SUPPLEMENT TO JOINT PROXY STATEMENT/PROSPECTUS,DATED APRIL 17, 1992 OF
SANTA FE ENERGY RESOURCES, INC.
and
ADOBE RESOURCES CORPORATION
__________________
On or about March 2, 1992, Santa Fe Energy Resources, Inc., a Delaware corporation
(“Santa Fe”), and Adobe Resources Corporation, a Delaware corporation (“Adobe”), mailed to
their respective stockholders of record as of the close of business on February 27, 1992 (the
“Record Date”) a Joint Proxy Statement/Prospectus, dated as of February 27, 1992 (the “Joint
Proxy Statement/Prospectus”), (i) relating to the solicitation of proxies for use at the Sant a Fe
Special Meeting and the Adobe Special Meeting (collectively, the “Initial Meetings”), and any
adjournments or postponements thereof, of their respective stockholders held on March 31, 1992
to vote on the proposed merger (the “Merger”) of Adobe with and into Santa Fe and (ii)
constituting a prospectus of Santa Fe with respect to (a) the shares of Santa Fe Common St ock
and Santa Fe Convertible Preferred Stock to be issued in the Merger as consideration to Adobe’s
stockholders in exchange for their shares on the terms described in the Merger Agreement, (b)
the shares of Santa Fe Common Stock subject to issuance in respect of a retention bonus program
implemented by Adobe in August 1991, (c) the shares of Santa Fe Common Stock issuable upon
conversion of the Santa Fe Convertible Preferred Stock, and (d) the shares of Santa Fe Common
Stock to be issued to certain holders of Adobe stock options in accordance with the Merger
Agreement. This supplement (“Supplement”) amends and supplements the Joint Proxy
Statement/Prospectus, and is intended to be, and should be, read in conjunction with the Joi nt
Proxy Statement/Prospectus. Capitalized terms used in this Supplement but not define d herein
have the meanings assigned to such terms in the Joint Proxy Statement/Prospectus.
On March 5, 1992, two holders of shares of both series of Adobe’s outstanding preferred
stock filed a complaint in the Delaware Chancery Court (the “Court”) seeking decla ratory,
injunctive and other relief in connection with the Merger (the “Lawsuit”). The pla intiffs alleged,
in effect, that the Merger should be enjoined due to (i) alleged breaches by the defendants of
their fiduciary duties, overreaching and coercion including, without limitation, the fact that the
Merger Consideration was unfairly apportioned among Adobe’s stockholders and inadequate,
and that all aspects of the initiation, negotiation, timing and approval of the proposed Merger
were, or will be, unfair to the holders of Adobe’s preferred shares and (ii) lack of candor and
alleged material disclosure violations in the Joint Proxy Statement/Prospectus. The defe ndants
named in the complaint include Adobe, the directors of Adobe, Santa Fe, Minorco (U.S.A.) Inc.
(“Minorco (USA)”), Adobe Mining Company (“Adobe Mining”) and AOI Coal Company
(“AOI”). Following expedited discovery, a hearing was held on March 27, 1992 on the plaintiffs’
motion for a preliminary injunction, and a decision granting the preliminary injuncti on was
issued by the Court on April 6, 1992. The Court ruled that the Joint Proxy Statement/Prospectus
omitted a material fact: that in the summer of 1991 “at least two direct ors, including Adobe’s
Chairman and Chief Executive Officer (Mr. Rawn), and its President and Chief Operat ing
Officer (Mr. Vagt), believed that this was a bad time to sell Adobe from the perspe ctive of the
stockholders due to the depressed gas market; and that they communicated that belie f to others
on the Adobe board.” In the order implementing its opinion, the Court held that the disclosure
omissions could be cured and, if such supplemented disclosure curing the disclosure omissions is
distributed to stockholders of record as of February 27, 1992 with an opportunity for such
stockholders to revoke or change their prior proxies, the Merger could proceed. This Supplement
has been prepared to inform the stockholders of the omitted fact determined by the Court to be
material. A copy of the plaintiffs’ complaint is included as Annex A to this Supplement
(“Complaint”), a copy of the Court’s opinion is included as Annex B to this Supplement
(“Opinion”) and a copy of the order implementing the Court’s opinion issued on April 8, 1992 is
included as Annex C to this Supplement (“Order”), and all references to the Complaint , the
Opinion and the Order contained in this Supplement are qualified in their entirety by re ference
thereto. For a further description of the Lawsuit, the Opinion and the Order, see “Descript ion of
the Litigation Related to the Merger” and Annexes A, B and C to this Supplement.
In accordance with the Order issued by the Court, this Supplement is being furnished to all
stockholders of record of Santa Fe and Adobe as of the Record Date. The Record Date was the
original record date for the determination of the stockholders of Santa Fe and Adobe entit led to
notice of, and to vote at, the Initial Meetings held on March 31, 1992. The Record Date has also
been established as the date for the determination of the stockholders of Santa Fe and Adobe
entitled to notice of, and to vote at, the Resumed Meetings, which are to be held on May 19,
1992 at 10:00 a.m. (Houston, Texas Time) in the Westbury Salon at the Omni Houston Hotel,
Four Riverway Drive, in Houston, Texas 77056 (for the Santa Fe Resumed Meeting) and in the
Colonnade Salon at the Omni Houston Hotel, Four Riverway Drive, in Houston, Texas 77056
(for the Adobe Resumed Meeting).
For a discussion of certain considerations regarding the businesses and operations of Santa
Fe and Adobe that should be evaluated before voting at the Resumed Meetings on the proposals
herein, see “Certain Considerations” in the Joint Proxy Statement/Prospectus.
This Supplement contains (i) information regarding the Santa Fe Resumed Meeting and the
Adobe Resumed Meeting, (ii) a description of the Lawsuit, (iii) a description of the settlement of
the lawsuit, (iv) updated opinions from the financial advisors to Santa Fe and Adobe as to the
fairness, from a financial point of view, of the proposed Merger, (v) certain other information
and (vi) the full text of the Complaint, the Opinion and the Order of the Court.
Holders of Adobe Common Stock, Adobe Preferred Stock, Adobe Convertible Preferred
Stock and Santa Fe Common Stock do not have dissenters’ appraisal rights in respect of the
Merger (as defined herein).
NEITHER THE TRANSACTIONS CONTEMPLATED HEREBY NOR THE SECURITIES TO BE ISSUEDPURSUANT TO THE JOINT PROXY STATEMENT/PROSPECTUS, AS SUPPLEMENTED
HEREBY, HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EX-
CHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACCURACY OR ADEQUACY OF THE INFORMATION IN THE JOINT
PROXY STATEMENT/PROSPECTUS, AS SUPPLEMENTED HEREBY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________________
This Supplement and the accompanying proxies are first being mailed to stockholders of
Santa Fe and of Adobe on or about April 23, 1992.
