-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NKODD4ROfxoTqN6YXKnjrKmnRpKqBarftaOZJ3HCtsIVIOx64tLv6mHF9uj2ef0I PLUVUEXjnED28FmGLC+plQ== 0000316704-97-000002.txt : 19970415 0000316704-97-000002.hdr.sgml : 19970415 ACCESSION NUMBER: 0000316704-97-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970414 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACK DOME ENERGY CORP CENTRAL INDEX KEY: 0000316704 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 840808397 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09394 FILM NUMBER: 97579671 BUSINESS ADDRESS: STREET 1: 1536 COLE BLVD. , STE #325 STREET 2: SUITE 325 CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 303-231-9059 MAIL ADDRESS: STREET 1: 1536 COLE BLVD STREET 2: SUITE 325 CITY: DENVER STATE: CO ZIP: 80401 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1996 Commission File Number 0-9394 BLACK DOME ENERGY CORPORATION ---------------------------------------------------- (Exact name of registrant as specified in its charter) Colorado 84-0808397 -------------------------------- ------------------ (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 1536 Cole Boulevard, Suite 325 Golden, Colorado 80401 ------------------------------------- ------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code: (303) 231-9059 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, No Par Value -------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] As of March 21, 1997, 73,755 shares of no par value common stock (the registrant's only class of voting stock) were outstanding, the market value of which is currently indeterminable because of a lack of trading market for the shares. Documents incorporated by reference: None. This Form 10-K consists of 38 pages. Exhibits are indexed at page 36. Page 1 PART I ITEM 1. BUSINESS - ------- -------- (a) General Development of Business. Black Dome Energy Corporation ------------------------------------- (referred to herein as the "Company" or "Black Dome"), was incorporated under the laws of the State of Colorado on December 12, 1979, and maintains its principal executive offices at 1536 Cole Boulevard, Suite 325, Golden, Colorado 80401. Throughout its existence, Black Dome has been an oil and gas company engaged in the exploration for oil and gas, the purchase of producing oil and gas properties, the sale of portions of the producing oil and gas properties and the operation of producing oil and gas leases. At a meeting held on December 16, 1996, the shareholders adopted a resolution authorizing the dissolution of the Company, and on January 7, 1997, Articles of Dissolution were filed with the Office of the Colorado Secretary of State. Since December 16, 1996, the business of the Company has been generally limited to the liquidation of assets, the satisfaction of liabilities and the winding up of the Company's affairs. During the fiscal year ended December 31, 1996, the Company was engaged in the business of exploring for, developing and acquiring interests in producing oil and gas leases for the purpose of resale of a portion of the working interest to industry participants, or for the addition of reserves for its own account. The Company acquired and retained the operation of the oil and gas production from those leases. During the fiscal year ended December 31, 1996, the Company's revenues attributable to its overall income were derived primarily from the sale of oil and gas from its producing oil and gas leases. Until the sale of substantially all of its oil and gas assets to an unaffiliated entity (which occurred effective December 31, 1996), the Company owned working interests in certain properties located solely in the continental United States. A more detailed description of these properties and reserves is set forth in Item 2 hereof. (b) Financial Information About Industry Segments. The Company has --------------------------------------------------- been engaged in business in only one industry segment, namely the exploration for oil and gas, production of oil and gas and the development of oil and gas properties. Therefore, no information is provided with respect to any other industry segment. (c) (1) Narrative Description of Business. The Company was involved ------------------------------------------- in the exploration, development and purchase and production of oil and gas properties as a general partner, joint venturer, or for its own account, and as an oil and gas lease operator. The Company's activities have in the past included the formation of joint ventures and drilling programs. It is anticipated, however, that the Company's future business will be limited to the satisfaction of its liabilities and other obligations, and to the winding up of its affairs. Management expects to complete this process as expeditiously as possible and currently intends to cause a final liquidating distribution to be made to the Company's shareholders prior to the completion of the current fiscal year. Page 2 (i) Principal Products Produced and Services Rendered. The Company's -------------------------------------------------- principal products during the fiscal year ended December 31, 1996 were natural gas, crude oil and oilfield operations and supervision. Crude oil and natural gas were sold to various purchasers, which generally service the areas in which the producing wells were located. The Company operated oil and gas properties for its own account and for the account of other working interest owners in the property. (ii) Status of New Products or Industry Segments. There has been no --------------------------------------------- public announcement of, and no information otherwise has been made public about, a new product or industry segment which would require the investment of a material amount of the Company's assets or which otherwise is material. (iii) Sources and Availability of Raw Materials. The existence of ------------------------------------------ commercial oil and gas reserves was essential to the ultimate realization of value from the Company's properties and thus may be considered a raw material essential to the Company's business during the past fiscal years. The acquisition, exploration, development, production, and sale of oil and gas are subject to many factors which are outside the Company's control. These factors include national and international economic conditions, availability of drilling rigs, casing, pipe, and other equipment and supplies, proximity to and capacity of pipelines, the supply and price of other fuels, and the regulation of prices, production, transportation, and marketing by the Department of Energy and other federal and state governmental authorities. These factors have not materially hindered nor adversely affected the business of the Company in the past and since the Company has disposed of all of its oil and gas assets and is in the process of dissolving, it is unlikely that these factors will have a material adverse effect on the Company in the future. (iv) Patents, Trademarks, Licenses, Franchises and Concessions. The ---------------------------------------------------------- Company does not own any patents, trademarks, licenses, franchises or concessions, except oil and gas leases and other interests granted by private landowners, the loss of any one of which could have a material impact on the Company. (v) Seasonal Nature of Business. The Company's business has not been ---------------------------- seasonal in nature, except to the extent that natural gas prices have tended to fluctuate on a seasonal basis and development of its oil and gas properties and its ability to drill oil and gas wells and the availability of drilling rigs and other equipment, were occasionally more restricted at calendar year end due to increased demand from tax-sheltered drilling programs conducted by others. (vi) Working Capital Items. It was the practice of the Company as ---------------------- well as others similarly situated in the industry to attempt to retain working capital in order to participate in the purchase of producing properties and the drilling and development of properties via partnerships, joint ventures and other arrangements, and to acquire significant blocks of undeveloped properties for future development and/or exploration. Working capital was not needed to meet rapid delivery requirements of customers, or to assure the Company of continuous allotments of goods from suppliers. (vii) Major Customers. During fiscal 1996, three customers accounted ---------------- for 10% or more (individually) of total oil and gas sales: GPM Gas Corporation, 38%, Boyd Rosene and Associates, 28% and Helmerich & Payne Energy Page 3 Services, Inc., 20%. During 1996, the Company sold oil and/or gas to eight (8) customers. No revenues were received in connection with foreign governments in which the Company acted as a producer. As the Company has disposed of its properties and is currently engaged in a dissolution, it no longer sells any oil or gas products and therefore no longer has any customers. (viii) Backlog. The Company has no backlog due to the nature of its -------- business, nor is backlog material to an understanding of the Company's business. (ix) Renegotiation or Termination of Government Contracts. The Company ----------------------------------------------------- has no material portion of its business which may be subject to renegotiation of profits or termination of contracts or subcontracts at the election of government. (x) Competitive Conditions. The purchase of existing producing ----------------------- properties and exploration, development and production of oil and gas are subject to considerable competition, and the Company was faced with strong competition from major and medium sized oil and gas companies and other independent operators. The principal methods of competition in the industry for the acquisition of producing oil and gas properties and leases are industry sales packages and the solicitation, bidding and auctioning of individual producing properties, and the payment of bonus payments at the time of acquisition of leases. The Company had an insignificant competitive position in the oil and gas industry. (xi) Research and Development. The Company was engaged in finding and ------------------------- producing oil and gas, and no funds were allocated to product research and development in the conventional sense. Since its inception, the Company has not had any customer or government sponsored research activities relating to the development of new products, services or techniques or the improvement of existing products, services or techniques. (xii) Environmental Protection. The Company, as a former owner and ------------------------- operator of oil and gas properties, is subject to various federal, state and local laws and regulations relating to the discharge of materials into, and protection of, the environment. These laws and regulations, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations, subject the Company to liability for pollution damages, require suspension or cessation of operations in affected areas and impose restrictions on the injection of liquids into subsurface aquifers that may contain groundwater. Page 4 Environmental requirements