-----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, QUPYpXTkCb81Sy1eW3bwaof/DgHJlB7peqG3MC8zN4/H/mMMoHIU98U3+b84eRxw duS5cbda2TAecBNk42YmiA== 0000033325-97-000009.txt : 19970811 0000033325-97-000009.hdr.sgml : 19970811 ACCESSION NUMBER: 0000033325-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY OIL CO CENTRAL INDEX KEY: 0000033325 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 870129795 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00610 FILM NUMBER: 97653987 BUSINESS ADDRESS: STREET 1: 10 W THIRD S STE 806 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 BUSINESS PHONE: 8015213515 MAIL ADDRESS: STREET 1: P O BOX 959 CITY: SALT LAKE CITY STATE: UT ZIP: 84110 10-Q 1 2ND QUARTER 1997 FORM 10-Q FORM 10Q UNITED STATES 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 June 30, 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: 0-610 EQUITY OIL COMPANY (Exact name of registrant as specified in its charter) COLORADO 87-0129795 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Suite 806, #10 West Third South, Salt Lake City, Utah 84101 (Address of principal executive offices) (Zip Code) (801) 521-3515 Registrant's telephone number, including area code (Former name, former address and former fiscal year, if changed since last report) 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 12,697,100 ITEM I: Financial Statements EQUITY OIL COMPANY Statement of Operations For the Six Months Ended June 30, 1997 and 1996 (Unaudited) 1997 1996 ----------- ----------- REVENUES Oil and gas sales ................... $ 8,745,718 $ 7,568,678 Partnership income .................. 150,000 150,000 Interest income ..................... 83,518 70,905 Other ............................... 552,157 123,074 ----------- ----------- 9,531,393 7,912,657 EXPENSES Operating costs ..................... 3,038,935 2,621,927 Depreciation, depletion and amortization ...................... 2,200,000 1,800,000 Equity loss in Symskaya Exploration .............. 143,837 -- Leasehold abandonments .............. 40,952 15,092 Exploration ......................... 1,228,047 1,230,577 General and administrative .......... 1,108,018 1,218,972 Interest ............................ 324,172 -- ----------- ----------- 8,083,961 6,886,568 Income before income taxes ................... 1,447,432 1,026,089 Provision (benefit) for income taxes ......... 505,847 205,033 NET INCOME ................................... $ 941,585 $ 821,056 =========== =========== Net income per common share .................. $ 0.07 $ 0.06 =========== =========== Weighted average shares outstanding .......... 12,704,840 12,728,834 The accompanying notes are an integral part of these statements. EQUITY OIL COMPANY Statement of Operations For the Three Months Ended June 30, 1997 and 1996 (Unaudited) 1997 1996 ----------- ----------- REVENUES Oil and gas sales ................... $ 3,903,440 $ 3,910,332 Partnership income .................. 75,000 75,000 Interest income ..................... 28,592 32,156 Other ............................... 437,357 62,497 ----------- ----------- 4,444,389 4,079,985 EXPENSES Operating costs ..................... 1,496,167 1,287,931 Depreciation, depletion and amortization ...................... 1,100,000 900,000 Equity loss in Symskaya Exploration .............. 58,112 -- Leasehold abandonments .............. 22,512 5,092 Exploration ......................... 589,630 419,980 General and administrative .......... 549,201 597,963 Interest ............................ 173,849 -- ----------- ----------- 3,989,471 3,210,966 Income before income taxes ................... 454,918 869,019 Provision for income taxes ................... 293,708 153,670 ----------- ----------- NET INCOME ................................... $ 161,210 $ 715,349 =========== =========== Net income per common share .................. $ 0.01 $ 0.06 Weighted average shares outstanding .......... 12,692,693 12,741,781 The accompanying notes are an integral part of these statements. EQUITY OIL COMPANY Balance Sheet as of June 30, 1997, and December 31, 1996 June 30, December 31, ASSETS 1997 1996 - ------ ------------- ------------- (Unaudited) Current assets: Cash and cash equivalents .............. $ 576,106 $ 787,961 Temporary cash investments ............. -- 49,802 Accounts and advances receivable ....... 3,296,784 3,660,670 Income taxes receivable ................ 106,770 311,393 Deferred income taxes .................. 31,053 31,053 Other current assets ................... 310,740 372,701 ------------- ------------- 4,321,453 5,213,580 Property and equipment ................... 109,066,076 106,147,145 Less accumulated depreciation, depletion and amortization .............. 63,764,028 61,732,014 ------------- ------------- 45,302,048 44,415,131 Other assets: Investment in Raven Ridge Pipeline Partnership ................. 331,467 405,328 Other assets ........................... 126,341 147,398 ------------- ------------- 457,808 552,726 TOTAL ASSETS ............................. $ 50,081,309 $ 50,181,437 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ....................... $ 881,611 $ 1,880,420 Accrued liabilities .................... 179,775 153,467 Federal, state and foreign income taxes payable ................. 427,359 191,509 Accrued profit sharing ................. 96,000 179,100 ------------- ------------- 1,584,745 2,404,496 Revolving credit facility ................ 8,878,830 8,878,830 Deferred income taxes .................... 5,421,183 5,565,973 ------------- ------------- 14,300,013 14,444,803 Stockholders' Equity Common stock ........................... 