The date of this Supplement is April 17, 1992.
Table of Contents
Description page
General .................................................................................................................................... 4
Voting Results of Initial Meetings; Right to Revoke Prior Vote ............................................ 4
Santa Fe Initial Meeting ...................................................................................................... 5
Adobe Initial Meeting ......................................................................................................... 5
Reasons for the Merger ........................................................................................................... 6
The Resumed MeetingsPurposes of the Resumed Meetings .................................................................................... 6
Date, Time and Place of Resumed Meetings ...................................................................... 6
Record Dates; Shares Entitled to Vote................................................................................ 6
Vote Required ..................................................................................................................... 7
Santa Fe Proxies.................................................................................................................. 7
Adobe Proxies ..................................................................................................................... 8
Solicitation of Proxies ......................................................................................................... 8
The Merger Agreement ........................................................................................................... 8
Recommendations of the Boards of Directors of Santa Fe and Adobe ................................... 9
Opinions of Financial Advisors
Opinion of Santa Fe Financial Advisor .............................................................................. 9
Opinions of Adobe Financial Advisors............................................................................... 9
No Appraisal Rights ................................................................................................................ 10
Description of the Litigation Related to the MergerAllegations of the Plaintiffs ................................................................................................ 10
The Court’s Opinion ........................................................................................................... 12
Succession by Santa Fe to Lawsuit if Merger is Consummated ......................................... 13
Review by Santa Fe and Adobe Board of Directors ........................................................... 13
The Settlement of the Lawsuit ............................................................................................ 13
Recent DevelopmentsCertain Financial Information Regarding Santa Fe. ........................................................... 14
Certain Financial Information Regarding Adobe ............................................................... 14
Comparative Market Price DataSanta Fe Common Stock..................................................................................................... 15
Adobe Shares ...................................................................................................................... 16
Stockholder Proposals ............................................................................................................. 16
Plaintiff’s Complaint for Injunctive and Other Relief............................................................. Annex A
Memorandum Opinion, dated April 6, 1992, of Delaware Court of Chancery ....................... Annex B
Preliminary Injunction Order, dated April 8, 1992 ................................................................. Annex C
Fairness Opinion of Lehman Brothers .................................................................................... Annex D
Fairness Opinion of Goldman Sachs ....................................................................................... Annex E
Fairness Opinion of Lazard Frères .......................................................................................... Annex F
Amendment No. 2 to the Merger Agreement, dated as of April 16, 1992 .............................. Annex G
All information concerning Santa Fe included in this Supplement has been fumished by
Santa Fe and all information concerning Adobe included in this Supplement has been furnished
by Adobe. Unless otherwise defined herein, capitalized terms used in this Supplement have the
respective meanings assigned to them in the Joint Proxy Statement/Prospectus. A glossary of
industry terms used in this Supplement is included as Annex E to the Joint Proxy
Statement/Prospectus. Stockholders are urged to read this Supplement together with the
information included in the Joint Proxy Statement/Prospectus, copies of which were previ ously
furnished to stockholders of record as of the Record Date. If you require another copy of the
Joint Proxy Statement/Prospectus, please contact Georgeson and Co., Inc. at (800) 223-
2064 (toll free) and a copy will be forwarded to you without charge.
GENERAL
At the Santa Fe Resumed Meeting and the Adobe Resumed Meeting (collectively, the
“Resumed Meetings”), holders of Santa Fe Common Stock, Adobe Common Stock, Adobe
Preferred Stock and Adobe Convertible Preferred Stock will be asked to consider and vote upon
a proposal to merge Adobe with and into Santa Fe pursuant to the terms of the Merger
Agreement, dated December 10, 1991, as amended by Amendment No. 1 to Agreement of
Merger dated January 28, 1992 and Amendment No. 2 to Agreement of Merger dated April 16,
1992, by and between Santa Fe and Adobe (the “Merger Agreement”). Amendment No. 2 to
Merger Agreement (a copy of which is included as Annex G to this Supplement) contains an
amendment to the Merger Agreement (i) pursuant to which Adobe and Santa Fe agreed, in
accordance with the ruling of the Court in the Lawsuit, to prepare this Supplement , convene the
Resumed Meetings and solicit proxies from their respective stockholders in favor of the Me rger,
the Merger Agreement and the transactions contemplated thereby and (ii) which provides that to
the extent this Supplement cures any omission in the Joint Proxy Statement/Prospectus and the
injunction issued by the Court is terminated, (a) such omission will not make untrue the
representations of either company in the Merger Agreement concerning the accuracy of
disclosure; (b) neither Santa Fe nor Adobe will exercise any right to terminate the Merger
Agreement by reason of any material misstatement or omission in the Joint Proxy
Statement/Prospectus to the extent corrected in this Supplement; and (c) neither Santa Fe nor
Adobe will assert that the issuance of the Opinion constitutes a material adverse e vent for the
other party for purposes of exercising its right to terminate the Merger or gives rise to t he failure
of any conditions precedent to consummation of the Merger contained in Sections 6.2(a), 6.2(b),
6.3(a) and 6.3(b) of the Merger Agreement. Santa Fe and Adobe entered into Amendment No. 2
to Agreement of Merger as a result of the ruling by the Court and the continued belief by the
Santa Fe board of directors and the Adobe board of directors that the proposed Merger is in the
best interests of their respective stockholders.
If the Merger is approved at the Resumed Meetings by the requisite votes of the
stockholders of Santa Fe and Adobe and the Merger is consummated, the separate existence of
Adobe will cease and Santa Fe will succeed to all of the assets, rights, liabil ities and obligations
of Adobe. If the Merger is not approved at the Resumed Meetings by the requisite votes of suc h
stockholders, Santa Fe and Adobe intend, under presently existing circumstances, to continue to
operate independently.
VOTING RESULTS OF INITIAL MEETINGS;RIGHT TO REVOKE PRIOR VOTE
As a result of the order of the Court in the Lawsuit and in accordance with Amendment No.
2 to Agreement of Merger, votes submitted at the Resumed Meetings will be used to det ermine if
the requisite stockholder votes have been obtained to approve the Merger. Proxies submitted by
stockholders of Santa Fe and Adobe for use at the Initial Meetings will continue to constit ute
valid proxies for purposes of the Resumed Meetings unless revoked or superseded. To revoke or
supersede a prior proxy or otherwise change a prior vote, the enclosed proxy card should
be dated, signed exactly as indicated on the proxy card and returned in the enclosed
envelope immediately.
