<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
AMENDMENT TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report - May 16, 1996
GOTHIC ENERGY CORPORATION
Commission file number 0-19753
A Delaware Corporation IRS Employer No. 22-2663839
5727 S. Lewis Ave.
Tulsa, Oklahoma 74105-7148
Telephone Number (918) 749-5666
AMENDMENT NO. 1
The undersigned hereby amends the following items, financial statements,
exhibits or other portions of its Current Report on Form 8-K dated May 16, 1996,
as set forth in the pages attached hereto:
Item 7. Financial Statements and Exhibits
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FORM 8-K/A
GOTHIC ENERGY CORPORATION
TABLE OF CONTENTS
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements of Business Acquired
Set forth below are the financial statements appearing in this
report:
Page in
Comstock Properties This Report
------------------- -----------
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Accountants F-1
Historical Schedule of Gross Revenues
and Direct Lease Operating Expenses of
the Comstock Properties for the Years Ended
December 31, 1995 and 1994, and for the
Three months ended March 31, 1996 and
1995 F-2
Notes to the Historical Schedule of Gross
Revenues and Direct Lease Operating
Expenses of the Comstock Properties F-3
(b) Pro Forma Financial Information - Gothic
Energy Corporation
Set forth below is the pro forma financial
information appearing in this report:
Unaudited Pro Forma Consolidated Condensed
Statement of Operations for the Year Ended
December 31, 1995 P-1
Unaudited Pro Forma Consolidated Condensed
Statement of Operations for the Three Months
Ended March 31, 1996 P-2
Notes to Unaudited Pro Forma Consolidated
Condensed Financial Statements P-3
(c) Signatures S-1
</TABLE>
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Gothic Energy Corporation
We have audited the accompanying historical schedule of gross revenues and
direct lease operating expenses of the Comstock Properties, as defined in
Note 1, (the "Schedule") for the year ended December 31, 1995. The Schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion on the Schedule 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 Schedule is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Schedule. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the Schedule. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying historical schedule of gross revenues and direct lease
operating expenses of the Comstock Properties was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission (for inclusion in the Form 8-K of Gothic Energy dated May 16, 1996)
as described in Note 2 and is not intended to be a complete presentation of
Comstock Properties' revenues and expenses.
In our opinion, the Schedule referred to above presents fairly, in all
material respects, the gross revenues and direct lease operating expenses
described in Note 2 of the Comstock Properties for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
July 19, 1996
F-1
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GOTHIC ENERGY CORPORATION
HISTORICAL SCHEDULE OF GROSS REVENUES AND DIRECT LEASE
OPERATING EXPENSES OF THE COMSTOCK PROPERTIES
<TABLE>
<CAPTION>
For the Year For the Three
Ended Months
December 31, Ended March 31,
------------------------ -------------------------
1995 1994 1996 1995
---------- ------------ ---------- ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Gross revenues $ 1,664,000 $ 2,244,896 $ 412,573 $ 412,973
Direct lease operating expenses 1,020,000 1,139,853 251,297 265,370
----------- ----------- --------- ---------
Excess of gross revenues over $ 644,000 $ 1,105,043 $ 161,276 $ 147,603
direct lease operating expenses =========== =========== ========= =========
</TABLE>
The accompanying notes are
an integral part of this schedule.
F-2
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GOTHIC ENERGY CORPORATION
NOTES TO THE HISTORICAL SCHEDULE OF
GROSS REVENUES AND DIRECT LEASE OPERATING EXPENSES
OF THE COMSTOCK PROPERTIES
1. THE PROPERTIES
On May 16, 1996, Gothic Energy Corporation ("Registrant") acquired
interests in 145 oil and natural gas wells (the "Comstock Properties") from
Comstock Oil and Gas, Inc. and Comstock Offshore Energy, Inc. ("Comstock").
The properties were purchased for a price of $6.6 million, subject to
certain post-closing purchase price adjustments. The wells are located
primarily in the Anadarko Basin of western Oklahoma and the Arkoma Basin of
eastern Oklahoma and Arkansas.
2.BASIS OF PRESENTATION
The schedule presents the historical gross revenues and direct lease
operating expenses related to the productive properties acquired. Expenses
such as depreciation, depletion and amortization, general and administrative
expenses and income taxes have not been included in the schedule.
3. SUPPLEMENTAL OIL AND GAS INFORMATION (unaudited)
ESTIMATED PROVED RESERVES - Proved reserves are estimated quantities of
crude oil and natural gas which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Proved
developed reserves are those which are expected to be recovered through
existing wells with existing equipment and operating methods.
