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 - NOVEMBER 26, 1999
(DATE OF EARLIEST EVENT REPORTED)
HS RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NO. 0-18886
DELAWARE 94-3036864
(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
<PAGE>
FORM 8-K/A
HS RESOURCES, INC.
This report amends the Company's Current Report dated November 26, 1999,
and filed December 13, 1999, by adding the financial statements and pro forma
financial information set forth in Item 7 below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
INDEX TO STATEMENTS OF ASSETS ACQUIRED AND REVENUES AND
DIRECT OPERATING EXPENSES
ACQUISITION OF THE WATTENBERG SYSTEM
PAGE
Report of Independent Public Accountants................................... 3
Statement of Assets Acquired for the Wattenberg System..................... 4
Statement of Revenues and Direct Operating Expenses for the
Wattenberg System..................................................... 5
Notes to Statement of Revenues and Direct Operating Expenses
for the Wattenberg System............................................. 6
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<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To HS Resources, Inc.:
We have audited the accompanying statements of assets acquired and revenues and
direct operating expenses for the gathering and transmission assets acquired
from Kinder Morgan, Inc. and affiliated entities (the "Wattenberg System") as of
and for the nine months ended September 30, 1999. These statements are the
responsibility of HS Resources, Inc.'s management. Our responsibility is to
express an opinion on these statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
The statements of assets acquired and revenues and direct operating expenses for
the Wattenberg System were prepared for the purpose of complying with the rules
of the Securities and Exchange Commission as described in Note 1 and are not
intended to be a complete presentation of the assets and liabilities or revenues
and expenses.
In our opinion, the statements referred to above present fairly, in all material
respects, the assets acquired and revenues and direct operating expenses for the
Wattenberg System as of and for the nine months ended September 30, 1999, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado
January 28, 2000
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<PAGE>
STATEMENT OF ASSETS ACQUIRED
FOR THE WATTENBERG SYSTEM
(IN THOUSANDS)
SEPTEMBER 30, 1999
Gathering and Transmission Assets $ 66,971
Accumulated Depreciation (40,595)
---------
Net Gathering and Transmission Assets Acquired $ 26,376
=========
The accompanying note is an integral part of this statement.
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<PAGE>
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE WATTENBERG SYSTEM
(IN THOUSANDS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
Gathering Revenues $ 19,384
Natural Gas Liquids Sales and other 5,250
--------
Total Revenues 24,634
--------
Cost of Sales 7,025
Operating and Maintenance Costs 7,904
Depreciation 816
--------
Total Direct Operating Expenses 15,745
--------
Revenues in Excess of Direct Operating Expenses $ 8,889
========
The accompanying note is an integral part of this statement.
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<PAGE>
NOTE TO STATEMENT OF ASSETS ACQUIRED AND REVENUES AND
DIRECT OPERATING EXPENSES FOR THE WATTENBERG SYSTEM
1. Basis of Presentation
On November 26, 1999, HS Resources, Inc. (HSR) acquired certain gas gathering
and transmission assets (the Wattenberg System) from Kinder Morgan, Inc. and
affiliated entities (KMI) for an adjusted purchase price of approximately $48
million plus the assumption of an operating lease which had a present value of
$19 million.
The Wattenberg System consists of a low pressure gathering system and a high
pressure transmission system. The low pressure gathering system consists of more
than 1,500 miles of pipeline and 3,000 horsepower of compression, located in
five northeastern Colorado counties. Gas is delivered to the inlet of the high
pressure transmission system, which consists of almost 60 miles of high pressure
pipeline and almost 40,000 horsepower of compression. The acquisition is being
accounted for using the purchase method of accounting.
The accompanying statements of assets acquired and revenues and direct operating
expenses were derived from the historical accounting records of the Wattenberg
System. The statement of assets acquired only presents the historical basis of
the assets acquired and the related accumulated depreciation, as full financial
statements for the acquired assets were not available. The statement of
revenues and direct operating expenses does not include general and
administrative, income tax or interest expenses as these costs were not
accounted for at the asset level by KMI. Additionally, the level of these
indirect expenses incurred by KMI may not be comparable to the expenses expected
to be incurred by HSR.
Gathering and Transmission Assets
Gathering and transmission assets are stated at historical cost, which, for
constructed plant, includes indirect costs such as payroll taxes, fringe
benefits, administrative and general costs. Expenditures that increase
capacities, improve efficiencies or extend useful lives are capitalized.
Routine maintenance, repairs and renewal costs are expensed as incurred.
Depreciation is computed based on the straight-line method over the estimated
useful lives of assets, ranging from 3 to 40 years for the gathering and
transmission assets acquired.
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<PAGE>
(b) Pro Forma Financial Information.
INDEX TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Pro Forma Condensed Consolidated Balance Sheet as of September 30,
1999.................................................................. 9
Pro Forma Condensed Consolidated Statement of Operations for the
Nine Months Ended September 30, 1999.................................. 10
Notes to Pro Forma Condensed Consolidated Financial Statements............. 11
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<PAGE>
PRO FORMA FINANCIAL STATEMENTS WITH ACQUISITION
OF THE WATTENBERG SYSTEM
The following unaudited pro forma condensed consolidated balance sheet at
September 30, 1999 and pro forma condensed consolidated statement of operations
for the nine months then ended adjust the historical financial information of
HSR to reflect the acquisition of the Wattenberg System. The pro forma balance
sheet and statement of operations were prepared as if the acquisition had
occurred on September 30, 1999 and January 1, 1999, respectively. The pro forma
adjustments are based on estimates and assumptions explained in further detail
in the accompanying notes.
