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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of the Report: April 17, 1998 Commission File No. 019020
OPTIMA PETROLEUM CORPORATION
(Exact Name of Registrant as Specified in its Charter)
CANADA 98-0115468
(State of Incorporation) (I.R.S. Employee Identification No.)
#600 - 595 HOWE STREET
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 2T5
(Address of Principal Executive Offices) (Postal Code)
(604) 684-6886
(Registrant's Telephone Number Including Area Code)
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ITEM 2 - ACQUISITION OF ASSETS
Whereas the Company reported on Form 8-K filed February 28, 1998 that it had
entered into a definitive agreement with American Explorer, L.L.C. of Lafayette,
Louisiana, in accordance with regulatory disclosure requirements, it has
attached pro forma financial statements for the 1996 and 1997 fiscal years
reflecting the combination of the Company with American Explorer, L.L.C. The
merger is subject to approval by Optima shareholders, U.S. and Canadian
regulatory authorities and customary conditions of closing.
ITEM 7 - EXHIBITS
<TABLE>
<CAPTION>
NO. DESCRIPTION
<S> <C>
7.2 Pro Forma Financial Statements of Optima Petroleum
Corporation as at December 31, 1997 and for the
years ended December 31, 1997 and 1996. (Unaudited
- see Compilation Report)
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
Registrant has duly caused this report to be signed on behalf of the undersigned
hereunto duly authorized.
April 17, 1998
OPTIMA PETROLEUM CORPORATION
/s/ RONALD P. BOURGEOIS
- ----------------------------
Ronald P. Bourgeois,
Chief Financial Officer
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Pro Forma Financial Statements of
OPTIMA PETROLEUM CORPORATION
As at December 31, 1997 and
For the Years Ended December 31, 1997 and 1996
(Unaudited - see Compilation Report)
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COMPILATION REPORT
The Board of Directors
Optima Petroleum Corporation
We have reviewed, as to compilation only, the accompanying pro forma
consolidated balance sheet of Optima Petroleum Corporation as at December 31,
1997 and the pro forma combined statements of operations of Optima Petroleum
Corporation and American Explorer LLC for the years ended December 31, 1997 and
1996. These pro forma financial statements have been prepared for inclusion in
the information circular relating to the issuance of 7,335,001 common shares of
Optima Petroleum Corporation on its merger with American Explorer LLC. In our
opinion, the pro forma consolidated balance sheet and the pro forma combined
statements of operations have been properly compiled to give effect to the
proposed transactions and assumptions described in Note 2 thereto.
/s/ KPMG
- ---------------------
Chartered Accountants
Vancouver, Canada
April 3, 1998
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OPTIMA PETROLEUM CORPORATION
Pro Forma Balance Sheet
December 31, 1997
<TABLE>
<CAPTION>
================================================================================================================================
Pro Forma
OPC AMEX Adjustments Notes Consolidated
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 5,660,354 $ 246,610 $ 5,906,964
Cash in trust 715,250 -- 715,250
Accounts receivable 2,220,151 2,100,443 4,320,594
Note receivable - current portion 129,861 -- 129,861
- --------------------------------------------------------------------------------------------------------------------------------
8,725,616 2,347,053 11,072,669
OTHER
Cash held in trust 703,996 1,109,356 1,813,352
Advances to operators 547,200 -- 547,200
Note receivable - long term portion 265,077 -- 265,077
Petroleum and natural gas interests,
full cost method 17,695,968 10,692,975 $ 6,504,228 2(a) 36,788,871
1,895,700 2(b)
Deferred charges 205,486 -- 205,486
- --------------------------------------------------------------------------------------------------------------------------------
$ 28,143,343 $14,149,384 $ 50,692,655
================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 868,796 $ 3,515,714 $ 4,384,510
Current portion of long-term debt -- 2,574,900 2,574,900
- --------------------------------------------------------------------------------------------------------------------------------
868,796 6,090,614 6,959,410
REVENUE IN DISPUTE 1,023,998 -- 1,023,998
LONG-TERM DEBT 143,050 2,288,800 2,431,850
SITE RESTORATION AND ABANDONMENT 369,297 -- $ 1,895,700 2(b) 2,264,997
SHAREHOLDERS' EQUITY
Share capital 30,891,689 -- 12,274,198 2(a) 43,165,887
Contributed surplus 608,222 -- 608,222
Deficit (5,761,709) 5,769,970 (5,769,970) 2(a) (5,761,709)
- --------------------------------------------------------------------------------------------------------------------------------
25,738,202 5,769,970 38,012,400
- --------------------------------------------------------------------------------------------------------------------------------
$ 28,143,343 $14,149,384 $ 50,692,655
================================================================================================================================
</TABLE>
See accompanying notes to pro forma financial statements.
