<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 20, 1997
-----------------
SOUTHERN MINERAL CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in charter)
Nevada
----------------------------------------------
(State or other jurisdiction of incorporation)
0-8043 36-2068676
- -------------------------------- --------------------------------
(Commission File Number) (IRS Employer Identification No.)
500 Dallas Street, Suite 2800, Houston, Texas 77002-4708
- ------------------------------------------------ ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 658-9444
-----------------
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 20, 1997, Southern Mineral Corporation (the "Company")
purchased from Mario Garcia and Dolores E. Garcia, ( "the Sellers"), the
outstanding capital stock of BEC Energy, Inc. ("BEC") . The purchase price was
$10,640,000. BEC's only assets consist of working interests in fourteen oil and
gas wells located in the Big Escambia Creek Field in Escambia County, Alabama.
The Company financed the acquisition with a $10,600,000 advance under
the Company's credit facility with Compass Bank-Houston.
This summary is qualified in its entirety by the May 20, 1997 Purchase
and Sale Agreement between the Company and Sellers filed as an exhibit to this
Form 8-K. The May 20, 1997, News Release of the Company concerning the subject
transactions is attached hereto as an exhibit and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
(b) Pro Forma Financial Information.
(c) Exhibits.
2.1 Purchase and Sale Agreement, dated as of May
20, 1997, by and among Mario Garcia and
Delores E. Garcia and Southern Mineral
Corporation (filed with original Form 8-K of
Registrant dated May 20, 1997).
99 News Release of Southern Mineral Corporation
dated May 20, 1997 (filed with original Form
8-K of Registrant dated May 21, 1997).
2
<PAGE> 3
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Description Page Number
- ----------- -----------
<S> <C>
Report of Independent Public Accountants:
KPMG Peat Marwick LLP 4
Financial Statements:
Balance Sheets at December 31, 1996 and March 31, 1997 (unaudited) 5
Statements of Operations for the Year Ended December 31,
1996 and the Three Months Ended March 31, 1997. (unaudited) 6
Statements of Stockholder's Equity for the Year Ended December 31,
1996 and the Three Months Ended March 31, 1997 (unaudited) 7
Statements of Cash Flows for the Year Ended December 31, 1996
and the Three Months Ended March 31, 1997 (unaudited) 8
Notes to Financial Statements for the Year Ended December 31, 1996
and the Three Months Ended March 31, 1997 (unaudited) 9-12
</TABLE>
INDEX TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1997 13
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1996. 14
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Three Months Ended March 31, 1997. 15
Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements. 16
</TABLE>
3
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Southern Mineral Corporation:
We have audited the accompanying balance sheet of BEC Energy, Inc. as of
December 31, 1996, and the related statements of operations, stockholder's
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BEC Energy, Inc. as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
By: /s/ KPMG PEAT MARWICK LLP
Houston, Texas
June 23, 1997
4
<PAGE> 5
BEC ENERGY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 26,156 $ 44,445
Receivables 194,120 140,916
----------- -----------
Total current assets 220,276 185,361
PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties, including processing
plant and equipment 3,015,198 3,015,198
Accumulated depreciation, depletion and amortization (261,471) (353,427)
----------- -----------
Net property, plant and equipment 2,753,727 2,661,771
OTHER ASSETS
Organizational costs 310 310
Loan acquisition costs 14,946 14,946
Accumulated amortization (3,098) (4,109)
----------- -----------
Net other assets 12,158 11,147
----------- -----------
Total assets $ 2,986,161 $ 2,858,279
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 42,004 $ 38,261
----------- -----------
LONG-TERM LIABILITIES
Note payable 2,600,957 2,431,126
Payable to shareholder 148,358 148,358
----------- -----------
Total long-term liabilities 2,749,315 2,579,484
STOCKHOLDER'S EQUITY
Common stock, 1,000,000 shares authorized, 1,000 shares
issued and outstanding, par value $1.00 per share 1,000 1,000
Retained earnings 193,842 239,534
----------- -----------
Total stockholder's equity 194,842 240,534
----------- -----------
Total liabilities and stockholder's equity $ 2,986,161 $ 2,858,279
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE> 6
BEC ENERGY, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1996 1997
------------ ------------
(Unaudited)
<S> <C> <C>
REVENUES
Oil and gas $ 1,061,312 $ 333,093
EXPENSES
Production 362,671 113,620
Depreciation, depletion and amortization 264,522 92,967
General and adminstrative 52,788 14,600
Interest 211,021 66,214
------------ ------------
891,002 287,401
------------ ------------
NET INCOME $ 170,310 $ 45,692
============ ============
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE> 7
BEC ENERGY, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
For the Year Ended December 31, 1996 and
the Three Months ended March 31, 1997 (unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1996 1,000 $ 1,000 $ 23,532 $ 24,532
Net income 170,310 170,310
------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 1996 1,000 1,000 193,842 194,842
Net income (unaudited) 45,692 45,692
------------ ------------ ------------ ------------
BALANCE AT MARCH 31, 1997 (unaudited) 1,000 $ 1,000 $ 239,534 $ 240,534
============ ============ ============ ============
</TABLE>
See accompanying notes to the financial statements.