may necessitate significant capital outlays which may materially affect the Company's earnings and potential earnings and could cause material changes in its form of business. The Company has made and may be required to continue to make expenditures in its efforts to comply with these requirements which it believes are necessary business costs in the oil and gas industry. As of December 31, 1996, the Company is not aware of any existing environmental claims which would have a material adverse effect upon its capital expenditures, earnings or competitive position. There is no assurance, however, that existing laws or regulations or changes in or additions to laws or regulations regarding the protection of the environment will not adversely affect the Company. It is impossible to determine whether or to what extent the amount of the Company's liquidating distribution may be affected by environmental laws; however, management does not believe that such laws have had a material adverse effect on the Company's financial position or results of operations. (xiii) Employees. The Company currently has one full-time salaried ---------- employee who performs clerical and administrative services, one part-time contract employee who performs accounting services, and one full-time employee who performs executive functions (but whose compensation was terminated pursuant to his request effective June 30, 1996) and one contract engineer employed on a retainer basis who are directly engaged in its activities. It is currently anticipated that the salaries for both the full-time salaried employee and the part-time contract employee will be terminated effective June 30, 1997. To the extent necessary, the Company will contract on an hourly basis to have services performed on its behalf after June 30, 1997. (d) Financial Information About Foreign and Domestic Operations and --------------------------------------------------------------- Export Sales. The Company has no material operations in foreign - ------------- countries and no material portion of its sales or revenues is derived from customers in foreign countries. ITEM 2. PROPERTIES. - ------- ----------- (a) Office Facilities. The Company's offices are located at 1536 ------------------ Cole Boulevard, Suite 325, Golden, Colorado 80401. The Company pays $1,372.00 monthly rental for the use of office facilities. The Company believes that its present offices are suitable and adequate for its present operations. (b) (1) Reserves. Proved developed and undeveloped oil and gas --------- reserves of the Company at December 31, 1996 and December 31, 1995 were computed by Joseph R. Albi, Jr., a consulting petroleum engineer and former Executive Vice President of the Company. Proved developed and undeveloped oil and gas reserves of the Company at December 31, 1995 and December 31, 1994 were audited by Donald M. Osmus, a consulting Petroleum Engineer. No audit services were performed on behalf of the Company for the fiscal year ended December 31, 1996. All of the Company's reserves were located in the continental United States and the majority of the properties comprising these reserves were operated by Black Dome Energy Corporation. Page 5
Reserve Category ---------------------------------------------------------- Proved Developed Proved Undeveloped Total Proved (1) (2) ---------------- ---------------- ----------------- December 31, (Bbls)* (Mcf)** (Bbls)* (Mcf)** (Bbls)* (Mcf)** ------- ------- ------- ------- ------- ------- 1994 9,355 2,031,425 -- -- 9,355 2,031,425 1995 9,825 1,431,318 -- 52,256 9,825 1,483,574 1996 6,987 1,380,932 -- 68,889 6,987 1,449,821
(*) Refers to barrels consisting of 42 U.S. gallons. (**) Refers to a volume of 1,000 cubic feet under prescribed conditions of pressure and temperature and represents the basic unit for measuring the volume of natural gas. (1) Proved Developed Reserves. These are proved reserves which can -------------------------- be expected to be recovered through existing wells with existing equipment and operating methods. This classification includes: (i) Proved Developed Producing Reserves. These are proved developed ------------------------------------ reserves which are expected to be produced from existing completion interval(s) now open for production in existing wells; and (ii) Proved Developed Non-Producing Reserves. These are proved ---------------------------------------- developed reserves which exist behind the casing of existing wells, or at minor depths below the present bottom of such wells, which are expected to be produced through these wells in the predictable future, where the cost of making such oil and gas available for production should be relatively small compared to the cost of a new well. Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery are included as "Proved Developed Reserves" only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved. (2) Proved Undeveloped Reserves. These are proved reserves which are ---------------------------- expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those drilling units offsetting productive units, which are reasonably certain of production when demonstrated with certainty that there is continuity of production from the existing productive formation. Estimates for proved undeveloped reserves may be attributable to acreage for which an application of fluid injection or other improved recovery technique is used or contemplated only where such techniques have been proved effective by actual tests in the area and in the same reservoir. Present Value of Estimated Future Net Revenues from Proved Developed -------------------------------------------------------------------- and Proved Undeveloped Oil and Gas Reserves. The table below presents, as of - -------------------------------------------- the end of 1996, 1995 and 1994, the present value of the estimated future net revenues attributable to proved developed reserves and proved undeveloped reserves discounted at an annual rate of ten percent (10%) per year. Page 6
Present Value of Future Net Revenues (dis- Future Net Revenues counted at 10%) as of Proved Proved Total December 31, Developed Undeveloped Proved - ------------------------- ----------- ------------- -------- 1994 $1,281,621 $ 0 $1,281,621 1995 $1,175,279 $ 21,037 $1,196,316 1996 $2,470,181 $148,150 $2,618,331
While it is reasonable to anticipate that the prices received from the future sale of production may be higher or lower than the prices used in the evaluation described above, and the operating and other costs relating to such production may increase above existing levels, such increases in prices and costs have been omitted from consideration in making these evaluations in accordance with rules adopted by the Securities and Exchange Commission. The Company emphasizes that reserve estimates and rates of production are inherently imprecise and that estimates of new discoveries and non-producing and/or undeveloped reserves are more imprecise than those of mature producing oil and gas properties. Accordingly, the estimates are subject to change as further information becomes available. For additional information concerning oil and gas revenues, see Note 6 to the Financial Statements. (b) (2) Reserves Reported to Other Agencies. The Company did not ------------------------------------ file any oil or gas reserve estimates with, or include such estimates in reports to, any other federal governmental authority or agency within its last fiscal year. (b) (3) (i) Production. The following table shows the Company's net ----------- quantities of oil (including condensate and natural gas liquids) and of gas produced for each of the Company's past three fiscal years:
Net Oil and Gas Production Year Ended December 31, ---------------------------- 1996 1995 1994 ------- ------- ------- Gas (Mcf) 237,963 261,562 309,210 Oil/Condensate (Barrels) 1,724 1,382 2,747
The Company has no long-term supply or similar arrangements with foreign governments or authorities and, as the Company has disposed of its properties and is currently engaged in dissolution, does not anticipate having any such arrangements in the future. (b) (3) (ii) Average Sales Price and Production Costs. The average ----------------------------------------- sales prices (including transfers) and production costs per barrel of oil and Mcf of gas received by the Company for the fiscal years ended December 31, 1996, 1995 and 1994, were as follows. Equivalent barrels of production were calculated on the basis of 6 Mcf equals 1 Barrel. Page 7
Oil (Per Bbl) Gas (Per Mcf) Production (MCF) Year Ended Sales Sales Costs of December 31, Price Price Equivalent Bbls ------------ ------------ ----------- --------------- 1996 $19.31 2.40 $4.96 1995 $17.10 $1.45 $4.24 1994 16.97 1.83 6.21
(b) (4) Productive Wells and Acreage. The following tables set ----------------------------- forth the Company's: (i) total gross and net productive oil and gas wells, and (ii) total gross and net developed acreage, both as of December 31, 1996: (i) Productive Oil and Gas Wells. As of December 31, 1996, the Company ----------------------------- owned an interest in 23 oil and/or gas properties, 18 of which were operated by the Company. The following depicts the number of gross and net oil and gas wells producing or capable of production in which the Company owned an interest at the end of the last fiscal period. Total Wells (Gross)* Total Wells (Net)** Oil Gas Total Oil Gas Total --- --- ----- --- ----- ----- December 31, 1996 2 21 23 1.03 15.30 16.33 The above numbers reflect an increase of two (2) gross wells (.66 net wells) which were recognized in 1996 (back-in of non-consent interest in a Dewey County, Oklahoma well in which the Company did not participate in the drilling of and the initiation of sales from one Harper County, Oklahoma well in which the Company held an overriding royalty interest). (*) A "gross well or acre" is a well or acre in which a working interest is owned. The number of gross wells or acres is the total number of wells or acres in which a working interest is owned. (**) A "net well or acre" exists when the sum of the fractional ownership working interests in gross wells or acres equals one. The number of net wells or acres is the sum of fractional working interests owned in gross wells or acres, expressed as whole numbers and fractions thereof. (ii) Developed Acreage. The following depicts the number of gross ------------------ and net developed acres in which the Company owned an interest at the end of the Company's last fiscal year. Gross Acres Net Acres ----------- --------- December 31, 1996 9,191 6,078 (b) (5) Undeveloped Acreage. The following table sets forth information regarding undeveloped acreage in which the Company had an interest at December 31, 1996. Location Gross Acres Net Acres -------- ----------- --------- Kansas 160 105 Texas 28 10 --- --- Total 188 115 Page 8 As of the date of December 31, 1996, the Company's total undeveloped acreage was held by production and was not subject to expiration until the producing well or wells which it held was/were non-commercial or plugged and abandoned. (b) (6) Drilling Activity. The following summarizes the drilling activity of the Company during each of the last three fiscal years.
