UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO FORM 8-K DATED AUGUST 30, 2002
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 13, 2002
(August 30, 2002)
CAL DIVE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 000-22739 95-3409686
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
400 N. SAM HOUSTON PARKWAY E., SUITE 400, HOUSTON, TEXAS 77060
(Address of Principal Executive Offices) (Zip Code)
(281) 618-0400
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed
since last report)
2
The undersigned registrant, Cal Dive International, Inc. ("Cal Dive" and "the
Company"), hereby amends Item 7. "Financial Statements, Pro Forma Financial
Information and Exhibits" of its Current Report on Form 8-K, dated August 30,
2002.
This Form 8-K/A includes or incorporates by reference certain statements that
may be deemed "forward looking statements" under applicable law. Forward looking
statements and assumptions in this Form 8-K/A that are not statements of
historical fact involve risks and assumptions that could cause actual results to
vary materially from those predicted, including among other things, unexpected
delays and operational issues associated with turnkey projects, the price of
crude oil and natural gas, offshore weather conditions, change in site
conditions, and capital expenditures by customers. The Company strongly
encourages readers to note that some or all of the assumptions, upon which such
forward looking statements are based, are beyond the Company's ability to
control or estimate precisely, and may in some cases be subject to rapid and
material change.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Attached hereto as Schedule A is the audited Statement of Combined Revenues and
Direct Operating Expenses of the Oil and Gas Property Purchased from Shell Oil
Company ("Shell") by Energy Resource Technology, Inc. (a wholly-owned subsidiary
of Cal Dive International, Inc.) for each of the years ended December 31, 2001
and 2000 and the related notes thereto, together with the Report of Independent
Accountants of PricewaterhouseCoopers LLP concerning the statement and related
notes. The property acquired is herein referred to as the "Acquisition".
(B) PRO FORMA FINANCIAL INFORMATION
Attached hereto as Schedule B for Cal Dive are the Unaudited Pro Forma Condensed
Consolidated Statements of Operations for the year ended December 31, 2001 and
for the six months ended June 30, 2002, the Unaudited Pro forma Condensed
Consolidated Balance Sheet as of June 30, 2002, and the related notes thereto,
adjusted to show the pro forma effects of the Acquisition.
(C) EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
10.1 Asset Purchase Agreement by and among Energy Resource
Technology, Inc. and Shell Oil Company dated August 30,
2002. (1)
23.1+ Consent of PricewaterhouseCoopers LLP.
+ Filed herewith
(1) Filed as an exhibit to the Company's Form 8-K dated August 30, 2002 and
filed with the Securities and Exchange Commission September 16, 2002.
3
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.
CAL DIVE INTERNATIONAL, INC.
Date: November 13, 2002 By: /s/ Owen Kratz
--------------------------------------
Owen Kratz
Chief Executive Officer
Date: November 13, 2002 By: /s/ A. Wade Pursell
-------------------------------------
A. Wade Pursell
Chief Financial Officer
4
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS OF CAL DIVE INTERNATIONAL, INC.:
We have audited the accompanying Statement of Combined Revenues and Direct
Operating Expenses of the Oil and Gas Property Purchased from Shell Oil Company
for each of the years ended December 31, 2001 and December 31, 2000. This
financial statement is the responsibility of Cal Dive International, Inc. and
Shell Oil Company management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying financial statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion in Cal Dive International, Inc.'s Form 8-K and is not intended to be a
complete presentation of the property described above.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the combined revenues and direct operating expenses as
described in Note 2 for each of the years ended December 31, 2001 and
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.
PricewaterhouseCoopers LLP
Houston, Texas
November 13, 2002
5
SCHEDULE A
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
STATEMENT OF COMBINED REVENUES AND DIRECT OPERATING EXPENSES
OF THE OIL AND GAS PROPERTY PURCHASED FROM SHELL OIL COMPANY
(IN THOUSANDS)
Six Months For The Years
Ended June 30, Ended December 31,
2002 2001 2001 2000
----------------------------------------------------------------
(unaudited)
Revenues ............................................ $ 14,701 $ 19,284 $ 32,621 $33,778
Direct operating expenses.............................. 3,252 5,775 8,054 6,426
------------- -------------- ------------ -------------
Excess of revenues over direct operating expenses...... $11,449 $13,509 $24,567 $27,352
============= ============== ============ =============
The accompanying notes are an integral part of this financial statement.
