Key Production Co Inc – ‘425’ on 8/29/00 re: Columbus Energy Corp

On:  Tuesday, 8/29/00, at 4:24pm ET   ·   Accession #:  1086130-0-500004   ·   File #:  1-09872

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Business-Combination Transaction Communication   —   Rule 425
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 425         08/29/00 Press Release                                 3±    13K 


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                                      Filed by: Key Production Company, Inc.
                                       This communication is filed pursuant to
                                       Rules 165 and 425, as promulgated under
                                       the Securities Act of 1933, as amended.

                                      Subject Company: Columbus Energy Corp.
                            Commission File No. 001-9872
--------------------------------------------------------------------------------

CONTACT:  Paul Korus                              FOR RELEASE AT 6:00 A.M. (MST)
    (303) 295-3995                          Tuesday, August 29, 2000

 KEY AGREES TO ACQUIRE COLUMBUS ENERGY

DENVER, August 29, 2000 -- Key Production Company, Inc. (NYSE: KP) and Columbus 
Energy Corp. (AMEX: EGY) today jointly announced that Key has agreed to acquire 
all of the outstanding common stock of Columbus in exchange for 1.3 million     
shares of Key common stock. As a result, the shareholders of Columbus would own 
approximately ten percent of the combined company, with Key's shareholders      
owning the balance.                                                             

Under the terms of the proposed merger agreement, Columbus shareholders will    
receive 0.355 of a share of Key common stock for each Columbus share in a       
tax-free reorganization. Because the merger is subject to a favorable Columbus  
shareholder vote, Columbus plans to hold a special shareholder's meeting in     
October or November following completion of the SEC's review of the proxy       
statement/prospectus. The boards of directors of both companies have unanimously
approved the transaction.                                                       

Commenting on the deal, Key's Chairman and Chief Executive Officer, F.H. (Mick) 
Merelli stated, "While combining the operations of Key and Columbus under one   
roof should be additive to cash flow per share, we have also enhanced our       
ability to grow net asset value. The combined company will have a stronger      
balance sheet and a larger base of cash flow from which to fund drilling,       
acquisitions, or debt reduction."                                               

According to information contained in Columbus Energy's latest 10-Q filed with  
the SEC on July 14, 2000, its long-term debt has been reduced to $4.9 million   
and working capital at May 31, 2000 approximated $1.3 million. The company also 
reported that its discretionary cash flow for the first six months of fiscal    
2000 was $3.235 million. Columbus presently has 3.75 million common shares      
outstanding, plus employee and director options of 0.6 million.                 

In connection with the proposed merger, Columbus' proved oil and gas reserves   
have been updated to June 30, 2000. Estimates by an outside engineering firm    
show that total proved reserves approximated 21 billion cubic feet (Bcf)        
equivalent, including 2.4 Bcf equivalent classified as proved undeveloped.      

Based on its economic evaluation parameters, Key estimates that as of June 30,  
2000, Columbus Energy's total proved reserves approximated 16 Bcf equivalent, of
which 98 percent are proved developed. About two-thirds of the proved reserves  
are natural gas, with the balance consisting of crude oil and condensate. Key   
also estimates that average daily production during 2001 from the proved        
reserves should approximate six million cubic feet of gas and 350 barrels of    
oil.                                                                            

Pursuant to the terms of the proposed merger, Key and Columbus have granted each
other the right to receive a $1 million termination fee, subject to certain     
conditions. Arthur Andersen LLP Global Energy Corporate Finance Group acted as  
financial advisor to Columbus and provided a fairness opinion to the Board of   
Directors of Columbus.                                                          

Key Production Company is an independent oil and gas exploration and production 
company with operations in the United States.                                   

Columbus Energy Corp. is a U.S. independent energy company involved in the      
exploration, development and production of crude oil and natural gas.           

INVESTOR NOTICES                                                                

This news release includes "forward-looking statements" as defined by the       
Private Securities Litigation Reform Act of 1995. Such statements are those     
concerning the companies' merger and strategic plans, expectations and          
objectives for future operations. All statements, other than statements of      
historical facts, included in this press release address activities, events or  
developments that the companies expect, believe or anticipate will or may occur 
in the future, are forward-looking statements. This includes completion of the  
proposed merger, reserve estimates, future financial performance, future equity 
issuance and other matters. These statements are based on certain assumptions   
made by the companies based on their experience and perception of historical    
trends, current conditions, expected future developments and other factors they 
believe are appropriate in the circumstances. Such statements are subject to a  
number of assumptions, risks and uncertainties, many of which are beyond the    
control of the companies. Statements regarding proved reserves and future       
production are subject to all of the risks and uncertainties normally incident  
to the exploration for and development and production of oil and gas. These     
risks include, but are not limited to, inflation or lack of availability of     
goods and services, environmental risks, drilling risks and regulatory changes. 
Investors are cautioned that any such statements are not guarantees of future   
performance and that actual results or developments may differ materially from  
those projected in the forward-looking statements. Readers are referred to the  
documents filed by Key and Columbus with the SEC, specifically the most recent  
reports on Form 10-K, 8-K, and 10-Q, including amendments thereto, which        
identify important risk factors that could cause actual results to differ from  
those contained in the forward-looking statements.                              

INVESTORS AND SECURITY HOLDERS ARE ALSO ADVISED TO READ THE PROXY               
STATEMENT/PROSPECTUS THAT WILL BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM
S-4 TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER BECAUSE IT  
WILL CONTAIN IMPORTANT INFORMATION. KEY AND COLUMBUS WILL FILE THE PROXY        
STATEMENT/PROSPECTUS WITH THE SEC. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A  
FREE COPY OF THE PROXY STATEMENT/PROSPECTUS (WHEN AVAILABLE) AND OTHER DOCUMENTS
FILED BY KEY AND COLUMBUS WITH THE SEC AT THE SEC's WEB SITE AT WWW.SEC.GOV. THE
PROXY STATEMENT/PROSPECTUS AND SUCH OTHER DOCUMENTS (RELATING TO KEY) MAY ALSO  
BE OBTAINED FOR FREE FROM KEY BY DIRECTING SUCH REQUESTS TO KEY PRODUCTION      
COMPANY, 707 SEVENTEENTH STREET, SUITE 3300, DENVER, COLORADO 80202, ATTENTION: 
SHARON M. POPE, ASSISTANT CORPORATE SECRETARY; TELEPHONE 303-295-3995. THE PROXY
STATEMENT/PROSPECTUS AND SUCH OTHER DOCUMENTS (RELATING TO COLUMBUS) MAY ALSO BE
OBTAINED FOR FREE FROM COLUMBUS BY DIRECTING SUCH REQUEST TO COLUMBUS ENERGY    
CORP., 1660 LINCOLN STREET, SUITE 2400, DENVER COLORADO 80264; ATTENTION:       
MICHAEL M. LOGAN, VICE PRESIDENT AND CORPORATE SECRETARY; TELEPHONE             
303-861-5252.                                                                   

Columbus, its directors, executive officers and certain members of management   
and employees may be considered "participants in the solicitation" of proxies   
from Columbus's shareholders in connection with the merger. Information         
regarding such persons and a description of their interests in the merger will  
be contained in the Registration Statement on Form S-4 when it is filed.        

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘425’ Filing		Date		Other Filings
Filed on:		8/29/00		425
		7/14/00
		6/30/00		10-Q
		5/31/00		10-Q,  8-K
				List all Filings