Year Ended Total Development Exploratory December 31, Wells Oil Gas Dry Oil Gas Dry ------------ ----- --- --- --- --- --- --- 1996 - Gross Wells 0 0 0 0 0 0 0 Net Wells 0 0 0 0 0 0 0 1995 - Gross Wells 1 0 0 1 0 0 0 Net Wells .4 0 0 .4 0 0 0 1994 - Gross Wells 0 0 0 0 0 0 0 Net Wells 0 0 0 0 0 0 0
(b) (7) Present Activities. No oil and/or gas properties were ------------------- acquired or drilled by the Company in 1996; however, revenues from two additional properties were recognized during 1996 as a result of (i) the back-in of a non-consent interest position in a gas well located in Dewey County, Oklahoma in which the Company did not participate in the drilling of and (ii) the initiation of sales from a Harper County, Oklahoma gas well in which the Company held an overriding royalty interest. The Company participated in the unsuccessful drilling of one (1) gross well (.4 net well) during the fourth quarter of 1995. Two (2) gross wells (1.73 net wells) in which the Company held an interest were plugged and abandoned during 1995. No additional oil and/or gas properties were acquired by the Company during 1996. (b) (8) Delivery Commitments. As of March 21, 1997, the Company was --------------------- not obligated to provide a fixed and determinable quantity of oil or gas in the future pursuant to existing contracts or agreements, nor has the Company had any significant delivery commitments since its inception on December 12, 1979. ITEM 3. LEGAL PROCEEDINGS. - ------- ------------------ There are no current legal proceedings concerning the Company and there are none pending, except that Black Dome has been named as a defendant in litigation concerning an alleged indebtedness resulting from a guarantee not to exceed $25,000 which Black Dome gave for the indebtedness of Deane J. Writer, Jr. to Capital Federal Savings and Loan Association. The alleged assignee of underlying debt, Federal Financial Corporation, has filed an action against a number of defendants, including Black Dome, in the District Court of the City and County of Denver, Colorado, Case No. 96-CV-5728. Black Dome believes it has potentially valid defenses, but, in light of the small amount at controversy, intends to attempt to negotiate a reasonable settlement of the matter in cooperation with the other defendants. Management otherwise intends to vigorously defend the claims asserted against Black Dome. No prediction of the outcome can reasonably be made at this initial stage of the litigation. Page 9 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- --------------------------------------------------- On December 16, 1996, the Company held a special meeting of its shareholders at which the only matter voted upon was the proposed dissolution of the Company. At the meeting, 60,134 votes were cast in favor of dissolution and 298 votes were cast against. In addition, 348 shares abstained from voting on the proposal and "zero" broker non-votes were cast at the meeting. PART II ------- ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED - ------- ----------------------------------------------------- STOCKHOLDER MATTERS ------------------- (a) Market Information. From October 1980 through November 12, 1984, ------------------- Black Dome's common stock was traded on the over-the-counter market under the symbol "BDEC" and the quotes were carried by NASDAQ during that period of time. NASDAQ voluntarily withdrew "BDEC" from the system on November 12, 1984 due to the depressed price of the stock. Since that date there has been sporadic trading in the Company's stock. At the present time, there are no market makers listed in the "pink sheets," and there have been no recorded public trades of the Company's common stock for at least the past two years. (b) Holders. As of March 31, 1997, there were approximately 1,616 -------- record holders of the Company's common stock. (c) Dividends. Holders of common stock are entitled to receive such ---------- dividends as may be declared by Black Dome's Board of Directors. No dividends have been paid with respect to Black Dome's common stock and no dividends are anticipated to be paid in the foreseeable future. ITEM 6. SELECTED FINANCIAL DATA. - ------- ------------------------
Years Ended December 31, ------------------------ 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Total Revenues $624,314 $441,384 $762,655 $677,537 $616,351 Oil and Gas Sales 605,454 402,627 592,513 647,328 537,162 Other Revenue 18,860 38,757 170,172 30,209 79,189 Net Income (loss) 394,413 (210,598) (23,449) 6,338 61,208 Net Income (loss) per share 5.35* (2.86)* (.32)* .16* .91* Total Assets 703,160 411,046 718,918 1,040,364 612,748 Obligations -- -- -- 120,000 60,000 Deferred Comp. 122,500 160,000 100,000 180,000 Bank Debt - LOC -- 84,987 132,724 223,987 --
* Earnings per share are restated to reflect the 1 for 1001 reverse stock split approved by shareholders on September 2, 1994. Page 10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - ------- ----------------------------------------------------------- AND RESULTS OF OPERATIONS. -------------------------- Liquidity and Capital Resources - ------------------------------- Working capital (which incorporates current and deferred obligations) increased by $191,038 during the year ended December 31, 1996, due primarily to higher prices received from sales of natural gas products. This increase in working capital during 1996 followed a previous slight increase of $2,136 during 1995 and an increase of $84,031 during 1994. As a source of additional working capital, the Company obtained a $300,000 line of credit with a lending institution in October 1992 which was secured with 10 producing natural gas wells in Clark County, Kansas. As of December 31, 1994, a total of $132,724 was borrowed from this line of credit. During 1995, the Company restructured the debt obligations associated with the outstanding balance of the line of credit. As of December 31, 1995, the Company had bank debt obligations of $84,987 tied to an 8.5% note which was then scheduled to mature on March 31, 1997. This obligation was paid in full during the fiscal year ended December 31, 1996. Because the Company's oil and gas properties continued to deplete (decrease in value) as they produced (which contributed to losses incurred by the Company during 1994 and 1995), management reached a conclusion during 1996 that, unless the Company was to successfully complete a liquidation of its oil and gas assets in the immediate future, it would inevitably suffer recurring losses from future operations as its properties continued to decline in production. As the subject properties would have eventually become worthless had the status quo been permitted to continue for an unreasonable period of time, the Board of Directors made a special determination that it would be in the best interests of all of the Company's shareholders to authorize the immediate dissolution of the Company and to liquidate its assets for cash in one or more commercially reasonable transactions while there was still a sufficient value to allow for a distribution to be made to shareholders after all of the Company's liabilities were paid. Accordingly, a plan to dissolve the Company was approved by the shareholders on December 16, 1996, and on February 21, 1997 the Company sold substantially all of its oil and gas assets (effective December 31, 1996) to an unaffiliated entity for $921,250.00 in cash, subject to adjustment as to certain items after consummation of the transaction. After payment of its obligations, claims and expenses and making provision or establishing reserves for the payment of future liabilities, the Company will distribute the remaining cash proceeds from the sale of its assets to the shareholders in proportion to their holdings of common stock. The Company intends to make this distribution at the earliest practicable date after all of the Company's liabilities are paid. It is the goal of the Board of Directors to cause all of such remaining proceeds to be paid out to shareholders in a single distribution during the current fiscal year. Prior to distribution, it is anticipated that all cash proceeds from the sale not needed to meet current obligations and liabilities will be held by the Company and deposited in an insured moneymarket account or invested in obligations of (or obligations guaranteed by) the United States Government or any agency thereof, or time deposits or certificates of deposit issued by any bank or trust company organized under the laws of the United States or any state thereof in such amounts and with such maturities as are deemed appropriate by the Board of Directors. Page 11 Although it is possible that more than one distribution will be made to shareholders, it is anticipated that all of the remaining proceeds will be distributed at once in order to minimize expenses. The Company currently has no commitments for capital expenditures. Results of Operations - --------------------- Higher received natural gas prices resulted in net income (before income taxes) from operations of $56,413 (or $.77 per share) for the year ended December 31, 1996. Lower received natural gas prices, payment of a portion of deferred compensation, declining production without reserve replacement and significant depreciable and depletable costs resulted in a loss of $210,598, or $2.86/share in 1995. These same factors (combined with unsuccessful workover costs of two wells in Oklahoma and the costs associated with restructuring the Company) contributed to a loss of $44,498, or $0.61 per share in 1994. As discussed above, a plan to dissolve the Company was approved by the shareholders on December 16, 1996, and on February 21, 1997 the Company sold substantially all of its oil and gas assets (effective December 31, 1996) to an unaffiliated entity for $921,250.00 in cash, subject to adjustment as to certain items after consummation of the transaction. As the Company's business activities are currently limited to the winding up of its affairs and completing its dissolution, it is anticipated that its expenses of operations will be substantially different, but will generally decrease during the next fiscal year. The Company's current office lease will expire in June, 1997, at which time it is anticipated that the Company's activities in connection with its dissolution will be significantly curtailed, and the Company's remaining records moved to Mr. Huff's personal residence. It is unlikely that any salaries for clerical staff (the Company currently pays no other salaries) will continue past June 30, 1997; however, the Company plans to contract with Ms. Tish Hartman, the Company's Corporate Secretary (and possibly one or more others), on an hourly basis should clerical staff be required to conclude the dissolution after that time. Changes in Prices, Costs and Impact of Inflation - ------------------------------------------------ Current economic trends still indicate that costs of conducting business activities will not rise as rapidly as they have during the preceding inflationary years. Neither inflation nor increasing costs are expected to have any material impact on the Company's current dissolution. