SCHEDULE 14A (Rule 14a-101) INFORMATION
Information Required in Proxy Statement
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. _____)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SOUTHERN MINERAL CORPORATION
(Name of Registrant as Specified in Its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:_______________
(2) Aggregate number of securities to which transaction
applies:_______________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was
determined):_______________
(4) Proposed maximum aggregate value of transaction:_______________
(5) Total fee paid:_______________
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_______________
(2) Form, Schedule or Registration Statement No.:_______________
(3) Filing Party:_______________
(4) Date Filed:_______________
<PAGE>
SOUTHERN MINERAL CORPORATION
1201 LOUISIANA STREET, SUITE 3350
HOUSTON, TEXAS 77002-5609
713/658-9444
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of stockholders of Southern
Mineral Corporation, a Nevada corporation (the "Company"), will be held on
Wednesday, May 13, 1998, at 10:00 a.m., in the Fannin Room, at The DoubleTree
Hotel, 400 Dallas Street, Houston, Texas, for the following
purposes:
1. To elect 11 directors to serve until the next annual meeting of
stockholders and until such time as their successors are duly
elected and qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as auditors of
the Company for the year ending December 31, 1998; and
3. To consider and act upon such other business as may properly be
presented to the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 13, 1998
as the record date (the "Record Date") for the determination of Stockholders
entitled to notice of and to vote at such meeting and any adjournment thereof.
Only Stockholders of record at the close of business on the Record Date are
entitled to notice of and to vote at such meeting.
By Order of the Board of Directors,
Margie Ewald
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT OF THE COMPANY DESIRES
TO HAVE THE MAXIMUM REPRESENTATION AT THE ANNUAL MEETING AND RESPECTFULLY
REQUESTS THAT YOU SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE
BOARD OF DIRECTORS OF THE COMPANY, AND PROMPTLY RETURN IT TO THE COMPANY IN THE
ENCLOSED PREADDRESSED ENVELOPE. A PROXY MAY BE REVOKED BY A STOCKHOLDER AT ANY
TIME BEFORE THE MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A
SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE ANNUAL MEETING AND VOTING IN
PERSON.
<PAGE>
SOUTHERN MINERAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 13, 1998
This Proxy Statement is furnished to the Stockholders of Southern Mineral
Corporation, a Nevada corporation (the "Company"), for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the date, time and place
and for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders, or at any adjournment thereof. The enclosed proxy is solicited on
behalf of the Board of Directors of the Company and is subject to revocation at
any time prior to the voting of the proxy. Unless a contrary choice is
indicated, all duly executed proxies received by the Company will be voted in
accordance with the instructions set forth on the reverse side of the proxy
card.
At the close of business on March 13, 1998, the record date for
determining the stockholders entitled to notice of and to vote at the meeting
(the "Record Date"), there were outstanding and entitled to vote 12,494,100
shares of the Company's common stock, par value $.01 per share ("Common Stock").
Each share of Common Stock entitles the holder to one vote on all matters
presented at the Annual Meeting.
The Company will bear the costs of soliciting proxies in the accompanying
form. In addition to solicitations by mail, a number of regular employees of the
Company may solicit proxies in person or by telephone.
The principal executive office of the Company is located at 1201 Louisiana
Street, Suite 3350, Houston, Texas 77002-5609.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
At the Annual Meeting, 11 nominees are to be elected to the Board of
Directors of the Company, each director to hold office until the next annual
meeting of stockholders and until such time as his successor is duly elected and
qualified. If any nominee for election as a director is unable to accept
election, the persons named in the proxy may vote for such other person or
persons as may be designated by the Board of Directors of the Company.
Management of the Company has no reason to believe that any nominee will be
unable to serve if elected. Certain information as of April 23, 1998 with
respect to the nominees for election as directors is set forth below.