6
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO STATEMENT OF COMBINED REVENUES AND DIRECT OPERATING
EXPENSES OF THE OIL AND GAS PROPERTY PURCHASED FROM SHELL OIL COMPANY
(1) THE PROPERTY
On August 30, 2002, Energy Resource Technology, Inc. ("ERT"), a wholly
owned subsidiary of Cal Dive International, Inc. ("Cal Dive") acquired a 74.8%
working interest in the South Marsh Island field from certain indirect
subsidiaries of Shell Oil Company ("Shell"). This field ("SMI 130" or "the
Acquisition") consists of two blocks: SMI 130 and SMI 131. ERT paid $10.3
million in cash and assumed Shell's pro-rata share of the related
decommissioning liability. SMI 130 is located in approximately 215 feet of
water, with approximately 155 wells on five 8-pile platforms.
(2) BASIS FOR PRESENTATION
The statement of combined revenues and direct operating expenses has been
derived from Shell's historical financial records and is prepared on the accrual
basis of accounting. Revenues and direct operating expenses as set forth in the
accompanying statement include revenues from oil and gas production, net of
royalties, and associated direct operating expenses related to the net revenue
interest and net working interest, respectively. These revenues and expenses in
SMI 130 represent ERT's acquired interest in SMI 130.
During the periods presented, SMI 130 was not accounted for or operated as a
separate division by Shell. Accordingly, full separate financial statements
prepared in accordance with generally accepted accounting principles do not
exist and are not practicable to obtain in these circumstances.
This statement varies from an income statement in that it does not show certain
expenses, which were incurred in connection with the ownership of SMI 130, such
as general and administrative expenses, and income taxes. These costs were not
separately allocated to SMI 130 in the Shell historical financial records 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 SMI
130 been operated historically as a stand alone entity. In addition, these
allocations, if made using historical Shell general and administrative
structures and tax burdens, would not produce allocations that would be
indicative of the historical performance of SMI 130 had they been assets of ERT,
due to the greatly varying size, structure, and operations between ERT and
Shell. This statement also does not include provisions for depreciation,
depletion and amortization as such amounts would not be indicative of future
costs and of those costs which would be incurred by ERT upon allocation of the
purchase price. Accordingly, the financial statement and other information
presented are not indicative of the financial condition or results of operations
of SMI 130 going forward due to the changes in the business and the omission of
various operating expenses.
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 SMI 130.
At the end of the economic life of these fields, certain restoration and
abandonment costs will be incurred by the respective owners of these fields. No
accrual for these costs is included in the direct operating expenses.
(3) RELATED PARTY TRANSACTIONS
A portion of SMI 130's crude oil production was purchased by affiliates of
Shell at market prices. Revenues in the accompanying statements include
(in thousands) $10,818 and $5,380 for the six month periods ended June 30,
2002 and 2001, respectively, and $13,693 and $-0- for the years ended
December 31, 2001 and 2000, respectively, related to such transactions.
(4) COMMITMENTS AND CONTINGENCIES
Pursuant to the terms of the Asset Purchase Agreements, Shell is obligated for
any claims, litigation or disputes pending as of the effective date of July 1,
2002 or any matters arising in connection with ownership of SMI 130 prior to the
effective date.
7
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS INFORMATION OF THE OIL AND GAS PROPERTY
PURCHASED FROM SHELL OIL COMPANY
(UNAUDITED)
OIL AND GAS RESERVE INFORMATION
There are numerous uncertainties inherent in estimating quantities of proved
reserves and projecting future rates of production. The following Cal Dive
reserve data related to SMI 130 represent estimates only and should not be
construed as being exact. The reliability of these estimates at any point in
time depends on both the quality and quantity of the technical and economic
data, the performance of the reservoirs, as well as extensive engineering
judgment. Consequently, reserve estimates are subject to revision as additional
data becomes available during the producing life of a reservoir. The evolution
of technology may also result in the application of improved recovery techniques
such as supplemental or enhanced recovery projects, which have the potential to
increase reserves beyond those currently envisioned.