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. - ------- -------------------------------------------- Page 12 The Board of Directors and Stockholders Black Dome Energy Corporation Evergreen, Colorado REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have audited the balance sheet of Black Dome Energy Corporation as of December 31, 1996 and 1995 and the related statements of income, stockholders' equity, and cash flows for the three years ended December 31, 1996, 1995, and 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Black Dome Energy Corporation as of December 31, 1996 and 1995 and the results of its operations and its cash flows for the three years ended December 31, 1996, 1995, and 1994 in conformity with generally accepted accounting principles. As discussed in Note 1 to the financial statements, in 1995, the Company elected to change its method of accounting for depreciation of lease and well equipment from the straight line method to the unit of production method and the financial statements have been restated to reflect the change. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations which raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. BY(Signature) /s/ Haliburton, Hunter & Associates P.C. Littleton, Colorado (Date) March 24, 1997 Page 13 BLACK DOME ENERGY CORPORATION ----------------------------- Balance Sheet -------------
December 31, ----------------------- 1996 1995 ---- ---- Assets ------ Current assets: Cash $ 128,220 $ 63,008 Accounts receivable: Joint interest owners 623 10,158 Oil and gas sales 103,034 69,772 Other --- 200 ------- ------- Total current assets 231,877 143,138 ------- ------- Property and equipment, at cost: Oil and gas properties, net (successful efforts method) 161,511 220,994 Other property and equipment, net of accumulated depreciation of $59,481 and $58,367, respectively --- 1,988 Inventory of well equipment 9,772 44,926 ------- ------- 171,283 267,908 ------- ------- Deferred income tax asset 300,000 --- ------- ------- $ 703,160 $ 411,046 =========== ===========
See accompanying notes to financial statements Page 14
Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Note payable, bank $ --- $ 84,987 Accounts payable, trade 99,431 78,581 Accounts payable, officer 9,600 9,600 Accrued interest --- 662 Deferred compensation 122,500 160,000 ------- ------- Total current liabilities 231,531 333,830 ------- ------- Commitments and Contingencies Stockholders' equity: Common stock, no par value. Authorized 10,000,000 shares; issued and outstanding 73,755 shares 292,415 292,415 Additional paid-in capital 1,895,938 1,895,938 Accumulated deficit (1,716,724) (2,111,137) ----------- ----------- 471,629 77,216 ----------- ----------- $ 703,160 $ 411,046 ========== ===========
Page 15 BLACK DOME ENERGY CORPORATION ----------------------------- Statement of Income -------------------
December 31, ------------------------------- 1996 1995 1994 ---- ---- ---- Revenue: Oil and gas sales $ 605,454 402,627 592,513 Operating income 11,356 38,034 19,879 Gain (loss) on property disposition --- --- 142,582 Interest income 1,206 366 2,413 Other income (loss) 6,298 357 4,998 ------- ------- ------- 624,314 441,384 762,655 ------- ------- ------- Costs and expenses: Oil and gas production 172,285 166,262 300,236 Production and windfall profit taxes 32,861 22,737 37,136 Depreciation, depletion and amortization 81,549 199,519 92,219 Exploration expense --- 10,110 216 Write-off non-productive wells --- 15,438 65,955 Interest 5,200 14,250 17,739 General and administrative 238,006 223,666 272,603 ------- ------- ------- 529,901 651,982 786,104 ------- ------- ------- Earnings (loss) before income taxes 94,413 (210,598) (23,449) Provision for income tax 38,000 --- --- ------- --------- -------- Net earnings (loss) before income tax benefit 56,413 (210,598) (23,449) Income tax benefit 338,000 --- --- ------- -------- ------ Earnings (loss) before cumulative affect of a change in accounting principle $ 394,413 (210,598) (23,449) ---------- --------- -------- Cumulative effect on prior years (to December 31, 1994) of changing to a different depreciation method --- 109,523 --- Net earnings (loss) 394,413 (320,121) (23,449) ========= ========= ======== Earnings (loss) per share before income tax benefit $ .77 (2.86) (.32) Earnings per share from income tax benefit $ 4.58 --- ---- --------- -------- ------- Earnings (loss) per common share before cumulative effect of a change in accounting principle (1) $ 5.35 (2.86) (.32) Cumulative effects on prior years (to December 31, 1994) of changing to a difference depreciation method --- (1.49) --- Net earnings (loss) per common share 5.35 (4.35) (.32) ==== ====== ===== Weighted average number of shares 73,755 73,605 72,866 ====== ====== ====== Proforma amounts assuming the new depreciation method is applied retroactively: Income (loss) before effect of changing a depreciation method $ 394,413 (210,598) (23,449) Retroactive application of changing depreciation methods --- --- (20,999) ------- --------- -------- Net income (loss) after retroactive change 394,413 (210,598) (44,448) ======= ========= ======== Earnings per common share after retroactive application of changing depreciation method and income tax benefit $ 5.35 (2.86) (.61) ========= ====== =====
(1) Calculated after one-for-1,001 share reverse split See accompanying notes to financial statements Page 16 BLACK DOME ENERGY CORPORATION ----------------------------- Statement of Stockholders' Equity ---------------------------------
Common Stock Total ------------------ Additional Accumulated Stock- Stated Paid-in Earnings holders' Shares Value Capital (Deficit) Equity ---------- --------- --------- ---------- -------- Balance at December 31, 1993 67,500,000 $ 283,040 1,898,495 (1,767,567) 413,968 Stock issued in lieu of annual compensation 7,500,000 9,375 --- --- 9,375 Contribution of office space for the six months ended June 30, 1994 6,000 6,000 Reverse split of stock one-for-1,001, and retirement of treasury stock (74,926,545) --- (8,557) --- (8,557) Net loss for year --- --- --- ( 23,449) (23,449) ----------- ------- --------- ----------- -------- Balance at December 31, 1994 73,455 292,415 1,895,938 (1,791,016) 397,337 --------- ------- --------- ----------- ------- Stock issued to employees for bonus 300 --- --- --- --- Net loss for year --- --- --- (320,121) (320,121) ------ --------- --------- ---------- --------- Balance at December 31, 1995 73,755 $ 292,415 1,895,938 (2,111,137) 77,216 ------ --------- --------- ----------- -------- Net income for year --- --- --- 394,413 394,413 ------ --------- --------- ----------- ------- Balance at December 31, 1996 73,755 $ 292,415 1,895,938 (1,716,724) 471,629 ====== ========= ========= =========== =======
See accompanying notes to financial statements Page 17 BLACK DOME ENERGY CORPORATION ----------------------------- Statement of Cash Flows -----------------------
December 31, ---------------------------- 1996 1995 1994 ---- ---- ---- Cash flows from operating activities: Net earnings (loss) $ 394,413 (320,121) (23,449) Depreciation, depletion, amortization 81,549 199,519 92,219 Cumulative effect of accounting change --- 109,523 --- (Gain) loss on property dispositions --- --- (142,852) Write-off non-producing properties --- 15,438 65,955 Office space contributed --- --- 6,000 Changes in assets and liabilities: (Increase) decrease in receivables (23,527) 18,056 16,444 Increase (decrease) in accounts payable 20,850 (676) (133,552) (Decrease) increase in other liabilities (662) 662 --- Decrease (increase) in other assets (300,000) 2,294 729 (Decrease) increase in deferred compensation (37,500) 60,000 (80,000) -------- ------ -------- Net cash provided (used) by operating activities 135,123 84,695 (198,506) ------- ------ --------- Cash flows from investing activities: Proceeds from property dispositions --- --- 164,424 Purchase of equipment (20,078) (36,374) (59,698) Purchase of well equipment inventory, net of (transfers) to wells and write-off of obsolete inventory 35,154 8,995 (20,115) ------ ----- -------- Net cash provided by (used in) investing activities 15,076 (27,379) 84,611 ------ -------- ------ Cash flows from financing activities: Decrease in line-of-credit --- (41,215) (91,263) (Decrease) in notes payable (84,987) (6,522) --- Issuance of common stock --- --- 9,375 Acquisition of Treasury stock --- --- (8,557) ------- ------- ------- Net cash (used in) financing activities (84,987) (47,737) 226,787 -------- -------- ------- Increase (decrease) in cash 65,212 9,579 130,412 Cash balance at beginning of year 63,008 53,429 127,357 ------ ------ ------- Cash balance at end of year $ 128,220 63,008 257,769 ========= ====== =======
