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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A-1
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MAY 22, 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 V6C 2T5
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number., Including Area Code: (604) 684-6886
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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 merger agreement with American Explorer, L.L.C. of
Lafayette, Louisiana, in accordance with regulatory disclosure requirements, it
has attached pro forma 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
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NO. DESCRIPTION
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7.2 Exhibit 7.2 has been amended to include results of
operations through the March 31, 1998 quarter end.
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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.
June 02, 1998
OPTIMA PETROLEUM CORPORATION
/s/RONALD P. BOURGEOIS
Ronald P. Bourgeois
Chief Financial Officer
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OPTIMA PETROLEUM CORPORATION
Pro Forma Balance Sheet
As at March 31, 1998
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================================================================================================================
Pro Forma
OPC AMEX Adjustments Notes Consolidated
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<S> <C> <C> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 5,033,461 $ 630,894 $5,664,355
Accounts receivable 1,942,974 1,321,902 3,264,876
Note receivable - current portion 128,599 - 128,599
- ---------------------------------------------------------------------------------------------------------------
7,105,034 1,952,796 9,057,830
OTHER
Cash held in trust 705,893 1,141,074 1,846,967
Advances to operators 473,886 - 473,886
Note receivable - long term portion 262,502 - 262,502
Loan receivable - AMEX 849,960 (849,960)
Petroleum and natural gas interests,
full cost method 17,285,171 11,097,254 $7,159,171 2(a) 37,437,296
1,895,700 2(b)
Deferred charges 276,308 - 276,308
- ---------------------------------------------------------------------------------------------------------------
$ 26,958,754 $13,341,164 $49,354,789
===============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 662,093 $3,579,689 $4,241,782
Current portion of long-term debt - 3,272,346 3,272,346
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662,093 6,852,035 7,514,128
REVENUE IN DISPUTE 1,047,664 - 1,047,664
LONG-TERM DEBT 141,660 1,374,102 1,515,762
SITE RESTORATION AND ABANDONMENT 369,297 - $1,895,700 2(b) 2,264,997
SHAREHOLDERS' EQUITY
Share capital 30,891,689 - 12,274,198 2(a) 43,165,887
Contributed surplus 608,222 - 608,222
Deficit (6,761,871) 5,115,027 (5,115,027) 2(a) (6,761,871)
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24,738,040 5,115,027 37,012,238
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$ 26,958,754 $13,341,164 $49,354,789
===============================================================================================================
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See accompanying notes to pro forma financial statements.
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OPTIMA PETROLEUM CORPORATION
Pro Forma Statement of Operations
Three Months Ended March 31, 1998
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Pro Forma
OPC AMEX Adjustments Notes Combined
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<S> <C> <C> <C> <C>
OPERATING REVENUE
Petroleum and natural gas sales $ 1,119,473 $2,355,938 $659,781 2(f) $ 4,135,192
COSTS AND EXPENSES
Royalties and production taxes 355,627 88,638 659,781 2(f) 1,104,046
Operating costs 338,175 1,000,966 1,339,141
Depletion and depreciation 872,714 1,154,794 425,116 2(c) 2,452,624
General and administrative 386,039 609,321 995,360
Interest and other revenue (99,109) (7,179) (106,288)
Foreign exchange loss 246,462 - 246,462
Interest and bank charges 2,644 114,824 117,468
Amortization of deferred financing costs 17,082 - 17,082
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INCOME (LOSS) BEFORE INCOME TAXES (1,000,161) (605,426) (2,030,703)
Income taxes - - -
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NET INCOME(LOSS) FOR THE YEAR $ (1,000,161) (605,426) $ (2,030,703)
===========================================================================================================
NET INCOME (LOSS) PER
COMMON SHARE (Note 3) $ (0.09) N/A $ (0.11)
===========================================================================================================
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See accompanying notes to pro forma financial statements.
