<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
September 9, 1997
GOTHIC ENERGY CORPORATION
Commission file number 0-19753
An Oklahoma Corporation IRS Employer No. 22-2663839
5727 S. Lewis Ave.
Tulsa, Oklahoma 74105-7148
Telephone Number (918) 749-5666
The undersigned hereby amends the following items, financial statements,
exhibits or other portions of its Current Report on Form 8-K dated September 9,
1997, as set forth in the pages attached hereto:
Item 7. Financial Statements and Exhibits
<PAGE>
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
HS Properties This Report
-----------------------------------------------------------------------
Report of Independent Accountants F-1
Historical Schedule of Gross Revenues
and Direct Lease Operating Expenses of the
HS Properties for the Years Ended
December 31, 1996 and 1995 and for the six months
ended June 30, 1997 and 1996 F-2
Notes to the Historical Schedule of Gross
Revenues and Direct Lease Operating
Expenses of the HS 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 Combined Condensed
Statement of Operations for the Year Ended
December 31, 1996 P-1
Unaudited Pro Forma Combined Condensed
Statement of Operations for the Six Months
Ended June 30, 1997 P-2
Unaudited Pro Forma Combined Condensed
Balance Sheet as of June 30, 1997 P-3
Notes to the Unaudited Pro Forma Combined
Condensed Financial Statements P-4
(c) Exhibits - Consent of Independent Accountants
<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
OCTOBER 2, 1997 BY: /S/ MICHAEL PAULK
-------------------------------------
MICHAEL PAULK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
S-1
<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 HS Properties, as defined in Note 1,
(the "Schedule") for the years ended December 31, 1996 and 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 audits 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 audits provide a reasonable basis for our opinion.
The accompanying historical schedule of gross revenues and direct lease
operating expenses of the HS 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 September 9,
1997) as described in Note 2 and is not intended to be a complete presentation
of HS 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 HS Properties for the years ended December 31, 1996
and 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
July 11, 1997
F-1
<PAGE>
GOTHIC ENERGY CORPORATION
HISTORICAL SCHEDULE OF GROSS REVENUES AND DIRECT LEASE
OPERATING EXPENSES OF THE HS PROPERTIES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
--------------------- ----------------------
1996 1995 1997 1996
---------- ---------- ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Gross revenues.................. $5,643,000 $3,884,000 $2,739,000 $2,614,000
Direct lease operating
expenses....................... 2,012,000 1,702,000 1,030,000 971,000
---------- ---------- ---------- ----------
Excess of gross revenues over
direct lease operating
expenses....................... $3,631,000 $2,182,000 $1,709,000 $1,643,000
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this schedule.
F-2
<PAGE>
GOTHIC ENERGY CORPORATION
NOTES TO THE HISTORICAL SCHEDULE OF
GROSS REVENUES AND DIRECT LEASE OPERATING EXPENSES
OF THE HS PROPERTIES
1. THE PROPERTIES
On September 9, 1997, Gothic Energy Corporation ("Gothic") acquired from two
affiliates of HS Resources, Inc. ("HS") various working interests in a total of
approximately 250 oil and gas producing wells located in New Mexico and Oklahoma
(the "HS Acquisition"). The purchase price for the properties (the "HS
Properties") was $27,500,000 plus the transfer of certain producing properties
presently owned by Gothic having a value of less than $1,000,000, subject to
closing adjustments. The effective date of the HS Aquisition was July 1, 1997,
for the purpose of determining the closing adjustments.
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 QUANTITIES--Oil and natural gas reserves cannot be measured
exactly. Estimates of oil and natural gas reserves require extensive judgments
of reservoir engineering data and are generally less precise than other
estimates made in connection with financial disclosures.
Proved reserves are those quantities which, upon analysis of geological and
engineering data, appear with reasonable certainty to be recoverable in the
future from known oil and natural gas reservoirs under existing economic and
operating conditions. Proved developed reserves are those reserves which can
be expected to be recovered. Undeveloped reserves are those reserves which are
expected to be recovered from new wells on undrilled acreage or from existing
wells where a relatively major expenditure is required.
