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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) August 30, 1996
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SOUTHERN MINERAL CORPORATION
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(Exact name of registrant as specified in charter)
Nevada
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(State or other jurisdiction of incorporation)
0-8043 36-2068676
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(Commission File Number) (IRS Employer Identification No.)
500 Dallas Street, Suite 2800, Houston, Texas 77002-4708
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 658-9444
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(Former name or former address, if changed since last report.)
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ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
SMC Development, L. P. was formed on January 5, 1996, to acquire minority
non-operated working interests in nineteen oil and gas properties and to drill
four development wells. Three of the four development wells were successfully
completed and are expected to commence production in September of 1996.
Financial statements of the acquired operations are not included, since
historical results of operations are not material.
(b) Pro Forma Financial Information.
On August 30, 1996, the Company acquired the limited partnership interest
in SMC Development, L. P. for $3,000,000. The Company previously owned a 7%
general partnership interest in the partnership. The partnership's assets
consisted of proved producing and proved undeveloped oil and gas properties,
with most of the value related to the proved undeveloped properties that were
drilled in 1996.
The pro forma condensed combined balance sheet as of June 30, 1996,
presents the acquisition of the SMC Development, L. P. properties as if it had
occurred at June 30, 1996, while the condensed combined statements of earnings
for the twelve months ended December 31, 1995, twelve months ended December 31,
1996, and six months ended June 30, 1996, present the transaction as if it had
occurred at January 1, 1995.
(c) Exhibits.
2.1 Purchase and Sale Agreement and Assignment of Partnership Interest,
dated August 30, 1996, by and between Torch Energy Finance Fund
Limited Partnership I and Southern Mineral Corporation.
2.2 Agreement Regarding Dissolution of Partnerships, dated August 30,
1996, between Southern Mineral Corporation and Diasu Oil & Gas Co.,
Inc.
10.1 Amendment to Credit Agreements between Southern Mineral Corporation
et al and Compass Bank-Houston dated August 30, 1996.
99 News Release of Southern Mineral Corporation dated September 3, 1996.
2
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INDEX TO PRO FORMA FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page Number
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1996 (Unaudited) 4
Pro Forma Condensed Consolidated Statement of
Operations for the Twelve Months Ended
December 31, 1995 (Unaudited) 5
Pro Forma Condensed Consolidated Statement of
Operations for the Six Months Ended
June 30, 1996 (Unaudited) 6
Pro Forma Condensed Consolidated Statement of
Operations for the Twelve Months Ended
December 31, 1996 (Unaudited) 7
Notesto Pro Forma Condensed Consolidated Financial
Statements for the Balance Sheet as of June 30, 1996,
The Statement of Operations for the Twelve Months
Ended December 31, 1995, December 31, 1996 and
for the six months ended June 30, 1996 (Unaudited) 8
</TABLE>
3
<PAGE> 4
SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
As of June 30, 1996
(Unaudited)
(000's Omitted)
<TABLE>
<CAPTION>
Southern SMC Pro Forma Adjustments
Mineral Development, Note Pro Forma
Corporation L. P. Amount Reference Consolidated
----------- ----------- --------- --------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 200 -- -- $ 200
Receivables 1,562 120 1,682
Other 108 28 (28)(2) 108
----------- ----------- -------------- -----------
Total Current Assets 1,870 148 (28) 1,990
----------- ----------- -------------- -----------
Property and Equipment, Net 17,397 2,486 422 (3) 20,305
Other Assets 1,954 -- -- 1,954
----------- ----------- -------------- -----------
$ 21,221 $ 2,634 $ 394 $ 24,249
=========== =========== ============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 419 $ 28 -- $ 447
Accounts Payable
Accrued Taxes 226 226
----------- ----------- -------------- -----------
Total Current Liabilities 645 28 0 673
----------- ----------- -------------- -----------
Deferred Income Taxes 774 -- -- 774
Long-term debt 12,900 -- 3,000 (2) 15,900
Stockholders' Equity
Partnership Capital Contribution -- 2,530 (2,530)(2) 0
Common Stock 66 -- -- 66
Additional Paid in Capital 3,313 -- -- 3,313
Retained Earnings 3,576 76 (76) 3,576
----------- ----------- -------------- -----------
6,955 2,606 (2,606)(2) 6,955
----------- ----------- -------------- -----------
Treasury stock (53) -- -- (53)
----------- ----------- -------------- -----------
Total Stockholders' Equity 6,902 2,606 (2,606) 6,902
----------- ----------- -------------- -----------
$ 21,221 $ 2,634 $ 394 $ 24,249
=========== =========== ============== ===========
</TABLE>
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SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATONS
For the Twelve Months Ended December 31, 1995
(Unaudited)
(OOO's Omitted, except for Share and Per Share Amount)
<TABLE>
<CAPTION>
1ST QTR 1995 STONE & PRO FORMA
SOUTHERN DIVERSE WEBSTER OIL TOTAL ADJUSTMENT
MINERAL PRODUCTION & GAS PRIOR TO SMD
