<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
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 16, 1998
TOREADOR ROYALTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-2517 75-0991164
(STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)
4809 COLE AVENUE, SUITE 108
DALLAS, TEXAS 75205
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 369-0080
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<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
As previously disclosed under a Current Report on Form 8-K filed on
December 31, 1998, Tormin, Inc., a wholly-owned subsidiary of Toreador Royalty
Corporation ("Toreador"), purchased certain oil, gas and other mineral and
royalty interests located in Alabama, Louisiana and Mississippi (the "Assets")
from Howell Petroleum Corporation ("Howell"), pursuant to a Purchase and Sale
Agreement dated October 28, 1998, by and between Howell and J.T. Philip Company.
In accordance with the rules of the Securities and Exchange Commission, Toreador
omitted from the Form 8-K the required financial statements and pro forma
financial information for the Assets. This amendment to the Form 8-K provides
such financial statements and pro forma financial information.
(a) Financial statements of businesses acquired.
Historical Statement of Revenues and Direct Operating Expenses
for the Years Ended December 31, 1997 and 1996 and for the
Nine Months Ended September 30, 1998 and 1997 (Unaudited).
Supplementary Oil and Gas Information (Unaudited).
(b) Pro forma financial information.
Pro Forma Consolidated Balance Sheet (Unaudited) of Toreador
Royalty Corporation as of September 30, 1998.
Pro Forma Consolidated Statements of Operations (unaudited) of
Toreador Royalty Corporation for the nine months ended
September 30, 1998 and for the fiscal year ended December 31,
1997.
(c) Exhibits
10.1* Securities Purchase Agreement, effective December 16,
1998, among Toreador Royalty Corporation and the
Purchasers party thereto.
10.2* Registration Rights Agreement, effective December 16,
1998, among Toreador Royalty Corporation and persons
party thereto.
10.3* Certificate of Designation of Series A Convertible
Preferred Stock of Toreador Royalty Corporation.
10.4* Purchase and Sale Agreement, effective November 1,
1998, between Howell Petroleum Corporation and The
J.T. Philip Company, as amended.
10.5* Credit Agreement effective December 15, 1998, between
Compass Bank and Tormin, Inc.
23.1 Consent of PricewaterhouseCoopers, LLP.
- -----------------------
* Previously filed in Current Report on Form 8-K filed on December 31, 1998.
(2)
<PAGE> 3
Report of Independent Accountants
To the Board of Directors of
Howell Corporation
We have audited the accompanying Historical Statement of Revenues and Direct
Operating Expenses of the Oil and Gas Properties Acquisition for the years ended
December 31, 1997 and 1996. This historical statement is the responsibility of
the management of the owner of the Properties. Our responsibility is to express
an opinion on this historical statement 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 historical statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the historical statement. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
historical statement. We believe that our audits provide a reasonable basis for
our opinion.
The accompanying historical statement, as described in Note 1, was prepared for
the purpose of complying with certain rules and regulations of the Securities
and Exchange Commission for inclusion in Form 8-K which will be filed by
Toreador Royalty Corporation. It is not intended to be a complete presentation
of the financial condition, results of operations and cash flows of the Oil and
Gas Properties Acquisition.
In our opinion, the historical statement referred to above presents fairly, in
all material respects, the revenues and direct operating expenses of the Oil and
Gas Properties Acquisition as described in Note 1 for the years ended December
31, 1997 and 1996, in conformity with generally accepted accounting principles.
