-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GkcUrQX2m+3sYMt48w9MZ3q5rfHSTdFp4IegoNxAam7ZgCmkWboMCV6asBWOiDge pLlJ4iltBdQO4Qz0oRJf/Q== 0000312340-98-000060.txt : 19981221 0000312340-98-000060.hdr.sgml : 19981221 ACCESSION NUMBER: 0000312340-98-000060 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981218 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SABA PETROLEUM CO CENTRAL INDEX KEY: 0000312340 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 470617589 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13880 FILM NUMBER: 98772385 BUSINESS ADDRESS: STREET 1: 3201 AIRPARK DR STREET 2: STE 201 CITY: SANTA MARIA STATE: CA ZIP: 93455 BUSINESS PHONE: 8053478700 MAIL ADDRESS: STREET 1: 3201 AIRPARK DR STREET 2: STE 201 CITY: SANTA MARIA STATE: CA ZIP: 93455 FORMER COMPANY: FORMER CONFORMED NAME: BORDEAUX PETROLEUM CO DATE OF NAME CHANGE: 19910924 FORMER COMPANY: FORMER CONFORMED NAME: BORDEAUX TRADING CO DATE OF NAME CHANGE: 19800716 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: (Date of earliest event reported) October 8, 1998 SABA PETROLEUM COMPANY (Exact name of registrant as specified in charter) Delaware 1-12322 47-0617589 (State or (Commission (IRS Employer other jurisdiction File Number) Identification No.) of incorporation) 3201 Airpark Drive Suite 201, Santa Maria, CA 93455 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (805) 347-8700
(Former name or former address, if changed since last report) Not Applicable Item 1 Changes in Control of Registrant Not Applicable Item 2 Acquisition or Disposition of Assets Not Applicable Item 3 Bankruptcy or Receivership Not Applicable Item 4 Changes in Registrant's Certifying Accountant Not Applicable Item No. 5. Other Material Events. Extended Closing of Common Stock Purchase Agreement. The Common Stock Purchase Agreement dated October 8, 1998 between Horizontal Ventures, Inc., a company whose shares are listed on the NASDAQ, ("HVNV") and the Company provided for a final closing date of 10:00 a.m. on December 4, 1998. By an Agreement To Amend The Common Stock Purchase Agreement effective December 3, 1998, HVNV and the Company agreed to extend the final closing date to 10:00 a.m. on or before January 31, 1999. Under the terms of the Common Stock Purchase Agreement HVNV agreed to purchase and the Company agreed to sell an aggregate of 2.5 million shares of the Common Stock of the Company at a price of $3 per share resulting in an aggregate price of $7.5 million. On November 6, 1998, HVNV purchased 333,333 shares of the Common Stock at a price of $3 per share. Proceeds of the interim sale of the Common Stock for $1.0 million were applied towards working capital. Proposed Merger On December 7, 1998, HVNV and the Company disclosed that the Board of Directors of the Company approved HVNV's proposal to merge with the Company. A majority of the Company's disinterested Board members voted in favor of the proposed merger. The Company's Board of Directors plans to call a special meeting of the Company's stockholders to vote upon the acquisition by HVNV of 100% of the issued and outstanding Common Stock of the Company not otherwise owned by HVNV. Under the proposed merger, the Company's stockholders will receive one share of HVNV common stock for each 6 shares of the Company's Common Stock outstanding. That exchange ratio is based upon (i) a total of 11,385,726 shares of the Company's Common Stock outstanding (11,052,393 shares outstanding as of December 2, 1998 plus 333,333 shares issued to HVNV on December 7, 1998), (ii) a price of $2.02 for the Company's Common Stock based on a 55 percent premium over the average closing price of the Company's Common Stock from November 2, 1998 through December 2, 1998, and (iii) the average closing price of HVNV's common stock of $12.14 during the same period. As part of this plan, HVNV has determined not to take control of the Company's Board of Directors prior to shareholder approval of the Plan of Merger. HVNV and the Company are expected to file a joint Proxy and Registration Statement by December 31, 1998 and call a special stockholders meeting. Chapter 11 Bankruptcy of Sabacol, Inc. On December 11, 1998, Sabacol, Inc., a wholly-owned subsidiary of the Company ("Sabacol"), filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court, Central District of California, Northern Division (BK Case No. ND 98-15858-RR). Sabacol's assets, located solely in Colombia, consist of a 50% interest in a 118-mile pipeline and varying interests in heavy oil producing properties. Sabacol's interest in the pipeline was collateralized to secure the payment of a promissory note payable from the Company in the approximate amount of $4.2 million which was all due and payable by December 14, 1998 to Omimex Resources, Inc. At the time of filing, Sabacol had a net book value of approximately $5.3 million with liabilities of $4.6 million. For the nine months ended September 