The unaudited pro forma financial statements should be read in conjunction
with the related historical financial statements and the related notes. The pro
forma information presented is not necessarily indicative of the financial
position or results that would have actually occurred had the acquisition of the
Wattenberg System been consummated on the dates indicated or which may occur in
the future.
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<PAGE>
HS RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
(Historical) Pro Forma
HSR Adjustments Pro Forma
----------- ----------- ---------
<S> <C> <C> <C
ASSETS
CURRENT ASSETS $ 77,553 $ (373)A $ 77,180
-------- -------- --------
OIL AND GAS PROPERTIES, at cost, using the
successful efforts method:
Undeveloped acreage 108,145 --- 108,145
Costs subject to depreciation, depletion and
amortization 859,798 --- 859,798
Less--accumulated depreciation, depletion and
amortization (214,298) --- (214,298)
-------- -------- --------
Net oil and gas properties 753,645 --- 753,645
-------- -------- --------
GAS GATHERING AND TRANSPORTATION FACIILITIES, net 4,507 48,083 A 52,590
-------- -------- --------
OTHER ASSETS 15,958 360 A 16,318
-------- -------- --------
TOTAL ASSETS $ 851,663 $ 48,070 $ 899,733
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 89,071 $ --- $ 89,071
-------- -------- --------
ACCRUED AD VALOREM TAXES 11,675 --- 11,675
-------- -------- --------
DEFERRED REVENUE 1,473 --- 1,473
-------- -------- --------
PAYABLE TO KMI --- 48,070 A 48,070
-------- -------- --------
LONG-TERM BANK DEBT 234,000 --- 234,000
-------- -------- --------
9 7/8% SENIOR SUBORDINATED NOTES, net of
unamortized discount 74,756 --- 74,756
-------- -------- --------
9 1/4% SENIOR SUBORDINATED NOTES, net of
unamortized discount 230,661 --- 230,661
-------- -------- --------
DEFERRED INCOME TAXES 49,276 --- 49,276
-------- -------- --------
STOCKHOLDERS' EQUITY 160,751 --- 160,751
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 851,663 $ 48,070 $ 899,733
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
HS RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(Historical) Pro Forma
HSR Adjustments Pro Forma
----------- ----------- ---------
<S> <C> <C> <C>
REVENUES:
Oil and gas sales $ 116,281 $ 9,333 C $ 121,659
(936)C
(3,019)C
Trading and transportation 32,874 --- 32,874
Gathering and transmission system revenues --- 17,610 B 9,127
(9,333)C
850 B
Other gas revenues 7,323 --- 7,323
Interest and other income 410 --- 410
-------- -------- --------
Total revenues 156,888 14,505 171,393
-------- -------- --------
EXPENSES:
Production taxes 7,657 --- 7,657
Lease operating 20,936 --- 20,936
Cost of trading and transportation 31,442 --- 31,442
Depreciation, depletion and amortization 40,472 1,766 D 41,302
(936)C
Gathering and transmission system operating
and management expense --- 7,904 B 2,678
(2,207)F
(3,019)C
Exploratory and abandonment 9,098 --- 9,098
Geological and geophysical 4,780 --- 4,780
Impairment and (gain)/loss on sales
of oil and gas properties (1,228) --- (1,228)
General and administrative 3,942 --- 3,942
Interest 31,657 3,751 E 35,408
-------- -------- --------
Total expenses 148,756 7,259 156,015
-------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES 8,132 7,246 15,378
PROVISION FOR INCOME TAXES 3,098 2,761 G 5,859
-------- -------- --------
NET INCOME $ 5,034 $ 4,485 $ 9,519
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.27 $ 0.24 $ 0.51
======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.27 $ 0.24 $ 0.51
======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 18,664 --- 18,664
======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING ASSUMING DILUTION 18,815 --- 18,815
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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HS RESOURCES, INC.
NOTES TO SEPTEMBER 30, 1999 UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(A) Record the purchase of the Wattenberg System and payable to KMI as follows:
Allocation of purchase price (in thousands):
Gathering system assets $ 9,419
Transmission system assets 35,963
Other 2,701
--------
Gas gathering and
transportation facilities 48,083
--------
Current assets net of cash
payment to KMI (373)
Deferred assets 360
--------
$ 48,070
========
The acquisition of the assets was financed with an obligation to KMI which will
be fully repaid by January 1, 2002.
(B) Record gross revenues and expenses associated with the Wattenberg System.
(C) Eliminate intercompany revenues and expenses attributable to gathering
charges billed to the Company for its share of production on the
Wattenberg System and record net Gathering System income as an offset to
gathering charges previously deducted in the Company's oil and gas sales.
(D) Record DD&A expense on the Wattenberg System. Pro forma DD&A expense is
computed using the straight-line method over 20 years.
(E) Record interest expense related to the payable due to KMI based upon an
imputed interest rate of 11.8%
(F) Record elimination of lease expense not assumed by HSR.
(G) Record the tax effect of the Wattenberg System assuming a combined federal
and state effective tax rate of 38.1%.
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<PAGE>
(c) Exhibits
23.1 Consent of Arthur Andersen LLP
(d) 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: February 9, 2000.
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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.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Denver, Colorado
February 9, 2000
