<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-2
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 20, 1995
-----------------
SOUTHERN MINERAL CORPORATION
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA
----------------------------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-8043 36-2068676
------ ----------
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
500 DALLAS, SUITE 2800, HOUSTON, TEXAS 77002-4708
- -------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 658-9444
--------------
N/A
---
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<PAGE> 2
Board of Directors
Southern Mineral Corporation
We have audited the accompanying combined statement of revenue and direct
operating expenses of Stone & Webster's Oil and Gas Operations (Stone &
Webster) (see Note A), as of December 31, 1994 and 1993. These financial
statements are the responsibility of Stone & Webster's management. Our
responsibility is to express an opinion on the financial statements based on
our audits.
We conducted our audits 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 audits provide reasonable basis for
our opinion.
The accompanying financial statements prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the registration statement on Form 8-K of Southern Mineral
Corporation) as described in note A to the financial statements and are not
intended to be a complete presentation of the Stone & Webster revenues and
expenses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined revenue and direct operating expenses of
Stone & Webster's Oil and Gas Operations, described in note A, as of December
31, 1994 and 1993, in conformity with generally accepted accounting principles.
/s/ GRANT THORNTON LLP
Houston, Texas
January 15, 1996
2
<PAGE> 3
STONE & WEBSTER OIL AND GAS OPERATIONS
COMBINED STATEMENTS OF REVENUE AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -------------
1994 1993 1995 1994
---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue
Oil and gas sales $6,906,579 $7,078,932 $4,539,939 $5,348,652
Pipeline operations
Gas sales 941,046 1,414,705 451,488 793,009
Transportation 623,923 800,179 286,096 500,169
--------------- --------------- --------------- ---------------
8,471,548 9,293,816 5,277,523 6,641,830
Direct operating expenses
Oil and Gas Production
Lease operations 1,394,800 1,328,475 1,139,405 989,938
Production taxes 270,534 303,921 150,727 218,131
Pipeline operations
Gas purchases 866,388 1,289,535 421,867 793,349
Operating expenses 188,448 255,299 38,048 76,810
--------------- --------------- --------------- ---------------
2,720,170 3,177,230 1,750,047 2,078,228
--------------- --------------- --------------- ---------------
Excess of revenue over direct
operating expenses $5,751,378 $6,116,586 $3,527,476 $4,563,602
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
STONE & WEBSTER OIL AND GAS OPERATIONS
NOTES TO COMBINED STATEMENTS OF
REVENUE AND DIRECT OPERATING EXPENSES
DECEMBER 31, 1994 AND 1993
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PRESENTATION AND GENERAL INFORMATION
The accompanying combined statements of revenue and direct operating expenses
present the ownership interest of Southern Mineral Corporation (Company) in
the revenue and direct operating expenses of certain oil and gas property
interests (Properties) and pipeline interests acquired from Stone & Webster,
Inc. The Company's acquisition included the stock of Spruce Hills Production
Co., Inc., San Salvador Development Company and Venture Resources, Inc., and
certain assets and liabilities of Stone & Webster Oil Company, Inc.
(collectively Stone & Webster Oil and Gas Operations) on December 20, 1995.
The combined statements include the revenue and direct operating expenses of
Stone & Webster Oil and Gas Operations for the years ended December 31, 1994
and 1993 and the nine months ended September 30, 1995 and 1994 (unaudited).
The accompanying combined statements do not reflect provisions for depletion,
depreciation and amortization, if any, which may have been recorded in the
financial records of the previous interest owner. The combined statements also
do not reflect certain additional expenses that may have been incurred in
connection with the ownership of the Properties such as indebtedness and
general and administrative expenses incurred individually by the prior
interest owners as such costs are not comparable to those which will result
from the future operation of the properties.
The interim financial statements for the nine months ended September 30, 1995
and 1994 are unaudited. However, in the opinion of management, these interim
financial statements include all necessary adjustments to fairly present the
results of the interim periods and all such adjustments are of a normal
recurring nature. The interim financial statements should be read in
conjunction with the audited financial statements for the years ended December
31, 1994 and 1993.
