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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[_] Definitive Proxy Statement RULE 14A-6(e)(2))
[_] Definitive Additional Materials
[x] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
MESA INC.
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(Name of Registrant as Specified In Its Charter)
SAME
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Item 22(a)(2) of Schedule 14A.
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6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Notes:
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Boone Pickens
chairman of the board and chief executive officer
LOGO
September 8, 1995
I wanted you to see this
Board of Directors letter exempting myself from Mesa's
MESA Inc. Retention/Severance Plan. I'm going
1400 Williams Square West to do what it takes to keep our
5205 N. O'Connor Blvd. people on the job, protecting your
Irving TX 75039-3746 investment! Boone
Dear Fellow Board Member:
Thank you for approving the Retention/Severance Plan for MESA employees at
the August 22 meeting of MESA's board of directors. This program provides much
needed protection for all MESA employees as well as our shareholders.
As you know, MESA is among the most efficient operators in the oil and gas
industry. We have always expected more from our employees than any other
company in the business. Our employees each manage 5.3 billion cubic feet of
equivalent natural gas reserves, over twice the industry average. Our recent
program has thrown additional challenges at our employees and in some cases
doubled their workload.
Unfortunately, the actions of the Davis/Washington/Batchelder group have
created tremendous uncertainty among our 400 employees and their families.
While we continue our efforts to maximize shareholder value through a sale,
merger or restructuring, your approval of the retention plan provides the
security our employees need to remain in place to see the program through.
I will do everything possible to protect our employees and our shareholders
as this process moves forward. Not surprisingly, the
Davis/Washington/Batchelder group has been vocal in its criticism of our
retention program, using my inclusion in the plan as their lightning rod.
Although our program is conservative when compared with others in the
industry, I request that you take appropriate action to exclude me from
participating. While there have been arguments that I should be included in the
program in recognition of my 35 years of service to the company, retention
shouldn't be a concern in my case. I have a large investment in MESA and will
stay to see our program through. Without my participation, however, I don't see
how the Davis/Washington/Batchelder group can object to our employees being
protected.
Sincerely,
/s/ Boone Pickens
Boone Pickens
1400 WILLIAMS SQUARE WEST / 5205 NORTH O'CONNOR BLVD. / IRVING, TEXAS 75039-
3746
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Boone Pickens
chairman of the board and chief executive officer
LOGO OF MESA INC. APPEARS HERE
September 14, 1995
Dear Fellow Shareholder:
In my letter to you on August 19, I outlined the steps MESA is taking to
address our company's debt concerns and the program we have put in place to
maximize shareholder value. I'm pleased to report that this program is underway
and on schedule.
With our financial adviser, Lehman Brothers Inc., we are pursuing a wide
range of options, including the sale of MESA or merger with another company,
the sale of all or major portions of our Hugoton field properties in southwest
Kansas, equity infusions, and restructuring and refinancing opportunities. We
are encouraged by widespread early indications of interest from more than half
of the nearly 140 companies Lehman has contacted so far, and data rooms opened
last week to continue moving this program forward.
MESA's management team and Lehman are uniquely prepared to fully explore and
evaluate all available options and to realize full value for our company. We
believe that THE PEOPLE WHO BUILT THIS COMPANY AND KNOW IT BEST--MESA'S CURRENT
MANAGEMENT AND BOARD OF DIRECTORS--ARE BEST QUALIFIED TO CAPITALIZE ON ITS
UNDERLYING STRENGTH TO MAXIMIZE SHAREHOLDER VALUE, WHETHER THROUGH A SALE,
MERGER, OR RESTRUCTURING. Lehman has a proven record in managing programs such
as this.
We believe that industry benchmarking measurements for oil and gas operations
clearly demonstrate that over the last 30 years we have been one of the most
aggressive, efficient, and best-managed independent oil and gas companies, and
we remain so to this day. That's not just our opinion, it's the conclusion of
such respected and independent institutions as PaineWebber, Howard Weil, and
others. Among the top two dozen or so independent producers, MESA...
