8-K 1 d8k.htm FORM 8-K Form 8-K
 
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): November 27, 2002
 
 
TIPPERARY CORPORATION
(Exact name of registrant as specified in its charter)
 
TEXAS
  
1-7796
  
75-1236955
(State or other jurisdiction of incorporation)
  
(Commission File Number)
  
(IRS Employer Identification No.)
 
633 Seventeenth Street, Suite 1550
Denver, Colorado
  
80202
(Address of principal executive offices)
  
(Zip Code)
 
Registrant’s telephone number, including area code:  (303) 293-9379
 
Not Applicable
(Former name or former address, if changed since last report)
 

 
Item 2.    Acquisition or Disposition of Assets.
 
On November 27, 2002, Tipperary Corporation (the “Company”) sold to Kerr-McGee Rocky Mountain Corporation (“Kerr-McGee”) 75% to 80% interests in 230,000 undeveloped acres in eastern Colorado for $4,800,000. The Company retained the remaining 25% to 20% interests in the acreage. The Company and Kerr-McGee entered into a joint operating agreement designating Kerr-McGee as operator and plan to begin exploration activities in early 2003.
 
As a result of sale, the Company expects to record a $1,400,000 gain, consistent with SEC SX Rule 4-10(C)(6)(i) for full cost accounting.
 
The transaction with Kerr-McGee was at arms-length. There were no material relationships between Kerr-McGee and the Company or any of its affiliates, any director or officer of the Company, or any associate of any such director or officer.
 
Item 7.    Financial Statements and Exhibits.
 
 
(a)
 
Financial statements of businesses acquired.
 
Not applicable.
 
 
(b)
 
Pro forma financial information.
 
The accompanying unaudited consolidated pro forma financial information has been prepared to give effect to the sale of interests to Kerr-McGee. The accompanying unaudited consolidated balance sheet as of September 30, 2002 was prepared as if the transactions occurred on September 30, 2002. Pro forma analysis of the consolidated statements of operations have not been prepared as the only effect to these statements is the $1,400,000 gain discussed above.
 
The following pro forma statements are subject to risks and uncertainties. Although the Company believes that its estimates are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. The operations of the Company, both domestically and internationally, are subject to risks including, but not limited to, all of the risks that are encountered in the drilling and completing of wells, the risks associated with operating oil and gas properties, the potential drilling and development costs of the Company’s Australian and U.S. prospects, uninsured hazards, volatile oil and gas prices, foreign exchange rate risk and uncertain markets and governmental regulation. For a discussion of these and other risks which relate to the forward-looking statements contained herein, please see “Risk Factors” in the Company’s Registration Statement on Form S-3, SEC File No. 333-59052, which discussion is incorporated herein by reference

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Tipperary Corporation and Subsidiaries
Consolidated Balance Sheets
Pro Forma Analysis
(in thousands)
(unaudited)
 
    
Historical
as of
September 30
2002
     
Proforma
Nov. 27
Acreage Sale
2002
     
Proforma
as of
September 30
2002
  
ASSETS
                           
Current assets:
                           
Cash and cash equivalents
   
$
3,480
 
   
$
4,800
 
   
$
8,280
 
Restricted cash
   
 
226
 
   
 
—  
 
   
 
226
 
Receivables
   
 
1,657
 
   
 
—  
 
   
 
1,657
 
Other current assets
   
 
238
 
   
 
—  
 
   
 
238
 
    
  
  
    
 
5,601
 
   
 
4,800
 
   
 
10,401
 
    
  
  
Property, plant and equipment, at cost:
                           
Oil and gas properties, full cost method
   
 
72,390
 
   
 
(3,400
)
   
 
68,990
 
Other property and equipment
   
 
4,024
 
   
 
—  
 
   
 
4,024
 
    
  
  
    
 
76,414
 
   
 
(3,400
)
   
 
73,014
 
Less accumulated depreciation and amortization
   
 
(4,355
)
   
 
—  
 
   
 
(4,355
)
    
  
  
Property plant and equipment, net
   
 
72,059
 
   
 
(3,400
)
   
 
68,659
 
    
  
  
Deferred loan costs
   
 
6,103
 
   
 
—  
 
   
 
6,103
 
Other noncurrent assets
   
 
92
 
   
 
—  
 
   
 
92
 
    
  
  
    
$
83,855
 
   
$
1,400
 
   
$
85,255
 
    
  
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                           
Current liabilities:
                           
Current portion of long-term debt
   
 
2,110
 
   
 
—  
 
   
 
2,110
 
Accounts payable
   
 
2,043
 
   
 
—  
 
   
 
2,043
 
Accrued liabilities
   
 
2,480
 
   
 
—  
 
   
 
2,480
 
Royalties payable
   
 
141
 
   
 
—  
 
   
 
141
 
    
  
  
Total current liabilities
   
 
6,774
 
   
 
—  
 
   
 
6,774
 
    
  
  
Long-term debt, net of current portion
   
 
22,989
 
   
 
—  
 
   
 
22,989
 
Minority interest
   
 
662
 
   
 
—  
 
   
 
662
 
Stockholders’ equity
                           
Common stock
   
 
785
 
   
 
—  
 
   
 
785
 
Capital in excess of par value
   
 
149,951
 
   
 
—  
 
   
 
149,951
 
Accumulated deficit
   
 
(97,281
)
   
 
1,400
 
   
 
(95,881
)
Treasury stock, at cost
   
 
(25
)
   
 
—  
 
   
 
(25
)
    
  
  
Total stockholders’ equity
   
 
53,430
 
   
 
1,400
 
   
 
54,830
 
    
  
  
    
$
83,855
 
   
$
1,400
 
   
$
85,255
 
    
  
  
 
See accompanying notes to unaudited pro forma consolidated balance sheets.

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Tipperary Corporation and Subsidiaries
Notes to Consolidated Pro Forma Balance Sheets
 
Note 1.    Pro Forma adjustment to cash
 
Amounts shown for prospect sales represent negotiated cash received as a result of the transaction.
 
Note 2.    Pro Forma adjustments to oil and gas properties and stockholder’s equity
 
Under the full cost method of accounting for oil and gas exploration and production, sales of oil and gas properties are accounted for as adjustments of capitalized costs, with no gain or loss recognized unless nonrecognition would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center. In determining gain or loss, the cost of the property sold is an allocation of the cost center’s total costs based on the relative fair market value of the property sold compared to the estimated fair market value of all properties in the cost center immediately prior to the sale. The allocated cost of the sale is estimated to be $3,400,000 whereby a $1,400,000 gain on the sale is expected to be recognized under the full cost method.
 
 
(c)
 
Exhibits
 
10.90
   
Purchase and Sale agreement dated November 27, 2002, between Tipperary Oil & Gas Corporation as Seller and Kerr-McGee Corporation as Buyer.
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated: December 12, 2002.
 
   
TIPPERARY CORPORATION
By:
  
/s/    David L. Bradshaw
   
David L. Bradshaw, President, Chief
Executive Officer and Chairman of the
Board of Directors

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