DIRECTOR NOMINEE DIRECTOR SINCE AGE
---------------- -------------- ---
B. Travis Basham ............. 1995 59
Thomas R. Fuller ............. 1995 50
Robert R. Hillery ............ 1993 69
E. Ralph Hines, Jr ........... 1985 69
Howell H. Howard ............. 1960 70
Steven H. Mikel .............. 1995 46
James E. Nielson ............. 1993 65
Jeffrey B. Robinson .......... 1998 53
Michael D. Watford ........... 1998 44
Donald H. Wiese, Jr .......... 1995 55
Spencer L. Youngblood ........ 1995 52
B. TRAVIS BASHAM has been a Manager since 1988 of four Texas general
partnerships operating under the Diverse name and headquartered in San Antonio,
Texas, all of which are engaged in the oil and gas exploitation and production
business (collectively, the "Diverse Partnerships"). Mr. Basham also has been
President of Venucot, Inc., an oil and gas production and management company,
since 1992. Mr. Basham is a certified public accountant with prior
administrative and financial positions with New London, Inc. from 1985 to 1986,
Gulf Energy and Development Corp. from 1976 to 1983, and Enserch Corporation
from 1959 to 1976. Mr. Basham received a B.B.A. in accounting from Southern
Methodist University.
THOMAS R. FULLER has been a Manager of the Diverse Partnerships since
1990. He has also been President of Wyogram Oil Company since 1980 which is
engaged in the oil and gas production business. He was a vice president of
Hillin Oil Company from 1980 to 1986, First City National Bank from 1974 to
1980, and a drilling and reservoir engineer with Exxon Company, U.S.A. from 1970
to 1974. Mr. Fuller holds a B.S. in petroleum engineering from the University of
Wyoming and attended Louisiana State University's Graduate School of Banking.
4
<PAGE>
ROBERT R. HILLERY has served as President and Chief Executive Officer of
The Links Group, Inc. ("LGI"), a Texas corporation, since 1993. From 1984 to
1992, Mr. Hillery was Director and President of Gulf Exploration Consultants,
Inc. ("GEC"). Both LGI and GEC are engaged in oil and gas exploration. He also
has been a member of the Board of Trustees of Phillips University since 1982.
Mr. Hillery graduated from Phillips University with a B.A. in Geology,
Mathematics and Physics.
E. RALPH HINES, JR. has been a Partner of Moon & Hines, an oil and gas
exploration partnership since 1972. Since 1982, he also has been a Director and
Vice President of Moon-Hines-Tigrett Operating Co., Inc., an oil and gas
operating company. Mr. Hines has been involved in the oil and gas industry in
Mississippi and Alabama since 1955, and received his BS in Geology from Texas
Tech University.
HOWELL H. HOWARD has been Trustee of the Ehlco Liquidating Trust since
1989 and was Chairman of the Board of Edward Hines Lumber Company from 1981
until its liquidation in 1989. Mr. Howard has been Chairman of the Board of the
Company since 1981.
STEVEN H. MIKEL has been the President and Chief Executive Officer of the
Company since 1995. From 1993 to 1994, he was an independent consultant in the
oil and gas industry, acting as a financial advisor to small and medium-sized
independents in their capital formation activities. Mr. Mikel was a co-founder
and served as the Managing Director of Resource Investors Management Company
(RIMCO), an oil and gas investment management company, from 1985 to 1993. He
began his career as a corporate finance attorney in Hartford, Connecticut, and
moved into finance with Aetna Life and Casualty, where he specialized in natural
resource industries. Mr. Mikel received his B.A. and J.D. degrees from Syracuse
University and his M.B.A. from the University of Connecticut.
JAMES E. NIELSON has held the position of President and Chief Executive
Officer of Nielson & Associates, Inc. since 1992. From 1979 to 1992, he was
President and Chief Executive Officer of JN Oil and Gas Company, an oil and gas
exploration company. He has served as Director of the American Petroleum
Institute, Rocky Mountain Oil and Gas Association and Shoshone First Bank since
1974, 1989 and 1992, respectively. Mr. Nielson has been President of Rocky
Mountain Oil and Gas Association since 1993.
