SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-KA
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): JUNE 11, 1998
-------------
EMPIRIC ENERGY, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2455467
<TABLE>
<CAPTION>
----- ----------
<S> <C>
(State or other jurisdiction of) (IRS Employer
incorporation or organization . . . Identification No.)
</TABLE>
12750 MERIT DRIVE, SUITE 750, DALLAS, TEXAS 75251-1609
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 387-4100
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- ----------------------------------------------------
On April 27, 1998, the Company filed the original Form 8-K describing a
formal closing which occurred on May 8-9, 1998 of an acquisition of working
interests in and other rights to certain assets from Skidmore Energy, Inc. and
Circle B Exploration, Inc. not included in this filing of April 27, 1998 was
certain financial statements described below which were not then available.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------------
a. Independent Auditor's Report as of March 31, 1998 F-1
b. Historical Summaries of Revenues and Direct Operating Expenses of
<TABLE>
<CAPTION>
<S> <C>
Properties Acquired in April 1998. . . . . . . . . . . . . . . . . . . . . F-2
c. Notes to Historical Summary of Revenue and Direct Operating Expenses of
Properties Acquired in April 1998. . . . . . . . . . . . . . . . . . . . . F-3 thru F-4
d. Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . . . F-5
e. Unaudited Pro Forma Consolidated Balance Sheet - March 31, 1998 F-6
f. Unaudited Pro Forma Consolidated Statements of Operations - Three Months
Ended March 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . . F-7
g. Unaudited Pro Forma Consolidated Statements of Income . . . . . . . . . . F-8
h. Notes to Unaudited Pro Forma Financial Information. . . . . . . . . . . . F-9
</TABLE>
<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.
EMPIRIC ENERGY, INC.
By: /s/ Clyde E. Skeen
---------------------------------
Clyde E. Skeen
Secretary/Treasurer (Principal Financial and
Accounting Officer) and Director
Date: June 11, 1998
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Empiric Energy, Inc.
Dallas, Texas
We have audited the accompanying historical summaries of revenue and direct
operating expenses of properties acquired in April 1998, for the years ended
March 31, 1998 and 1997. The historical summaries are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
historical summaries 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 historical summaries are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical summaries. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall historical summary presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying historical summaries were 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 Empiric Energy, Inc.) as described in Note 1 and
are not intended to be a complete presentation of the properties' revenues and
expenses.
In our opinion, the historical summaries referred to above present fairly, in
all material respects, the revenue and direct operating expenses of the
properties acquired in April 1998, in conformity with generally accepted
accounting principles.
Hein + Associates llp
June 2, 1998
Dallas, Texas
<PAGE>
<PAGE>
EMPIRIC ENERGY, INC.
HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES
OF PROPERTIES ACQUIRED IN APRIL 1998
1998 1997
----------- -----------
<TABLE>
<CAPTION>
<S> <C> <C>
OIL AND GAS SALES . . . . . $260,695 $527,324
DIRECT OPERATING EXPENSES . 94,879 341,677
-------- --------
NET REVENUE . . . . . . . . $165,816 $185,647
======== ========
</TABLE>
SEE NOTES TO HISTORICAL SUMMARIES.
<PAGE>
EMPIRIC ENERGY, INC.
NOTES TO HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES
OF PROPERTIES ACQUIRED IN APRIL 1998
1. BASIS OF PREPARATION
- ----------------------
The accompanying historical summaries of revenues and direct operating expenses
relate to the operations of the oil and gas properties acquired by Empiric
Energy, Inc. (the "Company") in April 1998 from Skidmore Energy, Inc. The
properties were acquired with the issuance of common stock, preferred stock and
notes payable with at total valuation of approximately $1,700,700, before
purchase adjustments.
Revenues are recorded when the Company's share of oil or natural gas and related
liquids are sold. Direct operating expenses are recorded when the related
liability is incurred. Direct operating expenses include lease operating
expenses, ad valorem taxes and production taxes. Depreciation and amortization
of oil and gas properties, general and administrative expenses and income taxes
have been excluded from operating expenses in the accompanying historical
summaries because the amounts would not be comparable to those resulting from
proposed future operations.
The historical summaries presented herein were prepared for the purpose of
complying with the financial statement requirements of a business acquisition to
be filed on Form 8-K as promulgated by Regulation S-B Item 3-10 of the
Securities Exchange Act of 1934.
2. SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES (UNAUDITED)
-------------------------------------------------------------------
Proved oil and gas reserves consist of those estimated quantities of crude oil,
natural gas, and natural gas liquids that 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 oil and gas reserves are reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.
The following estimates of proved reserves have been made by independent
engineers. The estimated net interest in proved reserves are based upon
subjective engineering judgments and may be affected by the limitations inherent
in such estimation. The process of estimating reserves is subject to continual
revision as additional information becomes available as a result of drilling,
testing, reservoir studies and production history. There can be no assurance
that such estimates will not be materially revised in subsequent periods.
The changes in proved reserves of the properties acquired in April 1998 for the
year ended March 31, 1998 and 1997 are set forth below. All of the reserves are
classified as proved developed.
