-----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, O/tuvpqVmik3ehEJq+Vq+gUfoxDzO3YdpDBUwDxKBsp2O3ZUaZZVej34kgENtBv5 lyuUX51Tv+NiWNzkXMyxHw== 0001008878-97-000012.txt : 19970513 0001008878-97-000012.hdr.sgml : 19970513 ACCESSION NUMBER: 0001008878-97-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOUNTAINS WEST EXPLORATION INC CENTRAL INDEX KEY: 0000319040 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 850280415 STATE OF INCORPORATION: NM FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09500 FILM NUMBER: 97600363 BUSINESS ADDRESS: STREET 1: 616 CENTRAL AVE SE STE 230 CITY: ALBUQUERQUE STATE: NM ZIP: 87102 BUSINESS PHONE: 5052434949 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_________________ to ________________ Commission File Number: 0-9500 MOUNTAINS WEST EXPLORATION, INC. (Exact name of small business issuer as specified in its charter) New Mexico 85-0280415 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 616 CENTRAL AVE. SE. SUITE 213 ALBUQUERQUE, NEW MEXICO 87102 (Address of principal executive offices) (Zip Code) Indicate by check mark whether the issuer (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the receding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of the issuer's common stock, par value $.001 per share, at May 12, 1997, was 37,034,270 shares. PART I ITEM 1. FINANCIAL STATEMENTS MOUNTAINS WEST EXPLORATION, INC. CONDENSED BALANCE SHEET UNAUDITED March 31, 1997 ASSETS Current Assets Cash ...................................................... $ 35,507 Account receivable/prepaid expenses ....................... 7,424 ___________ Total current assets ................................... 42,931 Furniture and Equipment Office furniture and equipment, at cost ................... 17,119 Less accumulated depreciation ............................. (9,541) ___________ Net furniture and equipment ............................ 7,578 Oil and gas properties, using the successful efforts method (Note 3) .................................. 2,758,907 Less accumulated depreciation, depletion and amortization ............................................. (14,778) ___________ Net oil and gas properties ............................. 2,744,129 Other assets Term deposit account - restricted (Note 3) ............... 53,042 Note receivable, officer ................................. 100,000 Investment in partnership ................................ 15,000 Mineral Interest ......................................... 40,083 ___________ Total other assets ..................................... 208,125 ___________ Total assets ........................................... $ 3,002,763 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Advances ................................................. $ 24,363 Accounts payable ......................................... 16,002 Accrued liabilities ...................................... 4,331 Note payable officer ..................................... 16,370 Due to affiliates ........................................ 2,693,352 ___________ Total current liabilities .............................. 2,754,418 Stockholders' equity Common Stock, $.001 par value, authorized: 50,000,00 shares, issued and outstanding 37,034,270 shares ....................................... 37,035 Capital in excess of par value ........................... 1,608,757 Accumulated deficit ..................................... (1,397,447) ___________ Total Stockholders Equity .............................. 248,345 ___________ Total liabilities and stockholders equity .............. $ 3,002,763 =========== MOUNTAINS WEST EXPLORATION, INC. CONDENSED STATEMENTS OF OPERATIONS UNAUDITED Three Months Three Months Ended Ended March 31, 1997 March 31, 1996 REVENUES Oil and Gas Sales ........................ $ 10,895 $ 3,680 Lease Income ............................. 13,655 -- Interest in sale of oil & gas property .................... -- 170,000 ____________ ____________ 24,550 173,680 EXPENSES Production costs ......................... 4,205 106,096 Depreciation and depletion ............... 366 1,276 Consulting ............................... 264 -- General and administrative ............... 26,536 41,937 ____________ ____________ Total expenses ........................ 31,371 149,309 (Loss) Gain from operations ............... (6,821) 24,371 OTHER INCOME Interest income .......................... 1,090 2,063 Interest expense ......................... (313) -- Other expense ............................ (230) -- ____________ ____________ Total other income (loss) ............. 547 2,063 ____________ ____________ Net earnings .............................. $ (6,274) $ 26,434 ============ ============ Earnings (loss) per common share: ......... $ 0.00 $ 0.00 ============ ============ Weighted Average Number of Shares Outstanding (Note 2) .................... 37,034,270 36,635,720 ============ ============ MOUNTAINS WEST EXPLORATION, INC. CONDENSED STATEMENTS OF CASH FLOWS UNAUDITED Three Months Three Months Ended Ended March 31, March 31, 1997 1996 Cash flows from operating activities Cash received from customers ....................... $ 49,295 $ 173,680 Cash paid to suppliers & employees ................. (52,441) (146,752) Interest received .................................. 90 2,063 Interest paid ...................................... (313) -- _________ _________ Net cash (used) provided by operating activities ........................ (3,369) 28,991 Cash flows from investing activities Proceeds from advances ............................. -- 10,000 Purchases related to oil and gas venture ........... -- (8,496) _________ _________ Net cash provided by investing activities ......... -- 1,504 Cash flows from financing activities Purchase of Treasury Stock ......................... -- (2,040) _________ _________ Net cash used by financing activities ............. -- (2,040) _________ _________ Net (decrease) increase in cash ..................... (3,369) 28,455 Cash at beginning of period ......................... 38,876 115,329 _________ _________ Cash at end of period ............................... $ 35,507 $ 143,784 ========= ========= Reconciliation of net (loss) earnings to cash flows from operating activities: Net (loss) earnings ................................. $ (6,274) $ 26,434 Adjustments Depreciation, depletion and amortization ...................................... 366 1,276 (Increase) decrease in prepaid expenses and accounts receivable .................. (1,000) 875 Increase in advances, accounts payable and accrued liabilities ........................... 3,539 406 _________ _________ Net cash (used) provided by operating activities ........................... (3,369) 28,991 ========= ========= Noncash Investing or Financing Activities: MWEX was loaned $116,623 and $315,043 in the first quarter 1997 and 1996, respectively, which was invested in its oil and gas property in Papua, New Guinea. MOUNTAINS WEST EXPLORATION, INC. NOTES TO FINANCIAL STATEMENTS March 31, 1997 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The balance sheet at March 31, 1997 and statements of operations and statements of cash flows for the three months ended March 31, 1997 and 1996 have been prepared by the company, without audit. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the Company's audited financial statements at December 31, 1996. The results of operations for the three months ended March 31, 1997 are not necessarily indicative of operating results for the full year. 2. NOTES TO FINANCIAL STATEMENTS. Net income or loss per common share has been computed based on the weighted average number of shares outstanding during the period. 3. OIL AND GAS PROPERTIES Capitalized costs using the successful efforts method related to the Company's oil and gas activities as of March 31, 1997 are as follows: Proved developed properties $ 14,779 Proved shut - in property 2,744,129 Accumulated depreciation, depletion, amortization and valuation allowances (14,779) ___________ Net capitalized costs $ 2,744,129 =========== 4. CONTINGENCIES MWEX has $53,042 of cash in a term deposit account that is restricted for the purpose of guaranteeing a performance bond related to PPL#165. The performance bond was acquired in 1995 to guarantee that exploratory procedures would be performed on the property. The ownership of this cash remains with MWEX even though PPL#165 was sold to Gedd, Inc. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Plan of Operations During the quarter ended March 31, 1997, oil and gas sales were $10,895 as compared to $3,680 for the same period in the prior year. Significant increases in such revenues are not anticipated by management to occur during the remainder of the current fiscal year or until there is production from the Southeast Gobe Oil and Gas Field. As previously reported, certain transactions involving the Company's Papua New Guinea operations occurred that will have a material effect on the Company in future quarters and years. Those are: a. The three oil wells in which the Company has an interest have been included in Petroleum Development License (PDL) has been unitized with Chevron Oil Company's existing PDL to the north. The two new PDLs will be developed into the Southeast Gobe and Gobe Main oil and gas Fields. Development of this field is well under way with an anticipated first production scheduled for early 1998. As a result of the government's exercising its option to acquire a 22.5% interest in the unitized PDLs, the Company's interest in the unitized PDL will be a net 0.88%. Management anticipates that this interest will result in initial production to the Company's interest of approximately 200 barrels of oil per day. The Company's expenses in this unit are to be carried until production from the wells located in the Southeast Gobe field is first sold. b. The costs of the gathering system that will be required to get the oil from the unit to sale has been estimated at more than $175,000,000, none of which will be borne by the Company until after the first sale of production. After that time, all of the money realized from the sale of the oil will be devoted to repayment of the Company's carried cost in the project. Management estimates that the Company's total carried cost will be approximately $3,000,000, which, at the production rate of 200 barrels per day to the Company's interest will take approximately 36 months to pay out after production begins. c. During the quarter ended March 31, 1997, the government notified the partners of its election to exercise its option to acquire 22.5% of the PDL's. Finalization of the acquisition occurred on April 29, 1997. As a part of the acquisition the government paid each partner 22.5% of its costs in the project. At the date of this Report, the Company is not able to state what the effect this transaction will have on its financial statements other that its anti- cipated reduction of debt and carrying cost of the assets to the extent of the payment. d. The effect of the exercise of the government's option has been a reduction in all of the partners' interest in the Southeast Gobe field. The Company's interest in the Southeast