PricewaterhouseCoopers LLP
Dallas, Texas
February 24, 1999
(3)
<PAGE> 4
Oil and Gas Properties Acquisition
Historical Statement of Revenues and Direct Operating Expenses
For the Years Ended December 31, 1997 and 1996 and
For the Nine Months Ended September 30, 1998 and 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the nine
months ended For the years ended
September 30, December 31,
------------------------- -------------------------
1998 1997 1997 1996
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Crude oil and condensate $ 448,055 $ 770,938 $1,016,646 $1,301,313
Natural gas 709,711 693,045 1,032,467 968,637
Plant products and other 25,452 32,847 44,765 67,514
Lease bonuses and rentals 280,426 700,256 933,675 642,636
---------- ---------- ---------- ----------
Total 1,463,644 2,197,086 3,027,553 2,980,100
---------- ---------- ---------- ----------
Direct operating expenses:
Production taxes 59,222 89,354 119,905 139,393
Gathering costs 52,413 43,736 64,938 54,131
---------- ---------- ---------- ----------
Total 111,635 133,090 184,843 193,524
---------- ---------- ---------- ----------
Revenues in excess of direct
operating expenses $1,352,009 $2,063,996 $2,842,710 $2,786,576
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
(4)
<PAGE> 5
Oil and Gas Properties Acquisition
Notes to Historical Financial Statement of Revenues and Direct Operating
Expenses
For the Years Ended December 31, 1997 and 1996 and For the Nine Months
Ended September 30, 1998 and 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. Basis of Presentation
On December 16, 1998, Tormin, Inc., a wholly owned subsidiary of
Toreador Royalty Corporation ("Company"), purchased, effective November
1, 1998, certain oil, gas and other mineral and royalty interests
located in Alabama, Louisiana and Mississippi (the "Properties") from
Howell Petroleum Corporation ("Howell"), a wholly owned subsidiary of
Howell Corporation, pursuant to a Purchase and Sale Agreement (the
"Howell Agreement") dated October 28, 1998 by and between Howell and
J.T. Philip Company ("JTP"). Tormin acquired JTP's rights under the
Howell Agreement through an assignment of JTP's rights and paid a
transaction fee of 1.5% of the purchase price of the Properties.
The purchase price for the Properties was $13 million. The Properties
are comprised of approximately 1,775,000 gross mineral acres and
876,000 net mineral acres. Producing interests, which make up
approximately 2% of the total net acres, are held in approximately 400
oil and gas wells. The acquisition of the Properties was accounted for
under the purchase method and closed on December 16, 1998 (the "Closing
Date").
The accompanying historical statement of revenues and direct operating
expenses ("Historical Statement") was prepared from the historical
accounting records of Howell which are prepared on the accrual basis.
Oil and gas revenues and direct operating expenses relate to the net
revenue interest in the Properties. Oil and gas sales are recognized as
product is sold from the wells.
The Historical Statement varies from an income statement in that it
does not show certain expenses which were incurred in connection with
ownership of the Properties, including general and administrative
expenses and income taxes. These costs were not separately allocated to
the Properties by Howell and any pro forma allocation would be both
time consuming and expensive and would not be a reliable estimate of
what these costs would actually have been had the Properties been
operated historically as a stand alone entity. In addition, these
allocations, if made using historical Howell general and administrative
structures and tax burdens, would not produce allocations that would be
indicative of the historical performance of the Properties had they
been assets of the Company, due to the greatly varying size, structure,
operations and accounting of the two companies. This Historical
Statement also does not include provisions for depreciation, depletion
and amortization as such amounts would not be indicative of those costs
which would be incurred by the Company upon allocation of the purchase
price.
For the same reason, primarily the lack of segregated or easily
obtainable reliable data on asset values and related liabilities, a
balance sheet is not presented for the Properties.
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 revenues and direct
operating expenses during the reporting period. Actual results could
differ from those estimates.
The interim financial data for the nine months ended September 30, 1998
and September 30, 1997 is unaudited; however, in the opinion of Howell,
the interim data includes all adjustments, consisting of only normal
recurring adjustments, necessary for a fair statement of the results
for the interim periods.
(5)
<PAGE> 6
Oil and Gas Properties Acquisition
Notes to Historical Financial Statement of Revenues and Direct Operating
Expenses
For the Years Ended December 31, 1997 and 1996 and For the Nine Months
Ended September 30, 1998 and 1997 (Unaudited)
- --------------------------------------------------------------------------------
2. Commitments and Contingencies
In the course of its business affairs and operations, the owner of the
Properties is subject to possible loss contingencies arising from
government, environmental and health and safety laws and regulations
and third-party litigation. There are no matters, which, in the opinion
of management, will have a material adverse effect on the financial
results of the Properties.
SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED)
The following information is presented pursuant to SFAS No. 69, Disclosures
about Oil and Gas Producing Activities:
Oil and Gas Reserves
The following table identifies the Company's net interest in estimated
quantities of proved oil and gas reserves associated with the Properties and
changes in such estimated quantities. In the absence of relevant detailed
information from Howell, reserve information presented below is based upon
estimates of proved reserves prepared by independent petroleum engineers as of
the Closing Date adjusted for historical production from January 1, 1996 to the
Closing Date.
