UNITED STATES
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)
December 16, 2002 (December 13, 2002)
ST. MARY LAND & EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 001-31539 41-0518430
(State or other jurisdiction (Commission (I.R.S Employer
of incorporation) File Number) Identification No.)
1776 Lincoln Street, Suite 700, Denver, Colorado 80203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 861-8140
Not applicable
(Former name or former address, if changed since last report.)
Item 5. Other Events and Regulation FD Disclosure
St. Mary Land & Exploration Company issued a press release on December 13,
2002, announcing that through its wholly owned subsidiary Nance Petroleum
Corporation it had agreed to acquire oil and gas properties with an estimated 69
BCFE of proved reserves, 92% developed, from Flying J Oil & Gas Inc. and Big
West Oil & Gas Inc. in exchange for the issuance of a total of 3.4 million
restricted shares of St. Mary common stock. In addition, St. Mary has agreed to
make a non-recourse loan to Flying J and Big West of $72 million at Libor plus
2% for up to a 39-month period beginning at the closing, which will be secured
by a pledge of the shares of St. Mary stock issued to Flying J and Big West.
During the 39-month loan period Flying J and Big West can elect to put their
shares of St. Mary stock to the Company for $72 million plus accrued interest on
the loan (not to exceed 30 months of interest), and St. Mary can elect to call
the shares for $98 million. If either the put option or the call option is
exercised, the other option will expire and the loan will become due at that
time, with the loan to be repaid from the put or call payment.
The number of St. Mary shares to be issued and the loan, put and call amounts
are subject to proportionate adjustments in the event of certain purchase price
adjustments that may occur under the acquisition agreement as a result of due
diligence matters. The shares will be subject to contractual restrictions on
transfer for a period of two years from the closing, and St. Mary will be
required to file a registration statement for the resale of the shares and have
it declared effective upon the expiration of the two-year period. In addition,
there will be a standstill agreement whereby Flying J and Big West and their
affiliates cannot increase their percentage ownership of St. Mary for a period
of 30 months after the closing. St. Mary has the capacity to fund the $72
million loan through borrowings under its bank credit facility.
The acquisition is expected to close January 29, 2003, upon completion of
customary due diligence.
The properties to be acquired are located primarily in the Williston, Powder
River and Green River basins and currently produce an estimated 2,100 barrels of
oil and 8,200 Mcf of gas per day or 20,800 MCFE per day, which is equivalent to
15% of St. Mary's average daily production rate for the third quarter 2002. In
addition, the acquisition will include approximately 500,000 acres of
undeveloped oil and gas leases. For calendar year 2003, approximately 100% of
the estimated oil production is hedged at an average NYMEX price of $27.80 per
barrel, with a provision that eliminates the hedge on a month-to-month basis in
the event the average monthly NYMEX oil price is below $21.00 per barrel.
Approximately 70% of the 2003 natural gas production is hedged using a CIG basis
collar with a floor of $2.50 per MMBTU and a ceiling of $5.93 per MMBTU. The
Company intends to hedge 100% of estimated 2004 production prior to closing.
This report contains forward-looking statements. These statements involve known
and unknown risks, which may cause St. Mary's actual results to differ
materially from results expressed or implied by the forward-looking statements.
These risks include such factors as the uncertain nature of the expected
benefits from the acquisition of oil and gas properties, the pending nature of
the reported acquisition transaction and the ability to complete the
transaction, the volatility and level of oil and natural gas prices, production
rates and reserve replacement, reserve estimates, drilling and operating risks,
market conditions for the acquisition of oil and gas properties, competition,
litigation, environmental matters, the potential impact of government
regulations, and other matters discussed under the "Risk Factors" section of St.
Mary's 2001 Annual Report on Form 10-K filed with the SEC. Although St. Mary may
from time to time voluntarily update its forward-looking statements, it
disclaims any commitment to do so except as required by securities laws.
The press release of St. Mary Land & Exploration Company dated December 13,
2002, entitled "St. Mary Announces Agreement to Acquire Oil and Gas Properties
from Flying J Oil & Gas and Big West Oil & Gas" is attached hereto as
Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibit is furnished as part of this report:
Exhibit 99.1 Press release of St. Mary Land & Exploration Company
dated December 13, 2002.
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.
ST. MARY LAND & EXPLORATION COMPANY
Date: December 16, 2002 /s/ GARRY A. WILKENING
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Garry A. Wilkening
Vice President-Administration
and Controller