------
Undiscounted future pre-tax cash flows, net of future income taxes 1,335,049
10% discount factor (689,937)
-----------
Standardized measure of discounted future net cash flows $ 645,112
===========
</TABLE>
As of the nine months ended September 30, 1997 the oil and gas prices used
in the determination of future cash flows were $16.38 and $2.31 per Bbl and per
Mcf, respectively.
Principal changes in estimated discounted future net cash flows for the
Pro Forma Financial Statements for the nine months ended September 30, 1997
are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997
---------
(In Thousands)
<S> <C>
Beginning of year $1,152,241
Sales and transfers of oil and gas produced, net of production costs (91,096)
Sale of reserves in place, net (30,948)
Net change in prices and production costs (539,927)
Extensions and discoveries less related costs 60,510
Change in future development costs (22,474)
Development costs incurred during the year that reduce future development costs 31,660
Revision of previous quantity estimates (46,872)
Purchase of reserves in place, net 125
Accretion of discount 112,881
Net change in income taxes 111,906
Changes in production rates and other (92,895)
----------
End of year $ 645,112
=========
</TABLE>
13
<PAGE> 14
HS RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
(Historical)
------------ Pro Forma
HSR Adjustments Pro Forma
------------ --------------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS $ 59,848 $ --- $ 59,848
----------- --------------- -----------
OIL AND GAS PROPERTIES, at cost, using the full
cost method:
Undeveloped acreage 54,710 124,000 A 178,710
Costs subject to depreciation, depletion and amortization 727,411 188,423 A 915,834
Less -- accumulated depreciation, depletion and
amortization (129,941) --- (129,941)
----------- --------------- -----------
Net oil and gas properties 652,180 312,423 964,603
----------- --------------- -----------
Gas gathering and other, net 19,257 --- 19,257
----------- --------------- -----------
TOTAL ASSETS $ 731,285 $ 312,423 $ 1,043,708
=========== =============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 46,098 $ --- $ 46,098
----------- --------------- -----------
ACCRUED AD VALOREM TAXES 9,006 --- 9,006
----------- --------------- -----------
LONG TERM OIL AND GAS PRODUCTION NOTE PAYABLE 734 --- 734
----------- --------------- -----------
MINORITY INTEREST 66 --- 66
----------- --------------- -----------
LONG-TERM BANK DEBT, net of current portion 174,000 292,423 A 466,423
----------- --------------- -----------
9 7/8% SENIOR SUBORDINATED NOTES, net of
unamortized discount 74,595 --- 74,595
----------- --------------- -----------
9 1/4% SENIOR SUBORDINATED NOTES, net of
unamortized discount 149,233 --- 149,233
----------- --------------- -----------
DEFERRED INCOME TAXES 84,829 --- 84,829
----------- --------------- -----------
STOCKHOLDERS' EQUITY 192,724 20,000 A 212,724
----------- --------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 731,285 $ 312,423 $ 1,043,708
=========== =============== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
14
<PAGE> 15
HS RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(Historical)
------------ Pro Forma
HSR Adjustments Pro Forma
------------ ----------- ---------
<S> <C> <C> <C>
REVENUES:
Oil and gas sales $107,281 $ 30,477 E $137,758
Trading and transportation 46,373 --- 46,373
Other gas revenues 2,720 2,486 B 5,206
Interest and other income 582 --- 582
-------- ----------- --------
Total revenues 156,956 32,963 189,919
-------- ----------- --------
EXPENSES:
Production taxes 8,195 2,085 E 10,280
Lease operating 17,692 3,392 E 21,084
Cost of trading and transportation 45,699 --- 45,699
Depreciation, depletion and amortization 42,335 15,679 F 58,014
General and administrative 5,642 2,012 G 7,654
Interest 22,936 19,167 C 42,103
-------- ----------- --------
Total expenses 142,499 42,335 184,834
-------- ----------- --------
INCOME (LOSS) BEFORE INCOME TAXES 14,457 (9,372) 5,085
PROVISION (BENEFIT) FOR INCOME TAXES 5,508 (3,571)D 1,937
-------- ----------- --------
NET INCOME (LOSS) $ 8,949 $ (5,801) $ 3,148
======== =========== ========
Basic earnings per share $ 0.63 $ 0.21
======== ========
Diluted earnings per share $ 0.61 $ 0.20
======== ========
Weighted average number of common shares 14,119 1,200 B 15,319
======== =========== ========
Weighted average number of common and
common equivalent shares assuming dilution 14,552 1,200 B 15,752
======== =========== ========
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE> 16
HS RESOURCES, INC.
NOTES TO DECEMBER 31, 1996, UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(A) Record cost of the oil and gas properties, additional bank debt incurred and
common stock issued by HSR in connection with the Amoco Acquisition as follows:
<TABLE>
<CAPTION>
Total
Pro Forma
Adjustments
-----------
(In Thousands)
<S> <C>
Acquisition Costs
Purchase price including the issuance of stock $ 333,000
Transfer of properties to Amoco (23,000)
Transaction costs 2,423
---------
Total pro forma adjustment $ 312,423
=========
Allocation of Acquisition Costs
Oil and gas properties -- undeveloped properties $ 124,000
Oil and gas properties -- developed properties 188,423
---------
Total pro forma adjustment $ 312,423
=========
Acquisition Funding and Stock Issued
Long-term bank debt $ 292,423
Issuance of common stock 20,000
---------
Total pro forma adjustment $ 312,423
=========
</TABLE>
(B) Record estimated income from the monetization of Section 29 tax credits
generated from the assets acquired in the Amoco Acquisition. The annual
estimated qualifying production is approximately 5,868,000 Mcf for the Amoco
Acquisition. The adjustment is based on the monetization of the Section 29 tax
credits available from the Amoco Acquisition pursuant to arrangements the
Company has with two financial institutions under the same terms as currently
apply to the monetization of the Company's other Section 29 tax credits.
