SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 12, 2004
PYR Energy Corporation
----------------------
(Exact name of registrant as specified in its charter)
Maryland 001-15511 95-4580642
-------- --------- ----------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1675 Broadway, Suite 2450, Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 825-3748
Item 2. Acquisition or Disposition of Assets.
---------------------------------------------
On May 12, 2004, PYR Energy Corporation (the "Company") announced that it
had closed on its acquisition of assets of Venus Exploration Inc. ("Venus"). A
Current Report on Form 8-K was filed on May 13, 2004 to report this transaction.
The related financial statements are being filed under cover of this Form 8-K/A
(Amendment No. 1).
Venus entered into bankruptcy proceedings in October 2002 and had been
operating under the supervision of the United States Bankruptcy Court (the
"Court") since February 2003. As a result, Venus' activities had been curtailed
and the number of full- time employees had been reduced substantially since that
date. The Company acquired the Venus properties through public auction as
approved by the Court.
In the financial statements included in this Form 8-K/A (Amendment No. 1),
the Company has included historical summaries of revenues and direct operating
expenses of the Venus properties acquired in May 2004. These historical
summaries exclude depreciation and amortization, general and administrative
expenses, and income taxes primarily because (i) during the bankruptcy
proceedings, Venus had not maintained a complete set of internal accounting
records on a full accrual basis of reporting, and (ii) combining the excluded
information with the information set forth in the historical summaries would not
be considered indicative of normal business operations due to the Venus
bankruptcy and the subsequent curtailment of Venus' activities. As a result,
including the excluded information in the historical summaries could not be
presented without unreasonable cost and effort due to the unavailability of
Venus' internal accounting records on a full accrual basis of reporting. Even if
that information were available, including it in the historical summaries would
result in information that would not be comparable to that resulting from
anticipated future operations for the reasons set forth above.
Item 7. Financial Statements and Exhibits.
------------------------------------------
(a) Financial statements of businesses acquired.
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Index
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FINANCIAL INFORMATION OF CERTAIN PROPERTIES ACQUIRED
Report of Independent Registered Public Accounting Firm -
HEIN & ASSOCIATES LLP........................................... F-1
Historical Summaries of Revenues and Direct Operating
Expenses of Properties Acquired in May 2004 for the
Year Ended August 31, 2003 and for the Six Months Ended
February 29, 2004 (Unaudited)................................... F-2
Notes to Historical Summaries of Revenues and Direct
Operating Expenses of Properties Acquired in May 2004........... F-3
(b) Pro forma financial information
-------------------------------
Index
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PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Introduction.................................................... F-5
Unaudited Pro Forma Condensed Balance Sheet as of
February 2004................................................... F-6
Unaudited Pro Forma Condensed Statement of Operations for
the Year Ended August 31, 2003.................................. F-7
Unaudited Pro Forma Condensed Statement of Operations for
the Six Months Ended February 29, 2004.......................... F-8
Notes to Unaudited Pro Forma Financial Information.............. F-9
(c) Exhibits.
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Exhibit
Number Exhibit Title
------ -------------
99.1* Press release dated May 12, 2004.
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* Previously filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PYR ENERGY CORPORATION
Date: July 2, 2004 By: /s/ D. Scott Singdahlsen
----------------------------
D. Scott Singdahlsen, Chief Executive
Officer
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Venus Exploration, Inc.
San Antonio, Texas
We have audited the accompanying historical summaries of revenue and direct
operating expenses of properties acquired in May 2004 by PYR Energy Corporation,
for the year ended August 31, 2003. The historical summaries are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the historical summaries based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
historical summaries are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the historical summaries. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall historical summaries presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying historical summaries were prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Form 8-K of PYR Energy Corporation) as described in Note 1 and
are not intended to be a complete presentation of the properties' revenues and
expenses.
In our opinion, the historical summaries referred to above present fairly, in
all material respects, the revenue and direct operating expenses of the
properties acquired in May 2004 by PYR Energy Corporation, in conformity with
accounting standards generally accepted in the United States of America.