Estimated quantities of proved oil and natural gas reserves acquired from HS
at June 30, 1997 (the date at which the most recent reserve report was
available) were (in thousands):
<TABLE>
<S> <C> <C>
Proved Reserves: Oil (Bbls) 1,914
Gas (Mcf) 39,066
Proved Developed
Reserves: Oil (Bbls) 1,251
Gas (Mcf) 24,921
</TABLE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS OF PROVED OIL AND
GAS RESERVES ("SMOG")--Estimates of oil and natural gas reserves require
extensive judgments of reservoir engineering data as explained above.
Assigning monetary values to such estimates does not reduce the subjectivity
and changing nature of such reserve estimates. Indeed, the uncertainties
inherent in the disclosure are compounded by applying additional estimates of
the rates and timing of production and the costs that will be incurred in
developing and producing the reserves. The information set forth herein is
therefore subjective and, since judgments are involved, may not be comparable
to estimates submitted by other oil and natural gas producers. In addition,
since prices and costs do not remain static and no price or cost escalations
or de-escalations have been considered, the results are not necessarily
indicative of the estimated fair market value of estimated proved reserves nor
of estimated future cash flows. Accordingly, these estimates are expected to
change as future information becomes available.
F-3
<PAGE>
GOTHIC ENERGY CORPORATION
NOTES TO THE HISTORICAL SCHEDULE OF
GROSS REVENUES AND DIRECT LEASE OPERATING EXPENSES
OF THE HS PROPERTIES--(CONTINUED)
3. SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)--CONTINUED
Future net cash inflows are based on the future production of proved
reserves of crude oil and natural gas as estimated by petroleum engineers by
applying current prices of oil and gas to estimated future production of
proved reserves. Prices used in determining future cash inflows for oil and
natural gas as of June 30, 1997, were $19.00 per barrel and $1.85 per mcf,
respectively.
Future net cash flows are then calculated by reducing such estimated cash
inflows by the estimated future expenditures (based on current costs) to be
incurred in developing and producing the proved reserves and by the estimated
future income taxes. Estimated future income taxes are computed by applying
the appropriate year-end tax rate to the future pretax net cash flows relating
to the estimated proved oil and gas reserves. The estimated future income
taxes give effect to permanent differences and tax credits and allowances.
The SMOG is based on criteria established by Financial Accounting Standards
Statement No. 69, "Accounting for Oil and Gas Producing Activities" and is not
intended to be a "best estimate" of the fair value of the acquired oil and gas
properties. For this to be the case, forecasts of future economic conditions,
varying price and cost estimates, varying discount rates and consideration of
other than proved reserves (i.e., probable reserves), would have to be
incorporated into the valuations.
Included in the estimated standardized measure of future cash flows are
certain capital projects. Gothic estimates the capital required to develop
undeveloped oil and gas reserves relating to the acquired HS properties over
the next three years to be approximately $8.9 million, including $4.4 million
during the year ending December 31, 1998. The SMOG for the acquired properties
is as follows (in thousands):
<TABLE>
<S> <C>
Future cash flows................................................... $112,111
Future production costs and development costs....................... (35,793)
Future income tax expense........................................... (18,551)
--------
Future net cash flows............................................... 57,767
10% annual discount for estimated timing of cash flows.............. (30,653)
--------
Standardized measure of discounted future net cash flows relating to
proved oil and natural gas reserves................................ $ 27,114
========
</TABLE>
F-4
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION - GOTHIC ENERGY CORPORATION
GOTHIC ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------------------------------------------------- ---------------------------
1996 1997 HS
GOTHIC ACQUISITIONS(a) ACQUISITIONS(b) ACQUISITION(c) ADJUSTMENTS COMBINED
----------- -------------- -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Oil and gas sales...... $10,385,000 $2,142,000 $10,269,000 $ 5,226,000 $ -- $28,022,000