. . . . has one of the leanest and most productive workforces of any
independent. Our employees each manage 5.3 Bcf of reserves, over twice the
average reserve volume managed by our industry peers. (Bloomberg,
PaineWebber, Howard Weil)
. . . . increased production by 11 percent in 1994, primarily in the Hugoton
field and as a result of exploration and development success in the Gulf
of Mexico. (PaineWebber)
1400 WILLIAMS SQUARE WEST / 5205 NORTH O'CONNOR BLVD. / IRVING, TEXAS 75039-
3746
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. . . . has built a long-life reserve base that mitigates the need for
aggressive replacement through drilling and acquisitions. MESA has a
14.7-year reserve-to-production ratio versus an average of 10 years for
MESA's industry peers. (PaineWebber, Howard Weil)
. . . . has a success record for net drilling activity during the past five
years of 97 percent or greater--a record unmatched in the industry.
(PaineWebber)
<TABLE>
<S> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Wells Drilled 25.3 30.1 21.0 15.8 123.9
Successful Wells 24.5 29.1 20.6 15.6 120.8
Success Ratio 97% 97% 98% 99% 97%
</TABLE>
WE BELIEVE THESE OPERATING RESULTS SPEAK FOR THEMSELVES: THEY DEMONSTRATE
THAT MESA'S CURRENT MANAGEMENT AND BOARD HAVE CREATED A STRONG UNDERLYING
VALUE, BASED ON A RECORD OF SUCCESS IN EXPLORATION AND DEVELOPMENT. We are
crippled by debt, and we're working on the solution. However, this should not
take away from the fact that MESA is an efficient, well-managed producer with
significant operating strengths.
I have purchased an additional 2.2 million shares of MESA in the past two and
one-half years and remain our company's largest individual shareholder. I have
worked hard for the past 30 years building value for our shareholders. Since
1979, we have distributed about $2 billion in cash and securities to MESA
shareholders--the owners of MESA. Nobody knows more about the current
underlying value of MESA, and no one is more determined or better able to
realize every cent of that shareholder value than I am.
As always, I appreciate your ongoing support for MESA, and I will continue to
keep you posted on developments as we progress.
Sincerely,
/s/ Boone Pickens
Boone Pickens
Chairman and CEO
On Behalf of the Majority of
MESA's Board of Directors
(Statistical information contained in the operation and efficiency points cited
above was compiled through information contained in PaineWebber's 1995
Exploration & Production Company Reserve Portrait and Howard Weil's 1994/95
Reserve & Finding Cost Study of the Oil and Gas Independents, along with MESA's
drilling and reserve reports and industry information obtained from Bloomberg,
a financial news service.)
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REQUIRED DISCLOSURE: INFORMATION REGARDING PARTICIPANTS
The Company, each of its directors (other than David H. Batchelder and Dorn
Parkinson), and each of its executive officers could be deemed to be
participants (within the meaning of Rule 14a-11(b) under the Securities
Exchange Act of 1934, as amended) in any solicitation in opposition to the
solicitation for requests to hold a special meeting of the shareholders of the
Company by Dennis R. Washington, Marvin Davis and certain of his affiliates,
Mr. Batchelder, and Mr. Parkinson (the "13D Group"). The identities of the
executive officer participants and a description of their interests in the
solicitation are as follows: Boone Pickens, Chairman and Chief Executive
Officer (owns beneficially 4,945,376 shares of Common Stock and, in 1994, was
awarded total compensation of $1,944,500, which includes a $950,000 bonus
payment which has been deferred until Mr. Pickens' retirement and is subject to
his continued employment (except in certain events) through December 31, 1995,
with respect to the Company's 1994 commodities and securities investment
activities managed by him and which resulted in gains to the Company of $17.3
million in 1994; and he was awarded 200,000 options at $4.25); Paul W. Cain,
Director, President and Chief Operating Officer (owns beneficially 260,139
shares of Common Stock and, in 1994, was awarded total compensation of $643,523
and 150,000 options); Stephen K. Gardner, Vice President and Chief Financial
Officer (owns beneficially 69,229 shares of Common Stock and, in 1994, was
awarded total compensation of $177,951 and 85,000 options); Dennis E.