Santa Fe Initial Meeting
At the Santa Fe Initial Meeting, which was called and held on March 31, 1992 and deemed
adjourned by the Court, commencing at 10:00 a.m. local time in the Ballroom of the Ritz Carlton
Hotel in Houston, Texas, there were present in person or represented by proxy 50,675,612 shares
of Santa Fe Common Stock, constituting approximately 78.7% of the 64,414,185 shares of Santa
Fe Common Stock outstanding as of the Record Date and entitled to vote. A total of 48,764,096
shares of Santa Fe Common Stock voted at the Santa Fe Initial Meeting FOR the Merger, the
Merger Agreement, the issuance of the Merger Consideration and the consummation of the
transactions contemplated thereby, 1,706,464 shares of Santa Fe Common Stock voted
AGAINST those matters and 205,052 shares of Santa Fe Common Stock ABSTAINED from
voting on those matters.
Accordingly, approximately 96% of the shares of Santa Fe Common Stock present in person
or by proxy at the Santa Fe Initial Meeting voted FOR the Merger, the Merger Agreement, the
issuance of the Merger Consideration and consummation of the other transactions contemplat ed
thereby. Such vote was sufficient to approve the proposal in accordance with the Santa Fe
Charter and the Delaware General Corporation Law (the “Delaware Act”), subject to the
outcome of the then pending ruling by the Court. For the reasons stated elsewhere in this
Supplement, however, the Merger cannot be consummated unless approved at the Resumed
Meetings by the requisite votes of stockholders.
As described in the Joint Proxy Statement/Prospectus, Itel Corporation has executed an
irrevocable proxy entitling Adobe to vote the shares of Santa Fe Common Stock owned by Itel
Corporation. Pursuant to such irrevocable proxy, Adobe is entitled to vote approximately 12.5%
of the outstanding shares of Santa Fe Common Stock on the Merger. At the Santa Fe Initial
Meeting, Adobe voted such shares FOR the Merger, the Merger Agreement, the issuance of the
Merger Consideration and the consummation of the transactions contemplated thereby. Adobe
has indicated that it does not currently intend to change or revoke such vote.
Adobe Initial Meeting
At the Adobe Initial Meeting, which was called and held on March 31, 1992 and deemed
adjourned by the Court, commencing at 10:00 a.m. local time in the Colonnade Room of the Ritz
Carlton Hotel in Houston, Texas, there were present in person or represented by proxy
25,820,450 shares of Adobe Common Stock and a combined total of 6,539,504 shares of Adobe
Preferred Stock and Adobe Convertible Preferred Stock, constituting approximately 84% and
73% of the 30,683,377 shares of Adobe Common Stock and the combined total of 9,015,142
shares of Adobe Preferred Stock and Adobe Convertible Preferred Stock, respectively,
outstanding as of the Record Date and entitled to vote. A total of 25,535,746 shares of Adobe
Common Stock voted at the Adobe Initial Meeting FOR the Merger, the Merger Agreement and
the consummation of the transactions contemplated thereby, 151,120 shares of Adobe Common
Stock voted AGAINST those matters and 133,584 shares of Adobe Common Stock
ABSTAINED from voting on those matters. A combined total of 6,285,428 shares of Adobe
Preferred Stock and Adobe Convertible Preferred Stock voted at the Initial Meeting FOR the
Merger, the Merger Agreement and the consummation of the transactions contemplated thereby,
170,346 of such combined shares voted AGAINST those matters and 83,730 of such combined
shares ABSTAINED from voting on those matters.
Approximately 99% of the shares of Adobe Common Stock present in person or by proxy at
the Adobe Initial Meeting and approximately 96% of the combined shares of Adobe Preferred
Stock and Adobe Convertible Preferred Stock so present in person or by proxy voted FOR the
Merger, the Merger Agreement and consummation of the other transactions contemplated
thereby. Such vote was sufficient to approve the proposal in accordance with the Adobe Chart er
and the Delaware Act subject to the outcome of the then pending ruling by the Court. For the
reasons stated elsewhere in this Supplement, however, the Merger cannot be consummated
unless approved at the Resumed Meetings by the requisite votes of stockholders. As described i n
the Joint Proxy Statement/Prospectus, Minorco (USA) and Messrs. Rawn and Pevehouse have
executed irrevocable proxies entitling Santa Fe to vote their shares of Adobe Common Stock
and, with respect to Messrs. Rawn and Pevehouse, Adobe Preferred Stock and Adobe
Convertible Preferred Stock owned by such persons. Pursuant to such irrevocable proxies, Santa
Fe was entitled to vote an aggregate of approximately 49.3% of the votes entitled to be cast at the
Adobe Initial Meeting by the holders of Adobe Common Stock and approximately 27.4% of the
votes entitled to be cast by the holders of Adobe Preferred Stock and Adobe Convertible
Preferred Stock, voting together as a single class. All such shares were voted by Santa Fe a t the
Adobe Initial Meeting FOR the Merger, the Merger Agreement and the consummation of the
transactions contemplated thereby. Santa Fe has indicated that it does not currentl y intend to
change or revoke such vote.
REASONS FOR THE MERGER
The Boards of Directors of Santa Fe and Adobe have each unanimously approved the
Merger Agreement and the Merger and continue to unanimously recommend that their respec tive
stockholders vote FOR approval of such matters. For a discussion of the reasons for the Merger
and other factors considered by the respective Boards of Directors of Santa Fe and Adobe, see
“Summary — Reasons for the Merger,” “Special Factors — Reasons for the Merger;
Recommendations of the Boards of Directors” and “— Interests of Certain Persons in the
Merger” in the Joint Proxy Statement/Prospectus and “Description of the Litigation Related to
the Merger” in this Supplement.
THE RESUMED MEETINGS
Purposes of the Resumed Meetings Santa Fe . The purpose of the Santa Fe Resumed Meeting is to consider and vote upon (i) the
approval and adoption of the Merger Agreement, the Merger and the issuance of the Merger
Consideration in accordance with the terms of the Merger Agreement and the consummat ion of
the other transactions contemplated thereby, as a single proposal, and (ii) such other matt ers as
may properly be brought before the Santa Fe Resumed Meeting.
Adobe. The purpose of the Adobe Resumed Meeting is to consider and vote upon (i) a
proposal to approve the Merger Agreement, the Merger and the consummation of the other
transactions contemplated thereby and (ii) such other matters as may properly be brought before
the Adobe Resumed Meeting.
Date, Time and Place of Resumed Meetings
Santa Fe. The Santa Fe Resumed Meeting will be held on Tuesday, May 19, 1992, in the
Westbury Salon at the Omni Houston Hotel, Four Riverway Drive, Houston, Texas, 77056
commencing at 10:00 a.m., local time.