7
<PAGE> 8
BEC ENERGY, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three
Year Ended Months Ended
December 31, March 31,
1996 1997
------------ ------------
(unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 170,310 $ 45,692
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation, depletion and amortization 264,522 92,967
(Increase) decrease in receivables (175,736) 53,204
Increase (decrease)in payables 36,427 (3,743)
------------ ------------
Total adjustments 125,213 142,428
------------ ------------
Net cash provided by operating activities 295,523 188,120
------------ ------------
Cash Flows from Investing Activities:
Capital expenditures (14,014) 0
Acquisition of oil and gas properties (2,852,756) 0
------------ ------------
Net cash used in investing activities (2,866,770) 0
------------ ------------
Cash Flows from Financing Activities:
Proceeds from long-term debt 3,025,000 0
Proceeds of shareholder's advance 10,000 0
Payments of long-term debt (424,043) (169,831)
Loan acquisition costs (14,946) 0
------------ ------------
Net cash provided by (used in) financing activities 2,596,011 (169,831)
------------ ------------
Net increase in cash 24,764 18,289
------------ ------------
Cash at beginning of period 1,392 26,156
------------ ------------
Cash at end of period $ 26,156 $ 44,445
============ ============
Supplemental disclosure
Cash paid for interest expense $ 199,693 $ 75,544
============ ============
</TABLE>
See accompanying notes to the financial statements.
8
<PAGE> 9
BEC ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND THE THREE MONTHS ENDING MARCH 31, 1997 (UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PRESENTATION AND GENERAL INFORMATION
GENERAL BUSINESS - BEC Energy, Inc., a Texas corporation, ("BEC" or the
"Company"), formally Travelers Energy, Inc., is an independent oil and gas
company headquartered in Houston, Texas. BEC is engaged in the acquisition,
exploitation, and exploration of oil and gas properties, in Escambia County,
Alabama. BEC owns interests in 14 oil and gas properties in Alabama. The
Company was formed March 24, 1995. The Company's operations substantially began
in 1996 upon the acquisition of oil and gas interests for $2,730,000.
The interim financial statements for the three months ended March 31, 1997, are
unaudited. However, in the opinion of management, these interim financial
statements include all necessary adjustments to fairly present the results of
the interim period and all such adjustments are of a normal recurring nature.
Operations prior to March 31, 1996, are not material. The interim financial
statements should be read in conjunction with the audited financial statements
for the year ended December 31, 1996.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property, Plant and Equipment - BEC uses the successful efforts method of
accounting for its oil and gas properties. Under this method of accounting, the
tangible and intangible development costs of productive wells and development
dry holes are capitalized, and dry hole costs on exploratory wells are charged
against income when the well is determined to be non-productive. Other
exploratory expenditures, including geological and geophysical costs and delay
rentals, are expensed as incurred. The cost of unevaluated leasehold
acquisitions and wells in progress are included in unproven properties pending
evaluation.