Proved reserves are estimated quantities of crude oil, including natural gas
liquids, 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
those which are expected to be recovered through existing wells with existing
equipment and operating methods.
<TABLE>
<CAPTION>
Oil Gas
(Bbls) (Mcf)
--------- ----------
<S> <C> <C>
Proved reserves at December 31, 1995 515,429 7,179,136
Production 65,775 397,756
--------- ----------
Proved reserves at December 31, 1996 449,654 6,781,380
Production 56,669 419,186
--------- ----------
Proved reserves at December 31, 1997 392,985 6,362,194
========= ==========
Proved developed reserves at:
December 31, 1995 511,734 6,138,530
========= ==========
December 31, 1996 445,959 5,740,774
========= ==========
December 31, 1997 389,290 5,321,588
========= ==========
</TABLE>
(6)
<PAGE> 7
Oil and Gas Properties Acquisition
Supplementary Financial Information for Oil and Gas Producing Activities
(Unaudited)
December 31, 1997 and 1996
- --------------------------------------------------------------------------------
Standardized Measures of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves
The Company has developed the Standardized Measure of Discounted Future Net Cash
Flows Relating to Proved Oil and Gas Quantities (Standardized Measure), before
income taxes, assuming year-end selling prices adjusted for future fixed and
determinable contractual price changes, year-end development and production
costs, and a 10% annual discount rate. The Standard Measure does not consider
the effects of income taxes as it is not practicable to identify all assets,
liabilities or indirect operating costs applicable to the Properties because
they were not maintained as a separate business unit.
The Standardized Measure does not purport to be an estimate of the fair market
value of the Company's reserves. An estimate of fair value would also have taken
into account, among other things, the expected recovery of reserves in excess of
proved reserves, anticipated changes in future prices and costs and a discount
factor representative of the time value of money and risks inherent in producing
oil and gas.
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Future cash inflows $ 21,751,070 $ 35,870,764
Future production costs 1,957,596 3,228,369
------------ ------------
Future net cash inflows 19,793,474 32,642,395
Ten percent annual discount 8,954,004 15,203,922
------------ ------------
Standardized Measure (before income taxes)
Of discounted future net cash flows $ 10,839,469 $ 17,438,473
============ ============
</TABLE>
The average oil and gas prices used to calculate future net cash inflows at
December 31, 1997 and December 31, 1996 were $16.17 per barrel and $2.42 per Mcf
and $23.37 per barrel and $3.74 per Mcf, respectively. Oil prices represent the
average December spot prices for EOTT crude oil and gas prices represent the
average December prices as reported by Gulf Coast Madison Energy Reporter for
the respective years. The prices of crude oil and natural gas have fluctuated
over the past several years, which affects the computed cash flows over the
period shown. The prices of crude oil and natural gas increased significantly
towards the end of 1996 and have decreased significantly since that time. Prices
comparable to those used in the standardized measure were $11.00 for crude oil
and $2.19 for natural gas at the Closing Date. Because the price of crude oil
and natural gas is likely to remain volatile in the future, price changes can be
expected to continue to significantly affect the standardized measure of
discounted future net cash flows.
(7)
<PAGE> 8
Oil and Gas Properties Acquisition
Supplementary Financial Information for Oil and Gas Producing Activities
(Unaudited)
December 31, 1997 and 1996
- --------------------------------------------------------------------------------
Changes in the Standardized Measure
The following are the principal sources of change in the standardized measure
(before income taxes):
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Balance at January 1 $ 17,438,473 $ 11,704,994
Changes resulting from:
Sales, net of production costs (1,864,270) (2,076,426)
Net changes in prices and costs (6,478,580) 6,639,406
Accretion of discount 1,743,847 1,170,499
------------ ------------
Balance at December 31 $ 10,839,470 $ 17,438,473
============ ============
</TABLE>
(8)
<PAGE> 9
TOREADOR ROYALTY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The accompanying unaudited pro forma consolidated financial information gives
effect to the acquisition of the Properties. The unaudited pro forma balance
sheet adjusts the September 30, 1998 historical balance sheet as though the
acquisition occurred on September 30, 1998. The unaudited pro forma income
statements for the nine month period September 30, 1998 and the year ended
December 31, 1997 are adjusted to reflect the acquisition as though it occurred
on January 1, 1997. The pro forma results exclude any nonrecurring charges or
credits directly attributable to the acquisition.
