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): May 6, 2014
TransCoastal Corporation
(Exact name of registrant as specified in its charter)
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Delaware |
001-14665 |
75-2649230 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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17304 Preston Road, Suite 700, Dallas, Texas |
75252 | |
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(Address of principal executive offices) |
(zip code) | |
Registrant’s telephone number, including area code: (972) 458-1701
N/A
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17304 Preston Rd, Suite 700, Dallas TX |
75252 |
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(zip code) |
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit report or Completed Interim Review.
On April 25, 2014, the Audit Committee of TransCoastal Corporation (the “Company”) concluded, after consulting with Rothstein Kass, the Company’s independent registered public accounting firm (“Rothstein”), that the Company’s consolidated financial statements as of and for the years ended December 31, 2013 and 2012 that were included in the Company’s Annual Report on Form 10-K (collectively, the “Prior Financial Statements”) should no longer be relied upon because of an error in the Prior Financial Statements relating to the Company’s reserve estimates and related depletion expense.
As soon as the Company has resolved the issues relating to this misstatement, the Company will restate the Prior Financial Statements to account for the change in reserve estimates and related depletion expense.
The restatements will reflect the adjustment of depletion expense and accumulated depletion based on the changes in reserve estimates at the end of each period covered by the Prior Financial Statements. The adjustments are non-cash adjustments and will have no impact on the Company’s cash flows. On May 6, 2014 the Company completed its assessment of the impact of the adjustments to the depletion expense and accumulated depletion for each of the years covered by the Prior Financial Statements and believes the effects of the restatements are as summarized in the following tables.
Consolidated Balance Sheet as of December 31, 2013 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Oil and natural gas properties, full cost method, net of accumulated depletion |
$ | 23,971 | $ | (371 | ) | $ | 23,600 | |||||
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Total oil and natural gas properties and other equipment, net |
$ | 24,441 | $ | (371 | ) | $ | 24,070 | |||||
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Total assets |
$ | 26,201 | $ | (371 | ) | $ | 25,830 | |||||
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Accumulated deficit |
$ | (42,201 | ) | $ | (371 | ) | $ | (42,572 | ) | |||
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Total shareholders’ equity |
$ | 3,415 | $ | (371 | ) | $ | 3,044 | |||||
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Total liabilities and shareholders’ equity |
$ | 26,201 | $ | (371 | ) | $ | 25,830 | |||||
Consolidated Balance Sheet as of December 31, 2012 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Oil and natural gas properties, full cost method, net of accumulated depletion |
$ | 22,745 | $ | (239 | ) | $ | 22,506 | |||||
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Total oil and natural gas properties and other equipment, net |
$ | 23,312 | $ | (239 | ) | $ | 23,073 | |||||
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Total assets |
$ | 24,667 | $ | (239 | ) | $ | 24,428 | |||||
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Accumulated deficit |
$ | (38,280 | ) | $ | (239 | ) | $ | (38,519 | ) | |||
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Total shareholders’ equity |
$ | 5,632 | $ | (239 | ) | $ | 5,393 | |||||
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Total liabilities and shareholders’ equity |
$ | 24,667 | $ | (239 | ) | $ | 24,428 | |||||
Consolidated Statement of Operations for the Year Ended December 31, 2013 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Depreciation, depletion and amortization |
$ | 572 | $ | 132 | $ | 704 | ||||||
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Total expenses |
$ | 6,893 | $ | 132 | $ | 7,025 | ||||||
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Operating income (loss) |
$ | (3,271 | ) | $ | (132 | ) | $ | (3,403 | ) | |||
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Net income (loss) |
$ | (3,921 | ) | $ | (132 | ) | $ | (4,053 | ) | |||
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Net income (loss) per basic common share |
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | |||
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Net income (loss) per diluted common share |
$ | (0.17 | ) | $ | (0.01 | ) | $ | (0.18 | ) | |||
Consolidated Statement of Operations for the Year Ended December 31, 2012 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Depreciation, depletion and amortization |
$ | 542 | $ | 118 | $ | 660 | ||||||
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Total expenses |
$ | 4,599 | $ | 118 | $ | 4,717 | ||||||
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Operating income (loss) |
$ | 1,909 | $ | (118 | ) | $ | 1,791 | |||||
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Net income (loss) |
$ | 1,154 | $ | (118 | ) | $ | 1,036 | |||||
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Net income (loss) per basic common share |
$ | 0.05 | $ | (0.00 | ) | $ | 0.05 | |||||
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Net income (loss) per diluted common share |
$ | 0.05 | $ | (0.00 | ) | $ | 0.05 | |||||
The restatements will also reflect the adjustment of the changes in reserve estimates and its effect on the supplemental oil and natural gas disclosures at the end of each period covered by the Prior Financial Statements. The adjustments are non-cash adjustments and will have no impact on the Company’s cash flows. The Company has assessed the impact of the adjustments to the change in reserve estimates for each of the years covered by the Prior Financial Statements and believes the effects of the restatements will be as summarized in the following tables.