2. UNAUDITED COMBINED STATEMENTS OF EARNINGS
As discussed above, the accompanying combined statements of revenue and direct
operating expenses do not include certain historical expense items which are
not necessarily indicative or comparable to future operations due to either a
change in the cost basis of the properties or in operational factors relating
to the new ownership. Additionally, these statements do not include revenues
and related expenses of natural gas marketing transactions, which ceased after
1993. Complete, unaudited combined historical statements of earnings are as
follows:
4
<PAGE> 5
STONE & WEBSTER OIL AND GAS OPERATIONS
NOTES TO COMBINED STATEMENTS OF
REVENUE AND DIRECT OPERATING EXPENSES - CONTINUED
DECEMBER 31, 1994 AND 1993
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
STONE & WEBSTER OIL AND GAS OPERATIONS
COMBINED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEAR END NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------------------------------------------
1994 1993 1995 1994
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue
Oil and gas sales $ 6,906,579 $ 7,078,932 $4,539,939 5,348,652
Pipeline operations
Gas sales 941,046 1,414,705 451,488 793,009
Transportation 623,923 800,179 286,096 500,169
Gas marketing 125,272 1,551,590 27,409 108,198
Interest income 234,105 76,816 89,981 193,048
Other 30,109 52,807 7,111 1,031
----------------- ------------------ ----------------- -----------------
8,861,034 10,975,029 5,402,024 6,944,107
----------------- ------------------ ----------------- -----------------
Expenses
General and administrative 2,078,944 1,844,228 1,353,527 1,428,261
expenses
Production 1,665,334 1,632,396 1,290,132 1,208,069
Depreciation, depletion and 2,737,198 1,907,346 1,409,800 1,443,760
amortization
Exploration 603,197 267,958 126,662 523,725
Other 62,651 -- 9,908 354
Pipeline operations
Gas purchases 866,388 1,289,535 421,867 793,349
Operating expenses 188,448 255,299 38,048 76,810
Gas marketing purchases 99,082 1,548,318 29,702 82,137
----------------- ------------------ ----------------- -----------------
8,301,242 8,745,080 4,679,646 5,556,465
----------------- ------------------ ----------------- -----------------
Earnings before income taxes 559,792 2,229,949 722,378 1,387,642
Provision for income taxes
Current 316,907 162,365 31,073 85,032
Deferred (53,350) (569,777) 37,491 3,653
Foreign 138,419 336,801 166,188 159,272
----------------- ------------------ ----------------- -----------------
401,976 (70,611) 234,752 247,957
----------------- ------------------- ----------------- -----------------
NET EARNINGS $ 157,816 $ 2,300,560 $ 487,626 1,139,685
================= ================== ================= =================
</TABLE>
5
<PAGE> 6
STONE & WEBSTER OIL AND GAS OPERATIONS
NOTES TO COMBINED STATEMENTS OF
REVENUE AND DIRECT OPERATING EXPENSES - CONTINUED
DECEMBER 31, 1994 AND 1993
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The entities that compose Stone & Webster Oil and Gas Operations were
components of a consolidated return. Tax expense was allocated to the
individual entities as if they were filing separate returns. Combined tax
expense differs from the amount calculated by applying the statutory depletion,
the non-recognition of deferred tax assets by entities with net operating loss
and, in 1993, due to the initial adoption of Statement of Financial Accounting
Standards No. 109, for which the Company does not have sufficient records to
separate the cumulative effect of this adoption from the current period tax
provision.