Adobe. The Adobe Resumed Meeting will be held on Tuesday, May 19, 1992, in the
Colonnade Salon at the Omni Houston Hotel, Four Riverway Drive, Houston, Texas, 77056
commencing at 10:00 a.m., local time.
Record Dates; Shares Entitled to Vote
Santa Fe. Holders of record of shares of Santa Fe Common Stock at the close of business on
February 27, 1992 are entitled to notice of, and to vote at, the Santa Fe Resumed Mee ting. As of
such date, there were 64,414,185 shares of Santa Fe Common Stock outstanding, each of which
will be entitled to one vote on each matter to be acted upon or which may prope rly be brought
before the Santa Fe Resumed Meeting.
Adobe. Holders of record of shares of Adobe Common Stock, Adobe Preferred Stock and
Adobe Convertible Preferred Stock (collectively, the “Adobe Shares”) at the close of business on
February 27, 1992 are entitled to notice of, and to vote at, the Adobe Resumed Meeting. On such
date, there were (i) 30,683,377 shares of Adobe Common Stock outstanding, each of which will
be entitled to one vote on each matter acted upon or which may properly be brought before the
Adobe Resumed Meeting, and (ii) 4,856,212 shares and 4,158,930 shares, respectively of Adobe
Preferred Stock and Adobe Convertible Preferred Stock outstanding, each of which will be
entitled to one vote on the Merger Agreement and the Merger at the Adobe Resumed Mee ting.
Pursuant to the terms of the Adobe Preferred Stock and the Adobe Convertible Preferred Stock,
holders thereof will be entitled to vote together as a single class with respec t to the approval of
the Merger Agreement and the Merger at the Adobe Resumed Meeting.
Vote Required
Santa Fe. The affirmative vote of the holders of a majority of the issued and outstanding
shares of Santa Fe Common Stock entitled to vote at the Santa Fe Resumed Meeting will be
required to approve and adopt the Merger Agreement, the Merger and the issuance of the Merger
Consideration upon consummation thereof. All such matters will be voted on as a single proposal
at the Santa Fe Resumed Meeting.
Adobe. The affirmative vote of (i) the holders of a majority of the issued and outstanding
shares of Adobe Common Stock and (ii) the holders of two-thirds of the shares of Adobe
Preferred Stock and Adobe Convertible Preferred Stock, present in person or represented by
proxy at the Adobe Resumed Meeting, voting together as a single class, will be required to
approve and adopt the Merger Agreement and the Merger, with a majority of the outstanding
shares of Adobe Preferred Stock and Adobe Convertible Preferred Stock necessary for a quorum.
For information concerning the proxies submitted at the Initial Meetings (which proxies will
continue to constitute valid proxies at the Resumed Meetings unless revoked or superseded by a
subsequent proxy submitted on the enclosed proxy card), see “Voting Results of Initial Meetings;
Right to Revoke Prior Vote.” For information concerning the security ownership of Santa Fe and
Adobe management and certain other persons, see “Special Factors — Interests of Certain
Persons in the Merger” and “Security Ownership” in the Joint Proxy Statement/Prospectus.
Santa Fe Proxies
Shares of Santa Fe Common Stock represented by proxies received by Santa Fe prior to or
at the Santa Fe Resumed Meeting will be voted in accordance with the instructi ons contained
therein. In addition, shares of Santa Fe Common Stock represented by proxies received by Santa
Fe prior to or at the Santa Fe Initial Meeting will be voted at the Santa Fe Resumed Meeting in
accordance with the instructions contained therein unless revoked or superseded by a subsequent
proxy submitted on the enclosed proxy card. Shares of Santa Fe Common Stock represented by
proxies for which no instruction is given will be voted FOR approval of the Merger, the Merger
Agreement, the issuance of the Merger Consideration pursuant to the Merger Agreement and t he
other transactions contemplated thereby.
Holders of Santa Fe Common Stock who wish to change their prior proxy or to submit a
proxy if a prior proxy was not submitted for the Santa Fe Initial Meeting are requested to
complete, sign, date and return promptly the enclosed proxy card in the postage paid envelope
provided for this purpose in order to insure that their shares are voted. A proxy may be revoked
at any time prior to the exercise of the authority granted thereunder. Revocation ma y be
accomplished by the granting of a later proxy with respect to the same shares or by giving not ice
thereof to Santa Fe in writing or at the Santa Fe Resumed Meeting at any time prior to the vote
on the matters to be considered at the Santa Fe Resumed Meeting. Presence at the Santa Fe
Resumed Meeting of a stockholder who signed a proxy does not in itself revoke the proxy.
The Board of Directors of Santa Fe is aware of no matters to be presented at the Sant a Fe
Resumed Meeting other than those described in the Joint Proxy Statement/Prospectus and this
Supplement. If other matters are properly brought before the Santa Fe Resumed Meeting, it is the
intention of the persons named in the proxies to vote the shares to which said proxies re late in
accordance with their judgment.
Adobe Proxies
Adobe Shares represented by proxies received by Adobe prior to or at the Adobe Resumed
Meeting will be voted in accordance with the instructions contained therein. In addit ion, Adobe
Shares represented by proxies received by Adobe prior to or at the Adobe Initial Meeting will be
voted at the Adobe Resumed Meeting in accordance with the instructions contained there in
unless revoked or superseded by a subsequent proxy submitted on the enclosed proxy card.
Adobe Shares represented by the proxies for which no instruction is given will be voted FOR
approval of the Merger and Merger Agreement and the other transactions contemplated thereby.
Holders of Adobe Shares who wish to change their prior proxy or to submit a proxy if a
prior proxy was not submitted for the Adobe Initial Meeting are requested to complete, sign, da te
and return promptly the enclosed proxy card in the postage paid envelope provided for this
purpose in order to insure that their shares are voted. A proxy may be revoked at any time prior
to the exercise of the authority granted thereunder. Revocation may be accomplished by the
granting of a later proxy with respect to the same shares or by giving notice thereof to Adobe in
writing or at the Adobe Resumed Meeting. Presence at the Adobe Resumed Meeting of a
stockholder who signed a proxy does not in itself revoke the proxy.
The Board of Directors of Adobe knows of no matters to be presented at the Adobe
Resumed Meeting other than those described in the Joint Proxy Statement/Prospectus and this
Supplement. If other matters are properly brought before the Adobe Resumed Meeting, it is t he
intention of the persons named in the proxies to vote the shares to which such proxies relate in
accordance with their judgment.