30, 1998, the average daily production of Sabacol's interest in the Colombian properties was 2300 Bopd and gross revenues were approximately $5.9 million with a negative cash flow. Sabacol had filed the bankruptcy petition to protect its asset base and to provide adequate time to develop a re-organization plan. Sabacol intends to file a reorganization plan that may include the disposition of its Colombian assets. A new management team has been appointed for Sabacol to protect its assets and develop an effective re-organization plan. There is no assurance, however, that a reorganization plan beneficial to Sabacol will be consummated. The filing is not expected to have any material adverse effect on the Company and does not change any terms of the proposed merger with HVNV. Non-Payments The promissory note in the approximate amount of $4.2 million was not paid by the Company to Omimex Resources, Inc. by December 14, 1998. Also, the Company has deferred the semi-annual interest payment of $162,000 due on December 15, 1998 on the Debentures. The Company intends to make the interest payment within the thirty day cure period provided by the Debentures and avoid default. Item No. 6. Resignation of Registrant's Directors Not Applicable Item No. 7. Financial Statements and Exhibits Exhibits to 8-K 10.1 Agreement to Amend Common Stock Purchase Agreement dated effective December 3, 1998 between Saba Petroleum Company and Horizontal Ventures, Inc. 10.2 December 7, 1998 Press Release announcing the agreement of Saba Petroleum Company and Horizontal Ventures, Inc. to merge. 10.3 December 15, 1998 Press Release announcing Sabacol, Inc.'s Filing under Chapter 11 to protect Colombian assets. 10.4 December 15, 1998 Press Release explaining the Company's current status. Item No. 8. Changes in Fiscal Year Not Applicable Item No. 9. Sales of Equity Securities Pursuant to Regulation S Not Applicable 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. SABA PETROLEUM COMPANY Date: December 18, 1998 By:/s/ William N. Hagler William N. Hagler, Chairman, Management Committee Date: December 18, 1998 By: /s/ Imran Jattala Imran Jattala, Executive Vice President and Chief Operating Officer EX-10 2 AGREEMENT TO AMEND COMMON STOCK PURCHASE AGREEMENT EXHIBIT 10.1 AGREEMENT TO AMEND COMMON STOCK PURCHASE AGREEMENT This Agreement effective this 3rd day of December, 1998, by and between Horizontal Ventures, Inc., a Colorado corporation ("HVI"), and Saba Petroleum Company, a Delaware corporation ("Saba"), is intended to act as an amendment to the Common Stock Purchase Agreement dated the 8th day of October, 1998 between HVI and Saba. WHEREAS, the parties to this Agreement acknowledge that a as result of continued due diligence required relating to HVI's interest in acquiring a controlling interest in Saba, certain modifications to the Common Stock Purchase Agreement are required; and WHEREAS, the parties acknowledge that the continuation of HVI's efforts towards its goal of acquiring control of Saba is in the best interest of both corporations. NOW, THEREOFRE, in consideration of mutual covenants and promises contained herein, the parties hereto agree as follows: 1. Extension of Closing. The final closing date initially scheduled for 10:00 a.m. on December 4, 1998 as set forth in Section 2.1 of the Common Stock Purchase Agreement shall be extended to 10:00 a.m. on or before January 31, 1999. HORIZONTAL VENTURES, INC. a Colorado corporation By: /S/ Randeep S. Grewal Randeep S. Grewal, Chairman and Chief Executive Officer SABA PETROLEUM COMPANY a Delaware corporation By: /S/ William N. Hagler William N. Hagler, Chairman of the Management Committee EX-10 3 PRESS RELEASE EXHIBIT 10.2 NEWS- For Release December 7, 1998, 8:45 a.m. Eastern Horizontal Ventures, Inc. Saba Petroleum Company 630 Fifth Avenue, Suite 1501 3201 Airpark Drive, Suite 201 New York, NY 10111 Santa Maria, CA 93455 (Nasdaq:HVNV) (AMEX:SAB) - ----------------------------------------------------------------------------------------------------------------------------------- FOR FURTHER INFORMATION CONTACT: Peter A. Zambelli Sultan Mahmud Investor Relations Investor Relations (212) 218-4680 (805) 347-8700