<TABLE>
<CAPTION>
Natural Gas
Oil (Thousand
(Barrels) Cubic Feet)
--------- -----------
<S> <C> <C>
Reserves at April 1, 1996. 64,523 992,055
Production . . . . . . . . (9,961) (77,167)
--------- -----------
Reserves at March 31, 1997 54,562 914,888
Production . . . . . . . . (3,962) (71,388)
--------- -----------
Reserves at March 31, 1998 50,600 843,500
========= ===========
</TABLE>
<PAGE>
The standardized measure of discounted estimated future net cash flows related
to proved oil and gas reserves at March 31, 1998 and 1997 is as follows:
March 31,
<TABLE>
<CAPTION>
March 31,
1998 1997
<S> <C> <C>
Future cash inflows. . . . . . . . . . . . $2,285,000 $2,144,200
Future production costs. . . . . . . . . . (560,400) (615,200)
----------- -----------
Future net cash flows, before income taxes 1,724,600 1,529,000
Future income taxes. . . . . . . . . . . . - -
----------- -----------
Future Net Cash Flows. . . . . . . . . . . 1,724,600 1,529,000
10% annual discount. . . . . . . . . . . . (503,900) (446,500)
----------- -----------
Standardized Measure of Discounted Future
Net Cash Flows . . . . . . . . . . . . . . $1,220,700 $1,082,500
=========== ===========
</TABLE>
The primary changes in the standardized measure of discounted estimated future
net cash flows for the years ended March 31, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
1998 1997
----------- -----------
<S> <C> <C>
Beginning of year. . . . . . . . . . . . . . . . . . . $1,082,500 $1,284,598
Sales of oil and gas produced, net of production costs (165,816) (185,647)
Effect of change in prices . . . . . . . . . . . . . . 284,306 (70,621)
Other. . . . . . . . . . . . . . . . . . . . . . . . . (88,540) (74,290)
Accretion of discount. . . . . . . . . . . . . . . . . 108,250 128,460
----------- -----------
End of year. . . . . . . . . . . . . . . . . . . . . . $1,220,700 $1,082,500
=========== ===========
</TABLE>
Estimated future cash inflows are computed by applying year-end prices of oil
and gas to year-end quantities of proved reserves. Estimated future development
and production costs are determined by estimating the expenditures to be
incurred in developing and producing the proved oil and gas reserves at the end
of the year, based on year-end costs and assuming continuation of existing
economic conditions. Estimated future income tax expense is calculated by
applying year-end statutory tax rates to estimated future pre-tax net cash flows
related to proved oil and gas reserves, less the tax basis of the properties
involved.
The assumptions used to compute the standardized measure are those prescribed by
the Financial Accounting Standards Board and as such, do not necessarily reflect
the Company's expectations of actual revenues to be derived from those reserves
nor their present worth. The limitations inherent in the reserve quantity
estimation process are equally applicable to the standardized measure
computations since these estimates are the basis for the valuation process.
<PAGE>
EMPIRIC ENERGY, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
In April 1998, Empiric Energy, Inc. (the Company) acquired interests in certain
producing and unproved properties in Texas in exchange for units consisting of
the Company's common stock, preferred stock, a note payable convertible into
shares of the Company's common stock, and warrants to acquire the Company's
common stock. The consideration was valued at a total of $1,700,700 based on
the estimated values of the assets. The following unaudited pro forma financial
statements have been prepared to demonstrate the effect on the Company's
financial position and results of operations as if the properties had been
acquired on March 31, 1998 (with respect to the pro forma balance sheet) and at
the beginning of the periods (with respect to the pro forma statements of
operations). The pro forma financial statements should be read in conjunction
with the historical summaries of revenues and direct operating expenses of the
properties included herein and with the financial statements of the Company as
filed in their Forms 10-KSB and 10-QSB. The pro forma financial statements
should not be construed as a reflection of the financial position or results of
operations that actually would have occurred if the acquisition would have
occurred on the above dates.