Solicitation of Proxies
As described in the Joint Proxy Statement/Prospectus, Georgeson & Co., Inc. (“Georgeson”)
has been retained to solicit proxies on behalf of each of Santa Fe and Adobe. For a descri ption of
the agreement with Georgeson (including the fee arrangement), see “The Meetings—Solicita tion
of Proxies” in the Joint Proxy Statement/Prospectus.
THE MERGER AGREEMENT
Pursuant to the Merger Agreement (a copy of which is included as Annex A to the Joint
Proxy Statement/Prospectus), Adobe will, subject to certain conditions, be merged with and into
Santa Fe and Santa Fe will be the surviving corporation (the “Merger”). The Merger Agreement,
except to the extent amended by Amendment No. 2 to Agreement of Merger, is described under
the heading “The Merger Agreement” in the Joint Proxy Statement/Prospectus and is incl uded
therein as Annex A. Amendment No. 2 to Agreement of Merger is described in this Supplement
under “General” and is included herein as Annex G.
For a description of the Santa Fe Common Stock and Santa Fe Convertible Preferred Stock
and the Adobe’ Shares, and a comparison of stockholder rights, see “Description of Santa Fe
Capital Stock,” “Description of Adobe Shares” and “Comparison of Stockholder Rights” in the
Joint Proxy Statement / Prospectus.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF SANTA FE AND ADOBE
Santa Fe Santa Fe’s Board of Directors continues to believe that the terms of the Merger are fai r to,
and in the best interests of, Santa Fe and its stockholders. Accordingly, Santa Fe’s Board of
Directors has unanimously approved the Merger Agreement, the Merger, the issuance of
the Merger Consideration in accordance with the Merger Agreement and the other
transactions contemplated thereby and unanimously recommends that holders of Santa Fe
Common Stock vote FOR adoption and approval of the Merger Agreement, the Merger,
the issuance of the Merger Consideration in accordance with the Merger Agreement and
the other transactions contemplated thereby.
Adobe
Adobe’s Board of Directors continues to believe that the terms of the Merger are fair t o, and
in the best interests of, Adobe and its stockholders. Accordingly, Adobe’s Board of Directors
has unanimously approved the Merger Agreement, the Merger and the other transactions
contemplated thereby and unanimously recommends that holders of Adobe Shares vote
FOR adoption and approval of the Merger Agreement, the Merger and the other
transactions contemplated thereby.
OPINIONS OF FINANCIAL ADVISORS
Opinion of Santa Fe Financial Advisor Lehman Brothers, a division of Shearson Lehman Brothers, Inc. (“Lehman Brothers”), has
delivered its written opinion, dated April 13, 1992, to the Board of Directors of Santa Fe to the
effect that, as of such date, the exchange ratios of Santa Fe Common Stock and Santa Fe
Convertible Preferred Stock to be paid by Santa Fe for the Adobe Common Stock, Adobe
Preferred Stock and Adobe Convertible Preferred Stock upon consummation of the Merger in
accordance with the Merger Agreement are fair from a financial point of view to Sa nta Fe and its
current stockholders. A copy of such opinion is included as Annex D to this Supplement.
Lehman Brothers also delivered written opinions dated January 21, 1992 and December 10, 1991
with respect to fairness of the exchange ratios set forth in them as amended by Am endment No. 1
to Agreement of Merger and as originally executed, respectively, a copy of which is inc luded as
Annex B to the Joint Proxy Statement/Prospectus and as an exhibit to the Registration Statement
of which this is a part, respectively. For a more specific description of such opinion, t he analysis
performed by Lehman Brothers and information regarding fees and expenses to be paid to
Lehman Brothers by Santa Fe Upon consummation of the Merger, see “Special Factors m
Opinions of Financial Advisor — Santa Fe” included in the Joint Proxy Statement/Prospectus.
Opinions of Adobe Financial Advisors
Goldman, Sachs & Co. ( “Goldman Sachs” ) has delivered a written opinion, dated April 16,
1992, to the Board of Directors of Adobe to the effect that, as of the date of its opini on, the
exchange ratio of 0.6000 shares of Santa Fe Common Stock to be paid for each share of Adobe
Common Stock was fair to the holders of Adobe Common Stock, the exchange ratio of 0.7029
shares of Santa Fe Common Stock and 0.5959 shares of Santa Fe Convertible Preferred Stock to
be paid for each share of Adobe Preferred Stock was fair to the holders of Adobe Preferred Stock
and the exchange ratio of 0.5974 shares of Santa Fe COmmon Stock and 0.5065 shares of Santa
Fe Convertible Preferred Stock to be paid for each share of Adobe Convertible Preferred Stock
was fair to the holders of Adobe Convertible Preferred Stock. A copy of such opinion is included
as Annex E to this Supplement. Goldman Sachs also delivered written opinions dated Janua ry
23, 1992 and December 10, 1991 with respect to the fairness of the exchange ratios set forth in
the Merger Agreement as amended by Amendment No. 1 to Agreement of Merger and as
originally executed, respectively, a copy of which is included as Annex C to the Joi nt Proxy
Statement/Prospectus and as an exhibit to the Registration Statement of which thi s Supplement is
a part, respectively. For a more specific description of such opinion, the analysis performed by
Goldman Sachs and information regarding fees and expenses payable to Goldman Sachs and it s
relationships with Santa Fe see “Special Factors — Opinions of Financial Advisor — Adobe”
included in the Joint Proxy Statement / Prospectus.
Lazard Frères & Co. (“Lazard Frères”) has delivered a written opinion, dated April 16,
1992, to the Board of Directors of Adobe to the effect that, from a financial point of view, a s of
the date of its opinion, the exchange ratio of 0.6000 shares of Santa Fe Common Stock to be pa id
for each share of Adobe Common Stock was fair to the holders of Adobe Common Stock, the
exchange ratio of 0.7029 shares of Santa Fe Common Stock and 0.5959 shares of Santa Fe
Convertible Preferred Stock to be paid for each share of Adobe Preferred Stock was fair to t he
holders of Adobe Preferred Stock and the exchange ratio of 0.5974 shares of Santa Fe Common
Stock and 0.5065 shares of Santa Fe Convertible Preferred Stock to be paid for each share of
Adobe Convertible Preferred Stock was fair to the holders of Adobe Convertible Preferred Stock.
A copy of such opinion is included as Annex F to this Supplement. Lazard Frères also delivered
written opinions dated January 23, 1992 and December 10, 1991 with respect to the fairness of
the exchange ratios set forth in the Merger Agreement as amended by Amendment No. 1 to
Agreement of Merger and as originally executed, respectively, a copy of which is included a s
Annex D to the Joint Proxy Statement/Prospectus and as an exhibit to the Registration Sta tement
of which this Supplement is a part, respectively. For a more specific description of such
opinions, the analysis performed by Lazard Frères and information regarding fees and expenses
payable to Lazard Frères and its relationships with Adobe, Minorco and Minorco (USA), see
“Special Factors — Opinions of Financial Advisor—Adobe” included in the Joint Proxy
Statement/Prospectus.