/s/ HEIN & ASSOCIATES LLP
-------------------------
HEIN & ASSOCIATES LLP
Denver, Colorado
May 21, 2004
F-1
PYR ENERGY CORPORATION
HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING EXPENSES
OF PROPERTIES ACQUIRED IN MAY 2004
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31, 2003
----------------- ---------------
(Unaudited)
OIL AND GAS SALES $ 764,365 $1,781,407
DIRECT OPERATING EXPENSES 394,347 928,543
---------- ----------
NET REVENUE $ 370,018 $ 852,864
========== ==========
See Notes to Historical Summaries
F-2
PYR ENERGY CORPORATION
NOTES TO HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING
EXPENSES OF PROPERTIES ACQUIRED IN MAY 2004
1. BASIS OF PREPARATION:
---------------------
The historical summaries presented herein were prepared for the purpose of
complying with the financial statement requirements of a business
acquisition to be filed on Form 8-K as promulgated by Regulation S-B Item
3-10 of the Securities Exchange Act of 1934. The accompanying historical
summaries of revenues and direct operating expenses relate to the
operations of the oil and gas properties acquired by PYR Energy Corporation
("PYR") in May 2004. The properties were acquired at a purchase price of
$3,230,150 through public auction from Venus Exploration, Inc., a company
in Chapter 11 Bankruptcy ("Venus"). The sale was approved by the United
States Bankruptcy Court.
Unaudited information. The historical summary of revenue and direct
operating expenses for the six months ended February 29, 2004 is unaudited;
however, this summary includes all adjustments (consisting of normal
accruals) required to present fairly, in management's opinion, the net
revenue for the period then ended.
Revenues are recorded when oil or natural gas and related liquids are sold.
Direct operating expenses are recorded when the related liability is
incurred. Direct operating expenses include lease operating expenses, well
workover costs, ad valorem taxes and production taxes. Depreciation and
amortization of oil and gas properties, general and administrative expenses
and income taxes have been excluded from operating expenses in the
accompanying historical summaries because the amounts would not be
comparable to those resulting from proposed future operations. Furthermore,
as a result of Venus bankruptcy, its recent activities are not considered
indicative of normal business operations.
2. SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES (UNAUDITED):
-------------------------------------------------------------
Proved oil and gas reserves consist of those estimated quantities of crude
oil, natural gas, and natural gas liquids that geological and engineering
data demonstrate with reasonable certainty to be recoverable in future
years from known reservoirs under existing economic and operating
conditions. Proved developed oil and gas reserves are reserves that can be
expected to be recovered through existing wells with existing equipment and
operating methods.
The following estimates of proved reserves have been made by independent
engineers. The estimated net interests in proved reserves are based upon
subjective engineering judgments and may be affected by the limitations
inherent in such estimation. The process of estimating reserves is subject
to continual revision as additional information becomes available as a
result of drilling, testing, reservoir studies and production history.
There can be no assurance that such estimates will not be materially
revised in subsequent periods.
F-3
PYR ENERGY CORPORATION
NOTES TO HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING
EXPENSES OF PROPERTIES ACQUIRED IN MAY 2004
The changes in proved reserves of the properties acquired in May 2004 for the
year ended August 31, 2003 are set forth below.
Natural Gas
Oil (Thousand
(Barrels) Cubic Feet)
---------- ----------
Reserves at August 31, 2002 561,000 720,000
Production (44,600) (107,300)
Revisions 83,600 459,300
---------- ----------
Reserves at August 31, 2003 600,000 1,072,000
---------- ----------
Proved developed reserves August 31, 2002 470,700 539,700
========== ==========
Proved developed reserves August 31, 2003 508,200 621,400
========== ==========
The primary changes in the standardized measure of discounted estimated future
net cash flows for the year ended August 31, 2003 were as follows:
August 31,
2003
-----------
Beginning of year $ 3,309,000
Sales of oil and gas produced, net of
production costs (853,000)
Effect of change in prices 1,025,000
Accretion of discount 331,000
Net change in income taxes --
Development costs incurred in during the year --
Changes in future development costs (105,000)
Changes in operating expenses (1,240,000)
Revision of estimates and other 2,542,000
-----------
End of year $ 5,009,000
===========
Estimated future cash inflows are computed by applying year-end prices of oil
and gas to year-end quantities of proved reserves. Estimated future development
and production costs are determined by estimating the expenditures to be
incurred in developing and producing the proved oil and gas reserves at the end
of the year, based on year-end costs and assuming continuation of existing
economic conditions. Estimated future income tax expense is calculated by
applying year-end statutory tax rates to estimated future pre-tax net cash flows
related to proved oil and gas reserves, less the tax basis of the properties
involved, current operating losses and other tax considerations.