<PAGE>
<PAGE>
EMPIRIC ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
ASSETS
- ------
<TABLE>
<CAPTION>
Empiric Pro Forma
Energy Adjustments Pro Forma
------------ --------------- ------------
CURRENT ASSETS:
<S> <C> <C> <C>
Cash. . . . . . . . . . . . . . . . . . . . $ 24,112 $ - $ 24,112
Accounts receivable . . . . . . . . . . . . 77,035 - 77,035
Notes receivable. . . . . . . . . . . . . . 31,000 - 31,000
------------ --------------- ------------
Total current assets. . . . . . . . . . . . 132,147 - 132,147
OIL AND GAS PROPERTIES:
Oil and gas properties - proved . . . . . . 3,725,871 1,220,700 (1) 4,946,571
Oil and gas properties - unproved . . . . . - 480,000 (1) 480,000
Less accumulated depletion and depreciation (1,555,954) - (1,555,954)
------------ --------------- ------------
Net oil and gas properties. . . . . . . . . 2,169,917 1,700,700 3,870,617
OTHER ASSETS. . . . . . . . . . . . . . . . 9,319 - 9,319
------------ --------------- ------------
Total assets. . . . . . . . . . . . . . . . $ 2,311,383 $ 1,700,700 $ 4,012,083
============ =============== ============
<FN>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
</TABLE>
CURRENT LIABILITIES:
<TABLE>
<CAPTION>
Current portion of long-term debt $30,000 $- $30,000
Accounts payable and accrued expenses 98,899 - 98,899
Due to shareholders 17,981 - 17,981
------------ -------------- ------------
Total current liabilities 146,880 - 146,880
<S> <C> <C> <C>
LONG-TERM DEBT, net of current portion. . . . . . . . . . 112,500 525,000(1) 637,500
------------ -------------- ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . 259,380 525,000 784,380
STOCKHOLDERS' EQUITY
Preferred stock . . . . . . . . . . . . . . . . . . . . . - 525,000 (1) 525,000
Common stock and additional paid-in capital . . . . . . . 4,365,979 650,700 (1) 5,016,679
Accumulated deficit . . . . . . . . . . . . . . . . . . . (2,313,976) - (2,313,976)
------------ -------------- ------------
Total stockholders' equity. . . . . . . . . . . . . . . . 2,052,003 1,175,700 3,227,703
------------ -------------- ------------
Total liabilities and stockholders' equity. . . . . . . . $ 2,311,383 $ 1,700,700 $ 4,012,083
============ ============== ============
<PAGE>
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL STATEMENTS.
<FN>
trql
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL STATEMENTS.
<PAGE>
<PAGE>
EMPIRIC ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
Empiric Properties Pro Forma
<TABLE>
<CAPTION>
Energy Acquired Adjustments Pro Forma
------------ ------------- ------------- -----------
REVENUE:
<S> <C> <C> <C> <C>
Oil and gas sales . . . . . . . $ 3,308 $ 50,562 $ - $ 53,870
COSTS AND EXPENSES:
Production expense. . . . . . . 1,192 31,160 - 32,352
Depletion and depreciation. . . 1,179 - 16,078 (3) 17,257
Interest. . . . . . . . . . . . 1,450 - 10,500 (4) 11,950
General and administrative. . . 105,539 - - 105,539
------------ ------------- ------------- -----------
Total costs and expenses. . . . 109,360 31,160 26,578 167,098
OTHER INCOME. . . . . . . . . . 12,368 - - 12,368
------------ ------------- ------------- -----------
NET AND COMPREHENSIVE INCOME
(LOSS) . . . . . . . . . . . $ (93,684) $ 19,402 $ (26,578) $ (100,860)
============ ============= ============= ===========
BASIC AND DILUTED EARNINGS PER
SHARE. . . . . . . . . . . . $ (.02) $ (.02)
============ =============
WEIGHTED AVERAGE SHARES
OUTSTANDING. . . . . . . . . 5,955,276 6,947,853
============ =============
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL STATEMENTS.
<PAGE>
EMPIRIC ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the twelve months ended
December 31, 1997 March 31, 1998
------------------- ----------------
Empiric Properties Pro Forma
Energy Acquired Adjustments Pro Forma
---------- --------- ---------- -----------
REVENUE:
<S> <C> <C> <C> <C>
Oil and gas sales . . . $ 102,270 $ 260,695 $ 92,867 (2) $ 455,832
COSTS AND EXPENSES:
Production expense. 70,812 94,879 12,708 (2) 178,399
Depletion and depreciation 19,417 - 97,531 (3) 116,948
Interest. . . . 6,839 - 42,000 (4) 48,839
General and administrative 335,591 - - 335,591
----------- ------------ ------------- -----------
Total costs and expenses. 432,659 94,879 152,239 679,777
OTHER INCOME 98,100 - - 98,100
----------- ------------ ------------- -----------
NET AND COMPREHENSIVE
INCOME (LOSS) $ (232,289) $ 165,816 $ (59,372) $ (125,845)
============ ============ =========== ===========
BASIC AND DILUTED
EARNINGS PER SHARE $ (.05) $ (.02)
============ ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING 4,900,617 5,893,194
============ ===========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL STATEMENTS.
<PAGE>
EMPIRIC ENERGY, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(1) Adjustment to reflect the acquisition of the proved and unproved oil and
gas properties for units consisting of a total of $525,000 convertible senior
notes, 5,250 shares of preferred stock, 992,577 shares of common stock, and
500,000 common stock warrants with varying maturities and exercise prices. The
transaction was valued based on the estimated value of the acquired assets by
reference to an independent engineering report for the producing properties and
comparable sales for the unproved properties.
(2) Adjustment to reflect the change in the acquired properties' revenues
and direct operating expenses from a March 31, 1998 year end to a December 31,
1997 year end.
(3) Adjustment to reflect additional depletion and depreciation expense as
if the properties had been acquired at the beginning of the respective periods.
(4) Adjustment to reflect additional interest expense at 8.0% as if the
properties had been acquired at the beginning of the respective periods.