Depreciation and depletion of producing oil and gas properties are computed
separately on each individual property on the unit-of-production method based
on estimated proved reserves. Depreciation of other property and equipment is
computed on the straight-line method over the estimated useful lives of the
assets of 3 to 14 years.
Statement of Financial Accounting Standards (SFAS) Nos. 121 - Effective January
1, 1996, BEC adopted SFAS No. 121. Accounting for Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of. This standard requires that
long-lived assets that are held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. When it is determined that
an asset's estimated future net cash flows, undiscounted and before interest
charges, will not be sufficient to recover its carrying amount, an impairment
charge must be recorded to reduce the carrying amount for the asset to its
estimated fair value. There was no effect for the adoption of SFAS 121 on the
Company's financial position, results of operations or liquidity.
Fair Value of Financial Instruments - The carrying value of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities
approximates fair value because of the short-term maturity of these
instruments.
The carrying value of the outstanding debt at December 31, 1996, approximates
fair value as this debt bears interest at rates which approximate current
market rates.
Income Taxes - BEC has elected to be treated as a Small Business Corporation (S
corporation) under Internal Revenue Code Section 1362. This election provides
that, in lieu of corporate income taxes, the taxable items and credits pass
directly to the stockholders. Therefore, these financial statements do not
include federal or state income taxes which would otherwise be applicable. The
tax basis of the Company's property, plant and equipment at December 31, 1996
was $2,781,910.
9
<PAGE> 10
BEC ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND THE THREE MONTHS ENDING MARCH 31, 1997 (UNAUDITED)
Cash and Cash Equivalents - BEC considers all currency and any liquid
investment with a maturity of three months or less to be cash equivalents.
Use of Estimates in the Preparation of Financial Statements - The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Major Customers - The Company is principally engaged in a single industry
segment, the exploration, development, and production of oil and gas reserves
in the Alabama. Sales of oil and gas to customers accounting for 10% or more of
revenues were as follows:
<TABLE>
<CAPTION>
Year ended Three months ended
Customer 12/31/96 3/31/97
-------- ---------- ------------------
<S> <C> <C>
Damsco Distribution $ 929,000 $ 303,000
</TABLE>
Loan Acquisition Costs - Costs related to obtaining the Company's outstanding
debt has been deferred and is being amortized over the life of the debt.
NOTE 3 ACQUISITIONS
In 1996, the Company acquired various interests in oil and gas properties from
J. G. Interests, Inc. The acquisition was funded by RIMCO Partners, L.P., RIMCO
Partners L.P. II and RIMCO Partners, L.P. IV (collectively, "RIMCO") pursuant
to a Note Purchase Agreement dated March 27, 1996. The original funding for the
acquisition was through an advance from RIMCO of $2,730,000. Through an
additional advance of $295,000 the Company acquired an additional interest from
J. G. Interests, Inc. in August, 1996.
NOTE 4 NOTES PAYABLE
In March, 1996 BEC entered into a Note Purchase Agreement dated March 27, 1996
for the purchase of oil and gas properties. The Note Agreement is for an
aggregate principal amount not to exceed $6,000,000 and is due December 31,
1999, if not previously paid. The Note Agreement is repayable from 90% of the
sum of net proceeds of production attributable to any mortgaged and/or
designated oil and gas properties. The note can be repaid at any time. The note
has a 10% rate of interest plus a contingent payment of 50% net profits
interest in the future production of hydrocarbons from or attributable to each
mortgaged oil and gas property upon repayment of the loan. No loan proceeds
were originally allocated to the contingent payment at the funding date. Upon
retirement of the loan in connection with the sale of the Company to Southern
Mineral Corporation, the Company paid $1,605,715 for the settlement of the
contingent payment.
During 1996, the Company was advanced $3,025,000 under the note agreement for
the purchase of various oil and gas properties. During 1996, the Company repaid
$424,043 of principal on the note and interest of $199,693. Interest on this
note has been paid through December 27, 1996. During the three months ended
March 31, 1997, the Company repaid $169,831 (unaudited) of principal.