HORIZONTAL VENTURES, INC. AND SABA PETROLEUM COMPANY AGREE TO MERGE Horizontal Ventures, Inc. (Nasdaq:HVNV) disclosed today that at a special meeting of the Board of Directors of Saba Petroleum Company (AMEX:SAB), Horizontal Ventures' proposal to merge and call a special shareholders' meeting to vote upon the acquisition by HVNV of 100% of the issued and outstanding Common Stock of Saba Petroleum Company was approved. Under the approved proposal, Saba shareholders will receive 1 share of HVNV Common Stock for each 6 shares of Saba outstanding on the date of the merger based on a total of 11,385,726 shares (11,052,393 outstanding and 333,333 authorized to be issued). The conversion ratio was priced on a 55% premium ($2.02 per share) for the Saba stock based upon a 31 calendar day average closing price compared to the average HVNV price for the same period with no premium($12.14 per share). The Companies are expected to file a joint Proxy and Registration Statement by December 10, 1998 and call a special shareholders meeting. Additionally, Saba extended until January 31, 1999, the closing of the HVNV private placement in the amount of $6.5 million. Randeep Grewal, Chairman and CEO of Horizontal Ventures said, "Our current controlling equity stake in Saba Petroleum Company precipitated this proposal in consolidating the resources and expertise of the two companies to focus on a collective business strategy. The combined entity will capitalize on the synergistic assets of both HVNV and Saba. The merged Company intends to divest certain non-core assets to satisfy the outstanding liabilities." "The merged Company will focus on applying our proprietary horizontal drilling technology on its reserves in California, increasing the production, transferring the production into the wholly owned asphalt refinery and efficiently placing the asphalt into the lucrative and stable asphalt market. Such a strategy provides a firm hedge to oil price fluctuations and thus the current oil price has little relevance to the merged Company's business strategy." The merged company is expected to have a low debt structure and high degree of liquidity, and to be listed on the Nasdaq NMS market. Note: This release includes certain statements that may be deemed to be "forward looking statements" which are subject to risks and uncertainties that could cause actual results to differ materially from those projected or forecasted. Such risks and uncertainties include, but are not limited to, the ability to raise required capital, conclude its transaction with Saba, development and exploration, drilling of wells, reserve estimates, future production of oil and gas, business strategies, expansion and growth of Horizontal Ventures operations and other such matters, including those discussed in the Company's filing with the Securities and Exchange Commission. Except for historical information contained herein, the statements in this Release are forward-looking statements that are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of oil prices, product demand, market competition, risks inherent in the Company's international operations, imprecision of reserve estimates, the availability of additional oil and gas assets for acquisition on commercially reasonable terms, and the Company's ability to replace and exploit its existing oil and gas reserves. These and other risks are described in the Company's Annual Report on Form 10-K and in the Company's other filings with the Securities and Exchange Commission. EX-10 4 PRESS RELEASE EXHIBIT 10.3 News Release For Release December 15, 1998 8:45 a.m. EASTERN For more information, please contact: Sultan Mahmud (805) 347-8700 ext. 205 Sabacol Files To Protect Colombian Assets SANTA MARIA, CALIFORNIA: December 15, 1998: Saba Petroleum Company (AMEX:SAB) announced today that its wholly-owned subsidiary, Sabacol, Inc. ("Sabacol"), has filed for the protection of its assets under Chapter Eleven of the U.S. Bankruptcy Code. Sabacol's assets, located solely in Colombia, consist of a 50% interest in a 118 mile pipeline and varying interests in heavy oil producing properties. Sabacol has undertaken this action to protect its asset base and to provide adequate time to develop a re-organization plan for the benefit of its creditors and shareholder. At the time of filing, Sabacol had reported that it had current liabilities of $4.6 million. Due to a 41% decline in oil prices since December 31, 1997, fully burdened costs are expected to exceed revenues. Under present operating procedures and conditions, the producing properties are uneconomic. Sabacol is not the operator of the properties and has notified the operator of its intent to audit all relevant operating documents and all financial transactions for 1996, 1997 and 1998. Any potential future action would be based on results of the audit. Furthermore, a new management team has been appointed for Sabacol to protect its assets and develop an effective re-organization plan. Saba's Management Committee stated, "Since inheriting the daily management of the Company, various corrective measures are being taken to provide active direction throughout the Company. The current debt-load and declining oil prices require a proactive plan to preserve all of the Company's assets. In addition, the Committee is aggressively working toward the consummation of the planned merger with Horizontal Ventures, Inc. ("HVNV") in order to implement the new business plan of the combined companies." Under the planned strategy, with a low-debt structure and high degree of liquidity, the combined company will focus on applying HVNV's proprietary horizontal drilling