JEFFREY B. ROBINSON has been the President and Chief Executive Officer of
Centas Technical Services, a Houston based international oil and gas company
since 1994. Mr. Robinson was also the President, Chief Executive Officer and a
director of Amerac Energy Corporation, an oil and gas company, from 1994 to
1998. He was previously with Amax Oil and Gas Inc. Mr. Robinson joined the
Company's Board of Directors in January of 1998 following the merger of Amerac
with and into the Company. Mr. Robinson received a B.S. degree in Petroleum
Engineering from Marietta College in Marietta, Ohio.
MICHAEL D. WATFORD was President, Chief Operating Officer and a member of
the Board of Directors of Nuevo Energy Company from 1994 to 1997. He has been a
Director of Bellwether Exploration Company since 1994, and was President of
Torch Energy Marketing, Inc. from 1990 to 1994. Mr. Watford began his career in
1975 with Shell Oil Company where he
5
<PAGE>
held various positions in exploration and production, refining, chemicals, and
mining. He later held a number of positions of increasing responsibility at
Superior Oil Company and Meridian Oil, Inc. Mr. Watford received a B.S. in
Finance from the University of Florida and an M.B.A. in Business Administration
from the University of New Orleans.
DONALD H. WIESE, JR. has been, since 1988, a Manager of the Diverse
Partnerships, and since 1980, has been President of Heathery Resources, Inc., an
oil and gas consulting company. He was retained by Primary Fuels, Inc. to
establish and manage its oil and gas acquisition program and was responsible for
$240,000,000 in producing property acquisitions from 1981 to 1987. Mr. Wiese was
President of Nord Petroleum Corporation from 1979 to 1981 and Vice-President of
American Express' international oil and gas project financing group from 1976 to
1979. His technical training includes evaluation and appraisal experience as
Vice President of DeGolyer and MacNaughton from 1973 to 1976, and oil and gas
operations with Texaco, Inc. from 1965 to 1973. Mr. Wiese is a graduate of New
Mexico State University and a Registered Professional Engineer.
SPENCER L. YOUNGBLOOD has been a Manager of the Diverse Partnerships since
1990 and President of Kona, Inc., an oil and gas production company, since 1992.
From 1984 to 1990, he was Senior Vice President with Geodyne Resources, Inc.
where he directed more than $200,000,000 in acquisitions. Mr. Youngblood began
his career at Aminoil USA in 1975 and worked with Gulf Energy and Development
Corp. from 1981 to 1984. He received a B.S. in Petroleum Engineering from
Louisiana State University and a M.B.A. from Florida Technological University.
BOARD AND COMMITTEE ACTIVITY, STRUCTURE AND COMPENSATION
The Company's operations are managed under the broad supervision and
direction of the Board of Directors, which has the ultimate responsibility for
the establishment and implementation of the Company's general operating
philosophy, objectives, goals and policies. Pursuant to delegated authority,
certain Board of Directors functions are discharged by five of the Board of
Directors' standing committees, the Executive, Audit, Compensation, Nominating
and Acquisitions Committees. Members of each committee for a given year are
selected by the Board of Directors following the annual meeting of stockholders.
During the fiscal year ended December 31, 1997, the Company's Board of Directors
held seven meetings. In 1997, each incumbent member of the Board of Directors
attended or participated in at least 75% of the aggregate number of (i) Board of
Directors meetings and (ii) committee meetings held by all committees of the
Board of Directors on which he served.
The Executive Committee was established in 1996 and is authorized to
exercise, to the extent permitted by law, the power of the full Board of
Directors when a meeting of the full Board of Directors is not practicable or
necessary. The Executive Committee held two meetings during 1997. Its current
members are Messrs. Mikel, Fuller and Wiese.