Fagerstone, Vice President-Exploration and Production (owns beneficially 81,000
shares of Common Stock and, in 1994, was awarded total compensation of $350,977
and 85,000 options); Andrew J. Littlefair, Vice President-Public Affairs (owns
beneficially 85,938 shares of Common Stock and, in 1994, was awarded total
compensation of $252,697 and 85,000 options); and William D. Ballew, Controller
(owns beneficially 51,103 shares of Common Stock and, in 1994, was awarded
total compensation of $188,639 and 45,000 options).The options awarded in 1994
have an exercise price of $4.25 per share and vest as follows: 30% on June 1,
1995, 55% on December 1, 1995, 80% on December 1, 1996 and 100% on December 1,
1997. Each of the executive officers participates in the Company's Employees
Premium Plan, Profit Sharing Plan, and 1991 Stock Option Plan and is covered by
customary liability insurance purchased by the Company. In addition, the
Company permits Mr. Pickens and his affiliates to use certain of the Company's
properties and assets for noncompany purposes on terms that, while not
disadvantageous to the Company, may be more favorable to Mr. Pickens than those
otherwise available to him. Mr. Pickens and affiliates reimbursed the Company a
total of $113,894 in 1994 for the use of these assets. The Company periodically
makes use of certain facilities owned by Mr. Pickens, paying for the use of
these facilities at rates comparable to those charged for similar facilities
owned by third parties. The Company paid Mr. Pickens $127,500 in 1994 for the
use of such facilities. The identities of the non-employee director
participants and a description of their interests in the solicitation are as
follows: John S. Herrington (owns beneficially 10,000 shares of Common Stock);
Wales H. Madden, Jr. (owns beneficially 22,000 shares of Common Stock); Fayez
S. Sarofim (owns beneficially 1,400,000 shares of Common Stock); Robert L.
Stillwell (owns beneficially 26,500 shares of Common Stock); and J. R. Walsh,
Jr. (owns beneficially 75,620 shares of Common Stock). Each of such non-
employee directors received $20,000 cash compensation for services as a
director in 1994 and is covered by customary liability insurance purchased by
the Company. In addition, Mr. Sarofim is Chairman of the Board, President, and
owner of a majority of the outstanding capital stock of Fayez Sarofim & Co.,
which acts as an investment adviser to certain employee benefit plans of the
Company. During the year ended December 31, 1994, Fayez Sarofim & Co. received
fees, paid by the employee benefit plans, of $135,442 for such services and has
been retained to provide such services in 1995. Mr. Stillwell is a partner in
the law firm of Baker & Botts, L.L.P. The Company retained Baker & Botts,
L.L.P. and incurred legal fees for such services in 1994. Baker & Botts, L.L.P.
has been retained to provide legal services in 1995. Mr. Walsh is President and
Chairman of the Board of United Mud Service Company. The Company paid United
Mud Service Company $82,428 for drilling mud and services during the year ended
December 31, 1994 and expects to use United Mud Service Company for such
products and services in 1995. The beneficial ownership information set forth
above is as of July 31, 1995 and includes with respect to the executive officer
participants an aggregate of 1,513,500 shares of Common Stock issuable upon
exercise of options that are exercisable within 60 days of such date. For more
detailed information regarding executive compensation and other matters
described above, see the Company's Proxy Statement for its 1995 annual meeting
and the Company's Proxy Statement in opposition to the 13D Group's solicitation
for written requests to hold a special meeting, a copy of which will be mailed
to shareholders.