Reserve Quantity Information (amounts shown in whole numbers)
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PROVED-DEVELOPED AND UNDEVELOPED RESERVES |
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Previously Reported |
Adjustment |
As Restated |
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Crude Oil |
Natural Gas |
Crude Oil |
Natural Gas |
Crude Oil |
Natural Gas |
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December 31, 2011 |
6,757,860 | 28,620,040 | (37,840 | ) | (17,945,420 | ) | 6,720,020 | 10,674,620 | ||||||||||||||||
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Revisions of previous estimates |
(351,407 | ) | (139,164 | ) | 25,890 | (314,990 | ) | (325,517 | ) | (454,154 | ) | |||||||||||||
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Extensions and discoveries |
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Acquisitions of reserves |
20,730 | 150,320 | - | - | 20,730 | 150,320 | ||||||||||||||||||
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Production |
(26,413 | ) | (134,736 | ) | - | - | (26,413 | ) | (134,736 | ) | ||||||||||||||
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December 31, 2012 |
6,400,770 | 28,496,460 | (11,950 | ) | (18,260,410 | ) | 6,388,820 | 10,236,050 | ||||||||||||||||
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Revisions of previous estimates |
355,406 | 311,343 | (109,870 | ) | 61,000 | 245,536 | 372,343 | |||||||||||||||||
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Extensions and discoveries |
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Acquisitions of reserves |
7,760 | 47,007 | - | - | 7,760 | 47,007 | ||||||||||||||||||
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Production |
(26,106 | ) | (152,470 | ) | - | - | (26,106 | ) | (152,470 | ) | ||||||||||||||
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December 31, 2013 |
6,737,830 | 28,702,340 | (121,820 | ) | (18,199,410 | ) | 6,616,010 | 10,502,930 | ||||||||||||||||
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PROVED DEVELOPED RESERVES |
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December 31, 2013 |
3,397,310 | 6,623,830 | (83,910 | ) | (14,750 | ) | 3,313,400 | 6,609,080 | ||||||||||||||||
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December 31, 2012 |
3,331,140 | 6,517,370 | 26,060 | (194,120 | ) | 3,357,200 | 6,323,250 | |||||||||||||||||
Standardized Measure of Discounted Future Net Cash Flows as of December 31, 2013 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Future cash inflows |
$ | 811,564 | $ | (78,147 | ) | $ | 733,417 | |||||
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Less: Future production costs |
(128,428 | ) | 8,930 | (119,498 | ) | |||||||
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Future development costs |
(70,714 | ) | 10,731 | (59,983 | ) | |||||||
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Future income tax expense |
(201,909 | ) | 19,885 | (182,024 | ) | |||||||
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Future net cash flows |
410,513 | (38,601 | ) | 371,912 | ||||||||
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10% discount factor |
(262,896 | ) | 27,239 | (235,657 | ) | |||||||
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Standardized measure of discounted future net cash inflows |
$ | 147,617 | $ | (11,362 | ) | $ | 136,255 | |||||
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Estimated future development cost anticipated for following two years on existing properties |
$ | 38,884 | $ | (10,732 | ) | $ | 28,152 | |||||
Standardized Measure of Discounted Future Net Cash Flows as of December 31, 2012 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Future cash inflows |
$ | 757,700 | $ | (61,052 | ) | $ | 696,648 | |||||
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Less: Future production costs |
(128,893 | ) | 6,223 | (122,670 | ) | |||||||
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Future development costs |
(70,737 | ) | 10,855 | (59,882 | ) | |||||||
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Future income tax expense |
(184,363 | ) | 14,951 | (169,412 | ) | |||||||
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Future net cash flows |