(C) Record interest expense related to debt necessary to finance the Amoco
Acquisition, using HSR's average LIBOR rate during 1996 of 7.15%. Interest was
calculated on new debt of approximately $292.4 million for the Amoco
Acquisition. Interest was capitalized on undeveloped property costs as
appropriate.
16
<PAGE> 17
(D) Record the tax effect of the acquisition assuming a combined federal and
state effective tax rate of 38.1%.
(E) Record direct revenues and expenses attributable to the Amoco Acquisition
net of revenues and expenses attributable to the properties transferred to
Amoco.
(F) Record DD&A expense on the assets acquired. Pro forma DD&A expense on proved
oil and gas properties is computed using the units-of-production amortization
method based on estimates of pro forma proved reserves and the net unamortized
costs of the proved properties acquired in the Amoco Acquisition. The DD&A rate
per Boe for the assets acquired and transferred was $5.45.
(G) Record estimated general and administrative expenses necessary to manage the
acquired assets.
SUPPLEMENTAL PRO FORMA CONSOLIDATED OIL AND GAS RESERVE INFORMATION (UNAUDITED)
Supplemental oil and gas reserve information related to the Pro Forma
Financial Statements is reported in compliance with FASB Statement No. 69,
"Disclosures about Oil and Gas Producing Activities." Net proved oil and gas
reserves and the discounted future net cash flows related to those reserves were
estimated by HSR's petroleum engineers as of December 31, 1997. Information
presented in that report was the basis for the net proved oil and gas reserve
and standardized measure disclosures presented below. Since reserve evaluations
for two periods ending September 30, 1997, and December 31, 1996, had not been
prepared, it was necessary to make certain assumptions and adjustments to
prepare the following disclosures for such periods. However, HSR believes that
the disclosures presented are adequate and are not misleading.
17
<PAGE> 18
The following tables set forth pro forma information for the year ended
December 31, 1996, with respect to changes in proved reserves. Quantities of
natural gas are expressed in this report in terms of thousand cubic feet (Mcf).
Oil is quantified in terms of barrels (Bbls).
<TABLE>
<CAPTION>
Year Ended
December 31,
1996
----------------------
Oil Gas
Bbls Mcf
-------- --------
(In Thousands)
<S> <C> <C>
Total proved reserves:
Beginning of year 34,884 617,522
Production (2,568) (48,672)
Revisions of previous estimates 5 (880)
Extensions, discoveries and other additions 1,424 41,787
Purchases of reserves in place 15,648 351,708
Sales of reserves in place (128) (12,807)
-------- --------
End of year 49,265 948,658
======== ========
</TABLE>
At December 31, 1996, proved developed reserves were estimated to be
28,613 MBbls and 672,104 MMcf.
For standardized measure purposes, future income taxes are estimated
using the "year-by-year" method. However, for ceiling test purposes, future
income taxes are estimated using the "short-cut" method.
18
<PAGE> 19
Information with respect to the estimated discounted future net cash
flows for the Pro Forma Financial Statements for the year ended December 31,
1996 is as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1996
------------
(In Thousands)
<S> <C>
Future cash inflows $ 4,642,287
Future production costs (912,842)
Future development costs (364,313)
-----------
Undiscounted future pre-tax cash flows 3,365,132
Undiscounted future income tax expense (945,330)
-----------
Undiscounted future pre-tax cash flows, net of future income taxes 2,419,802
10% discount factor (1,267,561)
-----------
Standardized measure of discounted future net cash flows $ 1,152,241
===========
</TABLE>
As of December 31, 1996 the oil and gas prices used in the determination
of future cash flows were $24.81 and $3.56 per Bbl and per Mcf, respectively.
Principal changes in estimated discounted future net cash flows for the
Pro Forma Financial Statements for the year ended December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1996
------------
(In Thousands)
<S> <C>
Beginning of year $ 548,492
Sales and transfers of oil and gas produced, net of production costs (105,451)
Sale of reserves in place, net (14,893)
Net change in prices and production costs:
on beginning of year reserves 281,677
on reserves purchased during the year 200,296
Extensions and discoveries less related costs 80,750
Change in future development costs (2,089)
Development costs incurred during the year that reduce
future development costs 32,336
Revision of previous quantity estimates (1,680)
Purchase of reserves in place, net 345,253
Accretion of discount 56,132
Net change in income taxes (253,687)
Changes in production rates and other (14,895)
-----------
End of year $ 1,152,241
===========
</TABLE>
(c) Exhibits
Exhibit Number Description
- - -------------- -----------
23.1* Consent of Arthur Andersen LLP
* Filed herewith.
19
<PAGE> 20
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 hereunto duly authorized.
HS RESOURCES, INC.
By: /s/ JAMES M. PICCONE
------------------------
James M. Piccone
Vice President
Dated: March 2, 1998.
20
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
23.1 Consent of Arthur Andersen LLP
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
Form 8-K.
Denver, Colorado
February 27, 1998
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
