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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 - JUNE 2, 1998
(DATE OF EARLIEST EVENT REPORTED)
HS RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NO. 0-18886
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)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 433-5795
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FORM 8-K
HS RESOURCES, INC.
June 2, 1998
ITEM 5. OTHER EVENTS.
On June 2, 1998, HS Resources, Inc., a Delaware corporation (the
"Company"), announced its intention to sell certain of its Mid-Continent
properties. A description of the proposed sale is contained in the June 2, 1998,
press release by the Company, attached hereto as Exhibit 99.1, and incorporated
herein by reference.
ITEM 7(C). EXHIBITS FILED.
Exhibit Number Description
- -----------------------------
99.1 Press Release, dated June 2, 1998.
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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: June 2, 1998.
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EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
99.1 Press Release, dated June 2, 1998.
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Exhibit 99.1
FOR IMMEDIATE RELEASE
June 2, 1998
HS RESOURCES ANNOUNCES PLANS TO SELL
MID-CONTINENT PROPERTIES
San Francisco, California --- HS Resources, Inc. (NYSE:HSE) today announced that
it intends to sell certain of its mid-continent oil and gas properties with
proved reserves of approximately 200 Bcfe and significant additional unproved
reserve potential. These properties are located primarily in the Anadarko and
Arkoma Basins of Oklahoma and include interests in more than 1,000 wells and
almost 400,000 gross acres. Net proceeds will be used to reduce bank debt
incurred in conjunction with the Company's December 1997 acquisition of Amoco
Production Company's oil and gas properties in the Wattenberg Field area of the
Denver-Julesburg ("D-J") Basin.
According to Nicholas J. Sutton, Chief Executive Officer, "Recent results from
our field activities have confirmed the potential of our exploitation projects,
most notably the low risk, high return projects in the D-J Basin and our
exploration projects in the onshore Gulf Coast region. For the past several
months we have evaluated numerous financing alternatives to both reduce the debt
associated with the Amoco acquisition and increase our financial flexibility.
With our current and anticipated level of activity, combined with our success in
other areas, our high quality mid-continent properties have had to fight hard
for our attention and capital. On the other hand they fit extremely well with
the strategic and financial goals of many potential purchasers. By applying
sales proceeds to the repayment of debt we will be able to significantly realign
our balance sheet without incurring shareholder dilution which would occur from
the issuance of equity securities."
President P. Michael Highum commented, "We have several active programs under
way in the D-J Basin that have confirmed the synergies of our Amoco acquisition
with our pre-existing D-J Basin assets. These include such things as
recompletions, refracs and deepenings, all of which have delivered very strong
financial results while at the same time providing additional data that can be
incorporated into future plans. For example, we now have performed over 100
Codell refracs with rates of return approaching 100%. Our J-Sand infill program
has shown stronger-than-anticipated early results, and our first 18 wells in the
Dakota deepening program have generated new reserves with a finding cost of less
than $0.15 per Mcfe. Furthermore, our North Gillis project in the Gulf Coast has
successfully drilled three wells in three attempts. These three wells are part
of the project's initial phase of activity that should see seven to twelve wells
drilled during 1998. In addition, before year-end we expect to commence drilling
on six other distinct 3-D defined projects that are supported by an aggregate of
328 square miles of seismic. Coupled with the recent ruling by the Colorado Oil
and Gas Conservation Commission which provides for blanket down-spacing in the
Wattenberg area, these results underpin our belief that we may be able to
replace a significant component of the mid-continent reserves which we intend to
sell with currently unbooked D-J Basin reserves."
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James E. Duffy, Chief Financial Officer, stated, "The impact of any divestiture
on our 1998 financial results will depend on a number of factors, including,
among other things, the mix of properties sold, timing and proceeds. For the
quarter ended March 31, 1998, the Company's operations in the mid-continent
generated production of 3.4 Bcfe out of 18.4 Bcfe for the total Company, oil and
gas revenues of $7.1 million out of $45.4 million for the total Company, and
production taxes plus lease operating expenses of $2.0 million out of $10.1
million for the total Company. We also anticipate that general and
administrative expenses will decline significantly, resulting in higher
operating margins and cash flow per Mcfe. We should see our ratio of debt to
capital decrease materially and coverage ratios improve as we apply proceeds to
debt repayment. Furthermore, with new reserve bookings in the D-J Basin and Gulf
Coast areas, we anticipate meaningful declines in debt per Boe. These
projections are based on somewhat generic assumptions and, while we currently
think they are reasonable, the ultimate result will depend on the specifics of
any actual transactions which are ultimately closed."
Qualified industry parties interested in receiving additional information about
the properties and divestiture process should contact George H. Solich, Vice
President - Acquisitions and Divestitures, at 303-296-3600.
Statements concerning divestiture plans; reserve quantities and reserve
replacement booking possibilities; debt reduction and debt coverage ratio
expectations; capital financing plans; future drilling, exploration, development
and other plans, risks and expected financial returns; production, expense, cash
flow and revenue expectations, and all similar statements or implications
concerning future events are forward looking statements within the meaning of
the Federal securities laws. Actual results or events may differ materially from
these forward looking statements, depending upon a variety of factors, including
commodity prices; demand and supply for oil and gas properties; offers received
for the properties; availability of capital to the Company and to potential
purchasers; results of exploration and other drilling; cash flow from
operations; costs of materials and labor; availability of equipment; regulatory
burdens; Company objectives and business judgment and other factors, both within
and outside of the Company's control. The Company's forward looking statements
are qualified in their entirety by these and other factors more fully set forth
on the company's report on Form 8-K filed February 26, 1997.
HS Resources, Inc. is an independent oil and gas exploration and development
company with active projects in the Rocky Mountain, Mid-Continent and Gulf Coast
regions. The common stock of HS Resources, Inc. is traded on the New York Stock
Exchange under the symbol "HSE."
Contact: Theodore Gazulis
Vice President -- Treasury, Capital Markets
and Investor Relations
415-433-5795
[email protected]
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