* In 1995, the line-of-credit was converted to a note payable in the amount of $91,509. See Note 11 to financial statements. Interest of $5,200 was paid in 1996, $14,250 in 1995 and $17,739 in 1994. See accompanying notes to financial statements Page 18 BLACK DOME ENERGY CORPORATION ----------------------------- Notes to Financial Statements December 31, 1996 and 1995 -------------------------- 1. Summary of Significant Accounting Policies: - ----------------------------------------------- Operations of the company ------------------------- Black Dome Energy Corporation was incorporated as a Colorado corporation on December 12, 1979 and was in the development stage through 1980. The Company is involved in exploration for oil and gas and the acquisition, development, and operation of oil and gas leasehold interests. During the relevant period, income from oil and gas sales was recognized as deliveries were made to the purchasers and operating income was recognized as services were performed in the management and operations of the producing properties. At the December 1996 Stockholders' Meeting, the stockholders approved disposition of its oil and gas properties. In reviewing the Statement of Financial Accounting Standards No. 121, paragraph 19, it was determined that no loss will be incurred in the disposition. Property and equipment and depreciation, depletion, and amortization -------------------------------------------------------------------- The Company follows the successful-efforts method of accounting for oil and gas exploration and development costs. Under this method, lease acquisition costs and exploration and development costs attributable to the finding and development of proved reserves are capitalized. Exploratory dry hole costs and other nonproductive oil and gas activities are expensed. Costs of nonproductive leases are charged to expense when abandoned or substantially impaired, based upon a property-by-property evaluation. Capitalized costs relating to producing properties are depleted or depreciated on the units-of-production method based on the total of proved reserves. Expenditures for repairs and maintenance costs and delay rentals are charged to expense as incurred; renewals and betterments are capitalized. The cost and related accumulated depreciation, depletion, or amortization of property sold or otherwise retired are eliminated from the accounts; and gains or losses on dispositions are reflected in the consolidated statement of operations. Furniture, office equipment, and an automobile are depreciated using the straight-line method of depreciation over the estimated useful lives of the assets. Depreciation of lease and well equipment has been computed by the units of production method in 1995 and 1996. Depreciation is recorded only on well equipment that has been placed in service. Depreciation of lease and well equipment in prior years, beginning in 1980, was computed by the straight line method. The new method of depreciation was adopted in 1995 to better recognize the matching of revenues and depreciation expenses and has been applied retroactively to equipment acquisitions of prior years. The effect of the change in 1995, was to decrease income by approximately $56,000 (or $.76 per share). The adjustment of $109,523 to apply retroactively the new method is included in the net loss for 1995. The pro forma amounts shown on the income statement have been adjusted for the effect of retroactive application on depreciation. Inventory --------- Inventory of lease and well equipment is valued at the lower of cost or market. Cost is determined by either the specific identification method or average cost method depending on the nature of the inventory item. Income taxes ------------ The Company accounts for income taxes using tax-liability method in accordance with Financial Accounting Standards Board Statement No. 109. Page 19 BLACK DOME ENERGY CORPORATION ----------------------------- Notes to Financial Statements, Continued December 31, 1996 and 1995 -------------------------- 1. Summary of Significant Accounting Policies: - ----------------------------------------------- Gain (loss) per share --------------------- Gain (loss) per common share is computed on the basis of the weighted average number of shares of common stock and common stock equivalents outstanding during the year. There were 73,755 shares outstanding at December 31, 1996 and 1995. Basis of presentation and going concern --------------------------------------- The accompanying financial statements have been prepared on a going-concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, and to increase sales to a level where the Company becomes profitable. The Company's management believes it will not be able to attain these goals. As a result, the Company disposed of its producing properties at a value in excess of its book value. At the December 1996 stockholders' meeting, the Board of Directors of the Company were authorized to arrange a sale of the oil and gas producing properties and to then proceed with liquidation of the Company. Subsequent to the year end in February 1997, the Company completed a sale of its producing properties effective December 31, 1996, at a gross sales price of $921,250. The Company has reviewed the Statements of Financial Accounting Standards No. 121 and 123 and believes that there will be no impact on its financial statements. 2. Oil and Gas Operations: - --------------------------- Information related to the Company's oil and gas operations is summarized as follows:
December 31, 1996 1995 1994 ----------------------------- Capitalized costs: Proved oil and gas properties $906,235 885,006 866,280 ------- ------- ------- 906,235 885,006 866,280 ------- ------- ------- Accumulated depletion, depreciation and amortization 744,724 664,012 362,781 ------- ------- ------- $161,511 220,994 502,499 ======= ======= ======= Costs incurred in oil and gas producing activities: Exploration costs --- 10,110 216 Production costs 205,146 188,999 337,372 Depreciation, depletion, and amortization expense 81,549 199,519 92,219 ------- ------- ------- $286,695 398,628 429,807 ======== ======= ======= Sales of oil and gas, net of production costs $318,759 $ 3,999 $162,706 ======== ======= ========
Page 20 BLACK DOME ENERGY CORPORATION ----------------------------- Notes to Financial Statements, Continued December 31, 1996 and 1995 -------------------------- 3. Income Taxes: - ----------------- The Company reports income for financial statements and income tax reporting on the same basis of accounting. The Financial Accounting Standards Board issued Statement No. 109, "Accounting for Income Taxes", which employs an asset and liability approach for income taxes, the objective of which is to recognize the amount of current and deferred tax payable at the date of the financial statements using the provisions of enacted tax laws. The Company has applied the provisions of Statement 109 in the accompanying financial statements. The deferred tax and related valuation allowance for the loss carryforwards are calculated at the end of each year as follows:
1996 1995 1994 Prior Years ---- ---- ---- ----------- Loss Carryforward for tax purposes $ 1,060,000 1,155,000 945,000 920,000 ========= ========= ======= ======= Deferred tax asset (40 percent) 424,000 462,000 378,000 368,000 Valuation allowance equal to amount which the deferred tax exceeds the deferred tax liability 124,000 462,000 378,000 368,000 --------- ------- ------- ------- Net deferred tax asset $ 300,000 --- --- --- ========= ======== ======= =======
Income tax benefit is calculated as follows using a 40% tax rate. Benefit from estimated gain of $750,000 on sale of all of the corporate oil and gas properties. An additional benefit of $38,000 was realized on the current year pretax profits of $94,413, making a total tax benefit of $338,000. 4. Employment Contracts: - ------------------------- On December 31, 1994, the Company entered into an employment contract with E.J. Huff as President of Black Dome for the three years ending December 31, 1997 with annual compensation of $100,000 for 1995; $125,000 for 1996 and $150,000 for 1997. The agreement was terminated effective July 1, 1996. 5. Major Customers: - -------------------- During the year ended December 31, 1996, sales of oil and gas to three customers totaled approximately $230,000, $170,000, and $120,000. During the year ended December 31, 1995, sales of oil and gas to two customers totaled approximately $295,000 and $52,000. During the year ended December 31, 1994, sales of oil and gas to two major customers were $336,000 and $154,000. Page 21 BLACK DOME ENERGY CORPORATION ----------------------------- Notes to Financial Statements December 31, 1996 and 1995 -------------------------- 6. Supplementary Oil and Gas Information (Unaudited): - ------------------------------------------------------ Changes in proved oil and gas reserves:
1996 1995 1994 Oil Gas Oil Gas Oil Gas (Bbls) (Mcf) (Bbls) (Mcf) (Bbls) (Mcf) ------ ----- ------ ----- ------ ----- Proved reserves: Balance at beginning of year 9,825 1,483,574 9,355 2,031,425 34,990 2,669,089 Properties sold --- --- --- --- (19,247) (227,135) Additions to and revisions of previous estimates (1,114) 204,210 1,852 (286,289) (3,641) (101,313) Production (1,724) (237,963) (1,382) (261,562) (2,747) (309,216) Balance at end ------- ---------- ------- ---------- ------- ---------- of year 6,987 1,449,821 9,825 1,483,574 9,355 2,031,425 Proved developed reserves: Balance at December 31, 1994 9,355 2,031,425 Balance at December 31, 1995 9,825 1,431,318 Balance at December 31, 1996 6,987 1,380,932 Future net cash flows from proved oil and gas reserves: Future net cash flows at December 31, 1996 Total Proved Proved Developed Reserves Reserves December 31, -------- --------- ------------ 1997 $ 666,205 $ 666,205 1998 557,683 545,853 1999 501,450 449,042 Remainder 2,090,085 1,924,435 --------- --------- $ 3,815,423 $ 3,585,535 =========== =========== Present value of future net cash flows (discounted at 10%): Proved Proved Developed December 31, -------- --------- ------------ 1994 1,281,621 1,281,621 1995 1,196,316 1,175,279 1996 2,618,331 2,470,181
Page 22 BLACK DOME ENERGY CORPORATION ----------------------------- Notes to Financial Statements December 31, 1996 and 1995 -------------------------- 6. Supplementary Oil and Gas Information (Unaudited), Continued: - ----------------------------------------------------------------- Changes in present value of estimated future net cash flows from proved oil and gas reserves:
December 31, 1996 1995 1994 ---------- ----------- ----------- Present value at beginning of period $ 1,196,316 $ 1,218,621 $ 2,739,716 Additions and revisions, net of future estimated development and productions costs and net of properties sold 1,740,774 (18,306) (1,295,389) Sales of oil and gas, net of lifting costs (318,759) (3,999) (162,706) ---------- ---------- ---------- Present value at end of period $ 2,618,331 $ 1,196,316 $ 1,281,621 =========== =========== =========== Summary of oil and gas producing activities on the basis of Reserve Recognition Accounting (RRA): 1996 1995 1994 ---- ---- ---- Additions and revisions to present value (discounted at 10%) of estimated future net revenues of proved oil and gas reserves: Additions, net of estimated future development and production costs $ --- $ 21,037 $ --- Revisions to estimates of reserves proved in prior years: Changes in prices, net of production costs and taxes 1,086,180 31,256 (66,517) Other revisions (86,695) (142,649) (217,515) Accretion of discount 711,290 86,357 (1,011,337) --------- --------- ----------- Total additions and revisions 1,740,774 (3,999) (1,295,389) Less evaluated acquisition, exploration and development costs incurred --- --- --- Additions and revisions under evaluated costs 1,740,774 (3,999) (1,295,389) Provision for income taxes --- --- --- --------- ------- ----------- Results of oil and gas producing activities on the basis of reserve recognition accounting $1,740,774 $(3,999) $(1,295,389) ========== ======== ============