CORPORATION COMPANY OPERATIONS PRUCHASE AMOUNT
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES
Oil & Gas $ 2,044 $ 197 $ 6,585 $ 8,826 $ 0
-------------- -------------- -------------- -------------- --------------
EXPENSES
Production 656 124 2,340 3,120
Exploration 221 0 217 438
Depletion & depreciation 792 51 1,789 2,632 469 (5)
(24)(7)
General & administrative 702 14 1,710 2,426
Interest 0 0 0 0 1,363 (4)
Other 117 0 0 117
-------------- -------------- -------------- -------------- --------------
2,488 189 6,056 8,733 1,808
-------------- -------------- -------------- -------------- --------------
Other income (expense) 316 53 1,982 2,351 (1,358)(8)
-------------- -------------- -------------- -------------- --------------
Net income (loss) before
income taxes (128) 61 2,511 2,444 (3,166)
Income tax 9 0 780 789 (557)(6)
-------------- -------------- -------------- -------------- --------------
Net income (loss) $ (137) $ 61 $ 1,731 $ 1,655 $ (2,609)
============== ============== ============== ============== ==============
Net income per share $ (0.02)
--------------
Weighted average shares
outstanding 5,701
==============
<CAPTION>
PRO FORMA
PRO FORMA SMC ADJUSTMENTS TOTAL
TOTAL PRIOR TO DEVELOPMENT, PRO FORMA
SMD PURCHASE L.P. AMOUNT CONSOLIDATED
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Oil & Gas $ 8,826 $ 313 $ 0 $ 9,139
-------------- -------------- -------------- --------------
EXPENSES
Production 3,120 110 3,230
Exploration 438 0 438
Depletion & depreciation 3,077 0 87 (5) 3,164
General & administrative 2,426 0 2 2,428
Interest 1,363 0 248 (4) 1,611
Other 117 0 117
-------------- -------------- -------------- --------------
10,541 110 337 10,988
-------------- -------------- -------------- --------------
Other income (expense) 993 0 0 993
-------------- -------------- -------------- --------------
Net income (loss) before
income taxes (722) 203 (337) (856)
Income tax 232 0 0 232
-------------- -------------- -------------- --------------
Net income (loss) $ (954) $ 203 $ (337) $ (1,088)
============== ============== ============== ==============
Net income per share
$ (0.19)
==============
Weighted average shares
outstanding 5,701
==============
</TABLE>
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SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATONS
For the Six Months Ended June 30, 1996
(OOO's Omitted, except for Share and Per Share Amount)
<TABLE>
<CAPTION>
SOUTHERN SMC PRO FORMA ADJUSTMENT TOTAL
MINERAL DEVELOPMENT, ADJUSTMENTS NOTE PRO FORMA
CORPORATION L.P. AMOUNT REFERENCE CONSOLIDATED
---------------- -------------- ------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Oil & Gas $5,210 $121 --- $5,331
--------------- ------------- ------------- ---------------
EXPENSES
Production 1,163 68 1,231
Exploration 83 0 83
Depletion & depreciation 1,181 33 (5) 1,214
General & administrative 822 1 823
Interest 619 0 124 (4) 743
Other 189 0 189
--------------- ------------- ------------- ---------------
4,057 102 124 4,283
--------------- ------------- ------------- ---------------
Other income (expense) 812 29 0 841
--------------- ------------- ------------- ---------------
Net income (loss) before
income taxes 1,965 48 (124) 1,889
Income tax (benefit) 521 0 (26) (6) 495
--------------- ------------- ------------- ---------------
Net income (loss) $1,444 $48 ($98) $1,394
=============== ============= ============= ===============
Net income per share $0.22 $0.22
=============== ===============
Weighted average shares
outstanding 6,465 6,465
================ ================
</TABLE>
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SOUTHERN MINERAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATONS
For the Twelve Months Ended December 31, 1996
(OOO's Omitted, except for Share and Per Share Amount)
<TABLE>
<CAPTION>
JAN-AUG
SOUTHERN SMC PRO FORMA ADJUSTMENT TOTAL
MINERAL DEVELOPMENT, ADJUSTMENTS NOTE PRO FORMA
CORPORATION L.P. AMOUNT REFERENCE CONSOLIDATED
---------------- ---------------- --------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Oil & Gas $11,780 $220 $0 $12,000
--------------- --------------- --------------- ---------------
EXPENSES
Production 2,742 87 2,829
Exploration 865 0 865
Depletion & depreciation 2,875 61 (5) 2,936
General & administrative 1,682 6 1,688
Interest 1,242 0 165 (4) 1,407
Other 0 0 0
--------------- --------------- --------------- ---------------
9,406 154 165 9,725
--------------- --------------- --------------- ---------------
Other income (expense) 739 29 0 768
--------------- --------------- --------------- ---------------
Net income (loss) before
income taxes 3,113 95 (165) 3,043
Income tax (benefit) 679 0 (26) (6) 653
--------------- --------------- --------------- ---------------
Net income (loss) $2,434 $95 $(139) $2,390
=============== =============== =============== ===============
Net income per share $0.34 $0.33
=============== ===============
Weighted average shares
outstanding 7,215 7,215
=============== ===============
</TABLE>
7
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SOUTHERN MINERAL CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
Note 1: On August 30, 1996 Southern Mineral Corporation (Southern
Mineral) acquired the limited partnership interest in SMC
Development, L. P. for $3,000,000. Southern Mineral previously owned
a 7% general partnership interest in the partnership. The
partnership's assets consisted of proved producing and proved
undeveloped oil and gas properties, with most of the value related
to proved undeveloped properties and wells drilled in 1996, but not
yet producing.
