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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
AMENDMENT TO
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 27, 1996
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FRONTIER NATURAL GAS CORPORATION
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(Exact name of registrant as specified in its character)
Oklahoma
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(State or other jurisdiction of incorporation)
0-22782 73-1421000
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(Commission File Number) (IRS Employer Identification No.)
One Allen Center, 500 Dallas Street, Suite 2920, Houston, TX 77002
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (713)-739-7100)
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ITEM 7. Financial Statements and Exhibits
(a) Pro Forma Financial Information (Unaudited)
The following unaudited pro forma condensed consolidated balance sheet as
of June 30, 1996, and the unaudited pro forma condensed consolidated statements
of income for the six month period then ended and the year ended December 31,
1996 give effect to the sale of nineteen of the Company's producing oil and gas
properties in Major County, Oklahoma. The adjustments related to the unaudited
pro forma condensed consolidated balance sheet assume the transaction was
consummated at June 30, 1996, while the adjustments to the unaudited pro forma
condensed consolidated income statements assume the transaction was consummated
at the beginning of the periods presented. The final sale occurred on September
27, 1996.
The pro forma information is based on the historical financial statements
of the Registrant. The pro forma adjustments required are to eliminate the net
assets, record the payment of related debt, and to reflect the effect of the
reduced oil and gas production on income and the related expenses.
These unaudited pro forma statements are not necessarily indicative of the
results that actually would have occurred if the sales had been in effect as of
and for the periods presented or what may be achieved in the future.
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<TABLE>
<CAPTION>
FRONTIER NATURAL GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 421,364 $ $ 421,364
Accounts receivable 545,918 545,918
Prepaid expenses and other 153,111 153,111
Receivable from affiliates 243,895 243,895
----------- ----------- ----------
Total Current Assets 1,364,288 -0- 1,364,288
PROPERTY AND EQUIPMENT, NET 8,239,849 (3,543,210) (A) 4,696,639
OTHER ASSETS 720,448 (293,000) (E) 427,448
----------- ----------- ----------
TOTAL ASSETS $10,324,585 ($3,836,210) $6,488,375
=========== =========== ==========
LIABILITIES:
Accounts payable $ 722,607 $ $ 722,607
Revenue distribution payable 411,111 411,111
Current portion of long-term debt 823,416 (430,641) (A) 331,246
(61,529) (E)
Other current liabilities 172,274 17,313 (A) 189,587
----------- ---------- ----------
Total Current Liabilities 2,129,408 (474,857) 1,654,551
LONG TERM DEBT 3,527,706 (2,885,471) (A) 910,764
268,529 (E)
OTHER LONG TERM LIABILITIES 313,245 313,245
----------- ---------- ----------
TOTAL LIABILITIES 5,970,359 (3,091,799) 2,878,560
STOCKHOLDERS' EQUITY:
Preferred stock 860 860
Common stock 52,084 52,084
Unamortized value of warrants issued (68,244) (68,244)
Additional paid-in capital 8,215,254 8,215,254
Deficit (3,845,728) (744,411) (F) (4,590,139)
----------- ---------- ----------
TOTAL STOCKHOLDER'S EQUITY 4,354,226 (744,411) 3,609,815
----------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $10,324,585 ($3,836,210) $6,488,375
=========== =========== ==========
</TABLE>
See notes to pro forma condensed consolidated financial statements.
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<TABLE>
<CAPTION>
FRONTIER NATURAL GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
JUNE 30, 1996
(UNAUDITED)
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
REVENUES:
Gas and oil revenues $ 1,941,561 ($516,755) (C) $1,424,806
Gain on sale of assets 270,571 270,571
Other revenues 237,534 237,534
----------- ----------- ----------
Total revenue 2,449,666 ($516,755) 1,932,911
COSTS AND EXPENSES:
Lease operating expense 321,401 (153,183) (C) 168,218
Transportation and marketing 190,255 190,255
Production taxes 139,418 (36,664) (C) 102,754
Gas purchase under deferred contract 82,461 82,461
Depletion, depreciation and
amortization 810,845 (331,621) (C) 479,224
Exploration costs 218,671 218,671
Interest expense 198,310 (129,850) (D) 68,460
Deferred gas contract settlement 368,960 368,960
General and administrative costs 1,110,186 1,110,186
----------- ---------- ----------
Total costs and expense 3,440,507 (651,318) 2,789,189
----------- ---------- ----------
NET LOSS (990,841) 134,563 (856,278)
CUMULATIVE PREFERRED STOCK DIVIDED 51,576 51,576
----------- ---------- ----------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDER'S SHARES ($1,042,417) $ 134,563 ($907,854)
=========== ========== ==========
NET LOSS PER COMMON AND
EQUIVALENT SHARE ($0.20) ($0.18)
=========== ==========
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES (IN THOUSANDS) 5,146 5,146
=========== ==========
</TABLE>
See notes to pro forma condensed consolidated financial statements.
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<TABLE>
<CAPTION>
FRONTIER NATURAL GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
DECEMBER 31, 1995
(UNAUDITED)
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
REVENUES:
Gas and oil revenues $ 2,673,497 ($988,053) (C) $1,685,444
Gain on sale of assets 1,323,104 1,323,104
Other revenues 657,873 657,873
----------- ----------- ----------
Total revenue 4,654,474 (988,053) 3,666,421
COSTS AND EXPENSES:
Lease operating expense 862,575 (338,054) (C) 524,521
Production taxes 214,664 (70,102) (C) 144,562
Gas purchases under deferred contract 549,800 549,800
Depletion, depreciation and
amortization 1,182,998 (518,821) (C) 664,177
Exploration costs 1,105,214 1,105,214
Interest expense 43,000 43,000
General and administrative costs 2,291,701 2,291,701
----------- ---------- ----------
Total costs and expenses 6,249,952 (926,977) 5,322,975
----------- ---------- ----------
NET LOSS (1,595,478) (61,076) (1,656,554)
CUMULATIVE PREFERRED STOCK DIVIDEND 395,381 395,381
VALUE OF COMMON STOCK ISSUED FOR
CUMULATIVE PREFERRED STOCK IN EXCESS
OF ORIGINAL TERMS, NET OF
RELIEVED PREFERRED STOCK DIVIDEND 2,183,471 2,183,471
---------- ---------- ----------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDER'S SHARES ($4,174,330) ($61,076) ($4,235,406)
=========== ========== ===========
NET LOSS PER COMMON AND
EQUIVALENT SHARE ($1.05) ($1.06)
=========== ===========
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES (IN THOUSANDS) 3,977 3,977
=========== ===========
</TABLE>
See notes to pro forma condensed consolidated financial statements.
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FRONTIER NATURAL GAS CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
(A) Represents recording of the sale of producing properties.
(B) Represents use of proceeds of the sale to reduce the outstanding loan
balance.
(C) Represents the effect on income and expense of the reduced production
from the sale of producing properties.
(D) Represents the effect on income of the reduced interest costs due to
the reduction of debt.
(E) Represents the impact of the reduction of debt costs and discount on
note payable due to the early payment of the loan.
(F) Represents the estimated net effect on retained earnings of the sale
of producing properties and the use of proceeds to reduce the
outstanding loan balance.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRONTIER NATURAL GAS CORPORATION
Dated: December 10, 1996
/s/ David W. Berry
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David W. Berry, President
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