Hallwood Energy Partners, L.P. and Hallwood Consolidated Resources Corporation Announce Proposed Consolidation Plan.DENVER--(BUSINESS WIRE)--Dec. 15, 1998--Hallwood Energy Partners, L.P. (AMEX AMEX See: American Stock Exchange :HEP and HEPC HepC Hepatitis C HEPC Handloom Export Promotion Council (India) HEPC Historical Electromagnetic Propagation Conditions HEPC High Energy Proportional Counter HEPC Hispanic Employment Program Coordinator ) and Hallwood Consolidated Resources Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :HCRC HCRC Human Communication Research Centre (University of Edinburgh) HCRC High Capacity Radio Concentrator HCRC Halton Community Rehabilitation Centre (Ontario, Canada) ) today jointly announced that the Boards of Directors of Hallwood Consolidated Resources and the general partner of Hallwood Energy Partners have unanimously approved and recommended the approval of the consolidation of Hallwood Energy Partners, Hallwood Consolidated Resources and the energy interests of The Hallwood Group Incorporated into the newly formed Hallwood Energy Corporation. As a result of the consolidation, public holders of Class A Units of Hallwood Energy Partners will receive 0.7417 of a share of common stock of Hallwood Energy Corporation for each Class A Unit they now hold, and public holders of Class C Units will receive one share of redeemable preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. of Hallwood Energy Corporation for each Class C Unit they now hold. Public stockholders of Hallwood Consolidated Resources will receive 1.5918 shares of common stock of Hallwood Energy Corporation for each share of stock they now hold. The Hallwood Group Incorporated will also contribute its energy interests to Hallwood Energy Corporation in exchange for additional shares of common stock of Hallwood Energy Corporation. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the companies' tax advisors A tax advisor is a financial expert especially trained in tax law. Some countries require tax advisors to verify the balance sheets of companies above a certain size. Individuals usually require tax advisors to minimize taxation, to avoid learning the details of tax law in , the consolidation will be, in almost all cases, tax-free to stockholders of Hallwood Consolidated Resources and unitholders of Hallwood Energy Partners. After the consolidation, the common stock of Hallwood Energy Corporation will be owned 56% by the current public Class A unitholders of Hallwood Energy Partners, 26% by the current public stockholders of Hallwood Consolidated Resources and 18% by HEPGP Ltd. The Hallwood Energy Corporation common stock is not expected to pay dividends. The preferred stock will have the right to receive an annual cumulative dividend of $1.00 per share and will be redeemable at the option of the company at $10.00 per share at any time following three years after the consolidation. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis as of December 31, 1997, Hallwood Energy Corporation would have had interests in approximately 1,100 oil and gas wells located in 11 states, with estimated proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. of 153 billion cubic feet of gas and 10.4 million barrels of oil. The preceding quantities are calculated based on December 31, 1997, prices of $2.25 per thousand cubic feet (mcf) of gas and $16.85 per barrel of oil. In October 1998, Hallwood Energy Partners and Hallwood Consolidated Resources acquired interests in approximately 570 additional wells with estimated proved reserves of 12.8 billion cubic feet of gas and 886,000 barrels of oil. The quantities for the October acquisition are calculated based on June 30, 1998, prices of $1.90 per mcf and $15.75 per barrel. To a large extent, Hallwood Energy Partners, Hallwood Consolidated Resources and HEPGP own interests in the same properties. Hallwood Energy Corporation will be a larger entity with a greater number of shareholders, greater market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. and greater oil and gas reserves than either Hallwood Energy Partners or Hallwood Consolidated Resources. Management believes the larger combined entity will result in greater liquidity for existing investors. In addition, the combined entity should be better positioned to obtain financing for additional acquisition and drilling projects. The structure of the new company will be simplified and future expenses will be reduced. The consolidation will eliminate the cross-ownership between Hallwood Energy Partners and Hallwood Consolidated Resources. The general partner of Hallwood Energy Partners has agreed to relinquish its indirect interest in acquisitions and drilling conducted by, and fees paid by, Hallwood Energy Partners. In addition, consulting fees previously paid to The Hallwood Group Incorporated will be eliminated. Hallwood Energy Corporation will not incur the substantial cost that Hallwood Energy Partners incurs in preparing the complex tax data necessary for its unitholders, and its shareholders will not be subjected to the costs and occasional delays that a Hallwood Energy Partner unitholder incurs in integrating tax data into his personal tax return. Because Hallwood Energy Corporation has no current plans to pay dividends on its common stock, it can retain more of its cash to finance growth. Holders of the redeemable preferred stock will receive an annual cumulative dividend of $1.00 per share. The consolidation was approved by committees composed of the outside directors of Hallwood Consolidated Resources and the general partner of Hallwood Energy Partners and is subject to a number of conditions, including the approval of a majority of each class of the outstanding units of Hallwood Energy Partners and of the outstanding shares of stock of Hallwood Consolidated Resources. It is expected that a Joint Proxy Statement/Prospectus will be filed with the Securities and Exchange Commission in the next several weeks and be mailed to the unitholders and stockholders in February 1999. The record date for determining unitholders and stockholders entitled to vote on the consolidation has not been set. It is presently anticipated that the Hallwood Energy Partners and Hallwood Consolidated Resources votes will occur and that the consolidation will be concluded in March 1999. There can be no assurance, however, that all conditions to the proposed consolidation will be satisfied by that time. It is anticipated that the Hallwood Energy Corporation shares will be traded on NASDAQ on the day after the consolidation is completed. Hallwood Energy Partners is a public oil and gas master limited partnership headquartered in Denver, Colorado, with properties primarily located in South Louisiana, the San Juan Basin The San Juan Basin is a drainage basin and geologic structural basin in the Four Corners region of the Southwestern United States; its main portion covers around 4,600 square miles, encompassing much of northwestern New Mexico, northeastern Arizona, and parts of Colorado and Utah. in New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). and Colorado, West Texas and the Rocky Mountain region The Rocky Mountain Region is a floristic region within the Holarctic Kingdom in western North America (Canada and the United States) delineated by Armen Takhtajan and Robert F. Thorne. . Hallwood Consolidated Resources is a public oil and gas company headquartered in Denver, Colorado, with properties primarily located in the San Juan Basin in New Mexico and Colorado, West Texas, South Louisiana and Kansas. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including information regarding estimated proved reserves, production and capital expenditures and the effects of the proposed consolidation. These statements involve certain assumptions, risks and uncertainties. Actual results could differ materially based upon numerous factors, including the volatility and level of hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen commodity prices; production rates; drilling and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. ; the market for oil and gas company securities; and other assumptions, risks and uncertainties detailed from time to time in Hallwood Energy Partners' and Hallwood Consolidated Resource's reports filed with the Securities and Exchange Commission. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion