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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) DECEMBER 11, 1998
ZYDECO ENERGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22076 76-0404904
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1710 TWO ALLEN CENTER, 1200 SMITH STREET 77002
HOUSTON, TEXAS (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 659-2222
NO CHANGE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On December 11, 1998, Zydeco Energy, Inc. ("Zydeco") announced the ruling
by the three member arbitration panel in the arbitration proceedings brought by
Zydeco against Cheniere Energy, Inc. The press release announcing this event is
labeled as Exhibit 20.3, "Zydeco Announces Arbitration Ruling" and is
incorporated herein.
On December 14, 1998, Zydeco announced the terminations and resignations of
13 Zydeco employees, or approximately 52% of its total workforce. The press
release announcing this event is labeled as Exhibit 20.4 "Zydeco Reports
Employee Terminations" and is incorporated herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
20.3 Press release dated December 11, 1998 titled "Zydeco
Announces Arbitration Ruling.
20.4 Press release dated December 14, 1998 titled "Zydeco
Reports Employee Terminations"
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZYDECO ENERGY, INC.
/s/ John Misitigh
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John Misitigh
Chief Accounting Officer and Controller
(Principal Accounting Officer)
Dated: December 16, 1998
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EXHIBIT 20.3
[ZYDECO LETTERHEAD APPEARS HERE]
FOR IMMEDIATE RELEASE
CONTACT: MR. SAM B. MYERS, JR.
CHIEF EXECUTIVE OFFICER
(713) 659-2222
ZYDECO ANNOUNCES ARBITRATION RULING
December 11, 1998 (Houston) -- Zydeco Energy, Inc. (NASDAQ National Market
System trading symbol "ZNRG") announced today that the three-member arbitration
panel has issued its decision in the arbitration proceedings brought by Zydeco
Energy, Inc. ("Zydeco"), against Cheniere Energy, Inc. ("Cheniere") NASDAQ:
"CHEX"). The arbitration claim and counterclaim, as both were amended before the
American Arbitration Association, sought resolution of differences between the
two companies over funding obligations, current ownership interests in various
leases and prospects, the scope of pre-drilling activities in the Project Area
and a variety of related issues. In its ruling, the panel confirmed Zydeco's
position as program manager but recognized Cheniere's independent right to
identify prospects and acquire leases in the West Cameron Seismic Project area.
The arbitration panel directed that Cheniere has the right to participate with a
50% working interest in most of the leases acquired by Zydeco or in prospects
designated by Zydeco. Cheniere, however, must exercise its right of
participation and pay its share of such costs within a thirty-day period
following Zydeco's formal notice of prospect designation. For each prospect,
Zydeco has the sole right to undertake the management and control of all
prospect development for a reasonable period not to exceed 90 days following
such formal notice.
The arbitration panel also ruled that project seismic costs incurred after
December 31, 1997 are not reimbursable to Zydeco as seismic costs. Zydeco
believes that these costs, in whole or in part, may be reimbursable as prospect
costs. Zydeco had previously billed Cheniere $1.1 million as their share of such
costs. In addition if certain criteria are met, then sale proceeds from certain
marketing activities would be paid to Cheniere until Cheniere recoups $13.5
million of its investment in the project. Zydeco and Cheniere would share any
such sales above that amount equally. Neither party received any damage awards
or recovery of legal costs.
This news release may contain forward-looking statements that are based on
assumptions that in the future may prove not to be accurate. Those statements,
and Zydeco Energy, Inc.'s business and prospects, are subject to a number of
risks including, but not limited to, the volatility of oil and gas prices,
environmental risks, operating risks and hazards, risks related to exploration
and development drilling, uncertainties about reserve estimates, competition,
governmental regulation and the ability of the Company to implement its business
strategy. These and other risks are described in the Company's periodic reports
that are filed with and available from the United States Securities and Exchange
Commission.
Zydeco Energy, Inc. is an independent oil and gas exploration company
engaged in acquiring leases, drilling and producing reserves utilizing focused
geologic concepts and advanced 3D seismic and computer-aided exploration (CAEX)
technology, including enhanced structural and stratigraphic depth imaging and
attribute analysis. Zydeco's efforts are focused primarily in the Louisiana
Transition Zone.
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EXHIBIT 20.4
[ZYDECO LETTERHEAD APPEARS HERE]
FOR IMMEDIATE RELEASE
CONTACT: MR. SAM B. MYERS, JR.
CHIEF EXECUTIVE OFFICER
(713) 659-2222
ZYDECO REPORTS EMPLOYEE TERMINATIONS
December 14, 1998 (Houston) -- Zydeco Energy, Inc. (NASDAQ National Market
System trading symbol "ZNRG") reported today that cost cutting measures have
resulted in the terminations and resignations of 13 Zydeco employees, or
approximately 52% of its total workforce. Mr. Sam Myers, Company Chairman and
CEO, remarked, "Regrettably, we had to take this action. Our recent spending
levels could not be supported during the near term." Coupled with other overhead
reductions, the Company is repositioning itself in order to weather the current
downturn in the oil and gas industry. Furthermore, the Company announced that
the terminations included Mr. John O. Smith, President and Chief Operating
Officer, who also resigned from the Board of Directors. In addition, the Company
accepted the resignation of Mr. John W. McTigue, Jr., Vice President of
Exploration Technology.
Discussing the impact of these employee reductions on the Company's
operations, Mr. Myers stated, "The cutbacks will not hamper our ability to
continue marketing our prospects situated within our West Cameron Seismic
Project. Over the past year, we have acquired approximately 12,000 gross acres
within the Project area and intend to sell interests in these prospects or an
interest in the Project." This Project, located within a 230 square mile area of
a narrow trend paralleling the Louisiana coastline known as the Louisiana
Transition Zone, has been the principal focus of the Company's exploratory
efforts. Mr. Myers further stated that the Company's marketing efforts to date
had been hampered by its litigation with Cheniere Energy, Inc. He said, "With
the final arbitration ruling made last week by the arbitration panel, both
companies are now keenly focused on resolving differences and having wells
drilled. We have an excellent inventory of prospects and believe that drilling
will commence sometime in the first quarter of 1999."
This news release may contain forward-looking statements that are based on
assumptions that in the future may prove not to be accurate. Those statements,
and Zydeco Energy, Inc.'s business and prospects, are subject to a number of
risks including, but not limited to, the volatility of oil and gas prices,
environmental risks, operating risks and hazards, risks related to exploration
and development drilling, uncertainties about reserve estimates, competition,
governmental regulation and the ability of the Company to implement its business
strategy. These and other risks are described in the Company's periodic reports
that are filed with and available from the United States Securities and Exchange
Commission.
Zydeco Energy, Inc. is an independent oil and gas exploration company
engaged in acquiring leases, drilling and producing reserves utilizing focused
geologic concepts and advanced 3D seismic and computer-aided exploration (CAEX)
technology, including enhanced structural and stratigraphic depth imaging and
attribute analysis. Zydeco's efforts are focused primarily in the Louisiana
Transition Zone.