The unaudited pro forma financial information is based on assumptions and
includes adjustments as explained in the notes to the unaudited pro forma
consolidated financial information. The actual recording of the acquisition
could differ. The unaudited pro forma financial information is not necessarily
indicative of the Company's financial position or results of operations that
might have occurred had the transaction occurred on the dates indicated above.
The unaudited pro forma financial information should be read in conjunction with
the historical financial statements and related notes thereto which are
contained in the Company's 1997 Annual Report on Form 10-K for the year ended
December 31, 1997, the Company's Quarterly Report on Form 10-Q for the nine
months ended September 30, 1998 and the historical statement of revenues and
direct operating expenses of the Properties and the Notes thereto included in
this Current Report on Form 8-K, as amended.
(9)
<PAGE> 10
TOREADOR ROYALTY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
As of September 30, 1998
Toreador Adjustments Pro Forma for
Historical for Acquisition the Acquisition
------------ --------------- ---------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,121,770 $ (415,262)(g) $ 2,706,508
Accounts receivable 185,742 -- 185,742
Marketable securities 127,130 -- 127,130
Federal income tax receivable 109,604 -- 109,604
Deferred tax benefit 791 -- 791
Other current assets 19,030 -- 19,030
------------ --------------- ---------------
Total current assets 3,564,067 (415,262) 3,148,805
------------ --------------- ---------------
Other Assets -- 134,296(b) 134,296
Properties and equipment, less accumulated
depreciation, depletion and amortization 3,408,910 13,279,643(a) 16,688,553
------------ --------------- ---------------
Total assets $ 6,972,977 $ 12,998,677 $ 19,971,654
============ =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 234,640 $ 398,677(g) $ 633,317
Current Portion of Long Term Debt -- 720,000(b) 720,000
------------ --------------- ---------------
Total current liabilities 234,640 1,118,677 1,353,317
------------ --------------- ---------------
Long Term Debt -- 7,880,000(b) 7,880,000
------------ --------------- ---------------
Total liabilities 234,640 8,998,677 9,233,317
------------ --------------- ---------------
Redeemable 9% convertible preferred stock, $25.00
stated value; 160,000 shares authorized and issued -- 4,000,000(b) 4,000,000
Stockholders' equity:
Preferred stock, $1.00 par value, 4,000,000
shares authorized; none issued -- -- --
Common stock, $0.15625 par value, 10,000,000 shares
authorized; 5,599,071 shares issued 874,855 -- 874,855
Capital in excess of par value 4,288,428 -- 4,288,428
Retained earnings 2,729,743 -- 2,729,743
------------ --------------- ---------------
7,893,026 -- 7,893,026
Treasury stock at cost: 438,400 shares (1,154,689) -- (1,154,689)
------------ --------------- ---------------
Total stockholders' equity 6,738,337 -- 6,738,337
------------ --------------- ---------------
Total liabilities and stockholders' equity $ 6,972,977 $ 12,998,677 $ 19,971,654
============ =============== ===============
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial
information.