The Audit Committee recommends to the Board of Directors the independent
accountants of the Company, reviews the Company's annual report on Form 10-KSB,
reviews the Company's internal controls and accounting operations, and reviews
any transactions of the Company in
6
<PAGE>
which management or controlling persons of the Company have an interest. Other
matters which the Audit Committee reviews with the Company's independent
accountants include financial policies and practices; the arrangement, scope and
results of the annual audit; and the independent accountants' findings and
recommendations relating to the Company's accounting practices, internal
controls and accounting procedures. The Audit Committee held two meetings during
1997. Its current members are Messrs. Basham, Hillery, and Youngblood.
The Compensation Committee is responsible for formulating and adopting or
recommending to the Board of Directors executive compensation plans and
policies, including those relating to incentive compensation and benefits. This
Committee also supervises the administration of all employee benefit and
executive compensation programs, including the establishment of specific
criteria against which executive officers' annual performance-based compensation
is measured. Compensation Committee decisions regarding aggregate executive
compensation, corporate performance goals relating to incentive compensation,
and the Chief Executive Officer's compensation are subject to approval by the
Company's Board of Directors. The Compensation Committee held five meetings
during 1997. Its current members are Messrs. Howard, Hines, and Nielson.
The Nominating Committee is responsible for considering and nominating
candidates for election as directors. This Committee will consider nominees
submitted by stockholders. Stockholders who wish to suggest individuals for
possible future consideration for Board of Directors positions should direct
recommendations to the Nominating Committee at the Company's principal offices.
The Nominating Committee held one meeting during 1997. Its current members are
Messrs. Howard, Fuller, Nielson and Youngblood.
The Acquisition Committee is responsible for evaluating significant
potential acquisitions and dispositions identified by management of the Company.
The Acquisition Committee held one meeting during 1997. Its current members are
Messrs. Hillary, Hines and Nielson.
The Company reimburses each director for his actual and necessary expenses
reasonably incurred in connection with attending meetings of the Board of
Directors and its committees. In April 1997, the Board of Directors adopted the
1997 Non-Employee Director Compensation Plan ("1997 Plan") which is effective
through May 2002. Under the 1997 Plan, non-employee directors are entitled to
receive 1,000 shares of Common Stock for each Board of Directors meeting
attended, excluding telephonic meetings. No retainer or other compensation for
serving as a director of the Company was paid during 1997.
7
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed KPMG Peat Marwick LLP, independent public accountants, to audit the
accounts of the Company for the year ending December 31, 1998. KPMG Peat Marwick
LLP audited the accounts of the Company for 1997 and re-audited 1996 in
conjunction with the Debenture Offering. While ratification by stockholders of
this appointment is not required by law or the Company's Restated Articles of
Incorporation or Bylaws, as amended, management of the Company believes that
such ratification is desirable.
The Company anticipates that representatives of KPMG Peat Marwick LLP will
attend the Annual Meeting, may make a statement if they desire to do so, and
will be available to answer appropriate questions.
Grant Thornton LLP served as the Company's independent accountants from
1992 through 1996. The Board of Directors made the determination not to engage
Grant Thornton LLP for 1997. The shareholders ratified this decision at the
Company's annual meeting of Stockholders held on May 14, 1997. Management had no
disagreement with Grant Thornton LLP on any material matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure. Grant Thornton LLP's report on the Company's financial statements for
1996 did not contain an adverse opinion or a disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPOINTMENT OF KPMG PEAT MARWICK
LLP AS AUDITORS.
8
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company serve at the pleasure of the Board
of Directors and are subject to annual appointment by the Board of Directors.
The Company has the following six executive officers:
Howell H. Howard is Chairman of the Board of Directors and a director of
the Company. Further information regarding Mr. Howard is provided above under
"Election of Directors--Nominees."
Steven H. Mikel is President and Chief Executive Officer, and a director
of the Company. Further information regarding Mr. Mikel is provided above under
"Election of Directors--Nominees."
James H. Price, age 48, joined the Company in 1996 and is its Vice
President-Finance. He has more than 20 years of experience in the oil and gas
finance industry, beginning his career in 1974 in the Energy Department of First
City National Bank (Houston). Since then he was Chief Financial Officer of
Matagorda Drilling and Exploration Company from 1980 to 1984 and Alliance Well
Service, Inc. from 1984 to 1988. He was Senior Vice President-Finance of TGX
Corporation from 1988 to 1990 and has been a director and president of Fannin
Energy Inc. and Grover G. Stanford Oil Company, L.L.C. since 1990 and 1994,
respectively. Mr. Price holds a B.B.A. in Finance from the University of
Houston.