F-4
PYR ENERGY CORPORATION
NOTES TO HISTORICAL SUMMARIES OF REVENUES AND DIRECT OPERATING
EXPENSES OF PROPERTIES ACQUIRED IN MAY 2004
The assumptions used to compute the standardized measure are those prescribed by
the Financial Accounting Standards Board and as such, do not necessarily reflect
the Company's expectations of actual revenues to be derived from those reserves
nor their present worth. The limitations inherent in the reserve quantity
estimation process are equally applicable to the standardized measure
computations since these estimates are the basis for the valuation process.
F-5
PYR ENERGY CORPORATION
UNAUDITED PRO FORMA FINANCIAL INFORMATION
In May 2004, PYR Energy Corporation ("PYR") acquired interests in certain
producing properties for approximately $3,230,000 (excluding costs associated
with the acquisition) and a future net profits obligation, which is payable only
after certain payout thresholds are met. These properties were acquired from
Venus Exploration, Inc. ("Venus"). Venus is in Chapter 11 Bankruptcy and the
properties were acquired through public auction as approved by the United States
Bankruptcy Court. To finance the purchase, PYR primarily used existing cash
reserves and also a portion of the proceeds from a private placement of common
stock.
The following unaudited pro forma financial statements have been prepared to
demonstrate the effect on PYR's financial position and results of operations as
if the properties had been acquired on February 29, 2004 (with respect to the
pro forma balance sheet) and at the beginning of the periods (with respect to
the pro forma statements of operations). The sale of the first tranche of common
stock is also reflected in the pro forma financial information. The pro forma
financial statements should be read in conjunction with the historical summaries
of revenues and direct operating expenses of the properties included herein and
with the financial statements of PYR as filed in their Forms 10-KSB and 10-QSB.
The pro forma financial statements should not be construed as a reflection of
the financial position or results of operations that actually would have
occurred if the acquisition would have occurred on the above dates, or of future
operations.
F-6
PYR ENERGY CORPORATION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
FEBRUARY 29, 2004
ASSETS
------
Historical Pro Forma
Amounts Adjustments Pro Forma
------------ ------------ ------------
CURRENT ASSETS
Cash $ 2,647,813 $ (2,980,150) (1) $ 4,572,663
4,905,000 (2)
Deposits, prepaid expenses, and other receivables 109,070 -- 109,070
------------ ------------ ------------
Total Current Assets 2,756,883 1,924,850 4,681,733
PROPERTY AND EQUIPMENT
Furniture and equipment, net 23,268 -- 23,268
Oil and gas properties under full cost, net 5,334,242 3,480,364 (1) 8,814,606
------------ ------------ ------------
5,357,510 3,480,364 8,837,874
OTHER ASSETS
Deferred financing costs and other assets 76,664 -- 76,664
Deferred acquisition costs 300,000 (300,000) (1) --
------------ ------------ ------------
376,664 (300,000) 76,664
------------ ------------ ------------
Total Assets $ 8,491,057 $ 5,105,214 $ 13,596,271
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 273,728 $ 513,803 (1,3) $ 787,531
Asset retirement obligation 727,231 -- 727,231
------------ ------------ ------------
Total Current Liabilities 1,000,959 513,803 1,514,762
LONG-TERM LIABILITIES
Convertible notes payable 6,462,552 -- 6,462,552
Asset retirement obligation 161,165 161,142 (1) 322,307
------------ ------------ ------------
Total Long-Term Liabilities 6,623,717 161,142 6,784,859
STOCKHOLDERS' EQUITY
Common stock, $.001 par value; authorized
75,000,000 shares; issued and outstanding
23,701,357 and 28,201,357 (pro forma) 23,701 4,500 (2) 28,201
Capital in excess of par value 35,407,657 4,425,769 (2,3) 39,833,426
Accumulated deficit (34,564,977) -- (34,564,977)
------------ ------------ ------------
866,381 4,430,269 5,296,650
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 8,491,057 $ 5,105,214 $ 13,596,271
============ ============ ============
See accompanying notes to pro forma financial statements.