NO APPRAISAL RIGHTS
Holders of Adobe Shares are not entitled to dissenters’ appraisal rights under the Delaware
Act in respect of the Merger. Similarly, holders of Santa Fe Common Stock are not entitl ed to
dissenters’ rights under the Delaware Act. See “Special Factors — No Appraisal Rights” in the
Joint Proxy Statement/Prospectus.
DESCRIPTION OF THE LITIGATION RELATED TO THE MERGER
Allegations of the Plaintiffs On March 5, 1992, plaintiffs, Patrick J. Gilmartin and Geraldine M. Gilmartin, holders of
Adobe Preferred Stock and Adobe Convertible Preferred Stock, (collectively “Adobe Preferred
Shares”), filed a complaint (the “Complaint”) in the Delaware Court of Chancery, in and for,
New Castle County seeking declaratory, injunctive and other relief in connection with the
proposed Merger. The Complaint was filed individually on behalf of the plaintiffs and on beha lf
of the class constituting all holders of Adobe Preferred Shares (excluding defendants, their
families and affiliates) on the Record Date set forth in the Joint Proxy State ment/Prospectus. A
hearing was held on plaintiffs’ motion for a preliminary injunction on March 27, 1992 and
following the hearing, at the request of the Court, Adobe and Santa Fe agreed to defer
consummation of the Merger until April 6, 1992 to give the Court sufficient time to consider the
matter and to prepare its opinion on the plaintiffs’ motion for a preliminary injunction.
On April 6, 1992 the Court issued its opinion (the “Opinion”) granting plaintiffs’ motion for
a preliminary injunction. The Court held for the plaintiffs on one of plaintiffs’ disclosure claims,
finding that the plaintiffs were likely to prevail at a final hearing on their c laim that the Joint
Proxy Statement/Prospectus failed to disclose that certain Adobe directors (Messrs. Rawn and
Vagt, executive officers and directors of Adobe) believed in the summer of 1991 that it wa s “a
bad time to sell Adobe from the perspective of the stockholders due to the depressed ga s market;
and that they communicated that belief to others on the Adobe Board”. The Court held that the
defendants could cure the defective disclosure, resolicit proxies and thereafter, subject to
stockholder approval, proceed with the Merger. On April 8, 1992, the Court issued the Order,
preliminarily enjoining the Merger. The full text of the Complaint, the Opinion and the Order are
included as Annexes A, B and C, respectively, to this Supplement. Stockholders are urged to
carefully read each of these documents in its entirety. The summary set forth below does not
contain each and every claim made by the plaintiffs and is qualified in its entirety by reference to
the documents included herein as Annexes A, B and C. The defendants have vigorously dispute d
the claims of the plaintiffs.
The Complaint alleges, among other things, that: (a) Minorco (USA) controlled the Adobe
Board and caused Adobe to enter into a change of control transaction so that Minorco (USA)
could obtain the benefits of a sale of the entire company; (b) the Adobe Board and its members
had irreconcilable conflicts, including an irreconcilable conflict of interest be tween the interests
of Minorco (USA) and the interests of the holders of the Adobe Preferred Shares; (c) in breach of
their fiduciary duties to the holders of the Adobe Preferred Shares, a majority of the Adobe
directors were interested in and lacked independence with respect to the proposed Merger; (d)
Minorco (USA) and the Adobe Board unfairly apportioned the Merger Consideration in a way
that treated the holders of Adobe Common Stock more favorably than the holders of Adobe
Preferred Shares; (e) the authorization of $4.3 million for the Adobe Retention Bonus Plan wa s a
breach of defendants’ fiduciary duties; (f) in addition to the fact that the Merger Consi deration
was unfairly apportioned and inadequate, all aspects of the initiation, negotiation, t iming and
approval of the proposed Merger were, or will be, unfair to the holders of Adobe Preferred
Shares; (g) there was no independent negotiation on behalf of the holders of Adobe Preferred
Shares; (h) the sale of certain Adobe assets to Santa Fe to obtain funds to procure the re lease of
Adobe from its obligations under the Guaranty Agreements was a breach of certain defendants’
fiduciary duties of loyalty and their duty to act in good faith; and (i) the Adobe Board breached
its duty to obtain the maximum value for Adobe by agreeing to the Merger, not conducting an
auction of Adobe and by agreeing to a “no shop” clause.
The Complaint also alleges that certain defendants breached their fiduciary duties by failing
to properly disclose all material facts relating to, among other things: (a) the negotiation and
approval of the Merger by the Adobe Board; (b) the fact that the 662/3% vote of the holders of
Adobe Preferred Stock was required for the reason that the Merger does not offer the holders of
such stock payment of the liquidation value of their stock or stock in Santa Fe with substantially
the same dividends, preferences, rights, powers, privileges and protective restrictions as are
applicable to the Adobe Preferred Shares; (c) the reasons for the suspension of the dividends on
the Adobe Preferred Shares; (d) Santa Fe’s decision not to terminate the Merger Agreement
when Adobe did not obtain the required agreements for the releases of its obligations under the
Guaranty Agreements by January 10, 1992 and when such releases were eventually obtained for
an amount substantially in excess of the $13.15 million maximum originally stipulate d in the
Merger Agreement; (e) Adobe’s sale of three properties to Santa Fe for approximately $14.2
million at a book loss of approximately $8.5 million; (f) Mr. Pevehouse’s conflicts of interest
resulting from his stock ownership and business relationships with AOI and Adobe Mining; (g)
Minorco (USA)’s reason for selling its stock as part of a sale of the whole company and
Minorco’s and Minorco (USA)’s business and financial relationships with Adobe’s directors; (h)
the value of the director’s stock options and the establishment and approval of the Adobe
Retention Bonus Plan and (i) the Adobe’s lenders’ demand that Adobe reduce its debt by $15
million.
The Complaint also claimed that the defendants breached the rights of holders of Adobe
Preferred Shares by structuring the change of control transaction as a merger to avoid such
stockholders’ liquidation rights. The Complaint also charged Santa Fe, its directors, AOI and
Adobe Mining with aiding and abetting breaches of fiduciary duty by the Adobe Board and
Minorco (USA).