John A. Walker, age 48, has been Vice President-Exploration of the Company
since 1996. He has 21 years of petroleum exploration and production experience
with major and independent companies, most recently as Exploration Manager of
Stone & Webster Oil Company, Inc. from 1994 to 1995, and as an independent
geological/geophysical consultant from 1987 to 1993. Mr. Walker received a B.S.
in Geology and an M.S. in Geology from Ohio University. Mr. Walker is an AAPG
Certified Petroleum Geologist.
Billy W. Lee, age 53, has been Vice President - Engineering since July,
1997. He earned a B.S. in Petroleum Engineering and an M.B.A. from Texas A&M
University. Mr. Lee has worked with Tenneco and BP Huddleston Company in
Houston. Prior to joining the Company, Mr. Lee headed an independent oil and gas
company.
Timothy R. Weddle, age 51, Vice President - Operations, has twenty-seven
years of petroleum engineering and management experience. He graduated with
honors from the University of Texas at Austin with a B.S. in Chemical
Engineering. Mr. Weddle held various engineering and supervisory positions with
Exxon Corporation domestically and overseas, onshore and offshore. He managed
the operations of a domestic exploration company for fourteen years and was
President and owner of an operating company for four years. Mr. Weddle is a
Registered Professional Engineer in Texas.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for Steven H.
Mikel, James H. Price and John A. Walker's services to the Company during the
years ended December 31, 1997 and 1996, and Steven H. Mikel for the year ended
December 31, 1995.
SUMMARY COMPENSATION TABLE
Long Term Compensation
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- ------------------------------------------
AWARDS
-----------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING PAYOUTS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS ($) OPTIONS/SARS (#) LTIP PAYOUTS COMPENSATION
- ---------------------- ---- -------- ------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Steven H. Mikel ...... 1997 $150,250 $50,000 -- -- -- -- $ 4,750(2)
President and ...... 1996 $125,750 $10,000 -- -- 10,000(1) -- $ 5,620(2)(3)
Chief Executive .... 1995 $120,000 -- -- -- -- -- $ 510(3)
Officer
James H. Price ....... 1997 $ 90,000 $20,000 -- -- 70,000(1) -- $ 4,750(2)
Vice President - ... 1996 $ 61,875 -- -- -- 50,000(1) -- $ 4,866(2)(4)
Finance
John A. Walker ....... 1997 $ 90,000 $20,000 -- -- 70,000(1) -- $ 4,750(2)
Vice President- .... 1996 $ 73,125 -- -- -- 50,000(1) -- $ 2,526(4)(5)
Exploration
</TABLE>
(1) See "Option Grants" below.
(2) Includes $4,750 contributed by the Company to each officer's account in
the Company's Simplified Employee Pension Plan in which substantially all
of the Company's employees are eligible to participate.
(3) Consists of the value ($870 for 1996 and $510 for 1995) computed in
accordance with Internal Revenue Service guidelines for premiums paid on
term life insurance exceeding $50,000 in coverages. Substantially all
employees of the Company are covered by term life insurance policies.
(4) Includes $116 of value computed in accordance with Internal Revenue
Service guidelines for premiums paid on term life insurance exceeding
$50,000 in coverages. Substantially all employees of the Company are
covered by term life income policies.
(5) Includes $2,410 contributed by the Company for Mr. Walker's account in the
Company's Simplified Employee Pension Plan in which substantially all of
the Company's employees are eligible to participate.
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<PAGE>
OPTIONS GRANTS
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARs EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) IN 1997 ($/SHARE) DATE
---- ------------ ------------ ----------- ----------
James H. Price..... 20,000 7.0%(1) $5.00(2) 3/04/02
John A. Walker..... 20,000 7.0%(1) $5.00(2) 3/04/02
James H. Price..... 50,000 17.5%(1) $6.75(3) 11/14/02
John A. Walker..... 50,000 17.5%(1) $6.75(3) 11/14/02
(1) Based upon 285,000 issuable upon exercise of options granted in 1997.