Estimates of proved reserves are derived from quantities of crude oil and
natural gas that geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
operating and economic conditions and rely upon a production plan and strategy.
Gas Oil
(MMCF) (MBLS)
--------------------- --------------------
Total Proved Reserves: (a)
Balance, December 31, 1999................................. 9,812 5,906
Production................................................. (1,634) (1,073)
Discoveries................................................ - -
--------------------- --------------------
Balance, December 31, 2000................................. 8,178 4,833
===================== ====================
(a) Substantially all proved reserves have been developed.
Gas Oil
(MMCF) (MBLS)
--------------------- --------------------
Total Proved Reserve: (a)
Balance, December 31, 2000................................. 8,178 4,833
Production................................................. (2,717) (947)
Discoveries................................................ - -
Revisions.................................................. - -
--------------------- --------------------
Balance, December 31, 2001................................. 5,461 3,886
===================== ====================
(a) Substantially all proved reserves have been developed.
8
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATIING TO PROVED
OIL AND GAS RESERVES
The following disclosures concerning the standardized measure of future cash
flows from proved oil and gas reserves are presented in accordance with the
Statement of Financial Accounting Standards No. 69, Disclosures about Oil and
Gas Producing Activities ("FAS 69"). As prescribed by FAS 69, the amounts shown
are based on prices and costs at the end of each period and a 10 percent annual
discount factor.
Future cash flows are computed by applying fiscal year-end prices of natural gas
and oil to year-end quantities of proved natural gas and oil reserves. Future
operating expenses and development costs are computed primarily by Cal Dive's
internal petroleum engineers by estimating the expenditures to be incurred in
developing and producing the Acquisition's proved natural gas and oil reserves
at the end of the year, based on year end costs and assuming continuation of
existing economic conditions. Future income taxes are based on currently enacted
statutory rates.
The standardized measure of discounted future net cash flows is not intended to
represent the replacement costs or fair value of SMI 130 natural gas and oil
properties. An estimate of fair value would take into account, among other
things, anticipated future changes in prices and costs, and a discount factor
more representative of the time value of money and the risks inherent in reserve
estimates of natural gas and oil producing operations.
The Standardized Measure of Discounted Future Net Cash Flows relating to Proved
Oil and Gas Reserves attributed to the Acquisition is as follows:
As of December 31,
2001 2000
--------------------- -------------------
Future cash inflows..................................................... $79,278 $192,908
Future operating expenses............................................... (35,829) (50,433)
Future development and abandonment costs................................ (26,945) (26,945)
Future income tax expense............................................... (5,776) (40,435)
--------------------- -------------------
Future net cash flows................................................... 10,728 75,095
10% discount rate....................................................... 6,234 (7,658)
--------------------- -------------------
Standardized measure of discounted future net
cash flows.............................................................. $16,962 $67,437
===================== ===================
Changes in the standardized measure of future net cash flows relating to proved
natural gas and oil reserves are summarized below:
For the Year Ended December 31,
2001 2000
---------------------- --------------------
Beginning of year....................................................... $67,437 $40,852
Sales, net of production costs.......................................... (24,567) (27,352)
Net change in price and production costs................................ (65,460) 66,488
Accretion of discount................................................... 16,064 9,221
Change in timing of production rates and other.......................... (11,171) (4,482)
Changes in income taxes................................................. 34,659 (17,290)
---------------------- --------------------
End of year............................................................. $16,962 $67,437
===================== ===================
9
SCHEDULE B
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
and related notes are presented to show effects of the acquisition of the
working interest of the property purchased by Cal Dive International, Inc. ("Cal
Dive") from Shell Oil Company ("Shell") effective July 1, 2002.
The pro forma condensed consolidated statements of operations are presented to
show net income attributable to common stock as if the Acquisition occurred
effective January 1, 2001 the pro forma condensed consolidated balance sheet is
based on the assumption that the Acquisition occurred effective June 30, 2002.
