FORM 8-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
AMENDMENT 1
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
August 16, 2001
Date of Report (Date of earliest event reported)
GULFWEST ENERGY INC.
(Exact name of registrant as specified in its charter)
Texas 1-12108 87-0444770
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
397 N. Sam Houston Parkway E., Suite 375, Houston, Texas 77060
(Address of principal executive offices)
Registrant's telephone number, including area code: (281) 820-1919
It was impracticable to provide the following items in the Company's Current
Report on Form 8-K dated August 16, 2001, which are included in this Current
Report Amendment 1 on Form 8-K/A, filed October 29, 2001:
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
(b) Pro Forma Financial Information
2
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
GULFWEST ENERGY INC. AND SUBSIDIARIES
We have audited the accompanying statements of revenues and direct operating
expenses of the Grand Goldking L.L.C. Acquired Properties (see Note 1) for the
six months ended June 30, 2001 and the years ended December 31, 2000 and 1999.
These financial statements are the responsibility of GulfWest Energy Inc.
management. Our responsibility is to express an opinion on these statements
based on our audits.
We conducted our audits in accordance with U. S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of revenues and direct
operating expenses are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the statements of revenues and direct operating expenses
referred to above present fairly, in all material aspects, the revenues and
direct operating expenses of the Grand Goldking L.L.C. Acquired Properties (see
Note 1), for the six months ended June 30, 2001 and the years ended December 31,
2000 and 1999, in conformity with U. S. generally accepted auditing standards.
/s/Weaver and Tidwell, L.L.P.
-----------------------------
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
October 20, 2001
3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
THE GRAND GOLDKING L. L. C. ACQUIRED PROPERTIES
Statements of Revenues and Direct Operating Expenses
For the Six Months Ended June 30, 2001 and
The Years Ended December 31, 2000 and 1999
2001 2000 1999
------------ ------------ ------------
REVENUES
Oil and gas sales $ 2,637,821 $ 7,299,427 $ 3,426,491
Operating overhead and other income 20,927 59,957 45,672
------------- ----------- -----------
Total Revenues 2,658,748 7,359,384 3,472,163
------------- ----------- -----------
EXPENSES
Production taxes 97,352 246,483 143,456
Lease operating expenses 533,405 853,888 655,660
------------- ----------- ----------
Total Expenses 630,757 1,100,371 799,116
------------- ----------- ----------
REVENUES LESS DIRECT OPERATING
EXPENSES $ 2,027,991 $ 6,259,013 $ 2,673,047
============ ============= ============
The accompanying Notes are an integral part of these statements.
4
THE GRAND GOLDKING L.L.C. ACQUIRED PROPERTIES
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statement presents the historical revenues and
direct operating expenses applicable to the oil and gas properties acquired
by GulfWest Energy Inc., (the "Grand Goldking L.L.C. Acquired Properties"),
effective July 1, P2001.
The accompanying statement of historical oil and gas revenues and direct
operating expenses of the properties does not include general and
administrative expenses, interest expense, depreciation, depletion and
amortization, or any provision for income taxes since historical expenses
of this nature incurred by the seller are not necessarily indicative of the
costs incurred by GulfWest Energy Inc.
Revenues and direct operating expenses, as set forth in this financial
statement, include oil and gas revenues and transportation income, and
associated direct operating expenses related to the net working interest in
the acquisition properties. Each owner recognizes revenue and expenses
based on its proportionate share of the related production and costs.
Expenses include labor, repairs and maintenance, fuel consumed and supplies
utilized to operate and maintain the wells and related equipment and
facilities, royalties, production taxes and ad valorem taxes.
Historical financial information reflecting financial position, results of
operations, and cash flows of the properties is not presented because the
purchase price was assigned to the oil and gas property interests and
related equipment acquired. Development and exploration expenditures
related to these properties were insignificant in the relevant period.
Accordingly, the historical statement of revenues and direct operating
expense of the Grand Goldking L.L.C. Acquired Properties is represented in
lieu of the financial statements required under Item 3-05 of Securities and
Exchange Commission Regulation S-X.
Use of Estimates
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
5
Note 2. Supplemental Oil and Gas Information (UNAUDITED)
The proved oil and gas reserves of the Grand Goldking L.L.C. Acquired
Properties are estimated in accordance with guidelines established by the
Securities and Exchange Commission and the Financial Accounting Standards
Board, which require that reserve estimates be prepared under existing
economic and operating conditions with no provision for price and cost
escalations over prices and costs existing at year end except by
contractual arrangements.
GulfWest Energy Inc. emphasizes that reserve estimates are inherently
imprecise. Accordingly, the estimates are expected to change as more
current information becomes available. It is reasonably possible that,
because of changes in market conditions or the inherent imprecision of
these reserve estimates, that the estimate of future cash inflows, future
gross revenues, the amount of oil and gas reserves, the remaining estimated
lives of the oil and gas properties, or any combination of the above may be
increased or reduced in the near term.
The estimates of proved reserves and information related to the
standardized measure of discounted future net cash flows related to proved
reserves ("Standardized Measure") were prepared by independent petroleum
engineers in accordance with Securities and Exchange Commission guidelines
as of December 31, 2000. Reliable information of oil and gas reserves of
the Grand Goldking L.L.C. Acquired Properties prior to December 31, 2000
does not exist. Accordingly, information on reserves or the Standardized
Measure at December 31, 1999 or the changes in reserves or the changes in
the Standardized Measure for the years ended December 31, 2000 and 1999 is
not presented.
The following schedules provide information concerning proved quantities of
reserves and the Standardized Measure, derived from independent engineer
reserve reports, as they apply to the Grand Goldking L.L.C. Acquired
Properties at December 31, 2000:
Crude Oil Natural Gas
QUANTITIES OF RESERVES (Bbl) (Mcf)
-------------------------------
Proved developed 1,167,278 4,210,000
Proved undeveloped 119,581 2,279,000
----------- ----------
1,286,859 6,489,000
=========== ==========
6
Note 2. Supplemental Oil and Gas Information (UNAUDITED) - continued
STANDARDIZED MEASURE:
Standardized measure of discounted future net cash flows relating to
proved reserves:
Future cash inflows $59,150,719
Future production and development costs
Production 7,545,099
Development 6,235,000
-------------
Future cash flows before income taxes 45,370,620
Future income taxes 10,310,609
-------------
Future net cash flows after income taxes 35,060,011
10% annual discount for estimated timing of cash flows 7,012,002
-------------
Standardized measure of discounted cash flows $28,048,009
============
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Item 7b. Pro Forma Financial Information
GULFWEST ENERGY INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2000
GulfWest Pro Forma GulfWest
Actual Adjustments Pro Forma
-------------------- ------------------- --------------------
-------------------- ------------------- --------------------
OPERATING REVENUES
Oil and gas sales $ 8,445,932 $ 7,299,427 (a) $ 15,745,359
Well servicing revenues 188,052 188,052
Operating overhead and other income 350,191 59,957 (a) 410,148
-------------- -------------- --------------
Total Operating Revenues 8,984,175 7,359,384 16,343,559
OPERATING EXPENSES
Lease operating expenses 3,377,583 1,100,371 4,477,954
Cost of well servicing operations 212,286 212,286
Depreciation, depletion and amortization 1,341,890 1,406,749 2,748,639
General and administrative 1,588,399 - 1,588,399
-------------- -------------- --------------
Total Operating Expenses 6,520,158 2,507,120 9,027,278
INCOME (LOSS) FROM OPERATIONS 2,464,017 4,852,264 7,316,281
OTHER INCOME AND EXPENSE
Interest income 16,082 16,082
Interest expense (2,134,718) (900,000) (c) (3,034,718)
Gain (loss) on sale of assets 7,393 - 7,393
--------------- -------------- --------------
Total other income and expense (2,111,243) (900,000) (3,011,243)
NET INCOME BEFORE INCOME TAXES 352,774 3,952,264 4,305,038
INCOME TAXES - - -
--------------- -------------- --------------
NET INCOME $ 352,774 $ 3,952,264 $ 4,305,038
DIVIDENDS ON PREFERRED STOCK
(PAID 2000-$76,992)) - (112,500) (112,500)
--------------- -------------- ---------------
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $ 352,774 $ 3,839,764 $ 4,192,538
=============== ============== ==============
INCOME PER COMMON SHAREHOLDER-
BASIC $ 0.02 $ 0.22 $ 0.24
=============== ============== ==============
DILUTED
$ 0.02 $ 0.19 $ 0.21
=============== ============== ==============
See accompanying notes to the unaudited pro forma statements.
8
GULFWEST ENERGY INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited pro forma statements of operations present the
results of operations of the Company for the year ended December 31, 2000,
as if the purchase of the Grand Goldking L.L.C. Acquired Properties had
occurred as of the beginning of 2000.
The unaudited pro forma information has been prepared and all calculations
have been made by the Company based upon assumptions deemed appropriate by
the Company. Certain of these assumptions are set forth in the notes below.
The pro forma presentation is not necessarily indicative of the financial
results of the Company that would have actually been obtained had the
transaction been consummated on January 1, 2000. The accompanying unaudited
pro forma financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
prepared in accordance with generally accepted accounting principles has
been condensed or omitted pursuant to those rules and regulations. The
financial statements of the Company and the related notes thereto presented
in the Annual Report on form 10-K should be read in conjunction with these
pro forma statements.
2. Pro Forma Adjustments
The accompanying unaudited pro forma statements of operations reflect the
following adjustments:
(a) To adjust oil and gas sales, transportation income and lease
operating expenses as a result of the acquisition of the Grand
Goldking L.L.C. Acquired Properties.
(b) To adjust depreciation and depletion as a result of the
acquisition of the acquired properties.
(c) To adjust interest expense for loans associated with the purchase
of the properties.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GULFWEST ENERGY INC.
(Registrant)
Date: October 26, 2001 By: /s/ Thomas R. Kaetzer
--------------------------------
Thomas R. Kaetzer
President
Date: October 26, 2001 By: /s/ Jim C. Bigham
-----------------------------------------
Jim C. Bigham
Executive Vice President and Secretary
Date: October 26, 2001 By: /s/ Richard L. Creel
-----------------------------------------
Richard L. Creel
Vice President of Finance