(2) This exercise price of $5.00 per share was the last sales price for the
Common Stock on March 4, 1997, as reported in the consolidated reporting
system for NASDAQ SmallCap issues.
(3) This exercise price of $6.75 per share was the last sales price for the
Common Stock on November 14, 1997, as reported in the consolidated
reporting system for NASDAQ National Market Systems issues.
OPTION EXERCISES AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, 1997 DECEMBER 31, 1997(2)
------------------------------- ------------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE RECEIVED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven H. Mikel .................. -- -- 460,000 0 $ 2,065,000(1) 0
James H. Price ................... 3,798 $ 18,041(3) 10,780 103,333 $ 26,950(5) $ 93,333(6)
James H. Price ................... 2,089 $ 5,494(4)
John A. Walker ................... -- -- 16,667 103,333 $ 41,668(5) $ 93,333(6)
</TABLE>
(1) Based upon an exercise price of $1.00 per share for 450,000 shares
issuable upon exercise of an option granted in December 1994, and an
exercise price of $1.50 per share for 10,000 shares issuable upon exercise
of an option granted in February 1996.
(2) Based upon the last sales price of $5.50 per share on December 31, 1997,
as reported in the consolidated reporting system for NASDAQ SmallCap
issues.
(3) Based upon an exercise price of $3.00 per share and the last sales price
of $7.75 per share on October 13, 1997, as reported in the consolidated
reporting system for NASDAQ Small Cap issues.
(4) Based upon an exercise price of $3.00 per share and the last sales price
of $5.63 per share on December 30, 1997, as reported in the consolidated
reporting system for NASDAQ Small Cap issues.
(5) Based upon an exercise price of $3.00 per share for shares issuable upon
exercise of an option granted to each officer in May 1996.
(6) Based upon an exercise price of $3.00 per share for 33,333 shares issuable
upon exercise of an option granted in May 1996, and an exercise price of
$5.00 per share for 20,000 shares issuable upon exercise of an option
granted in March 1997.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1998 the number of shares
of the Company's Common Stock beneficially owned by each director and director
nominee of the Company, executive officer named in the Summary Compensation
Table above, and all of the Company's directors and executive officers as a
group. Based on publicly-available filings with the Securities and Exchange
Commission, the Company knows of no person, other than the directors, nominees
and executive officers listed below, who is the holder of more than five percent
of its voting securities. Unless otherwise indicated, each holder has sole
voting and investment power with respect to the shares of Common Stock owned by
such holder, and is a United States citizen.
AMOUNT AND PERCENT
NATURE OF OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------ -------------------- -------
B. Travis Basham........... 518,807 (1) 4.2%
Thomas R. Fuller........... 519,807 (2) 4.2%
Robert R. Hillery.......... 68,828 (3) 0.6%
E. Ralph Hines, Jr......... 52,750 (4) 0.4%
Howell H. Howard........... 579,917 (5) 4.6%
Steven H. Mikel............ 517,421 (6) 4.1%
James E. Nielson........... 26,000 (7) 0.2%
Jeffrey B. Robinson........ 135,256 (8) 1.1%
Donald H. Wiese, Jr........ 512,307 (9) 4.1%
Spencer L. Youngblood...... 513,807 (10) 4.1%
John A. Walker............. 23,334 (11) 0.2%
James H. Price............. 17,447 (11) 0.1%
Timothy R. Weddle.......... 8,133 (12) 0.1%
All Directors and Officers
as a group............... 3,493,814 28%
- --------------------
(1) Includes 376,985 shares held by Venucot, Inc., a corporation controlled by
Mr. Basham, and 7,924 and 69,576 shares issuable upon exercise of
presently exercisable options held by Mr. Basham and Venucot, Inc.,
respectively.
(2) Includes 376,985 shares held by Michmatt, Inc., a corporation controlled
by Mr. Fuller, and 7,924 and 69,576 shares issuable upon exercise of
presently exercisable options held by Mr. Fuller and Michmatt, Inc.,
respectively.