373,707 | (29,023 | ) | 344,684 | ||||||||
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10% discount factor |
(248,633 | ) | 19,659 | (228,974 | ) | |||||||
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Standardized measure of discounted future net cash inflows |
$ | 125,074 | $ | (9,364 | ) | $ | 115,710 | |||||
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Estimated future development cost anticipated for following two years on existing properties |
$ | 30,207 | $ | (8,655 | ) | $ | 21,552 | |||||
Changes in Standardized Measure of Discounted Future Net Cash Flows for the Year Ended December 31, 2013 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Beginning of year |
$ | 125,074 | $ | (9,364 | ) | $ | 115,710 | |||||
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Sales of crude oil and natural gas, net of production costs |
(2,581 | ) | - | (2,581 | ) | |||||||
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Net changes in prices and production costs |
9,657 | (2,634 | ) | 7,023 | ||||||||
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Development costs incurred during the period |
716 | - | 716 | |||||||||
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Changes in future development costs |
(250 | ) | (415 | ) | (665 | ) | ||||||
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Extensions, discoveries, and improved recoveries |
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Revisions of previous quantity estimates |
10,553 | (2,263 | ) | 8,290 | ||||||||
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(Accretion of discount |
17,911 | (859 | ) | 17,052 | ||||||||
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Net change in income taxes |
(11,356 | ) | 1,540 | (9,816 | ) | |||||||
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Purchases and sale of mineral interests |
860 | - | 860 | |||||||||
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Timing and other |
(2,966 | ) | 2,632 | (334 | ) | |||||||
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End of year |
$ | 147,618 | $ | (11,363 | ) | $ | 136,255 | |||||
Changes in Standardized Measure of Discounted Future Net Cash Flows for the Year Ended December 31, 2012 (in thousands)
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Previously Reported |
Adjustment |
As Restated |
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Beginning of year |
$ | 135,496 | $ | (11,047 | ) | $ | 124,449 | |||||
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Sales of crude oil and natural gas, net of production costs |
(2,391 | ) | - | (2,391 | ) | |||||||
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Net changes in prices and production costs |
(27,078 | ) | 4,167 | (22,911 | ) | |||||||
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Development costs incurred during the period |
1,011 | - | 1,011 | |||||||||
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Changes in future development costs |
(264 | ) | 854 | 590 | ||||||||
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Extensions, discoveries, and improved recoveries |
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Revisions of previous quantity estimates |
(7,721 | ) | (1,918 | ) | (9,639 | ) | ||||||
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Accretion of discount |
20,535 | (1,727 | ) | 18,808 | ||||||||
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Net change in income taxes |
4,819 | (875 | ) | 3,944 | ||||||||
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Purchases and sale of mineral interests |
1,173 | - | 1,173 | |||||||||
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Timing and other |
(509 | ) | 1,185 | 676 | ||||||||
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End of year |
$ | 125,071 | $ | (9,361 | ) | $ | 115,710 | |||||
SIGNATURE
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.
Dated: May 7, 2014
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TransCoastal Corporation |
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By: |
/s/ Stuart G. Hagler |
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Name: |
Stuart G. Hagler, |
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Title: |
CEO |
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