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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) July 1, 1999
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MIDDLE BAY OIL COMPANY, INC.
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(Exact name of registrant as specified in its charter)
ALABAMA 0-21702 63-1081013
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1221 Lamar, Suite 1020, Houston, Texas 77010
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(Address of principal executive offices)
Registrant's telephone number, including area code (713) 759-6808
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N/A
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(Former name or former address, if changed since last report)
ITEM 1 - CHANGE IN CONTROL OF REGISTRANT
On July 1, 1999, the Registrant entered into a Securities Purchase Agreement
(the "Agreement") with 3TEC Energy Corporation, a privately-held Delaware
corporation ("3TEC"), whereby the Registrant would issue 4,755,556 shares of
common stock and 3,600,000 warrants to purchase common stock for $10,700,000
(the "Warrants") and a 5-year senior subordinated convertible note with a
face value of $10,700,000 (the "Note"). The Warrants may be exercised for up
to 3,600,000 shares of common stock at an exercise price of $1 per share.
Sixty percent of the Warrants may be exercised immediately. The remaining 40%
will be exercisable over a 4-year period commencing 12 months from the
closing date of the Agreement. The Note will bear interest at a rate of 9%
per annum and is convertible into 3,566,667 shares of common stock ($3 per
share).
The closing of the transaction is contingent upon approval of Middle Bay's
shareholders at Middle Bay's annual meeting, expected to be held August 10,
1999. Middle Bay's major shareholders, representing 71% of its outstanding
common stock, have agreed to vote in favor of the transaction.
At closing, 3TEC will become Middle Bay's largest shareholder with ownership
of approximately 36% of the then outstanding common stock. Middle Bay's
largest current shareholder, Kaiser-Francis Oil Company, will own 25% of
Middle Bay's
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outstanding common stock after closing. If 3TEC chooses to fully exercise the
Warrants and fully convert the Note to common shares, 3TEC would control
approximately 58% of the then issued and outstanding shares of common stock
of Middle Bay.
Under the terms of a shareholders agreement to be executed at closing, 3TEC
will have the right to designate three members of a new five-person Middle
Bay Board of Directors. Certain other major shareholders of Middle Bay will
have the right to designate the other two board members.
3TEC is a privately-held independent exploration and production company based
in Dallas, Texas whose largest shareholder is an affiliate of EnCap
Investments, L.C. Floyd C. Wilson, former president and chief executive
officer of Hugoton Energy Corporation, is a major shareholder and president
of 3TEC. Concurrent with the closing of the 3TEC/Middle Bay transaction, Mr.
Wilson will become chairman, president and chief executive officer of Middle
Bay. John J. Bassett, currently Middle Bay's president and chief executive
officer, will become executive vice president.
ITEM 7 - FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION
AND EXHIBITS
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(c) Exhibits
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4.1 - Securities Purchase Agreement Between 3TEC Energy
Corporation and Middle Bay Oil Company, Inc. dated
July 1, 1999. (Incorporated by reference to
exhibits to Preliminary Proxy Statement filed July
2, 1999)
99.1 - Press Release dated July 2, 1999
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Middle Bay Oil Company, Inc.
(Registrant)
Date: July l6, 1999 By: /s/ Frank C. Turner II
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Frank C. Turner, II
Vice President and
Chief Financial Officer
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FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
STEVE W. HEROD
713/759-6808, EXT. 104
MIDDLE BAY OIL COMPANY, INC. ANNOUNCES
SALE OF $21.4 MILLION OF COMMON STOCK, WARRANTS AND
SENIOR SUBORDINATED CONVERTIBLE DEBT TO 3TEC ENERGY CORPORATION
HOUSTON, TEXAS, JULY 2, 1999... Middle Bay Oil Company, Inc. ("Middle Bay" or
"Company") (NASDAQ: MBOC) announced today the execution of a Securities
Purchase Agreement (the "SPA") with 3TEC Energy Corporation ("3TEC") for the
sale of $21.4 million of common stock, warrants and senior subordinated
convertible debt. Pursuant to the terms of the SPA, 3TEC will purchase
4,755,556 shares of Middle Bay common stock and warrants to purchase
3,600,000 shares of Company common stock for $10.7 million. The warrants are
exercisable for $1.00 per share and are subject to certain restrictions
regarding the timing of their exercise. Middle Bay will issue 3TEC a senior
subordinated convertible note for $10.7 million (the "Note"). The Note will
have a five-year maturity, bear interest at 9% per annum and is convertible
into Middle Bay common stock at $3.00 per share, a total of 3,566,667 common
shares. Closing of the transaction is expected to be in August 1999. The
proceeds from the transaction will be added to working capital and be
available for the acquisition, development and exploration of oil and gas
properties.
3TEC Energy Corporation is a privately held independent exploration and
production company based in Dallas, Texas whose largest shareholder is an
affiliate of EnCap Investments L.C. Floyd C. Wilson, former President and
Chief Executive Officer of Hugoton Energy Corporation, is a major shareholder
and President of 3TEC. Concurrent with the closing of the 3TEC/Middle Bay
transaction, Mr. Wilson will become Chairman, President and Chief Executive
Officer of Middle Bay. John J. Bassett, currently Middle Bay's President and
Chief Executive Officer, will become Executive Vice President.
At closing, 3TEC will become Middle Bay's largest shareholder with ownership
of approximately 36% of the outstanding common stock. Under the terms of a
shareholders agreement to be executed at closing, 3TEC will have the right to
designate three members of a new five person Middle Bay Board of Directors.
Certain other major shareholders of the Company will have the right to
designate the other two board members. Middle Bay's largest current
shareholder, Kaiser-
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Francis Oil Company, will own 25% of the Company's outstanding common stock
after closing.
The closing of the transaction is contingent upon approval of Middle Bay's
shareholders at the Company's annual meeting, expected to be held in August
1999. Middle Bay's major shareholders, representing 71% of the Company's
outstanding common stock, have agreed to vote in favor of the transaction.
John J. Bassett, President and Chief Executive Officer of Middle Bay, stated,
"We are very excited about the financing transaction with 3TEC and its
shareholders, Floyd Wilson and EnCap Investments. This capital infusion will
position Middle Bay to take advantage of the opportunities that will be
available in the independent energy sector in the coming years. We welcome
the addition of Floyd Wilson to our management team and feel he can lead the
Company to great success."
Floyd C. Wilson, President of 3TEC, stated, "3TEC Energy Corporation and
EnCap Investments L.C. are committed to the continued growth of Middle Bay
Oil Company. We are focused on increasing shareholder value and look forward
to the completion of this transaction."
Middle Bay Oil Company, Inc. is an independent oil and gas exploration and
production company, headquartered in Houston, Texas, with operations in the
Gulf Coast and Mid-Continent regions.
The information contained in this press release may contain projections,
estimates and other forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Although the Company believes that its expectations are based on
reasonable assumptions, it can give no assurance that its goals will be
achieved. Important factors that could cause actual results to differ
materially from those included in the forward-looking statements include the
timing and extent of changes in commodity prices for oil and gas,
environmental risks, drilling, producing and operating risks, risks related
to exploration and development, uncertainties about the estimates of
reserves, government regulation, competition and the ability of the Company
to meet its stated business goals.