(10)
<PAGE> 11
TOREADOR ROYALTY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Nine Months Ended September 30,1998
<TABLE>
<CAPTION>
Toreador Acquisition Pro Forma
Historical Historical Adjustments for the
Amounts Amounts for Acquisition Acquisition
----------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 1,487,650 $ 1,183,218 $ -- $ 2,670,868
Lease bonuses and rentals 168,664 280,426 -- 449,090
Interest and other income 130,581 -- -- 130,581
----------- ----------- --------------- -----------
Total revenues 1,786,895 1,463,644 -- 3,250,539
Costs and expenses:
Lease operating expense 412,253 111,635 -- 523,888
Dry holes and abandonments 100,207 -- -- 100,207
Depreciation, depletion and amortization 358,659 -- 358,737(c) 717,396
Geological and geophysical 244,189 -- -- 244,189
General and administrative 765,108 -- -- 765,108
Interest expense -- -- 701,575(e) 701,575
----------- ----------- --------------- -----------
Total costs and expenses 1,880,416 111,635 1,060,312 3,052,363
----------- ----------- --------------- -----------
Income (loss) before federal income taxes (93,521) 1,352,009 (1,060,312) 198,176
Provision (benefit) for federal income taxes (32,143) -- 102,094(d) 69,951
----------- ----------- --------------- -----------
Net income (loss) $ (61,378) $ 1,352,009 $ (1,162,406) $ 128,225
=========== =========== =============== ===========
Basic income (loss) per share $ (0.01) $ 0.03
Diluted income (loss) per share $ (0.01) $ 0.03
Weighted average shares outstanding:
Basic 5,067,694 5,067,694
Diluted 5,067,694 49,625(f) 5,117,319
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial information
(11)
<PAGE> 12
TOREADOR ROYALTY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Fiscal Year Ended December 31,1997
<TABLE>
<CAPTION>
Toreador Acquisition Pro Forma
Historical Historical Adjustments for the
Amounts Amounts for Acquisition Acquisition
----------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 2,325,148 $ 2,093,878 -- $ 4,419,026
Lease bonuses and rentals 287,604 933,675 -- 1,221,279
Interest and other income 149,841 -- -- 149,841
Gain on sale of marketable securities
and other assets 26,171 -- -- 26,171
----------- ----------- --------------- -----------
Total revenues 2,788,764 3,027,553 -- 5,816,317
Costs and expenses:
Lease operating expense 695,007 184,843 -- 879,850
Dry holes and abandonments 166,710 -- -- 166,710
Depreciation, depletion and amortization 539,346 -- 470,959(c) 1,010,305
Geological and geophysical 546,634 -- -- 546,634
General and administrative 802,723 -- -- 802,723
Interest expense -- -- 1,081,641(e) 1,081,641
Loss on settlement of benefit plans 173,971 -- -- 173,971
----------- ----------- --------------- -----------
Total costs and expenses 2,924,391 184,843 1,552,600 4,661,834
----------- ----------- --------------- -----------
Income (loss) before federal income taxes (135,627) 2,842,710 (1,552,600) 1,154,483
Provision (benefit) for federal income taxes (84,261) -- 451,539(d) 367,278
----------- ----------- --------------- -----------
Net income (loss) $ (51,366) $ 2,842,710 $ (2,004,139) $ 787,205
=========== =========== =============== ===========
Basic income (loss) per share $ (0.01) $ 0.16
Diluted income (loss) per share $ (0.01) $ 0.16
Weighted average shares outstanding:
Basic 5,022,216 5,022,216
Diluted 5,022,216 46,740(f) 5,068,956
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial
information.
(12)
<PAGE> 13
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
1. GENERAL
On December 16, 1998, Tormin, Inc., a wholly owned subsidiary of
Toreador Royalty Corporation ("Company"), purchased, effective November
1, 1998, certain oil, gas and other mineral and royalty interests
located in Alabama, Louisiana and Mississippi (the "Properties") from
Howell Petroleum Corporation ("Howell"), a wholly owned subsidiary of
Howell Corporation, pursuant to a Purchase and Sale Agreement (the
"Howell Agreement") dated October 28, 1998 by and between Howell and
J.T. Philip Company ("JTP"). Tormin acquired JTP's rights under the
Howell Agreement through an assignment of JTP's rights and paid a
transaction fee of 1.5% of the purchase price of the Properties.
The purchase price for the Properties was $13 million. The Properties
are comprised of approximately 1,775,000 gross mineral acres and
876,000 net mineral acres. Producing interests, which make up
approximately 2% of the total net acres, are held in approximately 400
oil and gas wells. The acquisition of the Properties was accounted for
under the purchase method and closed on December 16, 1998 (the "Closing
Date").
The purchase price of the Properties was funded with proceeds received
from a private placement of $4 million of Company's Series A 9%
Convertible Preferred Stock (the "Preferred Securities"), utilization
of the Company's existing credit facility ($2.7 million), utilization
of Tormin's new credit facility ($5.9 million), and cash on hand.
The Preferred Securities, $1.00 par value, are owned by certain members
of management and outside investors and accrue dividends at a rate of
9% of the stated value of $25 per share, payable on a quarterly basis.
The Preferred Securities are convertible at the option of the holder at
any time, unless previously redeemed, into shares of common stock at a
conversion price of $4.00 per common share. The Company has the option
to redeem the Preferred Securities, in whole or in part, at any time on
or after December 1, 2001, at redemption prices declining from 103% to
par on December 1, 2004, plus all accrued and unpaid dividends. The
Company must redeem all outstanding Preferred Securities on December 1,
2008, at a redemption price equal to a liquidation value of $25 per
share, plus all accrued and unpaid dividends.