Pro forma data are based on assumptions and include adjustments as explained in
the notes to the unaudited pro forma condensed consolidated financial
statements. The pro forma data are not necessarily indicative of the financial
results that would have been attained had the Acquisition occurred on the dates
referenced above, and should not be viewed as indicative of operations in future
periods. The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the notes thereto, Cal Dive's Annual Report
on Form 10-K for the year ended December 31, 2001, its Quarterly Report on Form
10-Q for the quarter ended June 30, 2002 and the Statement of Combined Revenues
and Direct Operating Expenses of the Oil and Gas Properties Purchased from Shell
Oil Company included herein as Schedule A.
10
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(IN THOUSANDS)
Cal Dive Acquisition Pro Forma
Historical Historical Adjustments Pro Forma
-------------- ---------------- ----------------- -------------
REVENUES:
Subsea and salvage........................ $163,740 $ - $ - $163,740
Oil and gas production.................... 63,401 32,621 - 96,022
------------- --------------- ---------------- ------------
Total Revenues...................... 227,141 32,621 - 259,762
------------- --------------- ---------------- ------------
EXPENSES:
Operating expenses........................ 125,697 8,054 - 133,751
Depreciation, depletion and amortization.. 34,533 - 12,914 (a) 47,447
General and administrative expenses....... 21,325 - 902 (c) 22,227
------------- --------------- ---------------- ------------
Total Expenses...................... 181,555 8,054 13,816 203,425
------------- --------------- ---------------- ------------
INCOME (LOSS) FROM OPERATIONS.................. 45,586 24,567 (13,816) 56,337
Net interest expense and other............ 1,290 - 155 (b) 1,445
------------- --------------- ---------------- ------------
INCOME (LOSS) BEFORE INCOME TAXES.............. 44,296 24,567 (13,971) 54,892
Provision for income taxes................ 15,504 - 3,700 (d) 19,204
Minority interest......................... (140) - - (140)
------------- --------------- ---------------- ------------
NET INCOME (LOSS).............................. $28,932 $24,567 ($17,671) $35,828
============= =============== ================ ============
NET INCOME PER SHARE:
Basic $0.89 $ - $ - $1.10
============= =============== ================ ============
Diluted................................... $0.88 $ - $ - $1.08
============= =============== ================ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 32,449 - - 32,449
============= =============== ================ ============
Diluted................................... 33,055 - - 33,055
============= =============== ================ ============
The accompanying notes to unaudited pro forma condensed financial statements are
an integral part of these statements.
11
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(IN THOUSANDS)
Cal Dive Acquisition Pro Forma
Historical Historical Adjustments Pro Forma
-------------- ---------------- ----------------- --------------
REVENUES:
Subsea and salvage........................ $104,030 $ - $ - $104,030
Oil and gas production.................... 22,203 14,701 - 36,904
------------- --------------- ---------------- -------------
Total Revenues 126,233 14,701 - 140,934
------------- --------------- ---------------- -------------
EXPENSES:
Operating expenses........................ 82,267 3,252 - 85,519
Depreciation, depletion and amortization.. 15,663 - 6,671 (a) 22,334
General and administrative expenses....... 12,497 - 376 (c) 12,873
------------- --------------- ---------------- -------------
Total Expenses...................... 110,427 3,252 7,047 120,726
------------- --------------- ---------------- -------------
INCOME (LOSS) FROM OPERATIONS.................. 15,806 11,449 (7,047) 20,208
Net interest expense and other................. 91 - 78 (b) 169
------------- --------------- ---------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES.............. 15,715 11,449 (7,125) 20,039
Provision for income taxes..................... 5,500 - 1,513 (d) 7,013
------------- --------------- ---------------- -------------
NET INCOME (LOSS):............................. $10,215 $11,449 ($8,638) $13,026
============= =============== ================ =============
NET INCOME PER SHARE:
Basic..................................... $0.30 $ - $ - $0.39
============= =============== ================ =============
Diluted................................... $0.30 $ - $ - $0.38
============= =============== ================ =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic..................................... 33,676 - - 33,676
============= =============== ================ =============
Diluted................................... 33,976 - - 33,976
============= =============== ================ =============
The accompanying notes to unaudited pro forma condensed consolidated financial
statements are an integral part of these statements.