NOTE B - DISCLOSURE ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
The Properties' oil and gas activities are conducted in the United States and
Canada. A summary of the Properties' changes in quantities of proved oil and
gas reserves (all reserves are proved reserves) for the years ended December
31, 1993 and December 31, 1994 follows:
<TABLE>
<CAPTION>
UNITED UNITED
TOTAL TOTAL STATES STATES CANADA CANADA
OIL(BBL) GAS(MCF) OIL(BBL) GAS(MCF) OIL(BBL) GAS(MCF)
--------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total proved reserves -
developed and undeveloped:
Balance, January 1, 1993 1,569,874 30,507,573 438,798 23,771,857 1,131,076 6,735,716
Production (149,628) (2,163,687) (32,772) (1,787,732) (116,856) (375,955)
Extensions, discoveries
and other additions 66,795 -- -- -- 66,795 --
--------- ---------- ------- ---------- --------- ---------
Balance, December 31, 1993 1,487,041 28,343,886 406,026 21,984,125 1,081,015 6,359,761
Production (153,739) (2,261,909) (31,807) (1,808,298) (121,932) (453,611)
Extensions, discoveries
and other additions 26,847 556,900 117 2,000 26,730 554,900
--------- ---------- ------- ---------- --------- ---------
Balance, December 31, 1994 1,360,149 26,638,877 374,336 20,177,827 985,813 6,461,050
========= ========== ======= ========== ======= =========
Proved developed reserves:
January 1, 1993 1,569,874 30,507,573 438,798 23,771,857 1,131,076 6,735,716
========= ========== ======= ========== ========= =========
December 31, 1993 1,487,041 28,343,886 406,026 21,984,125 1,081,015 6,359,761
========= ========== ======= ========== ========= =========
December 31, 1994 1,360,149 26,638,877 374,336 20,177,827 995,813 6,461,050
========= ========== ======= ========== ======= =========
</TABLE>
6
<PAGE> 7
STONE & WEBSTER OIL AND GAS OPERATIONS
NOTES TO COMBINED STATEMENTS OF
REVENUE AND DIRECT OPERATING EXPENSES - CONTINUED
DECEMBER 31, 1994 AND 1993
NOTE B - DISCLOSURE ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) -
CONTINUED
The standardized measure of discounted future net cash flows relating to proved
oil and gas reserves at December 31, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1993 1994
---- ----
UNITED UNITED
States Canada Total States Canada Total
------- ------ ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Future cash flows 45,860,823 26,143,342 72,004,165 50,247,399 27,980,446 78,227,845
Future production and
development costs 9,630,541 11,738,976 21,369,517 10,750,121 13,539,503 24,289,624
Income taxes 9,166,190 3,213,098 12,379,288 10,132,537 3,312,467 13,445,004
---------- ---------- ---------- ---------- ---------- ----------
Future net cash flows 27,064,092 11,191,268 38,255,360 29,364,741 11,128,476 40,493,217
10% annual discount for
estimated timing of cash flows (13,228,369) (3,288,290) (16,516,659) (14,606,886) (3,529,721) (18,136,607)
---------- ---------- ---------- ---------- ---------- ----------
Standardized measure of
discounted future net
cash flows 13,835,723 7,902,978 21,738,701 14,757,855 7,598,755 22,356,610
========== ========== ========== ========== ========== ==========
</TABLE>
The changes in the standardized measure of discounted future net cash flows
relating to proved oil and gas reserves for the years ended December 31, 1994
and 1993:
<TABLE>
<CAPTION>
1994 1993
---- ----
UNITED UNITED
STATES CANADA TOTAL STATES CANADA TOTAL
------ ------ ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Sales of oil and gas produced,
net of production costs (3,337,196) (1,904,049) (5,241,245) (3,475,481) (1,971,055) (5,446,536)
Discoveries 350,545 350,545 386,982 386,982
Accretion of discount & other 2,415,064 1,857,727 4,272,791 3,515,650 1,496,876 5,012,526
---------- --------- ---------- ---------- --------- ---------
Net increase (decrease) (922,132) 304,223 (617,909) 40,169 (87,197) (47,028)
Beginning of period 14,757,855 7,598,755 22,356,610 14,717,686 7,685,952 22,403,638
End of period 13,835,723 7,902,978 21,738,701 14,757,855 7,598,755 22,356,610
========== ========= ========== ========== ========= ==========
</TABLE>
The estimate of proved reserves and related valuations were determined based
primarily upon the reserve report prepared by independent petroleum engineers
in accordance with the provisions of Statement of Financial Accounting
Standards No. 69 (SFAS 69) "Disclosures about Oil and Gas Producing
Activities." The reserve report was prepared at December 31, 1995. Reserves
for 1994 and 1993 were computed using these amounts, adjusted for production
and discoveries; accordingly, no revisions of prior estimates are indicated.
Stone & Webster Oil and Gas Operations had not prepared reserve reports for
1994 or 1993.
The estimates of proved reserves are inherently imprecise and are continually
subject to revision based on production history, results of additional
exploration and development, price changes and other factors.