The Company's credit facility bears interest at the prime rate and
matures in October 2000. Tormin's credit facility bears interest at
prime +.5% and matures in June 2000.
(13)
<PAGE> 14
Pro forma adjustments are made to reflect the following:
<TABLE>
(a) The acquisition of the Properties. The allocation of the pro forma purchase price under
the purchase method of accounting is presented below:
<S> <C>
Purchase Price ........................................... $ 13,000,000
Estimated purchase price adjustments, including
Distributions of cash flows from the Properties
from October 15, 1998 to the closing date,
December 16, 1998 ...................................... (68,250)
Other acquisition costs .................................. 347,893
------------
Total Purchase Price .................................... $ 13,279,643
============
Purchase Allocation :
Proved oil and gas properties ............................ $ 5,880,488
Mineral Interests ........................................ 7,399,155
------------
$ 13,279,643
============
</TABLE>
The purchase price was allocated to proved and unproved properties based
upon engineering estimates of remaining proved, probable, and possible
reserves considering the appropriate risk.
(b) The increase in current and long-term debt of $8.6 million, the issuance of
160,000 shares of the Preferred Securities and the capitalization of
closing costs associated with these financing instruments. The closing
costs will be amortized over the lives of the respective financing
instruments.
(c) The increase in depreciation, depletion and amortization associated with
the Properties. The pro forma adjustment assumes a depreciation, depletion
and amortization rate per BOE of $3.72 for the year ended December 31, 1997
and the nine months ended September 30, 1998 based upon depletable costs of
$5,880,488 and $5,409,529 at December 31, 1997 and September 30, 1998,
respectively and proved reserves of 9.479 BCFE and 8.720 BCFE at January 1,
1997 and January 1, 1998, respectively.
(d) The increase in federal and state income taxes associated with the income
generated by the Properties.
(14)
<PAGE> 15
(e) The increase in interest expense attributable to the increase in long-term
debt and the issuance of the Preferred Securities. Interest expense on the
credit facilities represents the floating rate the Company and Tormin would
have incurred as if the acquisition was funded at January 1, 1997.
Preferred dividends are calculated at a rate of 9% of the stated value as
if the Preferred Securities were issued on January 1, 1997. The interest
rates on the credit facilities and amortized financing fees were 8.75% and
$60,753 for the year ended December 31, 1997 and 8.25% and $31,646 for the
nine months ended September 30, 1998, respectively. The effect of a change
in interest rate by 1/8% would be $3,375 for the year ended December
31, 1997 and $3,375 for the nine months ended September 30, 1998.
(f) The increase in weighted average diluted shares due to the inclusion of
dilutive stock options. These options were not included in the historical
weighted average diluted shares as they would have created an anti-dilutive
effect on earnings per share.
(g) The receipt of $12,516,488 in proceeds, net of bank fees, the subsequent
use of $12,931,750 to acquire the Properties and the accrual of $398,677 in
acquisition costs.
(15)
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOREADOR ROYALTY CORPORATION
Date: March 1, 1999 By: /s/ G. Thomas Graves, III
-------------------------------
Name: G. Thomas Graves, III
Title: President and
Chief Executive Officer
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.1* Securities Purchase Agreement, effective December 16, 1998, among
Toreador Royalty Corporation and the Purchasers party thereto.
10.2* Registration Rights Agreement, effective December 16, 1998, among
Toreador Royalty Corporation and persons party thereto.
10.3* Certificate of Designation of Series A Convertible Preferred Stock of
Toreador Royalty Corporation.
10.4* Purchase and Sale Agreement, effective November 1, 1998, between Howell
Petroleum Corporation and The J.T. Philip Company, as amended.
10.5* Credit Agreement effective December 15, 1998, between Compass Bank and
Tormin, Inc.
23.1 Consent of PricewaterhouseCoopers, LLP.
</TABLE>
- -----------------------
* Previously filed in Current Report on Form 8-K filed on December 31, 1998.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-14145 and 333-39309) of Toreador Royalty
Corporation of our report dated February 24, 1999 appearing on page 3 of this
Form 8-K.
PricewaterhouseCoopers LLP
Dallas, Texas
March 1, 1999