12
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2002
ASSETS
Cal Dive Pro Forma
Historical Adjustments Pro Forma
-------------------- ------------------- ------------------
Cash and cash equivalents............................ $43,596 ($10,281) $33,315
Other current assets................................. 104,814 - 104,814
Net property and equipment........................... 442,593 35,163 477,756
Other assets......................................... 87,003 - 87,003
-------------------- ------------------- ------------------
TOTAL ASSETS......................................... $678,006 $24,882 $702,888
==================== =================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities.................................. $90,845 $150 $90,995
Long-term debt....................................... 144,033 - 144,033
Deferred credits and other non-current
Liabilities.......................................... 110,552 24,732 135,284
-------------------- ------------------- ------------------
TOTAL LIABILITIES.................................... 345,430 24,882 370,312
Shareholders' equity................................. 332,576 - 332,576
-------------------- ------------------- ------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........... $678,006 $24,882 $702,888
==================== =================== ==================
The accompanying notes to unaudited pro forma condensed consolidated financial
statements are an integral part of these statements.
13
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The unaudited pro forma statement of operations for the year ended December 31,
2001, is based on the audited financial statements of Cal Dive for the year
ended December 31, 2001, the audited statement of revenues and direct operating
expenses for the property purchased from Shell for the year ended December 31,
2001, and the adjustments and assumptions described below.
The unaudited pro forma statement of operations for the six months ended June
30, 2002 and the unaudited pro forma balance sheet as of June 30, 2002 are based
on the unaudited financial statements of Cal Dive as of and for the six months
ended June 30, 2002, the unaudited Statement of Combined Revenues and Direct
Operating Expenses of the Oil and Gas Property Purchased from Shell for the six
months ended June 30, 2002, and the adjustments and assumptions described below.
PRO FORMA ADJUSTMENTS
The unaudited pro forma statements of operations reflect the following
adjustments:
a. Record incremental depreciation, depletion and amortization expense
("DD&A") using the units-of-production method, resulting from the purchase
of properties from Shell.
b. Record interest income reduction associated with cash paid of approximately
$10.3 million to fund a portion of the purchase price. Applicable interest
rates were 1.5 percent for the year ended December 31, 2001 and for the six
months ended June 30, 2002.
c. Record incremental General and Administrative Expenses resulting from ERT's
bonus plan.
d. Record a pro forma income tax provision, assuming a 35 percent rate, based
on the pro forma change in income (loss) before income taxes.
The unaudited pro forma balance sheet reflects the following adjustments:
1. Record the purchase price of property from Shell, totaling $35.2 million
funded with:
o Available cash on hand.
o Assumption of decommissioning liability.
2. Record transaction costs, primarily legal and auditing fees, relating to
the purchase of property from Shell.
14
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA SUPPLEMENTAL OIL AND GAS DISCLOSURES
(UNAUDITED)
The following table sets forth certain unaudited pro forma information
concerning Cal Dive's proved oil and gas reserves as of December 31, 2001,
giving effect to the purchase of property from Shell Oil Company as if it had
occurred on January 1, 2001. There are numerous uncertainties inherent in
estimating the quantities of proved reserves and projection of future rates of
production and timing of development expenditures. The following reserve data
represents estimates only and should not be construed as being exact.