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OPTIMA PETROLEUM CORPORATION
Pro Forma Statement of Operations
December 31, 1997
<TABLE>
<CAPTION>
====================================================================================================================================
Pro Forma
OPC AMEX Adjustments Notes Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING INCOME
Petroleum and natural gas sales $ 7,649,415 $ 9,403,334 $ 3,806,465 2(f) $20,859,214
Royalties and production taxes 2,581,196 361,396 3,806,465 2(f) 6,749,057
Operating costs 1,018,211 3,279,187 4,297,398
- ------------------------------------------------------------------------------------------------------------------------------------
4,050,008 5,762,751 9,812,759
EXPENSES
General and administrative 1,691,779 550,768 2,242,547
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INTEREST,
DEPLETION, DEPRECIATION,
AMORTIZATION AND INCOME TAXES 2,358,229 5,211,983 7,570,212
Depletion and depreciation 4,269,745 3,898,106 1,303,345 2(c) 9,471,196
Provision for revenue dispute 1,023,998 -- 1,023,998
Gain on sale of Canadian petroleum
and natural gas interests (518,025) -- (518,025)
Interest and other revenue (250,916) (62,124) (313,040)
Foreign exchange gain (259,315) (43,035) (302,350)
Interest and bank charges 188,468 77,870 266,338
Amortization of deferred financing costs 68,494 -- 68,494
Write-down of petroleum and natural gas interests 2,520,000 -- 2,520,000
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (4,684,220) 1,341,166 (4,646,399)
Income taxes 151,000 -- 480,300 2(d) 151,000
(480,300) 2(e)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FOR THE YEAR $(4,835,220) $ 1,341,166 $(4,797,399)
====================================================================================================================================
NET INCOME (LOSS) PER
COMMON SHARE (Note 3) $ (0.43) N/A $ (0.26)
====================================================================================================================================
</TABLE>
See accompanying notes to pro forma financial statements.
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OPTIMA PETROLEUM CORPORATION
Pro Forma Statement of Operations
December 31, 1996
<TABLE>
<CAPTION>
===============================================================================================================================
Pro Forma
OPC AMEX Adjustments Notes Combined
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING INCOME
Petroleum and natural gas sales $ 12,862,701 $ 6,169,037 $ 2,795,460 2(f) $ 21,827,198
Royalties and production taxes 2,887,096 368,389 2,795,460 2(f) 6,050,945
Operating costs 1,649,650 1,940,903 3,590,553
- -------------------------------------------------------------------------------------------------------------------------------
8,325,955 3,859,745 12,185,700
EXPENSES
General and administrative 1,663,411 391,226 2,054,637
- -------------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INTEREST,
DEPLETION, DEPRECIATION,
AMORTIZATION AND INCOME TAXES 6,662,544 3,468,519 10,131,063
Depletion and depreciation 5,661,205 1,537,791 866,821 2(c) 8,065,817
Interest and other revenue (26,095) (87,957) (114,052)
Foreign exchange gain (3,789) (9,308) (13,097)
Interest and bank charges 685,942 231,162 917,104
Amortization of deferred financing costs 68,494 -- 68,494
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 276,787 1,796,831 1,206,797
Income taxes 48,214 -- 661,400 2(d) 48,214
(661,400) 2(e)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FOR THE YEAR $ 228,573 $ 1,796,831 $ 1,158,583
===============================================================================================================================
NET INCOME (LOSS) PER
COMMON SHARE (Note 3) $ 0.02 N/A $ 0.06
===============================================================================================================================
</TABLE>
See accompanying notes to pro forma financial statements.
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OPTIMA PETROLEUM CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
(CANADIAN DOLLARS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma financial statements of Optima
Petroleum Corporation ("OPC") have been prepared by management in
accordance with accounting principles generally accepted in Canada.
The pro forma statements have been prepared from the audited
consolidated financial statements of OPC for the years ended
December 31, 1997 and 1996 and from audited financial statements of
American Explorer, LLC ("AMEX") for the years ended December 31,
1997 and 1996, together with other publicly available information.