Page 23 BLACK DOME ENERGY CORPORATION ----------------------------- Notes to Financial Statements, Continued December 31, 1996 and 1995 -------------------------- 6. Supplementary Oil and Gas Information (Unaudited), Continued: - ----------------------------------------------------------------- Changes in prices subsequent to December 31, 1996, resulted in a decrease in the above valuation as of the date of the report resulting in an adjusted present value of $898,494, resulting primarily from a reduction in gas prices from $4.04 to $2.00 per MCF. The following accounting policies have been used in preparing the Reserve Recognition Accounting (RRA) presentation. The summary of oil and gas producing activities on the basis of RRA was prepared based on the rules of the Securities and Exchange Commission (SEC). Under RRA, earnings are recognized as proved reserves are found based on the estimated present value of such reserves, computed as described below. Subsequent revisions to the RRA valuation of proved reserves are included in earnings as they occur. Proved reserves are those quantities of oil and gas which can be expected, with little doubt, to be recoverable commercially at current prices and costs under existing operating methods. The proved reserves and related valuations were computed by J. R. Albi, Jr. in accordance with the rules of the SEC. Estimated future net revenues were computed by applying current prices received by the Company to estimated future production of reserves, less estimated future development and production costs and windfall profit taxes based on current costs. A discount factor of 10% was applied to the estimated future revenues to compute the estimated present value of proved oil and gas reserves. This valuation procedure does not necessarily result in an estimate of the fair market value of the Company's oil and gas properties. Totals of proved reserves are inherently imprecise estimates and are continually subject to revision based on production history, results of additional exploration and development, price changes, and other factors. The pretax income (loss) reflected in the primary financial statements for oil and gas producing activities corresponds to the pretax income (loss) on the basis of Reserve Recognition Accounting of $1,740,774 in 1996, $128,323 in 1995 and $(1,202,954) in 1994, respectively. "Additions to reserves" are the result of current acquisitions and development activities. Increases in prices are the approximate effect on the RRA valuation of proved reserves due to price changes. Other revisions represent the net effect of all revisions to estimated quantities of proved reserves. Accretion of discount was computed by multiplying 10% times the present value of future net revenues as of the beginning of the year, adjusted to reflect downward revisions. Evaluated acquisition, exploration, development, and production costs include current and estimated future costs associated with the current year reserve additions. Such expenses include property acquisitions, well costs, lease rentals, and abandonments. The cost of acquiring unproved properties and drilling exploratory wells are deferred until the properties are evaluated and determined to be either productive or nonproductive, at which time they are charged to expense. There were no deferred acquisition and exploration costs at December 31, 1996 or 1995. The provision for income taxes is based on the "liability" method computed by applying the current statutory income tax rate to the difference between the year end RRA valuation of proved reserves and the tax basis in the properties less estimated investment tax credits and statutory depletion associated with future development costs. 7. Commitments and Contingencies: - ---------------------------------- There were no commitments or contingencies known to management at December 31, 1996. Page 24 BLACK DOME ENERGY CORPORATION ----------------------------- Notes to Financial Statements, Continued December 31, 1996 and 1995 -------------------------- 8. Environmental Liabilities: - ------------------------------ The company's oil and gas operations are subject to various federal, state, and local laws and regulations regarding environmental and ecological matters. These laws and regulations, among other things, impose liability on the Company, as a lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations, subject the lessee to liability for pollution damages, require suspension or cessation of operations in affected areas and impose restrictions on the injection of liquids into subsurface aquifers that may contain groundwater. As of December 31, 1996, the Company was not aware of any environmental claims which would have a material impact upon the Company's financial position or results of operations. 9. Subsequent events: - ---------------------- In February 1997, the Company sold substantially all of its oil and gas properties at a price of $921,250. At the shareholders' meeting in December 1996, the Board of Directors was directed to locate a buyer for the oil and gas properties and to subsequently liquidate the Company. The Board of Directors estimates a period of three to nine months to complete the liquidation. 10. Line-of-Credit and Bank Debt: - ---------------------------------- In October, 1992, as a source for additional working capital, the Company obtained a $300,000 line-of-credit with a lending institution, secured with 10 producing natural gas wells in Clark County, Kansas. As of December 31, 1994, a total of $132,724 was borrowed from the line-of-credit. During 1995, the Company reconstructed the debt obligations associated with the outstanding balance of the line-of-credit. As of December 31, 1995, the Company had bank debt obligations of $84,987 tied to an 8.5% note which matures on March 31, 1997. The note was paid in full in 1996. 11. Value of Office Space and Rental Expense: - ---------------------------------------------- During the year ended December 31, 1993, and for the six months ended June 30, 1994, the Company was provided office space by the Company President. The value of the space provided in amounts of $12,000 in 1993, and $6,000 in 1994, have been recorded as an expense in the financial statements for those years and as a capital contribution. Page 25 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING - ------- ----------------------------------------------------------- AND FINANCIAL DISCLOSURE. ------------------------- None applicable. PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. - -------- --------------------------------------------------- The Company's bylaws provide that the Board of Directors shall consist of not less than three nor more than five members. All members of the Board of Directors will hold office until the dissolution of the Company is completed, or until their earlier death, resignation or removal. Executive Officers are elected at the first meeting of the Board of Directors following the Annual Meeting of Shareholders. It is anticipated that all of the current officers and directors of the Company will continue to serve in their present capacities until such time as the dissolution of the Company is completed. The following table sets forth the name and age of each Executive Officer and/or Director, indicating all positions and offices with the Company presently held by him, and the period during which he has served as an officer or as a member of the Board of Directors:
Period Served Other Positions and as Officer Offices Held with or Director Name Age the Company of the Company ----------- --- ----------------- -------------- Edgar J. Huff 73 Chairman of the Board, President and President and Director, December Treasurer 1979 to present; Treasurer,November 1984 to Present Joseph R. Albi, Sr. 65 None Director, February 1985 to present Robert C. Huff 46 None Director, November 1987 to present; Secretary March 1985 to September 2, 1994 James E. Huff 42 None Director, November 1987 to present Tish M. Hartman 36 Secretary - September 2, 1994 to Present
The principal occupation and employment during the last five years and business experience of each Executive Officer and/or Director of Black Dome Energy Corporation, are set forth below. Page 26 Edgar J. Huff: President and Chairman of the Board of Directors of the Company since December, 1979, and Treasurer since November, 1984. Mr. Huff is also the President and Chief Executive Officer and is one of the majority stockholders of Clayton Corporation, a family-owned independent oil and gas company since January, 1972. Mr. Huff is a graduate of Texas Tech University with a B.S. degree in Petroleum Engineering, and has been continuously active in the oil and gas industry as a consulting geologist, petroleum engineer, independent oil operator, Company President and major stockholder of several oil and gas companies during the period of time between 1949 to the present. Joseph R. Albi, Sr.: Member of the Board of Directors of the Company since February, 1985. Mr. Albi is a graduate of Regis College with a B.S. degree in Business Administration. He has owned and operated a Denver real estate development and corporate financial consulting business from 1965 to the present. Mr. Albi is a former member of the Colorado House of Representatives, a past Vice President of the Rocky Mountain Better Business Bureau and was selected by presidential appointment to be the Federal Region VIII Administrator for the American Revolution Bicentennial Administration. Mr. Albi served as a member on the Board of Directors of the Denver Metro Sewer District #1 from 1979 to 1984, and on the Board of Directors of Energy Resources of North Dakota, Inc. from 1980 until 1985. Mr. Albi is retired with the rank of Brigadier General USAF Reserve where his position was Mobilization Assistant to the USAF Chief of Security Police. Robert C. Huff: Member of the Board of Directors of the Company since November 1987. Mr. Huff held the position of Secretary of the Company from March 1985 to September 2, 1994. From June of 1979 through December of 1991, he was employed in various capacities (most recently as Manager, Facilities Operations) for Atlantic