NOTE 5 RELATED PARTY TRANSACTIONS
In 1996 , the sole shareholder advanced $10,000 to BEC. Prior to 1996, this
shareholder had advanced $138,358 with the total advanced through December 31,
1996, being $148,358. These advances are pursuant to an oral obligation to
repay the advance with interest at 5.8% within five years. There is no stated
repayment schedule and the advances can be repaid at any time. There were no
repayments through the period ended March 31, 1997, and the liability has been
shown as a long-term liability.
During the year ended December, 1996, BEC paid a management fee of $48,000
which is included in general and administrative expenses to an affiliated
corporation for services rendered.
10
<PAGE> 11
BEC ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND THE THREE MONTHS ENDING MARCH 31, 1997 (UNAUDITED)
NOTE 6 SUBSEQUENT EVENTS - UNAUDITED
During April 1997, the Company acquired additional interests in oil and gas
properties for approximately $4,737,000, which was funded through a note
payable with RIMCO. On May 20, 1997, the stockholder sold the Company's common
stock to Southern Mineral Corporation for $10,640,000.
NOTE B - DISCLOSURE ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
The Company's capitalized costs of all oil and gas properties and related
allowances for depreciation, depletion and amortization are as follows at
December 31, 1996 (in thousands):
<TABLE>
<S> <C>
Proved Properties $ 3,015
Less accumulated depreciation, depletion and amortization (171)
----------
Total $ 2,844
==========
</TABLE>
Costs incurred in oil and gas property acquisition and development activities
during the year ended December 31, 1996 were as follows (in thousands):
<TABLE>
<S> <C>
Proved property acquisition costs $ 2,853
Development costs 14
----------
Total costs incurred $ 2,867
==========
</TABLE>
Estimated Quantities of Proved Oil and Gas Reserves (Unaudited)
The following table presents estimates prepared by BEC's reserve engineers of
proved oil and gas reserves at December 31, 1996. Proved reserves are estimated
quantities of crude oil and natural gas which 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 reserves are proved reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.
BEC emphasizes that reserve estimates are inherently imprecise and that
existing estimates will change as information becomes available in the future.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
OIL GAS
(MBBL) (MMCF)
-------- ---------
<S> <C> <C>
PROVED RESERVES:
Beginning of year 29,121 146,534
Purchase of reserves in place 295,674 1,596,189
Production (28,807) (147,398)
-------- ---------
End of Year 295,988 1,595,325
======== =========
OIL GAS
(MBBL) (MMCF)
-------- ---------
PROVED DEVELOPED RESERVES:
Balance, December 31, 1995 29,121 146,534
======== =========
Balance, December 31, 1996 278,646 1,497,725
======== =========
</TABLE>
11
<PAGE> 12
BEC ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND THE THREE MONTHS ENDING MARCH 31, 1997 (UNAUDITED)
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves - (Unaudited)
The following disclosure concerning the standardized measure of future net cash
flows from proved oil and natural gas reserves have been prepared by the
Company and are presented in accordance with Statement of Financial Accounting
Standards No. 69. The standardized measure does not purport to represent the
fair market value of BEC's proved oil and natural gas reserves. An estimate of
fair market value would also take into account, among other factors, the
recovery of reserves not classified as proved, anticipated future changes in
prices and costs and a discount factor more representative of the time value of
money and the risk inherent in reserve estimates.
Under standardized measure, future cash flows were estimated by applying
year-end prices at December 31, 1996, adjusted for fixed and determinable
escalations, to estimated future production of year-end proved reserves. The
future cash flows are reduced by estimated production costs, costs to develop
and produce the proved reserves and certain abandonment costs, all based on
year-end economic conditions. The future cash flows are not reduced for the
estimated effect of future income taxes since BEC is not a tax paying entity.