technology to the enhancement of its reserves in California, increasing its production, processing its oil at its wholly-owned asphalt refinery and efficiently placing the asphalt into the stable asphalt market. This strategy is expected to provide a firm hedge to oil price fluctuations and thus the current oil price will have little relevance to the merged company's business results. A telephone press conference to discuss this press release has been scheduled a for 1:30 p.m. (Pacific Standard Time) Wednesday, December 16, 1998, hosted by Saba's Management Committee. Callers may participate by dialing (913) 981-5508, confirmation number 593799, five to ten minutes before the teleconference is scheduled to begin in your time zone. Saba Petroleum Company is an independent energy company with oil and gas production and development activities in North America and Colombia. In the United States, the Company's primary areas of activity are California, Louisiana and New Mexico. The Company also has large land positions and exploration options on exploratory projects in the U.S.A., Indonesia and the United Kingdom. - ------------------------------------------------------------------------------- Safe Harbor for Forward Looking Statements Except for historical information contained herein, the statements in this Release are forward-looking statements that are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of oil prices, product demand, market competition, risks inherent in the Company's international operations, imprecision of reserve estimates, the availability of additional oil and gas assets for acquisition on commercially reasonable terms, and the Company's ability to replace and exploit its existing oil and gas reserves. These and other risks are described in the Company's Annual Report on Form 10-K and in the Company's other filings with the Securities and Exchange Commission. EX-10 5 PRESS RELEASE EXHIBIT 10.4 News Release For Immediate Release December 15, 1998 For more information, please contact: Sultan Mahmud (805) 347-8700 ext. 205 SABA EXPLAINS CURRENT STATUS SANTA MARIA, CALIFORNIA: December 15, 1998: Saba Petroleum Company (AMEX:SAB) disclosed further information today following the announcement of the filing by its wholly-owned subsidiary, Sabacol, Inc. ("Sabacol"), for the protection of its assets under Chapter 11 of the U.S. Bankruptcy Code. At the time of filing, Sabacol had a net book value of approximately $5.3 million with liabilities of $4.6 million. For the nine months ended September 30, 1998, the average daily production of Sabacol's interest in the Colombian properties was 2300 Bopd and gross revenues were approximately $5.9 million with a negative cash flow. Sabacol intends to expeditiously file a reorganization plan that may include the disposition of its Colombian assets. There is no assurance, however, of consummating the plan. The filing is not expected to have any material adverse effect on the Company. Furthermore, the filing does not change any terms of the proposed merger with Horizontal Ventures, Inc. (NASDAQ:HVNV) previously announced by the Company on December 7, 1998 and which is expected to close within the first quarter of 1999. The Company expects that the related registration statement and proxy documents will be filed with the Securities and Exchange Commission prior to year end. The Company has deferred the semi-annual interest payment of $162,000 due today on its 9% Convertible Senior Subordinated Debentures ($3,575,000 principal amount outstanding), but this action does not constitute a default under the terms of the indenture. The Company intends to make the interest payment within the next thirty days prior to the event of default. Saba Petroleum Company is an independent energy company with oil and gas production and development activities in North America and Colombia. In the United States, the Company's primary areas of activity are California, Louisiana and New Mexico. The Company also has large land positions and exploration options on exploratory projects in the U.S.A., Indonesia and the United Kingdom. - ----------------------------------------------------------------------------- Safe Harbor for Forward Looking Statements Except for historical information contained herein, the statements in this Release are forward-looking statements that are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of oil prices, product demand, market competition, risks inherent in the Company's international operations, imprecision of reserve estimates, the availability of additional oil and gas assets for acquisition on commercially reasonable terms, and the Company's ability to replace and exploit its existing oil and gas reserves. These and other risks are described in the Company's Annual Report on Form 10-K and in the Company's other filings with the Securities and Exchange Commission. -----END PRIVACY-ENHANCED MESSAGE-----