7
<PAGE> 8
The standardized measure of discounted future net cash flows related to proved
oil and gas reserves and the changes in standardized measure of discounted
future net cash flows relating to proved oil and gas reserves were prepared in
accordance with the provisions of SFAS 69. Future cash inflows were computed by
applying year-end 1995 prices to estimated future production, computed as
discussed above. Future production and development costs are computed by
estimating the expenditures to be incurred in developing and producing the
proved oil and gas reserves at year-end, based on 1995 year-end costs and
assuming continuation of existing economic conditions. Accordingly, no changes
in prices and production/development costs are indicated. Future net cash flows
are discounted at a rate of 10% annually to derive the standardized measure of
discounted future net cash flows. This calculation procedure does not
necessarily result in an estimate of the fair market value or the present value
of the Stone & Webster Oil and Gas Operations properties.
8
<PAGE> 9
SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
AS OF SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
STONE & SAN SPRUCE
SOUTHERN WEBSTER OIL SALVADOR HILLS VENTURE PRO FORMA
MINERAL COMPANY DEVELOPMENT PRODUCTION RESOURCES ADJUSTMENTS PRO FORMA
CORPORATION INC CO CO INC AMOUNT CONSOLIDATED
----------- ----------- ----------- ---------- --------- ----------- ------------
(000'S OMITTED)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash 548 371 213 557 569 -1473 9 785
equivalents
Marketable securities 1,249 0 -1249 2 0
0
Receivables 278 309 10 257 91 945
0
Other 45 817 81 -847 9 96
-------- -------- ------- ------- ----- -------- --------
Total Current Assets 2,120 1,497 223 814 741 (3,569) 1,826
Investment in Subs 0 0
Property and Equipment, 3,396 5,178 73 6,709 147 4096 1 19,599
net
0
Other assets 0 15 75 0 90
-------- -------- ------- ------- ----- ------- --------
5,516 6,690 371 7,523 888 527 21,515
======== ======== ======= ======= ===== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable 217 180 36 309 188 -535 9 395
Accrued Taxes 136 61 51 (49) -199 9 0
Deferred Income Taxes 29 43 28 -100 9 606
606 1
Notes Payable 22,915 -22915 2 15,215
15215 2
Stockholders' Equity 0
Common Stock 64 350 100 100 1 -551 3 64
Additional Paid in 3,038 1,724 60 0 0 -1784 3 3,038
Capital
Retained Earnings 2,250 (18,615) 85 7,020 720 10790 3 2,250
-------- --------- ------- ------- ----- -------- --------
5,352 (16,541) 245 7,120 721 8,455 5,352
Treasury Stock (53) -53
--------- -------- ------- ------- ----- -------- --------
Total Stockholders' Equity 5,299 (16,541) 245 7,120 721 8,455 5,299
-------- --------- ------- ------- ----- -------- --------
5,516 6,690 371 7,523 888 527 21,515
======== ======== ======= ======= ===== ======== ========
</TABLE>
9
<PAGE> 10
SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
1st Qtr 1995 Stone &
Southern Diverse Webster Oil Pro
Mineral Production & Gas Pro Forma Adjustments Forma
Corporation Company Operations Amount Note Ref Consolidated
----------- ------------ ----------- --------------------- ------------
(OOO's Omitted, except for share and per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Oil and Gas 1,611 197 5,305 7,113
Interest 67 0 90 157
Other 101 53 7 (800) 4 (639)
------- ------- ------ ------ -------
1,779 250 5,402 (800) 6,631
------- ------- ------ ------ -------
Expenses
Production 466 124 1,780 2,370
Exploration 198 0 127 325
Depletion & Depreci 458 51 1,410 (18) 7 2,258
357 8
Valuation Reduction 0 0 0 0
General & Administ 675 14 1,353 2,042
Interest Expense 0 0 0 1,022 5 1,022
Other 0 0 10 10
------- ------- ------ ------ -------
1,797 189 4,680 1,361 8,027
------- ------- ------ ------ -------
Net Income (loss) before