Standardized Measure of discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Future cash inflows $ 11,713,029
Future production costs (3,671,702)
Future development costs (141,382)
------------
Future net inflows 7,899,945
10% discount factor (2,943,070)
------------
Standardized measure of discounted future net cash flows $ 4,956,875
============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Standardized measure, beginning of year $ 232,043
Sales, net of production costs (698,641)
Purchase of minerals in place 5,383,273
Accretion of discount 23,204
Net change in sales prices, net of production costs 31,329
Net change in timing and other (14,333)
------------
Standardized measure, end of year $ 4,956,875
============
</TABLE>
12
<PAGE> 13
SOUTHERN MINERAL CORPORATION
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
SOUTHERN TOTAL
MINERAL BEC PRO FORMA PRO FORMA
CORPORATION ENERGY, INC. ADJUSTMENTS NOTE CONSOLIDATED
----------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 234 $ 44 $ (84) (10) $ 194
Receivables and other 2,848 141 0 2,989
---------- ---------- ---------- ----------
Total current assets 3,082 185 (84) 3,183
Property and equipment 26,253 3,015 7,545 (11) 36,813
Accumulated depreciation, depletion and
amortization (5,896) (353) 353 (11) (5,896)
Properties held for sale and other 2,246 11 (11) (5) 2,246
---------- ---------- ---------- ----------
Total Assets $ 25,685 $ 2,858 $ 7,803 $ 36,346
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 1,731 $ 38 $ (11) (8) $ 1,758
Note payable 1,099 0 0 1,099
---------- ---------- ---------- ----------
Total current liabilities 2,830 38 (11) 2,857
Long-term debt 2,000 2,580 (2,580) (8) 2,000
10,600 (2) 10,600
Deferred income taxes 1,146 0 34 (7) 1,180
Shareholders' Equity
Common stock 91 1 (1) (9) 91
Additional paid-in capital 13,994 0 0 13,994
Retained earnings 5,676 239 (239) (9) 5,676
---------- ---------- ---------- ----------
19,761 240 (240) 19,761
Less: Treasury stock (52) 0 0 (52)
---------- ---------- ---------- ----------
Total shareholders' equity 19,709 240 (240) 19,709
---------- ---------- ---------- ----------
Total liabilities and shareholders' equity $ 25,685 $ 2,858 $ 7,803 $ 36,346
========== ========== ========== ==========
</TABLE>
13
<PAGE> 14
SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
UNAUDITED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(In thousands, except for Per Share Amounts)
Unaudited
<TABLE>
<CAPTION>
JAN-AUG
SOUTHERN SMC TOTAL
MINERAL DEVELOPMENT, PRO FORMA BEC PRO FORMA PRO FORMA
CORPORATION L.P ADJUSTMENTS ENERGY, INC. ADJUSTMENTS NOTE CONSOLIDATED
---------- ---------- ----------- ----------- ----------- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Oil and Gas $ 11,780 $ 220 $ 0 $ 1,061 $ 920 (12) $ 13,981
Gain on sale 453 0 0 0 0 453
---------- ---------- ---------- ---------- ---------- ----------
12,233 220 0 1,061 920 14,434
EXPENSES
Production 2,742 87 0 363 195 (12) 3,387
Exploration 865 0 0 0 0 865
Depreciation, depletion
and amortization 2,875 61 0 264 305 (4, 12) 3,505
General and administrative 1,682 6 0 53 (48) (6) 1,693
---------- ---------- ---------- ---------- ---------- ----------
8,164 154 0 680 452 9,450
---------- ---------- ---------- ---------- ---------- ----------
Income from operations 4,069 66 0 381 468 4,984
Other income, expenses and deductions
Interest and other income 286 29 0 0 0 315
Interest and debt expense (1,242) 0 (165) (211) (664) (3) (2,282)
---------- ---------- ---------- ---------- ---------- ----------
Income before
income taxes 3,113 95 (165) 170 (196) 3,017
Income tax expense (benefit) 679 0 (26) 0 (9) (7) 644
---------- ---------- ---------- ---------- ---------- ----------
Net income $ 2,434 $ 95 $ (139) $ 170 $ (187) $ 2,373
========== ========== ========== ========== ========== ==========
Net income per share $ 0.34 $ 0.33
========== ==========
Weighted average shares
outstanding 7,215 7,215
========== ==========
</TABLE>
14
<PAGE> 15
SOUTHERN MINERAL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