In briefs submitted to the Court plaintiffs asserted a number of additional claims not pleaded
in the Complaint including: (a) that Minorco’s decision to sell Adobe in June 1991 was
motivated by its desire to avoid a retroactive restatement of its financial statements which would
have been required as a result of a change in accounting principles effected by Adobe in the
second quarter of 1991 and would have resulted in a $74 million negative effect on Minorco
(USA)’s financial results; (b) that Adobe’s investment bankers had irreconcilable conflicts of
interest and the exact amount of their fee was not disclosed; (c) that Adobe’s direc tors engaged
in efforts to coerce the holders of Adobe Preferred Stock and Adobe Convertible Preferred Stock
into accepting the Merger by making it appear that such holders had no alternative; (d) that the
structure of the transaction was unfair as there was no “collar” to protect Adobe stoc kholders
from declines in the price of Santa Fe securities after October 22, 1991; and (e) that wi th regard
to negotiation of the Merger Consideration Adobe’s directors failed to appoint an independent
negotiator in light of fiduciary obligations to safeguard the interests of Adobe’s preferred
stockholders. Plaintiffs also asserted that the Joint Proxy Statement/Prospectus was material ly
misleading in that it failed to disclose that: (a) in June 1991, Mr. Rawn, Adobe’s Chai rman and
Chief Executive Officer, believed it was a highly disadvantageous time to sell Adobe and had
expressed this belief to Minorco, Minorco (USA) and the Adobe Board and had attempted to
convince Minorco not to sell; (b) Mr. Pevehouse, a director of Adobe and the owner of
approximately 24.4% and 27.7% of Adobe Preferred Stock and Adobe Convertible Preferred
Stock, had become critically ill in September 1991 and, therefore, was not in a posi tion to
adequately represent the interests of the holders of the Adobe Preferred Shares; (c) the Adobe
Board’s approval of the Merger at the December 10, 1991 meeting was not unanimous since all
directors were not present when the vote was taken on the proposed Merger; although all those
present were unanimously in favor of the Merger; (d) Mr. Rawn directly owns 1,000 shares of
Minorco and has a one million dollar equity interest in Noel Group, Inc.; and (e) the reduc tion in
Adobe’s borrowing base following the announcement of the Merger was made at Adobe’s
request in order to assist Adobe in consummating the Merger.
The Court’s Opinion
On April 6, 1992, the Court rendered the Opinion granting plaintiffs’ motion for a
preliminary injunction. The Court determined that it did not need to address the Pla intiffs’
substantive unfairness contentions because “(i) on the present record I find that the Plaint iffs
probably will be unable to prove that the Merger is other than an arm’s-length transacti on with a
third party, and (ii) the unaffiliated Preferred Stockholders had the legal right to vet o that
transaction at the Stockholders’ meeting. Thus, if the Preferred Stockholders vote was fully
informed, no reason exists for this Court to intervene on substantive unfairness grounds in a
transaction that the Preferred Stockholders themselves were empowered to prevent.” However,
the Court held for the plaintiffs on one of their disclosure claims, finding that the pla intiffs were
likely to prevail at a trial hearing on their claim that the Joint Proxy Sta tement/Prospectus failed
to disclose the material fact that in the summer of 1991 Messrs. Rawn and Vagt, e xecutive
officers and directors of Adobe, and Mr. William Loomis, Managing Director of Lazard Frères
and a director of Minorco, believed that it was “a bad time to sell Adobe from t he perspective of
the stockholders due to the depressed gas market; and that they communicated that belief to
others on the Adobe Board.” The Court enumerated several reasons why it believed the fa ilure to
include this information rendered the Joint Proxy Statement/Prospectus materially misle ading.
Stockholders are urged to review this reasoning which is set forth on pages B-9 to B-12 in
the text of the Opinion attached hereto as Exhibit B. The reasons enumerated by the Court
included, without limitation, the following: (i) “because if disclosed, it would have alerted the
Preferred Stockholders to the possibility that a fair price might not be obtainable in this
depressed market, and that, therefore, a merger might not be in their best interest s” and (ii) the
omitted facts rendered other disclosures materially false and misleading, including (a) the
disclosure that the Abode board “unanimously recommends” that shareholders vote for the
Merger and that the Adobe “board believes that the terms of the Merger are fair to, a nd in the
best interests of, Adobe and its stockholders”, (b) the “Proxy Statement’s effort to downplay the
significance of the depressed oil and gas market”, including the statements in the Joint Proxy
Statement/Prospectus that one of the reasons of the Adobe Board for recommending the Merger
is that “since both Santa Fe and Adobe are oil and gas companies, the exchange ra tio reflects
asset values that are affected similarly by the currently depressed state of the oi l and gas
industry”, (c) the disclosure in the Joint Proxy Statement/Prospectus with respect to the Adobe
board’s evaluation of a liquidation and the risks thereof and (d) the disclosure that Adobe’s
chairman had informed the Adobe board of Minorco (USA)’s decision to dispose of its Adobe
stock at the June 24 meeting. In its Order dated April 8, 1992, the Court ordered, among other
things, that the defendants be enjoined pendente lite from consummating the Merger until the
holders of Adobe Shares as of the February 27, 1992 record date shall have been provided with
supplementary disclosure materials complying with the Opinion and the holders of Adobe Shares
shall have voted in the requisite number to approve the Merger at the Adobe Resumed Meet ing.
The Court further ordered that (i) Adobe may count the proxies already received as long as it
provides all Adobe stockholders with a new proxy and clearly informs them that the last
previously submitted proxy will be counted, unless a new proxy is submitted; (ii) Adobe shall
not hold its meeting sooner than 20 days from the date of mailing of the Supplement; and (i ii)
such meeting shall be treated as an adjournment of the March 31, 1992 meeting and no ne w
record date need be set.
Succession by Santa Fe to Lawsuit if Merger is Consummated
At the Effective Time, all obligations of Adobe will be assumed by Santa Fe by opera tion of
law, including, without limitation, all liabilities and obligations arising under the Lawsuit
including any obligations to indemnify Adobe’s directors and officers for liabilities arisi ng from
the Lawsuit. Although no assurance can be given because the outcome of litigation is inherently
unpredictable, Santa Fe does not believe that the liabilities and obligations a rising from the
Lawsuit and to which it will succeed if the Merger is consummated will have a material adverse
effect on Santa Fe’s financial position or results of operations.
Review by Santa Fe and Adobe Board of Directors
On April 6, 1992, a special meeting of the Santa Fe Board of Directors was convened to
discuss the ruling of the Delaware Chancery Court in the Lawsuit and the actions to be taken
with respect thereto. No formal action was taken by Santa Fe’s Board of Directors at that time.