Gobe Field was reduced from 2.5% to 1.93% which is an interest of approximately 0.88 of the unitized field. e. The northern part of PPL 56 is now PPL 190-Fold Belt License. This block of approximately 462,632 acres (17,409 net to the Company's interest) has many very prospective surface structures located on it. One of these structures will be drilled during the first two years of the license. A reallocation of interests has increased the Company's interest in this license from 2.5% to 3.763%. During the first few months of the new License existence the Company will have to fund its share of a new seismic program which it is estimated will be approximately $37,630. The Iehi shut-in gas field lies on this license but the reserves are insignificant at this time. The Company will have to fund its percentage of most of the work program of the license which calls for a total expenditure of $13,500,000 over the next six years. Of the total costs that must be incurred by the Company on this new License, 2.5% are subject to the carried interest granted in PPL 56, therefore, the Company is obligated to pay only 1.263% of the total costs incurred prior to production from any of the properties originally encompassed by PPL 56. Management estimates that the Company's cost in this new concession over the next year will be approximately $200,000. f. The southern part of PPL 56 has been reissued as Foreland PPL 189 Application, which contains approximately 483,661 acres (24,429 net acres to the Company's interest.) As a result of a reallocation of interests, the Company's interest in this License has been increased from 2.5% to 5.051%. This license has the Barikewa shut-in gas field located on it, which has gas reserves estimated from 163 billion cubic feet to as high as 1590 billion cubic feet. Further evaluation will be made to more precisely define the true reserves of this field. Plans to build at least one LNG plant near Port Moresby has been announced and Chevron has announced plans to build a gas pipeline from Papua, New Guinea into Northern Australia which, it plans to have in operation within four years. Either an LNG plant or the proposed pipeline should greatly increase the value of the gas reserves at Barikewa. The Company will have to fund most of its share of the work program of this license which calls for an expenditure of approximately $6,250,000 over a period of six years, with approximately $56,000 to be paid by the Company over the next year. g. Petroleum Prospecting License No. 165, owned by the Company and Gedd PNG is being evaluated at this time. An aeromagnetic survey has been completed and the Company is awaiting the results of the survey which will determine if there is one or more drillable structures on the license. Gedd is funding the work program of this license. With the increased activity and development in Papua New Guinea, the Company is now seeking funds to carry forward the programs which are currently under way. With oil production only a little over a year away and the gas reserves in Papua New Guinea currently being studied for early development, the Company believes that it will be able to acquire the necessary funds, either through borrowing or through sale of equity, to meet its payment obligations under each of the licenses. However, the Company does not presently have the liquidity that may be necessary to meet any call for payment of expenses and the Company has no present assurance of the availability of any of the funds that may be needed at the time needed. The failure of the Company to meet any cash call made on it for its share of the expenses incurred on any concession could result it its losing its interest in the concession. Changes in Financial Condition The Company has experienced a decline in cash but has increased total assets through the first three months of the current fiscal year. The Company's primary liability is a continually developing carried interest in certain New Guinea oil and gas rights. Total liabilities aside from this obligation are approximately $60,000. It is Management's belief that the Company will be able to continue to meet its financial commitments during the coming fiscal year. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Other than the judgment described in the Company's annual report on form 10KSB, incorporated herein by reference, management knows of no legal proceedings or unsatisfied judgments which have not been provided for in any court or agency to which the Company or any of its officers or directors are or may be a party. ITEM 2. CHANGES IN SECURITIES NONE ITEM 3. DEFAULTS IN SENIOR SECURITIES NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER NONE ITEM 5. OTHER INFORMATION NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) There are no exhibits required by Item 601 of regulation S-K (b) Reports on Form 8-K. States whether any reports on Form 8-K have been filed during the quarter for which this report is filed, listing the items reported, any financial statement filed, and the dates of any such reports. NONE SIGNATURES In accordance with section 13 to 15 (d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Robert A. Doak, Jr. May 12, 1997 ________________________________________________________ Robert A. Doak, Jr. President, Chief Executive Officer and Chief Financial Officer EX-27 2
5 3-MOS DEC-31-1997 MAR-31-1997 35507 0 7424 0 0 42931 2776026 24319 3002763 2754418 0 0 0 37035 211310 3002763 10895 24550 4205 4205 27709 0 313 (6274) 0 (6274) 0 0 0 (6274) (0.00) (0.00)
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