The news:
BusinessWire, Wednesday, November 04, 1998 at 12:37
HOUSTON--(BUSINESS WIRE)--Nov. 4, 1998--
Fortune's Proved Reserves and Revenues for the Merged Companies
are Expected to More Than Triple Over Existing Levels
Fortune Natural Resources Corporation (AMEX SYMBOL:FPX) today
announced that it has signed a letter of intent with 3DX Technologies
Inc. (NASDAQ:TDXT), an exploration and production company emphasizing
the use of state-of-the-art geophysical interpretation and processing
technology, and a second letter of intent with Petro-Guard Company,
Inc. and Petro-Guard Production LLC, two privately held operating and
production companies. The letters of intent, which provide for the
merger of both 3DX and the Petro-Guard group into Fortune, have been
approved by the boards of directors of each of the four entities. Each
of the transactions is still conditioned upon, among other things, the
preparation and approval of definitive merger agreements and the
approval of Fortune's shareholders. The shareholders of 3DX must also
approve the merger of that company into Fortune.
3DX Technologies Inc. is an integrated exploration company formed
in 1993 by three former executives of Landmark Graphics. 3DX currently
employs five (5) geoscience explorationists and an engineer, all of
whom are expected to remain with Fortune. In addition to the
acquisition of this experienced professional staff, the merger will
greatly increase the Company's inventory of well-defined and drillable
3-D seismic generated Gulf Coast prospects. 3DX also has proven
reserves, as of June 30, 1998, of 6.3 BCF and approximately 1,500
square miles of 3-D seismic (the majority of which is proprietary).
3DX's primary oil and gas interests are geographically complementary
to Fortune's oil and gas interests. 3DX reported total revenues for
the six months ended June 30, 1998, of $2.1 million and a net loss for
the same period of $6.4 million.
Petro-Guard Company, Inc. and Petro-Guard Production LLC
(collectively, Petro-Guard) are both privately owned companies held
principally by Dewey A. Stringer III, a director of Fortune.
Petro-Guard also operates and participates in Fortune's Espiritu Santo
Bay project in Calhoun County, Texas. In addition, Petro-Guard owns
interests in multiple projects covering approximately 250 square miles
of proprietary 3-D seismic, all of which are geographically
complementary to Fortune. Petro-Guard's reserves, as of September 30,
1998, of approximately 4.5 BCFE, and revenues, which have been
approximately $1.5 million for the nine months ended September 30,
1998, will add to the positive fundamentals brought about by the
merger. Petro-Guard operates approximately 40 wells along the Gulf
Coast and the addition of its engineering staff will enable Fortune to
re-commence operations, a facet of Fortune's business which has been
absent since the sale of all of its California operated properties in
1996, and better control its projects.
The terms of the 3DX acquisition provide for the issuance
initially of up to a maximum of 6,965,431 shares of Fortune stock. 3DX
shareholders could also receive additional Fortune stock two years
after closing, up to a total of approximately 3.8 million shares, if
additional reserves attributable to the exploration properties
acquired from 3DX contribute disproportionately to the total of all
reserves added by Fortune from all exploration properties, under
certain conditions. The letter of intent with Petro-Guard provides for
the issuance of three million shares of Fortune common stock to the
Petro-Guard shareholders in exchange for the assets of those
companies. Fortune currently has 12,134,678 common shares outstanding.
Proxies seeking approval of these transactions are expected to be
presented to the shareholders of 3DX and Fortune prior to February 1,
1999 and closing before the end of the first quarter of 1999. Fortune
has also obtained a conditional commitment from a private investor for
an additional $5 million in capital, on terms to be agreed upon, to
facilitate the additional exploration capital requirements of the
combined companies. Fortune has reported total revenues for the six
months ended June 30, 1998 of $1.2 million and a net loss for the same
period of $1.5 million. Fortune is currently not profitable and has
not been profitable for the past five years. Because of this fact,
Fortune is below the continued listing requirements of the AMEX and
there can be no assurance that the Company will remain listed on the
exchange. Management believes, however, that these mergers will
reflect favorably upon future decisions regarding continued listing.
Tyrone J. Fairbanks, president and CEO of Fortune, commented
that, "We are very pleased to enter into these agreements with
companies comprised of such fine oil and gas professionals. It has
been a long-standing goal of Fortune, since moving to Houston in 1996,
to bring operational, geophysical and geological disciplines inside
the Company. This transaction, along with each company's existing
reserve and production bases and drillable prospect inventory, will
significantly enhance Fortune's Gulf Coast presence." Mr. Fairbanks
added, "In this current market, we intend to continue to seek
additional anti-dilutive acquisition opportunities which strengthen
our fundamental base and expand our opportunity for dramatic growth."
Ronald P. Nowak, president and CEO of 3DX, commented, "We are
extremely pleased to have entered into this agreement with Fortune and
feel this builds upon the framework for a stronger E&P company. With
the addition of Petro-Guard, the combined production, reserves and
exploration potential of the companies will make the new entity a more
powerful presence in the Gulf Coast. More importantly, the synergy of
the complementary skills that each group brings -- financial
management, operations and geoscience -- positions the new Fortune to
realize significant growth."
Fortune Natural Resources Corporation is an independent oil and
gas exploration and production company with its principal properties
located onshore and offshore Louisiana and Texas. Certain statements
in this news release regarding future expectations and plans may be
regarded as "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. They are subject to various risks, such as
operating hazards, drilling risks, and other uncertainties inherent in
the business of exploring for, developing and producing oil and gas
which may be beyond the Company's control. For a discussion of the
contingencies and uncertainties affecting future events and
forward-looking statements, see Fortune's Annual Report on Form 10-K
for the year ended December 31, 1997, as well as other filings with
the Securities and Exchange Commission. There can be no assurance that
the Company will be successful in meeting its expectations. |