(3) Includes 43,878 shares issuable upon exercise of a presently exercisable
option, and 6,054 shares based on ownership of $50,000 of Convertible
Subordinated Debentures (of
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$41,400,000 issued on October 7, 1997, at a conversion rate of $121.07 per
$1,000.00).
(4) Includes 41,750 shares owned by Mr. Hines' wife.
(5) Includes 366,633 shares held in trusts of which Mr. Howard or his wife is
a co-trustee and shares voting and dispositive power, and 26,488 shares
owned by Mr. Howard's wife.
(6) Includes 460,000 shares issuable upon exercise of presently exercisable
options, and 2,421 shares based on ownership held in trusts of which Mr.
Mikel is trustee with voting and dispositive power of $20,000 of
Convertible Subordinated Debentures (of $41,400,000 issued on October 7,
1997, at a conversion rate of $121.07 per $1,000.00).
(7) Includes 4,000 shares held by Nielson & Associates, Inc., a corporation
controlled by Mr. Nielson.
(8) Includes 2,270 shares issuable upon the exercise of warrants and 50,489
shares issuable upon the exercise of presently exercisable options.
(9) Includes 369,485 shares held by DHW Energy, Inc. a corporation controlled
by Mr. Wiese, and 7,924 and 69,576 shares issuable upon exercise of
presently exercisable options held by Mr. Wiese and DHW Energy, Inc.,
respectively.
(10) Includes 376,985 shares held by Kona, Inc., a corporation controlled by
Mr. Youngblood, and 7,924 and 69,576 shares issuable upon exercise of
presently exercisable options held by Mr. Youngblood and Kona, Inc.,
respectively.
(11) These shares are issuable upon exercise of presently exercisable options.
(12) The shares are held by Petroleum Resource Management Co., a corporation
controlled by Mr. Weddle.
13
<PAGE>
CERTAIN TRANSACTIONS
Acquisition of Amerac Energy Corporation. On January 28, 1998, the Company
consummated the transactions contemplated by an Amended and Restated Agreement
and Plan of Merger ("Merger") executed November 17, 1997 by and among Amerac
Energy Corporation ("Amerac"), a Delaware corporation, SMC Acquisition Corp., a
Delaware Corporation, and the Company. Pursuant to the Merger, the Company
acquired all of Amerac's outstanding capital stock in consideration for issuing
to Amerac's stockholders the right to receive 3,333,333 shares of SMC common
stock. That number of shares represented a cap on the number of SMC that could
have been exchanged under the Merger equation, and resulted from an average
share price of $4.89 based on the 20 consecutive trading days ending three days
prior to the consummation of the Merger. Amerac's former stockholders include
Mr. Jeffrey B. Robinson, who became a director of the Company effective January
28, 1998.
14
<PAGE>
OTHER MATTERS
REQUIRED VOTE. Only holders of Common Stock as of the Record Date will be
entitled to vote in person or by proxy at the Annual Meeting. A majority of
issued and outstanding shares of Common Stock as of the Record Date represented
at the meeting in person or by proxy will constitute a quorum for the
transaction of business. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum. Provided that a
quorum is present at the meeting, (i) the 11 director nominees who receive the
greatest number of votes cast for election by stockholders entitled to vote
therefore will be elected directors of the Company, and (ii) the affirmative
vote for ratification of the appointment of KPMG Peat Marwick LLP as auditors by
a majority of shares present in person or by proxy and entitled to vote thereon
will constitute stockholder ratification thereof. Votes withheld in connection
with the election of one or more director nominees will not be counted as votes
cast for such individuals. Abstentions and broker non-votes with respect to the
ratification of the appointment of KPMG Peat Marwick LLP will have the same
effect as a vote against ratification thereof. Votes will be tabulated and the
results will be certified by the inspector of election who is required to
resolve impartially any interpretive questions as to the conduct of the vote. In
tabulating votes, a record will be made of the number of shares (i) voted for
each nominee, (ii) with respect to which authority to vote for each nominee has
been withheld, (iii) voted for, against and abstaining from the ratification of
the appointment of KPMG Peat Marwick LLP, and (iv) present at the meeting but
not voting. Under Nevada law, stockholders will have no appraisal or similar
dissenters' rights with respect to action on the ratification of the appointment
of KPMG Peat Marwick LLP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Under Section 16(a) of
the Exchange Act, directors, certain officers, and beneficial owners of 10% or
more of the Company's Common Stock ("Reporting Persons") are required from time
to time to file with the Securities and Exchange Commission reports of ownership
and changes of ownership. Reporting Persons are required to furnish the Company
with copies of all Section 16(a) reports they file. Based solely on its review
of forms filed with the Securities and Exchange Commission and written
representations received by the Company from Reporting Persons with respect to
the year ended December 31, 1997, the Company believes that all filing
requirements applicable to the Reporting Persons have been met.