income taxes (18) 61 722 (2,161) (1,396)
------- ------- ------ ------ -------
Income Tax 0 0 234 (50) 6 184
------- ------- ------ ------ -------
Net income (loss) ($18) $61 $488 ($2,111) ($1,580)
======= ======= ====== ====== =======
Net loss per share ($0.00) ($0.29)
======= =======
Average Common and
common equivalent
shares outstanding 5,507 5,507
======= =======
</TABLE>
10
<PAGE> 11
SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Twelve Months Ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
Stone &
Southern Diverse Webster Oil Pro
Mineral Production & Gas Pro Forma Adjustments Forma
Corporation Company Operations Amount Note Ref Consolidated
----------- ---------- ----------- --------------------- ------------
(OOO's Omitted, except for share and per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Oil and Gas 1,747 835 8,597 11,179
Interest 56 0 234 290
Other 86 131 30 (300) 4 (53)
---------- ---------- --------- -------- -----------
1,889 966 8,861 (300) 11,416
---------- ---------- --------- -------- -----------
Expenses
Production 548 401 2,820 3,769
Exploration 1,566 6 585 2,157
Depletion & Depreciat 704 192 2,770 (1,217) 7 2,983
534 8
Valuation Reduction 1,724 0 63 1,787
General & Administra 903 43 2,063 3,009
Interest Expense 0 0 0 1,369 5 1,369
Other 135 0 0 135
---------- ---------- --------- -------- -----------
5,580 642 8,301 686 15,209
---------- ---------- --------- -------- -----------
Net Income (loss) before
income taxes (3,691) 324 560 (986) (3,793)
---------- ---------- --------- -------- -----------
Income Tax Expense (Ben (558) 0 402 (223) 6 (379)
---------- ---------- --------- -------- -----------
Net income (loss) ($3,133) $324 $158 ($763) ($3,414)
========== ========== ========= ======== ===========
Net loss per share ($0.78) ($0.55)
========== -----------
Average Common and
common equivalent
shares outstanding 4,024 6,218
========== -----------
</TABLE>
11
<PAGE> 12
SOUTHERN MINERAL CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE BALANCE SHEET AS SEPTEMBER 30, 1995,
FOR THE STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 1994
AND FOR THE STATEMENT OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
1995
(UNAUDITED)
1. ON DECEMBER 20, 1995, SOUTHERN MINERAL CORPORATION (THE "COMPANY")
COMPLETED THE ACQUISITION OF CERTAIN OIL AND GAS ASSETS AND OUTSTANDING
CAPITAL STOCK OF THREE SUBSIDIARIES OF STONE & WEBSTER, INC. ("S&W").
THE OIL AND GAS ASSETS ACQUIRED INCLUDE INTERESTS IN MORE THAN 1,400
WELLS, INCLUDING 14 WELLS OPERATED BY COMPANY PERSONNEL. ONE OF THE
ACQUIRED SUBSIDIARIES IS A DELAWARE CORPORATION THAT OWNS INTERESTS IN
APPROXIMATELY 1,200 WELLS LOCATED IN CANADA. ANOTHER ACQUIRED SUBSIDIARY
HOLDS INTERESTS IN 10 PIPELINE AND GATHERING SYSTEMS LOCATED IN OKLAHOMA,
TEXAS AND LOUISIANA. THE THIRD ACQUIRED SUBSIDIARY OWNS INTERESTS IN
APPROXIMATELY 270,000 GROSS MINERAL ACRES IN THE TEXAS PANHANDLE AND NEW
MEXICO TOGETHER WITH ASSOCIATED PRODUCING ROYALTIES. THE PURCHASE PRICE
FOR THE ASSETS AND CAPITAL STOCK OF THE THREE SUBSIDIARIES ACQUIRED IN
THE TRANSACTION WAS APPROXIMATELY $16,400,000, INCLUDING ADJUSTMENTS AND
RELATED TRANSACTION COSTS.
THE COMPANY FINANCED THE S&W ACQUISITION WITH WORKING CAPITAL AND TWO
LOANS AGGREGATING $15,215,000 FROM COMPASS BANK--HOUSTON. THE COMPANY
BORROWED $3,500,000 PURSUANT TO A TERM LOAN ARRANGEMENT DUE JULY 1,
1996. THE COMPANY BORROWED $11,715,000 PURSUANT TO A REDUCING REVOLVING
CREDIT ARRANGEMENT WITH AN INITIAL BORROWING BASE OF $12,500,000.
THE PRO FORMA BALANCE SHEET PRESENTS THE S&W ACQUISITION AS IF IT HAD
OCCURRED AT SEPTEMBER 30, 1995, WHICH THE PRO FORMA STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995, AND THE YEAR
ENDED DECEMBER 31, 1994, PRESENT THE TRANSACTION AS IF IT HAD OCCURRED AT
JANUARY 1, 1994.