Well operations........ 1,062,000 -- -- -- 1,052,000 (d) 2,114,000
Interest and other
income................ 68,000 27,000 -- -- -- 95,000
----------- ---------- ----------- ----------- ------------ -----------
Total revenue......... 11,515,000 2,169,000 10,269,000 5,226,000 1,052,000 30,231,000
Costs and expenses:
Lease operating
expense............... 4,807,000 761,000 1,433,000 1,745,000 -- 8,746,000
Gas system expense..... -- -- 2,984,000 -- -- 2,984,000
Depletion, depreciation
and amortization...... 2,856,000 -- -- -- 4,936,000 (e) 7,792,000
General and
administrative
expense............... 1,781,000 -- -- -- -- 1,781,000
Provision for
impairment of oil and
gas properties........ 5,050,000 -- -- -- -- 5,050,000
----------- ---------- ----------- ----------- ------------ -----------
Operating income
(loss)................ (2,979,000) 1,408,000 5,852,000 3,481,000 (3,884,000) 3,878,000
Interest expense and
debt issuance costs... 1,529,000 -- -- -- 12,098,000 (f) 13,627,000
----------- ---------- ----------- ----------- ------------ -----------
Income (loss) before
income taxes and
extraordinary item..... (4,508,000) 1,408,000 5,852,000 3,481,000 (15,982,000) (9,749,000)
Income tax benefit...... 2,993,000 -- -- -- -- 2,993,000
----------- ---------- ----------- ----------- ------------ -----------
Income (loss) before
extraordinary item..... $(1,515,000) 1,408,000 5,852,000 3,481,000 (15,982,000) (6,756,000)
Preferred dividends
($68.75 per preferred
share)................. 381,000 -- -- -- -- 381,000
Preferred dividend--
amortization of
discount............... 792,000 -- -- -- -- 792,000
----------- ---------- ----------- ----------- ------------ -----------
Income (loss) before
extraordinary item
available for common
shares................. $(2,688,000) $1,408,000 $ 5,852,000 $ 3,481,000 $(15,982,000) $(7,929,000)
=========== ========== =========== =========== ============ ===========
Income (loss) before
extraordinary item per
common share $ (0.23) $ (0.66)
=========== ===========
Weighted average shares
outstanding (both
primary and fully
diluted)............... 11,663,117 350,000 (1) 12,013,117
=========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
condensed financial statements.
P-1
<PAGE>
GOTHIC ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------- --------------------------
KERR-
GOTHIC FINA(g) MCGEE(g) HS(c) ADJUSTMENTS COMBINED
---------- -------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Oil and gas sales...... $8,025,000 $322,000 $599,000 $2,498,000 $ -- $11,444,000
Gas system revenue..... 2,179,000 -- -- -- -- 2,179,000
Well operations........ 631,000 -- -- -- 226,000 (d) 857,000
Interest and other
income................ 20,000 -- -- -- -- 20,000
---------- -------- -------- ---------- ----------- -----------
Total revenue......... 10,855,000 322,000 599,000 2,498,000 226,000 14,500,000
Costs and expenses:
Lease operating
expense............... 3,222,000 88,000 122,000 877,000 -- 4,309,000
Gas system expense..... 1,742,000 -- -- -- -- 1,742,000
Depletion, depreciation
and amortization 2,673,000 -- -- -- 776,000 (e) 3,449,000
General and
administrative
expense............... 1,041,000 -- -- -- -- 1,041,000
---------- -------- -------- ---------- ----------- -----------
Operating income....... 2,177,000 234,000 477,000 1,621,000 (550,000) 3,959,000
Interest expense and
debt issuance costs 2,926,000 -- -- -- 3,888,000 (f) 6,814,000
---------- -------- -------- ---------- ----------- -----------
Income (loss) before
income taxes........... (749,000) 234,000 477,000 1,621,000 (4,438,000) (2,855,000)
Income tax provision.... -- -- -- -- -- --
---------- -------- -------- ---------- ----------- -----------
Net income (loss)....... $ (749,000) 234,000 477,000 1,621,000 (4,438,000) (2,855,000)
Preferred dividend...... 196,000 -- -- -- -- 196,000
---------- -------- -------- ---------- ----------- -----------
Net income (loss
available for common
shares................. $ (945,000) $234,000 $477,000 $1,621,000 $(4,438,000) $(3,051,000)
========== ======== ======== ========== =========== ===========
Net loss per common
share.................. $ (.07) $ (.24)
========== ===========
Weighted average shares
outstanding (both
primary and fully
diluted)............... 12,820,079 100,000 (l) 12,920,079
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
condensed financial statements.