Estimated quantities of proved developed oil and natural gas reserves
acquired from Comstock at January 1, 1996 (the date at which the most recent
reserve report was available) were:
Oil (Bbls) 177,907
Gas (Mcf) 8,397,418
F-3
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GOTHIC ENERGY CORPORATION
NOTES TO THE HISTORICAL SCHEDULE OF
GROSS REVENUES AND DIRECT LEASE OPERATING EXPENSES
OF THE COMSTOCK PROPERTIES
3. SUPPLEMENTAL OIL AND GAS INFORMATION (unaudited), Continued
STANDARD MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS OF PROVED OIL AND GAS
RESERVES - The standardized measure of discounted future net cash flows
("SMOG") of the Comstock Properties was calculated using December 31, 1995
prices and costs, and year-end statutory tax rates, adjusted for permanent
differences, that relate to existing proved oil and natural gas reserves.
The SMOG for the acquired properties is as follows (in thousands):
Future cash flows $ 17,608
Future production costs and development
costs (8,159)
Future income tax expense (1,147)
---------
Future net cash flows 8,302
10% annual discount for estimated
timing of cash flows (3,653)
---------
Standardizing measure of discounted
future net cash flows relating to
proved oil and natural gas reserves $ 4,649
=========
The process of estimating oil and gas reserves is complex, requiring
significant subjective decisions in the evaluation of available geological,
engineering, and economic data for each reservoir. The data for a given
reservoir may change substantially over time as a result of, among other
things, additional development activity, production history, and viability
of production under varying economic conditions; consequently, material
revisions to existing reserve estimates may occur in the near future.
Although every reasonable effort has been made to ensure that the reserve
estimates reported herein represent the most accurate assessment possible,
the significance of the subjective decisions required and variances in
available data for various reservoirs make these estimates generally less
precise than other estimates presented in connection with financial
statement disclosures.
F-4
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GOTHIC ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
----------------------------------------- ---------------------------
Gothic
Energy Buttonwood Comstock
Corporation Energy (a) Properties Adjustments Combined
----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Oil and natural gas sales $ 1,894,000 $4,120,000 $1,664,000(b) $ - $7,678,000
Well operations 63,000 1,118,000 - - 1,181,000
Compressor rental - 486,000 - - 486,000
Gain from sale of option - 1,850,000 - (1,850,000)(c) -
Gain from sale of equipment - 1,087,000 - - 1,087,000
Other income 81,000 123,000 - - 204,000
----------- ----------- ---------- ------------- -----------
Total revenues 2,038,000 8,784,000 1,664,000 (1,850,000) 10,636,000
----------- ----------- ---------- ------------- -----------
Costs and expenses:
Lease operating expenses 1,203,000 2,626,000 1,020,000(b) - 4,849,000
Compressor rental - 369,000 - - 369,000
Depreciation, depletion and
amortization 882,000 1,442,000 - 2,034,000(d) 4,358,000
General and administrative 1,010,000 1,959,000 - - 2,969,000
Loss on termination of option 1,850,000 - - (1,850,000)(c) -
Provision for impairment of oil and
gas properties 2,247,000 - - - 2,247,000(g)
Provision for impairment of investment 802,000 - - - 802,000
Dry hole and abandonment - 27,000 - (27,000)(f) -
Interest expense and debt issuance
costs 1,627,000 231,000 - 629,000(e) 2,487,000
----------- ----------- ---------- ------------- -----------
Total costs and expenses 9,621,000 6,654,000 1,020,000 786,000 18,081,000
----------- ----------- ---------- ------------- -----------
Income (loss) before income taxes and
extraordinary item (7,583,000) 2,130,000 644,000 (2,636,000) (7,445,000)
Income tax expense - (70,000) - - (70,000)
----------- ----------- ---------- ------------- -----------
Income (loss) before extraordinary item (7,583,000) 2,060,000 644,000 (2,636,000) (7,515,000)
Preferred dividend - - - 416,000 416,000
----------- ----------- ---------- ------------- -----------
Income (loss) before extraordinary
item available for common shares $(7,583,000) $2,060,000 $ 644,000 $(3,052,000) $(7,931,000)
=========== =========== ========== ============= ===========
Loss before extraordinary item
available per common share $(1.73) $ (0.66)
=========== ===========
Weighted average shares outstanding
(both primary and fully diluted) 4,375,417 7,635,000(h) 12,010,417
=========== ============= ===========
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma consolidated condensed financial statements.