2. TO REFLECT THE ACQUISITION COSTS OF STONE & WEBSTER OIL CO AND ITS
AFFILIATES
3. TO ELIMINATE STONE & WEBSTER OIL COMPANY, SPRUCE HILLS PRODUCTION
COMPANY, SAN SALVADOR DEVELOPMENT COMPANY, AND VENTURE RESOURCES, INC
EQUITY.
4. TO ELIMINATE DIVIDEND INCOME FROM SUBSIDIARY.
5. TO REFLECT INTEREST EXPENSE ON NOTE FOR STONE & WEBSTER ACQUISITION.
6. TAX ADJUSTMENT TO REFLECT TAXES UNDER SFAS 109 COMPUTED AS IF THE
COMBINING ENTITIES WERE A SINGLE TAX PAYING UNIT SINCE THE BEGINNING OF
THE PERIOD PRESENTED.
7. TO ELIMINATE AMORTIZATION OF GOODWILL OF PURCHASED ENTITIES
8. TO RECORD ADDITIONAL DD&A RELATED TO OIL & GAS PROPERTIES STEP-UP IN
BASIS
12
<PAGE> 13
9. TO ELIMINATE ASSETS AND LIABILITIES NOT TRANSFERRED IN THE ACQUISITION
10. NO ADJUSTMENTS HAVE BEEN MADE TO REFLECT FUTURE EXPECTED REDUCTIONS OF
GENERAL AND ADMINISTRATIVE EXPENSES.
11. FOR THE 1995 PERIOD, DPC PRO FORMA DATA IS FOR THE FIRST QUARTER OF 1995.
THE REMAINING SIX MONTHS OF 1995 IS ACTUAL DPC RESULTS CONSOLIDATED WITH
SOUTHERN MINERAL CORPORATION, AS THE ENTITY WAS ACQUIRED IN APRIL 1995.
IN THE 1994 STATEMENT DPC PRO FORMA DATA IS FOR THE ENTIRE YEAR.
13
<PAGE> 14
STONE & WEBSTER OIL AND GAS OPERATIONS
NOTES TO COMBINED STATEMENTS OF
REVENUE AND DIRECT OPERATING EXPENSES - CONTINUED
DECEMBER 31, 1994 AND 1993
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 October 31, 1995, by and
among Stone & Webster, Incorporated, Stone & Webster Oil Company,
Inc. and Southern Mineral Corporation (incorporated by reference to
Exhibit 2.1 to Form 8-K of Registrant dated October 31, 1995).
2.2 Escrow Agreement, dated as of October 31, 1995, by and among Southern
Mineral Corporation, Stone & Webster, Incorporated, Stone & Webster
Oil Company, Inc. and Texas Commerce Bank National Association
(incorporated by reference to Exhibit 2.2 to Form 8-K of Registrant
dated October 31, 1995).
10.1 Credit Agreement, dated December 20, 1995, between Southern Mineral
Corporation, SMC Production Co., San Salvador Development Company,
Inc., Venture Resources, Inc., Venture Pipeline Company, VenGas
Pipeline Company, Spruce Hills Production Company, Inc., and Compass
Bank-Houston for Reducing Revolving Line of Credit of up to
$25,000,000.
10.2 Promissory Note, dated December 20, 1995, in the original principal
amount of $25,000,000, made by Southern Mineral Corporation, SMC
Production Co., San Salvador Development Company, Inc., Venture
Resources, Inc., Venture Pipeline Company, VenGas Pipeline Company,
and Spruce Hills Production Company, Inc. in favor of Compass Bank-
Houston.
10.3 Credit Agreement, dated December 20, 1995, between Southern Mineral
Corporation, SMC Production Co., San Salvador Development Company,
Inc., Venture Resources, Inc., Venture Pipeline Company, VenGas
Pipeline Company, Spruce Hills Production Company, Inc., and Compass
Bank-Houston for Term Loan of $3,500,000.
10.4 Promissory Note, dated December 20, 1995, in the original principal
amount of $3,500,000, made by Southern Mineral Corporation, SMC
Production Co., San Salvador Development Company, Inc., Venture
Resources, Inc., Venture Pipeline Company, VenGas Pipeline Company,
and Spruce Hills Production Company, Inc. in favor of Compass Bank-
Houston.
99 News Release of Southern Mineral Corporation dated December 20, 1995
14
<PAGE> 15
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.
February 10, 1997 SOUTHERN MINERAL CORPORATION
By: /s/ James H Price
--------------------------------
Steven H. Mikel, President
15