P-2
<PAGE>
GOTHIC ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ----------------------------
ASSETS GOTHIC ADJUSTMENTS COMBINED
------ ----------- ----------- ------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents......... $ 304,000 $15,423,000 (h) $ 15,727,000
Oil and gas receivable............ 2,829,000 -- 2,829,000
Receivable from officers and
employees........................ 85,000 -- 85,000
Other............................. 293,000 -- 293,000
----------- ----------- ------------
Total current assets............ 3,511,000 15,423,000 18,934,000
Property and equipment:
Oil and gas properties on full
cost method:
Properties being amortized....... 62,542,000 31,100,000 (i) 93,642,000
Unproved properties not subject
to amortization................. 1,768,000 1,768,000
Gas gathering and processing
system........................... 5,046,000 5,046,000
Equipment, furniture and
fixtures......................... 359,000 -- 359,000
Accumulated depreciation,
depletion and amortization....... (6,310,000) -- (6,310,000)
----------- ----------- ------------
Property and equipment, net....... 63,405,000 31,100,000 94,505,000
Other assets, net................. 5,333,000 4,250,000 (h) 6,073,000
(810,000)(j)
(2,700,000)(k)
----------- ----------- ------------
Total assets.................... $72,249,000 $47,263,000 $119,512,000
=========== =========== ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable trade............ 1,858,000 -- 1,858,000
Revenues payable.................. 1,899,000 -- 1,899,000
Accrued liabilities............... 511,000 (132,000)(h) 379,000
Notes payable..................... 14,500,000 (14,500,000)(h) --
Current portion long-term debt.... 4,760,000 (4,760,000)(h) --
----------- ----------- ------------
Total current liabilities....... 23,528,000 (19,392,000) 4,136,000
Long-term debt...................... 29,835,000 70,165,000 (h) 98,810,000
(1,190,000)(m)
Gas imbalance liability............. 883,000 -- 883,000
Common stock subject to repurchase
(1,500,000 shares)................. 2,700,000 (2,700,000)(k) --
Stockholder's equity:
Preferred stock, par value $.05,
authorized 500,000 shares; issued
and outstanding 4,490 shares..... 1,000 -- 1,000
Common stock, $.01 par value,
authorized 100,000,000 shares;
issued and outstanding 13,606,511
shares........................... 136,000 -- 136,000
Additional paid in capital........ 34,726,000 1,190,000 (m) 35,916,000
Accumulated deficit............... (19,560,000) (810,000)(j) (20,370,000)
----------- ----------- ------------
Total stockholder's equity...... 15,303,000 380,000 15,683,000
----------- ----------- ------------
Total liabilities and
stockholders' equity........... $72,249,000 $47,263,000 $119,512,000
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
condensed financial statements.
P-3
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
1. THE PROPERTIES
On September 9, 1997, pursuant to an agreement dated June 30, 1997, the
Company acquired from HS Resources, Inc. ("HS") various working interests in a
total of approximately 250 oil and gas producing properties located in New
Mexico and Oklahoma (the "HS Acquisition"). The Company will operate 142 of the
wells. The purchase price for the properties acquired was $27,500,000, plus the
transfer of certain properties to HS valued at less than $1,000,000. The HS
Acquisition closed concurrently with, and the purchase price was financed
through, the Offering on September 9, 1997, (the "HS Acquisition") as more fully
discussed below. The Company issued 1,500,000 shares of its common stock to HS
on June 30, 1997 when the market price of the stock was $1.80 per share as a
deposit toward the purchase price. The Company re-acquired and retired the
shares issued to HS upon closing of the HS Acquisition at a purchase price of
$1.80 per share.