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OPTIMA PETROLEUM CORPORATION
Pro Forma Statement of Operations
Year Ended December 31, 1997
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Pro Forma
OPC AMEX Adjustments Notes Combined
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<S> <C> <C> <C> <C>
OPERATING REVENUE
Petroleum and natural gas sales $ 7,649,415 $9,403,334 $3,806,465 2(f) $ 20,859,214
COSTS AND EXPENSES
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
Depletion and depreciation 4,269,745 3,898,106 1,435,016 2(c) 9,602,867
Write-down of petroleum and natural
gas interests 2,520,000 - 2,520,000
Provision for revenue dispute 1,023,998 - 1,023,998
Gain on sale of Canadian petroleum
and natural gas interests (518,025) - (518,025)
General and administrative 1,691,779 550,768 2,242,547
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
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INCOME (LOSS) BEFORE INCOME TAXES (4,684,220) 1,341,166 (4,778,070)
Income taxes 151,000 - 480,300 2(d) 151,000
(480,300) 2(e)
- ------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FOR THE YEAR $ (4,835,220) $1,341,166 $ (4,929,070)
============================================================================================================
NET INCOME (LOSS) PER
COMMON SHARE (Note 3) $ (0.43) N/A $ (0.27)
============================================================================================================
</TABLE>
See accompanying notes to pro forma financial statements.
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OPTIMA PETROLEUM CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
YEAR ENDED DECEMBER 31, 1997
(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 ("GAAP") in
Canada. A reconciliation of Canadian and U.S. GAAP is provided in note
4.
The pro forma statements have been prepared from the unaudited
consolidated financial statements of OPC for the three months ended
March 31, 1998 and from the audited consolidated financial statements of
OPC for the year ended December 31, 1997 and from the unaudited
financial statements of American Explorer, LLC ("AMEX") for the three
months ended March 31, 1998 and from the audited financial statements of
AMEX for the year ended December 31, 1997, 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 March 31, 1998 is translated at a current
exchange rate at this date of $1.4166 and the statements of operations
are translated at the average exchange rate for the statement period
presented (March 31, 1998 - $1.4321; December 31, 1997 - $1.3846;).
The pro forma statements are not necessarily indicative of either the
results of operations that would have occurred for the three months
ended March 31, 1998 or 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
unaudited consolidated financial statements of OPC and the unaudited
financial statements of AMEX for the three months ended March 31, 1998
and 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.
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 March 31, 1998. The pro forma combined
statements of operations for the three months ended March 31, 1998 and
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.
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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
$5,115,027.
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NET ASSETS ACQUIRED
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Current assets $ 1,952,796
Petroleum and natural gas interests, at historical cost 11,097,254
Other assets 1,141,074
Current liabilities (6,852,035)
Long term debt (2,224,062)
-----------
5,115,027
Excess purchase price, attributed to petroleum and natural gas
interests 7,159,171
------------
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
===========
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The Company will also issue 1,667,001 in contingent stock issue
rights which will be exchangeable for common shares of the
Company if the Company's share price exceeds U.S.$5 per share for
20 consecutive trading days. As this contingent consideration is
not reasonable determinable at this time, no amount has been
recorded in the cost of the acquisition. Any contingent
consideration will be recorded when reasonable determinable
which, in this case, would be when the contingent stock issue
rights are exercisable.
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.
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Three Months
Ended Year Ended
March 31/98 Dec 31/97
------------ -----------
<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: $ 425,116 $1,435,016
============ ==========
d) Income taxes
To record deferred income taxes on income of AMEX $ -- $ 480,300
============ ==========
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e) Income taxes
To reduce deferred income taxes of AMEX to reflect the
utilization of OPC's losses carry forward. $ -- $ (480,300)
============= ==========
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. $ 659,781 $3,806,465
============= ==========
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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
three months ended March 31, 1998 and for the years ended December 31,
1997 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 period or year.
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<CAPTION>
Three months ended Year ended
March 31, December 31,
1998 1997
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<S> <C> <C>
Weighted average common shares, at historical 11,002,346 11,159,663
Shares issued pursuant to offering 7,335,001 7,335,001
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Weighted average common shares, pro forma 18,337,347 18,494,664
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. CANADA / U.S. GAAP RECONCILIATION
The following Canada / U.S. GAAP reconciliation is provided for material
differences affecting the reported amount in the pro forma financial
statements:
a) Pro forma balance sheet as at March 31, 1998
In 1995, the Company applied its opening deficit of $10,602,526
against its share capital. This adjustment is not in accordance
with U.S. GAAP. At March 31, 1998 deficit is $10,602,526 higher
or $17,364,397 and share capital is $10,602,526 higher or
$53,768,413 for U.S. GAAP.
b) Pro forma statement of operations for the three months ended
March 31, 1998
There are no significant Canadian / U.S. GAAP differences.
c) Pro forma statement of operations for the year ended December 31,
1997
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<S> <C>
Loss for the year reported $ 4,929,070
Write-down of petroleum and natural gas interests (800,000)
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Loss for U.S. GAAP $ 4,129,070
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Loss per share for U.S. GAAP $ 0.22
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</TABLE>