Richfield Company. From December, 1991 through November 1993, Mr. Huff was the President and owner of Clayton Consulting, Inc., a privately-held facilities management consulting firm. From November of 1993 to October 1995, Mr. Huff served as Facilities Manager with the Dial Corporation located in Scottsdale, Arizona. Since October 1995 to the present time, he has been and currently is employed by Hilti Corporation, an international company with western hemisphere headquarters in Tulsa, Oklahoma, as Director of Administrative Operations. He is a Certified Facilities Manager certified by the International Facilities Management Association ("IFMA"). Mr. Huff is a 1972 graduate of the University of Colorado with a degree in business, and a 1974 graduate of Colorado State University with a degree in Industrial Construction Management. James E. Huff: Member of the Board of Directors of the Company since November 1987. Mr. Huff worked continuously and extensively in the oil and gas industry from 1977 to 1986, first as a landman for a major oil and gas company, and later as an independent landman, consultant and manager of his own exploration office in North Dallas, Texas. From June 1986 to February 1990 Mr.Huff was employed by Electronic Data Systems Corporation as a regional marketing director, southwestern region USA, in Plano, Texas. Since February 1990 Mr. Huff has been employed by Computer Science Corporation in the Dallas, Texas area. In September 1994, Mr. Huff accepted a transfer to Houston, Texas where he opened the CSC Consulting office. At the present time, he is a partner in CSC Consulting and Manager of the CSC Consulting Houston, Texas office. Mr. Huff graduated from the University of Colorado in 1977 with a degree in business administration. Page 27 Tish M. Hartman: Ms. Hartman has been employed in the oil and gas industry with Black Dome Energy Corporation since April 18, 1985 in the capacity of Administrative Assistant to Edgar J. Huff. Ms. Hartman held the position of Assistant Corporate Secretary from July 22, 1985 to September 1, 1994, and has held the position of Corporate Secretary from September 2, 1994 through the present. Ms. Hartman does not perform policy making or similar functions for the Company. There is no family relationship between any Director or nominee for Director of the Company and any other Director or Executive Officer of the Company, except that Messrs. Robert C. Huff and James E. Huff are brothers and the children of Edgar J. Huff. DIRECTORS' MEETINGS During 1996 there were four Directors' meetings held. Each Director was paid $100 per day for his attendance at such meetings. ITEM 11. EXECUTIVE COMPENSATION. - -------- ----------------------- Executive Compensation - ---------------------- The following tabular information includes all plan and non-plan compensation paid to the Company's president and all other executive officers whose total annual salary and bonus is $100,000 or more for the Company's last three completed fiscal years:
SUMMARY COMPENSATION Annual Comp. Long-Term Comp. --------------------------- ----------------------- Awards Payouts Other Rest. Securities Name and Annual Stock underlying LTIP All Principal Salary Bonus Comp. Awards Options Payouts Other Position Year ($) ($) ($) ($) (#) ($) Comp. - --------- ---- ------ ----- ------ ------ -------- ------- ----- Edgar J. Huff 1996 62,500* 0 0 0 0 0 $100,000(1) (President, CEO, 1995 100,000* 0 0 0 0 0 0 Treasurer and 1994 60,000 9,600(2) 0 0 0 0 0 Chairman of the (3) Board) Joseph R. Albi, 1996 0(4) 0 0 0(4) 0 0 0 Jr. (Exec. Vice 1995 0(4) 0 0 0(4) 0 0 0 President) 1994 35,000(4) 0 0 3,023(4) 0 0 0
* See Employment Contracts and Termination of Employment and Change of Control Arrangements (Page 31). (1) During the fiscal year ended December 31, 1996, Mr. Huff received payment of $100,000 out of a total of $222,500 in deferred compensation that was due to him for services performed during previous years. The remaining $122,500 was paid to him subsequent to the fiscal year end. No further amounts are due and Mr. Huff has agreed to serve without charge until the Company's dissolution has been completed. Page 28 (2) Mr. Huff's Employment Contract dated May 11, 1991 also provides for the payment of an annual bonus in the amount of $9,600. Mr. Huff's 1993 earned bonus of $9,600 was not paid as of December 31, 1993; however, it was paid during fiscal year 1994. During fiscal 1994, Mr. Huff received the 1993 earned bonus which was paid in stock and cash. The earned bonus of $9,600 for 1994 due in January 1995 was paid subsequent to December 31, 1996. (3) In 1994, the Board of Directors of the Company authorized the issuance of 7,500,000 shares of no par value restricted common stock, plus a cash payment of $225.00 to Mr. Huff as payment of the contractual bonus of $9,600 earned by Mr. Huff for the calendar year 1993. The Board of Directors determined the price of $0.00125 per share to be a fair and reasonable value to the Company for such shares when considering, among other things, the current net tangible book value of the Company's assets, its existing debt obligations, the current lack of any existing trading market for the Company's shares, the absence of any market makers for the Company's shares, the lack of any ascertainable market value for the Company's common stock, and the restricted nature of the shares to be issued. (4) On July 1, 1991, the Company entered into a three-year Employment Contract with Mr. Joseph R. Albi, Jr. which provided for annual compensation of $60,000 per year ($5,000/month) and the issuance of 7,256,000 shares of the restricted no par value Common Stock of the Company valued at $.00125 per share or $9,070. The shares were restricted for the term of Mr. Albi's contract which began on July 1, 1991 and ended on June 30, 1994 and were forfeitable as follows: If Mr. Albi left the employ of the Company prior to June 30, 1992, all of the shares would be forfeited; prior to June 30, 1993, two-thirds of the shares would be forfeited; and prior to June 30, 1994, one- third of the shares would be forfeited. Mr. Albi left the employ of the Company on June 30, 1994 and became vested in the entire 7,256,000 shares of restricted no par value common stock of the Company. Page 29 Compensation of Directors - ------------------------- Standard Arrangements. Directors of the Company receive a fee of $100 per meeting for their attendance at meetings of the Company's Board of Directors, and are entitled to reimbursement for reasonable travel expenses. During 1996, an aggregate of $1,300 was paid to all of the Company's Directors for their attendance at meetings. Other Arrangements. There are no other arrangements pursuant to which the Company's Directors receive compensation from the Company for services as Directors. OPTIONS/SAR GRANTS IN LAST FISCAL YEAR Individual Grants Pot. Realizable ---------------------------- Number of Value at Securities % of Total Assumed Rates of Underlying Options Stock Price App. Options Granted to Exercise Exp. for Opt. Term. Name Granted Employees Price Date 5%($) 10%($) - ------------ -------- ---------- -------- ----- -------- ------ Edgar J. Huff 0(1) 0 0 0 0 0 (1) No stock options have been issued by the Company during 1996. As of December 31, 1996, the Company does not have a stock option plan available to any employee and/or director of the Company. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options at Options at Shares 12/31/96 12/31/96 Acquired on Value Exercisable/ Exercisable/ Name Exercise(#) Realized($) Unexercisable Unexercisable Edgar J. Huff 0(1) 0 0 0 (1) No stock options were exercised during fiscal year 1996. As of December 31, 1996, the Company does not have a stock option plan available to any employee and/or director of the Company. As of December 31, 1996, the Company does not have an Incentive Stock Option Plan available to its employees and/or directors. Page 30 LONG TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE The following table sets forth each award made to a named executive officer in the last completed fiscal year under any LTIP: LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR Estimated Future Payouts under Non-Stock Price-Based Plans --------------------------------- (a) (b) (c) (d) (e) (f) Number of Performances or Shares,Units Other Period Until or Other Maturation or Threshold Target Maximum Name Rights (#) Payout ($ or #) ($ or #) ($ or #) - ------------- ----------- --------------- --------- -------- -------- Edgar J. Huff -0- N/A -0- -0- -0- On May 1, 1993, the Board of Directors of the Company adopted an IRS approved (Model Form 5035-A) Salary Deferred Simplified Employee Pension Plan (SAR-SEP) allowing eligible salaried employees to contribute (through elective deferrals) a portion of their salary on a before tax basis to individual IRA accounts set up on behalf of the Company. Should employee contributions be such that the Plan is deemed "top-heavy" for any Plan year (as defined by the IRS), the Company will be required to contribute an amount to non-key employees (not to exceed 3% of their annual compensation) for that plan year. During the fiscal year ended December 31, 1996, the Company contributed $666 to the IRA accounts of non-key employees to satisfy "top-heavy" Plan requirements for the year 1996. Other Compensation - ------------------ No other compensation (not covered by the above categories)was paid or distributed during the last fiscal year to any executive officer of the Company. Employment Contracts and Termination of Employment and Change of Control - ------------------------------------------------------------------------ Arrangement - ----------- Effective December 31, 1994, the Board of Directors approved a new three-year employment agreement with the President of the Company, Mr. Edgar J. Huff, for his continued services. The Agreement became effective January 1, 1995. It is a standard employment agreement with standard disability, death and term clauses, providing for a deferred salary of $100,000 for the year 1995 to be paid on January 5, 1996, a deferred salary of $125,000 for the year 1996 to be paid on January 5, 1997 and a deferred salary of $150,000 for the year 1997 to be paid on January 5, 1998. The agreement further provides for the Company to carry insurance on the life of Mr. Huff in the amount of $250,000. Premiums are to be paid by the Company and such sum shall be payable to the Company in the event of Mr. Huff's demise during the term of the Employment Agreement. The Employment Agreement further provides that, should there not be sufficient cash each year as provided in the agreement so that the lump sum is not available, then Mr. Huff may be paid with any class of the Company's stock as may be mutually agreed between Mr. Huff and the Company; provided, however, that there shall be deducted from all compensation paid to Mr. Huff, such sums, including, but without limitation to, social security, income tax withholding and unemployment insurance, as the Company is by law obligated to do. On June 30, 1996, the subject Employment Agreement was terminated at Mr. Huff's request and he has Page 31 agreed to continue to serve as the Company's President without charge until such time as the dissolution of the Company has been completed. The Company has no compensatory plan or arrangement, including payments to be received from the Company, with respect to any individual named above for the latest or the next preceding fiscal year, if such plan or arrangement results or will result from the resignation, retirement or any other termination of such individual's employment with the Company, or from a change in control of the Company or a change in the individual's responsibilities following a change in control. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND - -------- --------------------------------------------------- MANAGEMENT. ----------- The following table sets forth as of March 21, 1997, information with respect to the ownership of the Company's No Par Value Common Stock by each person, including any "group" as that term is defined in Section 13(d) (3) of the Securities Exchange Act of 1934, known by the Company to own beneficially more than five percent of its outstanding equity securities, and by its Directors and Officers individually and by its Officers and Directors as a group. Information as to beneficial ownership is based upon statements furnished to the Company by such persons. Page 32
Amount and Nature of Name and Address Beneficial Percent of Beneficial Owner Title of Class Ownership(1) of Class - -------------------- -------------- ------------ -------- Edgar J. Huff(2) Common Stock 43,698 59.25% 1536 Cole Blvd., Ste 325 (No Par Value) Golden, CO 80401 James E. Huff(3) Common Stock 1,099 1.49% 2414 Briar Ridge Dr. (No Par Value) Houston, TX 77057 Robert C. Huff(3) Common Stock 999 1.35% 9930 S. 87th E. Ave. (No Par Value) Tulsa OK 74133 Joseph R. Albi, Sr.(3) Common Stock 300 .41% P.O. Box 5271, T.A. (No Par Value) Denver, CO 80217 Tish M. Hartman(4) Common Stock 400 .54% 1536 Cole Blvd., Ste 325 (No Par Value) Golden, CO 80401 Officers and/or Common Stock 46,496 63.04% Directors as a (No Par Value) Group (5 persons)
(1) All beneficial owners have sole voting and investment power over shares indicated in the table. (2) President, Treasurer and Director of the Company. (3) Director of the Company (4) Corporate Secretary Edgar J. Huff currently controls the Company by virtue of his ownership of 59.25% of the Company's outstanding Common Stock. There is no arrangement known to the Company, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company. Page 33 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. - -------- ----------------------------------------------- Transactions with Management and Others - --------------------------------------- No Director or Executive Officer of the Company, nominee for election as a Director, security holder who is known to the Company to own of record or beneficially more than 5% of any class of the Company's voting securities, or any relative or spouse of any of the foregoing persons, or any member of the immediate family of any such persons, has had any transaction, or series of similar transactions, since the beginning of the Company's last fiscal year, or has any currently proposed transaction, or series of similar transactions, to which the Company was or is to be a party, in which the amount involved exceeds $60,000 and in which any of such persons had or will have any direct or indirect material interest. Related Party Transactions - -------------------------- All cash and note obligations to Clayton Corporation, a company controlled by Edgar J. Huff, from Black Dome Energy Corporation were paid to Clayton Corporation in fiscal 1994. Certain Business Relationships - ------------------------------ No director or nominee for director is, or during the last fiscal year has been, an executive officer of, or owns, or during the last fiscal year has owned, of record or beneficially in excess of ten percent equity interest in, any business or professional entity that has made during the Company's current fiscal year, payments to the Company for property or services in excess of five percent of (i) the Company's consolidated gross revenues for its last full fiscal year, or (ii) the other entity's consolidated gross revenues for its last full fiscal year. No director or nominee for director is, or during the last fiscal year has been, an executive officer of or owns, or during the last fiscal year has owned, of record or beneficially in excess of ten percent equity interest in, any business or professional entity to which the Company has made during the Company's last full fiscal year, or proposes to make during the Company's current fiscal year, payments for property or services in excess of five percent of (i) the Company's consolidated gross revenues for its last full fiscal year, or (ii) the other entity's consolidated gross revenues for its last full fiscal year. No director or nominee for director is, or during the last fiscal year has been, an executive officer of, or owns, or during the last fiscal year has owned, of record or beneficially, in excess of ten percent equity interest in, any business or professional entity to which the Company was indebted at the end of the Company's last full fiscal year in the aggregate amount in excess of five percent of the Company's total consolidated assets at the end of such fiscal year. No director or nominee for director is, or during the last fiscal year has been, a member of, or of counsel to, a law firm that the Company has retained during the last fiscal year or proposes to retain during the current fiscal year where the dollar amount of such fees paid to such law firm exceeded five percent of such law firm's gross revenues for its past fiscal year. Page 34 No director or nominee for director is, or during the last fiscal year has been, a partner or executive officer of any investment banking firm that has performed services for the Company, other than as a participating underwriter in a syndicate, during the last fiscal year or that the Company proposes to have performed during the current year. There are no other relationships that the Company is aware of between a director or nominee for director and the Company that are substantially similar in nature and scope to those relationships listed above. Indebtedness of Management - -------------------------- No director or executiveofficer of the Company, nominee for election as a director, any member of the immediate family of such persons, corporation or organization (other than the Company or a majority-owned subsidiary of the Company) of which any of such persons is an executive officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities, or any trust or other estate in which any of such persons has a substantial beneficial interest or as to which such person serves as a trustee or in a similar capacity, has been indebted to the Company at any time since the beginning of the Company's last fiscal year in an amount in excess of $60,000. Page 35 PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON - -------- ------------------------------------------------------ FORM 8-K. --------- a) (1) The following financial statements are filed as part of this report: Report of Independent Certified Public Accountants Financial Statements: Balance Sheets, December 31, 1996 and 1995 Statements of Operations for the years ended December 31, 1996, 1995 and 1994 Statement of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994 Statement of Cash Flows for the years ended December 31, 1996, 1995 and 1994 Notes to Financial Statements Schedule V - Property, Plant and Equipment Schedule VI - Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment Schedules other than those listed above have been omitted since they either are not required or are not applicable. Sequential (a) (3) Exhibits: Page Number --------- ----------- 3 Articles of Incorporation and Bylaws (incorporated by reference to Registration Statement on Form S-1, SEC File No. 2-67734) -- 24 Consent of Joseph R. Albi, Jr. 38 27 Finacial Data Schedule 39 (b) No reports on Form 8-K were filed by Black Dome during the last quarter of the period covered by this report. Page 36 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated this 28th day of March, 1997. (Registrant) BLACK DOME ENERGY CORPORATION BY(Signature) /s/Edgar J. Huff (Name and Title) Edgar J. Huff, President, Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Company and in the capacities and on the dates indicated. Name and Capacity BY(Signature) /s/Edgar J. Huff (Date) March 28, 1997 (Name and Title) Edgar J. Huff, Director BY(Signature) /s/Joseph R. Albi,Sr. (Date) March 28, 1997 (Name and Title) Joseph R. Albi, Sr., Director BY(Signature) /s/Robert C. Huff (Date) March 28, 1997 (Name and Title) Robert C. Huff, Director BY(Signature) /s/James E. Huff (Date) March 28, 1997 (Name and Title) James E. Huff, Director Page 37 JOSEPH R. ALBI, JR. P.O. BOX 26022 HIGHLANDS RANCH, CO 80163-0022 March 30, 1997 I, Joseph R. Albi, Jr., hereby consent to the use of and/or reference to my report estimating Black Dome Energy Corporation's reserves and revenues as of January 1, 1997 in the Annual Report on Form 10-K of Black Dome Energy Corporation. I also consent to the reference to my name in the Annual Report on Form 10-K. The estimated reserves and revenues attributable to certain Black Dome Energy Corporatin leasehold presented in my report were based on an engineering evaluation utilizing data supplied by Black Dome Energy Corporation. Sincerely, BY(Signture) /s/ Joseph R. Albi, Jr. Joseph R. Albi, Jr. B.S. Petroleum Engineering Colorado School of Mines, 1982 M.S. Mineral Economics Colorado School of Mines, 1986 Page 38 EX-27 2
5 YEAR DEC-31-1996 DEC-31-1996 128,220 0 103,657 0 0 231,877 161,511 59,481 703,160 231,531 0 0 0 73,755 0 703,160 605,454 624,314 0 529,901 0 0 5,200 56,413 0 0 0 338,000 0 394,413 5.35 5.35
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