The pro forma balance sheet presents the acquisition of the SMC
Development, L. P. Limited partnership interest as if it had
occurred at June 30, 1996, while the pro forma statement of
operations for the twelve months ended December 31, 1995 and
December 31, 1996, and for the six months ended June 30, 1996
present the transaction as if it had occurred at January 1, 1995.
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 statement of operations
is 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, 1995.
Historical amounts for the 1995 statement of operations were
obtained from Diasu Oil & Gas Co., Inc., the owners of the
properties prior to their purchase by SMC Development, L. P. The
amounts for the six months ended June 30, 1996 and for the twelve
months ended December 31, 1996 are from the partnership records.
Note 2: Reflects purchase of the limited partnership interest. Financing
was obtained through additional long-term debt.
Note 3: Reflects adjustment of the Partnership's historical cost basis in
assets to fair value.
Note 4: Reflects additional interest expense as a result of debt financing
of the acquisition. The interest rate charged under the Company's
debt financing was, at the Company's option, the bank's prime rate,
floating or LIBOR rate plus two and one half percent.
Note 5: Reflects depreciation, depletion and amortization, including amount
related to the increase in oil and gas property bases for the Stone
& Webster and the Diverse transactions. The 1996 and 1995
depreciation, depletion and amortization (DD&A) for the SMC
Development L. P. (Partnership) acquisition is based on the
carrying value of the producing properties by the partnership.
Partnership carrying value of proved producing properties is the
same as Southern Mineral's carrying value after the acquisition, as
the Partnership's book value of producing properties approximated
their fair value and excess purchase price paid over the historical
basis of oil and gas properties was allocated to proved non-
producing properties. Accordingly, their is no pro forma adjustment
to the historical 1996 DD&A amount. Since the partnership did not
acquire the properties until January 1996 and no historical DD&A
amounts exist for 1995, the entire DD&A 1995 amount has been shown
as a pro forma adjustment for that year. 8
8
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Note 6: Reflects reduction in income tax expense caused by reduction in
pro forma earnings, computed using statement of Financial Accounting
Standards No. 109. Also includes taxes on SMC Development L.P.
income included in the pro forma for which no historical taxes has
been recorded due to its partnership status.
Note 7: To eliminate amortization of goodwill of purchased entities.
Note 8: To eliminate dividend income from subsidiary.
Note 9: Diverse Production Company data is for the first quarter of 1995;
the remaining nine months of 1995 is actual DPC results consolidated
with Southern Mineral Corporation.
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amended report to be signed on its behalf by
the undersigned thereunto duly authorized.
SOUTHERN MINERAL CORPORATION
April 3, 1997 By: /s/ James H Price
---------------------------
James H. Price
Vice President - Finance
(Chief Accounting Officer)
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
2.1 Purchase and Sale Agreement and Assignment of Partnership Interest,
dated August 30, 1996, by and between Torch Energy Finance Fund
Limited Partnership I and Southern Mineral Corporation.
2.2 Agreement Regarding Dissolution of Partnerships, dated August 30,
1996, between Southern Mineral Corporation and Diasu Oil & Gas Co.,
Inc.
10.1 Amendment to Credit Agreements between Southern Mineral Corporation
et al and Compass Bank-Houston dated August 30, 1996.
99 News Release of Southern Mineral Corporation dated September 3, 1996.
</TABLE>