P-1
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GOTHIC ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------- -----------------------------
Gothic
Energy Comstock
Corp. Properties Adjustments Combined
------------ ----------- ------------- ----------
<S> <C> <C> <C> <C>
Revenues:
Oil and natural gas sales $ 1,608,000 $ 413,000(b) $ - $2,021,000
Other income 163,000 - - 163,000
------------ ----------- ------------- ----------
Total revenues 1,771,000 413,000 - 2,184,000
------------ ----------- ------------- ----------
Costs and expenses:
Lease operating expenses 883,000 251,000(b) - 1,134,000
Depreciation, depletion and amortization 535,000 - 378,000(d) 913,000
General and administrative 406,000 - - 406,000
Provision for impairment of oil and gas
properties 5,050,000 - - 5,050,000(g)
Interest expense and debt issuance costs 322,000 - 140,000(e) 462,000
------------ ----------- ------------- ----------
Total costs and expenses 7,196,000 251,000 518,000 7,965,000
------------ ----------- ------------- ----------
Loss before income taxes and
extraordinary item (5,425,000) 162,000 (518,000) (5,781,000)
Income tax benefit 2,993,000 - - 2,993,000
------------ ----------- ------------- ----------
Loss before extraordinary item (2,432,000) 162,000 (518,000) (2,788,000)
Preferred dividend 69,000 - - 69,000
------------ ----------- ------------- ----------
Income (loss) before extraordinary item available
for common shares $(2,501,000) $162,000 $(518,000) $(2,857,000)
============ =========== ============= ==========
Loss before extraordinary item available
per common share $(0.26) $ (0.30)
============ ==========
Weighted average shares outstanding (both
primary and fully diluted) 9,673,237 9,673,237
============ ==========
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma consolidated condensed financial statements.
P-2
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GOTHIC ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
Item 2. Acquisition or Disposition of Assets:
1. THE PROPERTIES
On May 16, 1996, the Registrant completed the acquisition, effective
as of January 1, 1996, from Comstock Oil and Gas, Inc. and Comstock Offshore
Energy, Inc. ("Comstock"), of various working interests in 145 producing oil
and gas properties. The Registrant will operate approximately 70 of the
wells. The purchase price for the properties acquired was $6,600,000,
subject to certain adjustments. Substantially all of the properties acquired
are located in the Anadarko Basin of western Oklahoma and the Arkoma Basin
of eastern Oklahoma and Arkansas.
The purchase price was financed through an increase in the amount of
borrowings under the Registrant's Loan Agreement dated January 19, 1996
with Bank One, Texas, N.A.
2. BASIS OF PRESENTATION
The accompanying unaudited Pro Forma Consolidated Condensed Statements
of Operations are presented to reflect the consummation of the Comstock
Property acquisition in May 1996 as if these transactions had occurred at
January 1, 1995, and may not be indicative of the results that would have
occurred if the acquisitions had been effective on the date indicated or of
the results that may be obtained in the future. The accompanying unaudited
Pro Forma Consolidated Condensed Statements of Operations should be read in
conjunction with the financial statements and notes to consolidated
financial statements of the Registrant for the year ended December 31, 1995
and the three months ended March 31, 1996, and the Historical Schedule of
Gross Revenues and Direct Lease Operating Expenses of the Comstock
Properties for the year ended December 31, 1995 and for the three months
ended March 31, 1996.
3. PRO FORMA ADJUSTMENTS
The accompanying unaudited Pro Forma Consolidated Condensed Statements
of Operations include the following adjustments:
(a) Reflects the historical results of Buttonwood Energy which was
acquired by Gothic on January 30, 1996.
(b) Oil and natural gas revenues and operating costs represent historical
revenues and direct lease operating expenses related to the producing
properties acquired from Comstock.
P-3
<PAGE>
GOTHIC ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
3. PRO FORMA ADJUSTMENTS, Continued
(c) Reflects the elimination of the loss on termination of the option from
the Company's historical expense and the corresponding elimination of
the option deposit from Buttonwood historical income.
(d) Depreciation, depletion and amortization ("DD&A") was calculated using
a DD&A rate based on production for 1995 and the three months ended
March 31, 1996, and estimated acquired reserves at the beginning of
the year, under the full cost method of accounting for oil and gas
properties.
(e) Adjustment to interest expense to reflect debt incurred to purchase
properties and amortization of discounts and debt issuance costs.
(f) Adjustments to reflect the conversion of Buttonwood's financial
statements to the full cost method of accounting which is used by the
Company.
(g) Not reflected in the Pro Forma Statement of Operations for the year
ended December 31, 1995 is an estimated full cost ceiling write-down
of $5,195,000 ($3,221,000, net of deferred tax benefit) which results
from lower oil and gas prices and would have been recorded had the
Buttonwood and Comstock Acquisitions been closed by December 31, 1995.
A similar full cost ceiling write-down of $5,050,000 was recorded by
the Company during the first quarter of 1996 upon completion of the
Buttonwood Acquisition. An additional write-down may be required
during the second quarter upon completion of the Comstock Acquisition.
(h) To adjust for shares issued, proceeds of which were used to fund a
portion of the Buttonwood Acquisition.
P-4
<PAGE>
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.
GOTHIC ENERGY CORPORATION
July 19, 1996 By:
----------------------------
Michael Paulk
President and Chief Executive Officer
S-1