In the opinion of management, these pro forma statements include all
adjustments necessary for fair presentation.
The pro forma statements do not include the financial position and
results of operations of Goodson Exploration Company, NAB Financial,
L.L.C. or Dexco Energy, Inc., all of which will be acquired under
the proposed acquisition, as all assets and liabilities of these
companies, except for their investments in AMEX, will be removed
immediately prior to the acquisition.
The audited financial statements of AMEX have been translated from
U.S. dollars to Canadian dollars using the current rate method.
Under this method, the balance sheet at December 31, 1997 is
translated at a current exchange rate at this date of $1.4305 and
the statements of operations are translated at the average exchange
rate for the year presented (1997 - $1.3846; 1996 - $1.3635).
The pro forma statements are not necessarily indicative of either
the results of operations that would have occurred for the year
ended December 31, 1997, or of the results of operations expected in
1998 and future years. In preparing these pro forma statements, no
adjustments have been made to reflect the operating synergies and
general and administrative cost savings expected to result from
consolidating the operations of OPC and AMEX.
These pro forma statements should be read in conjunction with the
audited consolidated financial statements and notes thereto of OPC
and the audited financial statements and notes thereto of AMEX for
the years ended December 31, 1997 and 1996.
2. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS
The pro forma consolidated balance sheet gives effect to the
acquisition of AMEX and the share issue as at December 31, 1997. The
pro forma combined statements of operations for the year ended
December 31, 1997 gives effect to the acquisition and the share
issue as of January 1, 1997, including adjustments in respect to
certain transactions that may not occur in future years. The pro
forma combined statement of operations for the year ended December
31, 1996 gives effect to the acquisition and the share issue as of
January 1, 1996, including adjustments in respect of certain
transactions that may not occur in future years.
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These pro forma statements give effect to the following assumptions
and adjustments:
a) Accounting for the acquisition of AMEX is by the
purchase method of accounting. The following table shows
the assumptions made with respect to the allocation of
the aggregate purchase price to AMEX's net assets and
the adjustments necessary to their historical cost
carrying value. Included as part of the adjustments is
the elimination of AMEX's shareholders' equity of
$5,769,970.
NET ASSETS ACQUIRED
<TABLE>
<S> <C>
Current assets $ 2,347,053
Petroleum and natural gas interests, at historical cost 10,692,975
Other assets 1,109,356
Current liabilities (6,090,614)
Long term debt (2,288,800)
------------
5,769,970
Excess purchase price, attributed to petroleum and natural gas interests 6,504,228
------------
Total consideration $ 12,274,198
============
CONSIDERATION COMPRISED OF
Share capital on issue of 7,335,001 shares at a fair value of $1.67 $ 12,274,198
============
</TABLE>
b) Site Restoration and abandonment
This is to reallocate AMEX Site Restoration and
Abandonment of $1,895,700 from Accumulated Depletion,
Depreciation and Amortization to Site Restoration and
Abandonment on the balance sheet as required under
Canadian Generally Accepted Accounting Principles.
<TABLE>
<CAPTION>
Year Ended Year Ended
Dec. 31/97 Dec. 31/96
---------- ----------
<S> <C> <C>
c) Depletion and depreciation
Increased depletion and depreciation expense
resulting from the higher cost base on acquisition
of AMEX's petroleum and natural gas interests: $1,303,345 $ 866,821
========== ==========
d) Income taxes
To record deferred income taxes on income
of AMEX. $ 480,300 $ 661,400
========= =========
e) Income taxes
To reduce deferred income taxes of AMEX to
reflect the utilization of OPC's losses carry forward. $(480,300) $(661,400)
========== ==========
f) Gross up to working interest
To gross-up AMEX petroleum and natural gas sales from
net revenue interest reporting to working interest
reporting in accordance with OPC's financial
statement presentation. $3,806,465 $2,795,460
========== ==========
</TABLE>
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3. PER COMMON SHARE INFORMATION
Pro forma net income (loss) per common share has been calculated
using the weighted average number of OPC common shares outstanding
during the years ended December 31, 1997 and 1996 plus the
additional OPC common shares that were issued pursuant to the AMEX
acquisition and to be issued pursuant to this offering, all as if
the additional common shares were outstanding at the beginning of
each year.