PROVED OIL AND NATURAL GAS RESERVES
Natural Gas
----------------------------------------------------------------
Acquisition
Cal Dive (MMcf) Pro Forma
-------------------- ------------------- -----------------
Proved Reserves:
Balance, December 31, 2000........................... 21,711 8,178 29,889
Revision of previous estimates....................... 4,479 - 4,479
Production........................................... (9,473) (2,717) (12,190)
Purchases of reserves in place....................... 1,644 - 1,644
Sales of reserves in place........................... (22) - (22)
Extensions and discoveries........................... 35,597 - 35,597
-------------------- ------------------- -----------------
Balance, December 31, 2001........................... 53,936 5,461 59,397
==================== =================== =================
Oil
----------------------------------------------------------------
Cal Dive Acquisition Pro Forma
(MBbls)
-------------------- ------------------- -----------------
Proved Reserves:
Balance, December 31, 2000........................... 1,081 4,833 5,914
Revision of previous estimates....................... 623 - 623
Production........................................... (743) (947) (1,690)
Purchases of reserves in place....................... 53 - 53
Extensions and discoveries........................... 6,844 - 6,844
-------------------- ------------------- -----------------
Balance, December 31, 2001........................... 7,858 3,886 11,744
==================== =================== =================
As of December 31, 2000, -0- Bbls of oil and -0- Mcf of gas of the Company's
proven reserves were undeveloped. As of December 31, 2001, 6,829,000 Bbls of oil
and 35,525,000 Mcf of gas were undeveloped, all of which is attributable to the
Gunnison field.
15
CAL DIVE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA SUPPLEMENTAL OIL AND GAS DISCLOSURES - (CONTINUED)
(UNAUDITED)
The following is a summary of pro forma standardized measure of discounted
future net cash flows from proved oil and gas reserves of Cal Dive as of
December 31, 2001, net of income tax expense and includes the effects of the
Acquisition. Future cash flows are computed by applying fiscal year-end prices
of natural gas and oil to year-end quantities of proved natural gas and oil
reserves. Future operating expenses and development costs are computed primarily
by the Company's internal petroleum engineers by estimating the expenditures to
be incurred in developing and producing the Acquisition's proved natural gas and
oil reserves at the end of the year, based on year end costs and assuming
continuation of existing economic conditions. Future income taxes are based on
currently enacted statutory rates.
The information should be viewed only as a form of standardized disclosure
concerning possible future cash flows that would result under the assumptions
used but should not be viewed as indicative of fair market value nor be
considered indicative of any trends. Reference should be made to Cal Dive's
financial statements for the fiscal year-ended December 31, 2001, and the
Statement of Combined Revenues and Direct Operating Expenses of the Oil and Gas
Property Purchased from Shell Oil Company included herein as Schedule A, for a
discussion of the assumptions used in preparing the information presented.
FUTURE NET CASH FLOWS Cal Dive Acquisition Pro Forma
-------------------- ------------------- -----------------
Cash inflows.............................................. $261,613 $79,278 $340,891
Production and development costs.......................... (193,916) (62,774) (256,690)
Income tax expense........................................ (24,223) (5,776) (29,999)
-------------------- ------------------- -----------------
Future net cash flows..................................... 43,474 10,728 54,202
10% discount rate......................................... (22,029) 6,234 (15,795)
-------------------- ------------------- -----------------
Discounted future net cash flows.......................... $21,445 $16,962 $38,407
==================== =================== =================
The following table sets forth the principal sources of change in discounted
future net cash flows:
FUTURE NET CASH FLOWS Cal Dive Acquisition Pro Forma
-------------------- ------------------- -----------------
Beginning of year......................................... $77,713 $67,437 $145,150
Sales, net of production costs....................... (50,165) (24,567) (74,732)
Net change in prices, net of production
costs ............................................... (68,811) (65,460) (134,271)
Changes in future development costs.................. (2,421) - (2,421)
Development costs incurred........................... 18,247 - 18,247
Accretion of discount................................ 3,013 16,064 19,077
Net change of income taxes........................... 30,192 34,659 64,851
Purchases of reserves in place....................... 433 - 433
Extensions and discoveries........................... 16,612 - 16,612
Sales of reserves in place........................... 20 - 20
Net change due to revision in quantity
estimates............................................ 1,604 - 1,604
Changes in production rates (timing)
and other............................................ (4,992) (11,171) (16,163)
-------------------- ------------------- -----------------
End of year............................................... $21,445 $16,962 $38,407
==================== =================== =================
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
10.1 Asset Purchase Agreement by and among Energy Resource
Technology, Inc. and Shell Oil Company dated August 30,
2002. (1)
23.1+ Consent of PricewaterhouseCoopers LLP.
+ Filed herewith
(1) Filed as an exhibit to the Company's Form 8-K dated August 30, 2002 and
filed with the Securities and Exchange Commission September 16, 2002.