On May 15, 1997, the Company purchased, pursuant to a purchase and sale
agreement dated April 12, 1997 with Fina Oil and Chemical Company ("Fina")
various working interests in 20 oil and gas producing properties (the "Fina
Aquisition"). The producing properties are located in Beaver County, Oklahoma
and Clark County, Kansas. The purchase price was approximately $3,300,000 after
closing adjustments, including a $200,000 deposit paid in March 1997, and was
borrowed under the Company's Credit Facility. The Company assumed operations of
all 20 producing properties.
On August 12, 1997, pursuant to an agreement dated July 10, 1997 the Company
acquired from Kerr-McGee Corporation ("Kerr-McGee") various working interests
and royalty interests in 162 wells located in Canadian and Grady Counties of
Oklahoma (the "Kerr-McGee Acquisition"). The total purchase price was $3,600,000
paid at the closing of the transaction. The funds to pay the purchase price were
borrowed under the Company's Credit Facility. The Company will operate 16 of the
wells acquired.
2. FINANCING
Financing for the HS Acquisition was provided by a portion of the proceeds of
an offering of 100,000 Units, consisting of an aggregate of $100,000,00
principal amount of 12 1/4% Senior Notes due 2004 and 1,400,000 warrants to
purchase an aggregate of 1,400,000 shares of Common Stock of the Company for
$3.00 per share, the "Offering", which closed concurrently with the closing of
the HS Acquisition. The Notes will mature on September 1, 2004 and bear interest
at the rate of 12 1/4% per annum, payable semiannually on March 1 and September
1 of each year, commencing March 1, 1998. In addition to providing funding for
the HS Acquisition, the proceeds from the Offering were used to retire the
Company's existing bank borrowing, to repay other indebtedness, and are intended
to be used to fund future acquisitions and development of producing properties
and for working capital. The Company incurred offering costs of approximately
$4,250,000 in connection with the Offering.
3. BASIS OF PRESENTATION
The accompanying Unaudited Pro Forma Combined Condensed Statements of
Operations and Balance Sheet are presented to reflect the consummation of the HS
Acquisition in September 1997, the Fina and Kerr-McGee Acquisitions, and various
other acquisitions made by the Company in 1997 and 1996, as discussed below, as
if these transactions had occurred at January 1, 1996, for purposes of the
statements of operations and as of June 30, 1997 for purposes of the balance
sheet, and may not be indicative of the results that would have occurred if the
acquisitions had been effective on the dates indicated or of the results that
may be obtained in the future. The accompanying unaudited Pro Forma Combined
Condensed Statements of Operations and Balance Sheet should be read in
conjunction with the historical consolidated financial statements and notes to
consolidated financial statements of the Company for the year ended December 31,
1996 and the six months ended June 30, 1997, the Historical Schedule of Gross
Revenues and Direct Lease Operating Expenses of the Comstock Properties for the
three months ended March 31, 1996, the Historical Schedule of Gross Revenues and
Direct Operating Expenses of the Norse and Horizon Properties for the year ended
December 31, 1996, and the Historical Schedule of Gross Revenues and Direct
Lease Operating Expenses of the HS Properties for the year ended December 31,
1996 and for the six months ended June 30, 1997.
Other 1997 acquisitons made by Gothic include the acquisition of interests in
oil and gas properties and in a gas gathering system in February 1997 from Norse
Exploration, Inc., and Norse Pipeline, Inc., (the "Norse Acquisition") and from
H. Huffman & Company (the "Huffman Acquisition"), as well as the acquisition of
interests in oil and gas properties in February 1997 from Horizon Gas Partners,
L.P. (the "Horizon Acquisition"). The 1996 acquisitions made by Gothic include
the acquisition of Buttonwood Energy Corporation (the "Buttonwood Acquisition")
in January 1996, the acquisition of interests, in oil and gas properties from
Comstock Oil and Gas, Inc. (the "Comstock Acquisition") in May 1996, and the
acquisition of interests in oil and gas properties from Athena Energy, Inc. (the
"Athena Acquisition"), in December 1996.