Effective as of April 14, 1992, Santa. Fe’s Board of Directors unanimously (i) approved the
execution of Amendment No. 2 to Agreement of Merger, (ii) authorized the preparation and
mailing of this Supplement, (iii) authorized the resolicitation of the proxies from Sant a Fe’s
stockholders on the terms described herein, (iv) re-affirmed their belief that consummation of the
proposed Merger on the terms set forth in the Merger Agreement was in the best interests of
Santa Fe and its stockholders and (v) recommended that Santa Fe stockholders approve the
Merger, the Merger Agreement, the issuance of the Merger Consideration and the consummation
of the other transactions contemplated thereby.
On April 8, 1992, the Adobe Board authorized the preparation of this Supplement and a
form of Amendment No. 2 to Agreement of Merger. At the April 8, 1992 meeting, attended by
all of Adobe’s directors other than Mr. Allen who was traveling at the time, the B oard
unanimously recommended that the Adobe stockholders approve the Merger. On April 16, 1992,
the Adobe Board approved this Supplement and the execution and delivery of Amendment No. 2
to Agreement of Merger, which is described herein under “General” and a copy of which is
included herein as Annex G. At the April 16, 1992 meeting, attended by a majority of Adobe’s
directors, the Board unanimously recommended that the Adobe stockholders approve the
Merger. At that meeting, each of Goldman Sachs and Lazard Frères delivered an oral opi nion,
which was confirmed in writing, restating, as of the date of the meeting, the conclusions stated in
their respective letters of January 23, 1992.
Settlement of the Lawsuit
After the Court rendered its Opinion, Adobe and Santa Fe entered into negotiations with the
plaintiffs seeking to settle the Lawsuit. Adobe and Santa Fe made available t o the plaintiffs,
among other things, a draft of this Supplement for the plaintiffs’ review and comment. Plai ntiffs
made certain suggestions for changes in the Supplement which were adopted and incorporated
herein by Adobe and Santa Fe. On the basis of their review of the Supplement as revised, and a ll
parties’ conclusion that this Supplement fully complies with the Court’s Opinion and Orde r, the
plaintiffs and the defendants entered into a Memorandum of Understanding providing for the
settlement of the Lawsuit and the dismissal with prejudice of all of plaintiffs’ re maining claims
in the Lawsuit, including all claims that could have been brought on the facts set forth therein or
arising out of the actions set forth herein or by reason of the submission of this Supplement t o the
shareholders of Adobe and Santa Fe (the “Settlement”). The Settlement is subject t o, among
other things, approval of the Merger as set forth herein, to the entering into of a formal
Stipulation of Settlement in customary form, to Court approved notice of the Settlem ent to the
Preferred Shareholders of Adobe, and to approval of the Settlement by the Delaware Court of
Chancery at a hearing expected to be held sometime in June. Counsel for the plai ntiffs have
stated that they intend to petitition the Court for an award of attorneys’ fees and expenses in an
amount that will be specified in the notice of hearing of the Settlement. Defe ndants have
reserved their right to oppose any such application.
RECENT DEVELOPMENTS
Certain Financial Information Regarding Santa Fe Lower oil and gas sales prices had a significant impact on Santa Fe’s results of operat ions in
the first quarter of 1992 as revenues declined from $98.0 million in the first quarter of 1991 to
$78.5 million in the first quarter of 1992. Oil prices, including the effect of hedging, averaged
$12.56 per barrel in the first quarter of 1992 compared to $17.13 per barrel in the first quarter of
1991 and $15.19 per barrel in the fourth quarter of 1991. Natural gas sales prices also declined
from an average of $1.61 per Mcf in the first quarter of 1991 to $1.45 per Mcf in 1992. Oil sale s
volumes averaged 57,000 barrels per day in the first quarter of 1992 compared to 54,600 barrels
per day in the first quarter of 1991. Natural gas sales volumes declined from 100.1 MMcf per
day in 1991 to 92.0 MMcf per day in 1992 primarily reflecting curtailments due to market
conditions. Santa Fe’s loss from operations totaled $3.5 million in the first quarter of 1992
compared to income from operations of $20.6 million in the first quarter of 1991. Santa Fe’s net
loss for the period totaled $8.8 million, $0.14 per share, compared to net income of $6.9 mil lion,
$0.11 per share, in the first quarter of 1991.
Net cash provided by operating activities totaled $30.3 million in the first quart er of 1992
compared to $27.8 million in the first quarter of 1991. The 1992 amount includes $9.2 million
received from the settlement of open hedging contracts during the period which will be
recognized in revenues in subsequent periods in which the barrels that were hedged are sold.
Capital expenditures, excluding the acquisition of producing properties, totaled $15.9 milli on in
the first quarter of 1992 compared to $30.2 million in the same period in 1991. Capital
expenditures in 1992 are expected to remain below 1991 levels throughout the year. During the
first quarter of 1992 Santa Fe purchased Adobe’s interest in certain producing properties for
$14.2 million in cash.
Certain of Santa Fe’s long-term debt agreements include covenants that, among other thi ngs,
restrict Santa Fe’s ability to incur additional indebtedness and to pay dividends. At Ma rch 31,
1992, Santa Fe had the ability to incur approximately $40.5 million in additional long-term debt
and pay approximately $35.8 million in dividends and other restricted payments. If the Me rger is
consummated, the amount available for the payment of dividends on Santa Fe’s capital stock will
be reduced by the net loss of Adobe for the period from the beginning of 1992 to the Effective
Time.
Certain Financial Information Regarding Adobe
Adobe’s financial information for the first quarter of 1992 is expected to be available for
release to the public on or about April 30, 1992. Accordingly, Adobe’s financial results
discussed below describe its results of operation and financial condition for the two months
ended February 29, 1992. The financial results for such two-month period are not necessarily
indicative of, and could vary significantly from, the financial results of Adobe’s operati ons for
the first quarter of 1992.
Total revenues of Adobe for the two months ended February 29, 1992 were $25.3 million.
Adobe’s domestic production of crude oil for the first two months of 1992 averaged 5,055
barrels per day at an average price of $17.66 per barrel, compared to 5,427 barrels per day at
$19.30 for the fourth quarter of 1991. Adobe realized additional revenues from hedging activities
of $0.7 million for the two months of 1992, which increased its average sales price to $20.09.
Adobe’s domestic natural gas production for the two-month period averaged 68.6 MMcf per day,
at an average price of $1.57 per Mcf, compared to 74.3 MMcf per day at $1.72 during the fourth
quarter of 1991. Natural gas prices have declined during the first quarter of 1992 and March gas
prices were significantly lower than the average for the first two months of 1992. Principally as a
result of lower oil and gas revenues, Adobe had a loss from operations of $2.9 million for the
two months ended February 29, 1992. After interest expense and other income and expenses,
Adobe’s net loss was $4.4 million, or $0.14 per share. The net loss attributable to Adobe’s
common shareholders, after deducting preferred divide