UNAUDITED
<TABLE>
<CAPTION>
SOUTHERN TOTAL
MINERAL BEC PRO FORMA NOTE PRO FORMA
CORPORATION ENERGY, INC. ADJUSTMENTS REFERENCE CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Oil and Gas $ 3,832 $ 333 $ 223 (12) $ 4,388
Gain on Sale 185 0 0 185
------------ ------------ ------------ ------------
4,017 333 223 4,573
EXPENSES
Production 801 114 107 (12) 1,022
Exploration 283 0 0 283
Depreciation, depletion and amortization 691 92 94 (4, 12) 877
General and administrative 622 15 0 637
------------ ------------ ------------ ------------
2,397 221 201 2,819
------------ ------------ ------------ ------------
Income from operations 1,620 112 22 1,754
Other income, expenses and deductions
Interest and other income 14 0 0 14
Interest and debt expense (65) (66) (153) (3) (284)
------------ ------------ ------------ ------------
Income before
income taxes 1,569 46 (131) 1,484
Income tax expense (benefit) 458 0 (29) (7) 429
------------ ------------ ------------ ------------
Net income $ 1,111 $ 46 $ (102) $ 1,055
============ ============ ============ ============
Net income per share $ 0.12 $ 0.12
============ ============
Weighted average shares
outstanding 9,005 9,005
============ ============
</TABLE>
15
<PAGE> 16
SOUTHERN MINERAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: On May 20, 1997, Southern Mineral Corporation (Southern Mineral)
acquired the oil and gas assets and outstanding capital stock of BEC
Energy, Inc. ("BEC") from Mario Garcia and Dolores E. Garcia. The
purchase price was $10,640,000. The acquisition includes interests
in fourteen wells located in the Big Escambia Creek Field in
Escambia County, Alabama. The acquisition of BEC will be recorded
using the purchase price method of accounting.
The pro forma balance sheet presents the acquisition of BEC as if it
had occurred at March 31, 1997, while the pro forma statement of
operations for the twelve months ended December 31, 1996, and for
the three months ended March 31, 1997, present the transaction as if
it had occurred at January 1, 1996. The pro forma statement of
operations for the twelve months ended December 31, 1996, includes
the results of SMC Development, L.P., for the period prior to its
acquisition by the Company on August 30, 1996.
These statements should be read in conjunction with the separate
financial statements and notes thereto of Southern Mineral's
previously filed statements. The pro forma statements of operations
are not necessarily indicative of the results of operations of the
Company as it may be in the future or as if it might have been had
the acquisition been effective at January 1, 1996.
Note 2: Reflects purchase of BEC. Financing was obtained through additional
long-term debt.
Note 3: Reflects additional interest expense at 8.25% as a result of debt
financing of the acquisition. The interest rate used reflects the
Company's available rate under its debt financing.
Note 4: Reflects additional depreciation, depletion and amortization related
to oil and gas properties step-up in basis.
Note 5: Eliminate amortization and unamortized amounts of loan acquisition
costs of BEC.
Note 6: Eliminate $48,000 payment of management fees to related parties.
Note 7: Tax adjustment to reflect taxes computed as if the combining entity
were a single tax paying entity.
Note 8: Eliminate liabilities not transferred in the acquisition.
Note 9: Eliminate BEC Energy, Inc. equity.
Note 10: Eliminate cash that remains with Seller and $40,000 paid by the
Company for the acquisition.
Note 11: Reflects value assigned to property, plant and equipment
acquired and elimination of BEC's accumulated depreciation,
depletion and amortization.
Note 12: Reflects subsequent acquisition of additional property interests
in A. Philyaw 8-1 #1 and the Turner 6-1 on April 7, 1997.
16
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED HEREUNTO DULY AUTHORIZED.
JULY 29, 1997 SOUTHERN MINERAL CORPORATION
BY: /s/ JAMES H. PRICE
-----------------------------------
JAMES H. PRICE
VICE PRESIDENT-FINANCE
17