P-4
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
4. PRO FORMA ADJUSTMENTS
The accompanying unaudited Pro Forma Combined Condensed Statements of
Operations and Balance Sheet include the following adjustments:
(a) Reflects the historical revenues and lease operating expenses of the
properties acquired during 1996 for the allocable portion of 1996 not included
in the Company's historical 1996 financial statements. The 1996 acquisitions'
allowable results include the Buttonwood Acquisition for one month, the
Comstock Acquisition for four months, the Athena Acquisition for eleven months
and other various working interests acquired for seven weeks. The 1996
acquisitions also reflect a deduction for revenues and lease operating
expenses associated with certain properties sold in April and August of 1996.
(b) Reflects the historical revenues and lease operating expenses of the
properties acquired in the Norse Acquisition, the Horizon Acquisition, the
Huffman Acquisition, the Fina Acquisition, the Kerr McGee Acquisition and
other acquisitions consummated in 1997.
(c) Reflects the historical revenues and lease operating expenses of the
properties acquired during 1997 from HS, less the historical revenues and
lease operating expenses associated with certain properties transferred to
HS as part of the acquisition.
(d) Adjustment to well operations revenue to reflect the historical revenue
realized as a result of operating a total of 248 wells acquired from various
parties including Fina, Kerr-McGee, and HS during the year ended December 31,
1996 and for the six months ended June 30, 1997.
(e) Depreciation, depletion and amortization ("DD&A") was calculated using a
DD&A rate based on production for 1996 and for the six months ended June 30,
1997, and estimated reserves at the beginning of 1996 and 1997, respectively,
under the full cost method of accounting for oil and gas properties and the
straight line method for the Company's gas gathering system.
(f) Adjustment to interest expense to reflect the debt incurred
associated with the Offering at an interest rate of 12.25% per annum,
amortization of debt issuance costs and amortization of the estimated
original issue discount related to the warrants issued in connection with
the Offering.
(g) Reflects the historical revenues and lease operating expenses of the
properties acquired during 1997 from Fina and Kerr-McGee. The Fina amounts
include the first three months of 1997 only, as the remaining three months
are included in Gothic's historical numbers.
(h) Adjustment to debt to reflect the Offering and the repayment of the
Company's credit facility and bridge financing. Adjustment also reflects
payment of $132,000 in related accrued interest under the credit facility,
$4,250,000 in deferred offering costs, and excess cash of $15,423,000 to be
used for working capital, future acquisitions, and development costs.
(i) Adjustment to reflect the Kerr-McGee Acquisition for $3,600,000, and
the HS Acquisition for $27,500,000.
(j) Adjustment to deferred loan costs to reflect the write-off of $435,000
as the remaining unamortized portion of the estimated fair value of the
250,000 shares of common stock issued as part of the bridge financing, the
$83,000 remaining unamortized portion of the fee paid in cash related to the
bridge financing, and the $112,000 remaining unamortized portion of the
estimated fair value of the 100,000 shares of common stock issued on May 31,
1997 to extend the $2,500,000 bridge note, and $180,000 as the estimated fair
value of the 100,000 shares of common stock issued on July 31, 1997, to extend
the $2,500,000 bridge note to September 30, 1997.
(k) Adjustment to reflect the repurchase and retirement of the 1,500,000
shares of the Company's common stock for $1.80 per share from HS in
conjunction with the closing of the HS Acquisition and the Offering.
P-5
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(l) To adjust the year ended December 31, 1996 for 250,000 shares issued
as additional debt costs on debt incurred to purchase properties and
100,000 shares issued to extend the maturity date of the $2,500,000 loan
and to adjust the six months ended June 30, 1997 for the 100,000 shares
issued to extend the maturity date of the $2,500,000 loan.
(m) Adjustment to reflect the estimated fair value of the warrants of
$1,190,000 issued in connection with the Offering.
P-6
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement on
Form S-3 of Gothic Energy Corporation (File No. 333-23239) of our report dated
July 11, 1997 on our audit of the historical schedule of gross revenues and
direct lease operating expenses of the HS Properties for the years ended
December 31, 1996 and 1995, which report is included in this Form 8-K/A.
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
October 3, 1997