STOCKHOLDER PROPOSALS. Management anticipates that the Company's 1999 annual
stockholders meeting will be held during May 1999. Any stockholder who wishes to
submit a proposal for action to be included in the proxy statement and form of
proxy relating to the Company's 1999 annual stockholders meeting must submit the
proposal to the Company on or before December 23, 1998. Any such proposals
should be timely sent by certified mail, return receipt requested, to the
Secretary of the Company, 1201 Louisiana Street, Suite 3350, Houston, Texas
77002-5609.
AVAILABILITY OF ANNUAL REPORT. The Company is including herewith a copy of its
annual report on Form 10-KSB for the fiscal year ended December 31, 1997, which
has been filed with the Securities and Exchange Commission.
15
<PAGE>
By order of the Board of Directors,
/s/ Margie Ewald
Secretary
SOUTHERN MINERAL CORPORATION
16
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 13, 1998
The undersigned hereby appoints Howell H. Howard and Steven H. Mikel, and each
of them, either one of whom may act without joinder of the other, each with full
power of substitution and ratification, attorneys and proxies of the undersigned
to vote all shares of Southern Mineral Corporation which the undersigned is
entitled to vote at the annual meeting of stockholders to be held in the Fannin
Room at The DoubleTree Hotel, 400 Dallas Street, Houston, Texas on May 13, 1998
at 10:00 a.m., and at any adjournment thereof.
(TO BE VOTED AND SIGNED ON REVERSE SIDE)
PLEASE promptly DATE, SIGN AND MAIL YOUR PROXY CARD
ANNUAL MEETING OF STOCKHOLDERS SOUTHERN MINERAL CORPORATION
to be held MAY 13, 1998
Please Detach and Mail in the Envelope Provided
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF FOR election (except WITHHOLD authority to NOMINEES: B. Travis Basham
DIRECTORS as indicated below) vote for all nominees Thomas R. Fuller
listed at right Robert R. Hillery
E. Ralph Hines, Jr.
[ ] [ ] Howell H. Howard
Steven H. Mikel
James E. Nielson
Jeffrey B. Robinson
Michael D. Watford
Donald H. Wiese, Jr.
Spencer L. Youngblood
INSTRUCTION: To withhold authority to vote for any individual nominee, print that nominee's name on the line below.
- -------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of the appointment of KPMG Peat Marwick LLP as
auditors of the Company for year ending December 31, 1998. [ ] [ ] [ ]
</TABLE>
3. In their discretion, upon such other matters (including procedural and other
matters relating to the conduct of the meeting) which may properly come
before the meeting and any adjournment thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREON. IF
NO CONTRARY SPECIFICATION IS MADE, THEN THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE ELEVEN DIRECTOR NOMINEES NAMED IN ITEM 1 AND OF THE PROPOSAL
IDENTIFIED IN ITEM 2.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND THE PROXY STATEMENT FURNISHED HEREWITH.
PLEASE PROMPTLY DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED,
PRE-ADDRESSED STAMPED ENVELOPE.
Signature(s) of Stockholder ________________________________________________
Dated this ____ day of _____________ 1998
Note: Please sign exactly as your name appears on your stock certificate. When
signing as executor, administrator, trustee or other representative,
please give your full title. All joint owners should sign.