F-7
PYR ENERGY CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2003
PYR Energy Pro Forma
Corporation Adjustments Pro Forma
------------ ------------ ------------
REVENUE
Oil and gas production $ 195,167 $ 1,781,407 (4) $ 1,976,574
------------ ------------ ------------
195,167 1,781,407 1,976,574
OPERATING EXPENSES
Lease operating expenses 95,334 928,543 (4) 1,023,877
Impairment, dry hole, and abandonments 3,234,029 -- 3,234,029
Depreciation, depletion, and amortization 239,393 354,183 (5) 593,576
General and administrative 1,265,912 12,891 (6) 1,278,803
------------ ------------ ------------
4,834,668 1,295,617 6,130,285
(LOSS) INCOME FROM OPERATIONS (4,639,501) 485,790 (4,153,711)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 53,520 -- 53,520
Interest (expense) (310,457) -- (310,457)
------------ ------------ ------------
(256,937) -- (256,937)
------------ ------------ ------------
(LOSS) INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE (4,896,438) 485,790 (4,410,648)
Cumulative effect of change in
accounting principle (341,175) -- (341,175)
------------ ------------ ------------
NET (LOSS) INCOME $ (5,237,613) $ 485,790 $ (4,751,823)
============ ============ ============
NET LOSS PER COMMON
SHARE -BASIC AND DILUTED $ (0.22) $ (0.17)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 23,701,357 4,500,000 (2) 28,201,357
============ ============ ============
See accompanying notes to pro forma financial statements.
F-8
PYR ENERGY CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 2004
PYR Energy Pro Forma
Corporation Adjustments Pro Forma
------------ ------------ ------------
REVENUE
Oil and gas production $ 84,394 $ 764,365 (4) $ 848,759
------------ ------------ ------------
84,394 764,365 848,759
OPERATING EXPENSES
Lease operating expenses 36,952 394,347 (4) 431,299
Impairment, dry hole, and abandonments -- -- --
Depreciation, depletion, and amortization 124,228 177,092 (5) 301,320
General and administrative 536,932 6,446 (6) 543,378
------------ ------------ ------------
698,112 577,885 1,275,997
(LOSS) INCOME FROM OPERATIONS (613,718) 186,480 (427,238)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 10,608 -- 10,608
Interest (expense) (160,550) -- (160,550)
------------ ------------ ------------
(149,942) -- (149,942)
------------ ------------ ------------
NET (LOSS) INCOME $ (763,660) $ 186,480 $ (577,180)
============ ============ ============
NET LOSS PER COMMON
SHARE -BASIC AND DILUTED $ (0.03) $ (0.02)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 23,701,357 4,500,000 (2) 28,201,357
============ ============ ============
See accompanying notes to pro forma financial statements.
F-9
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(1) Adjustment to reflect the acquisition cost of the oil and gas properties
and related costs (of approximately $86,000 and including $50,000
previously accrued), including the asset retirement obligation.
In connection with the purchase, PYR will be obligated to pay a net profit
interest, which varies between 25% to 50%, to a trust. This amount is
payable only on future drilling projects and after the Company has
recovered its capital costs in the drilling of these projects. These
percentages decrease by 50% after $3,300,000 has been paid to the trust.
Due to the uncertainty as to any future payment, no liability was recorded
in connection with the purchase. Also, as this relates only to future
drilling projects, no amounts were deducted in the condensed pro forma
statement of operations information.
(2) Adjustment to reflect the sale of 4,500,000 shares of common stock in a
private placement at $1.09 per share.
(3) Adjustment to reflect costs totaling approximately $475,000 associated with
the sale of 4,500,000 shares of common stock in a private placement at
$1.09 per share.
(4) Oil and gas sales and direct operating expenses of the acquired properties
for the respective periods.
(5) Adjustment to reflect additional depletion and depreciation expense as if
the properties had been acquired at the beginning of the respective
periods.
(6) Adjustment to record additional asset retirement obligation expense for the
respective periods.
F-10