12,761,100 12,751,100 Paid in capital ........................ 3,667,708 3,648,333 Less cost of treasury stock ............ (205,200) (98,653) Retained earnings ...................... 17,972,943 17,031,358 ------------- ------------- 34,196,551 33,332,138 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................... $ 50,081,309 $ 50,181,437 ============= ============= The accompanying notes are an integral part of these statements. EQUITY OIL COMPANY Statement of Cash Flows For the Six Months Ended June 30, 1997 and 1996 (Unaudited) 1997 1996 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ......................... $ 941,585 $ 821,056 Adjustments Depreciation, depletion and amortization .......................... 2,200,000 1,800,000 Partnership distributions in excess of income ...................... 73,861 71,622 (Gain) loss on property dispositions ............. (284,105) 15,092 Decrease in deferred income taxes ....... (144,790) (4,617) Equity loss in Symskaya Exploration .............. 143,837 -- Change in other assets .............. 21,057 21,057 Common stock issued for services .... 29,375 103,313 Net cash provided before changes in ----------- ----------- working capital items .................. 2,980,820 2,827,523 Increase (decrease) from changes in: Accounts and advances receivable ...... 363,886 18,521 Other current assets .................. 61,961 53,158 Accounts payable and accrued liabilities ......................... (972,501) (221,537) Income taxes receivable/payable ....... 440,473 60,901 Accrued profit sharing ................ (83,100) (52,771) ----------- ----------- Net cash provided by operating activities ................. 2,791,539 2,685,795 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Advances to Symskaya Exploration .......... (143,837) (1,577,729) Sale of temporary cash investments ........ 49,802 699,044 Proceeds from sale of properties .......... 339,384 -- Capital expenditures ...................... (3,142,196) (2,619,825) ----------- ----------- Net cash used in investing activities .............................. (2,896,847) (3,498,510) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock ................ (106,547) -- Exercise of incentive stock options ....... -- 84,375 Borrowings under revolving credit facility ................ -- 2,210,000 ----------- ----------- Net cash provided by (used in) financing activities ................... (106,547) 2,294,375 ----------- ----------- NET INCREASE (DECREASE) IN CASH .............. (211,855) 1,481,660 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................... 787,961 511,252 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................... $ 576,106 $ 1,992,912 =========== =========== Supplemental disclosures of cash flow information: Cash paid during the period for: Income Taxes $ 278,156 $ 270,340 Interest $ 324,172 $ -- The accompanying notes are an integral part of these statements. NOTES TO FINANCIAL STATEMENTS Note 1. Interim Financial Statements The accompanying financial statements of Equity Oil Company ("Equity" or "the Company") have not been audited by independent accountants, except for the Balance Sheet as of December 31, 1996. In the opinion of the Company's management, the financial statements reflect the adjustments, all of which are of a normal and recurring nature, necessary to present fairly the financial position of the Company as of June 30, 1997, and the results of its operations for the three and six month periods ended June 30, 1997 and 1996, and its cash flows for the six month periods ended June 30, 1997 and 1996. The financial statements and the accompanying notes to financial statements have been prepared according to rules and regulations of the Securities and Exchange Commission. Accordingly, certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. These financial statements should be read in conjunction with the Company's 1996 Annual Report on Form 10-K, and the Company's Form 10-Q for the first quarter of 1997. The results for the three and six month periods ended June 30, 1997 are not necessarily indicative of future results. Note 2. Net Income Per Share Net income per share is based on the weighted average number of common shares and common share equivalents outstanding during the period. Primary and fully diluted earnings per share are essentially the same. Note 3. Reclassifications Certain balances in the June 30, 1996 financial statements have been reclassified to conform with the current year presentation. These changes had no effect on the previously reported net income, total assets, liabilities or stockholders' equity. PART I ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operation RESULTS OF OPERATIONS Financial Results Net income for the first six months of 1997 was $941,585, or $.07 per share, 15% higher than net income of $821,056, or $.06 per share recorded during the first half of 1996. Total revenues of $9,531,393 were 20% higher than total revenues of $7,912,657 recorded in the first half of 1996. Second quarter 1997 net income was $161,210, or $.01 per share, compared to second quarter 1996 net income of $715,349, or $.06 per share. Second quarter revenues in 1997 of $4,444,389 were 9% higher than the $4,079,985 reported in the second quarter of 1996. Operating Results During the first half of 1997, the Company participated in a total of 16 wells, 11 of which have been completed as oil and gas wells. In California, where the Company continues to drill on 3D seismic surveys, 6 of 9 wells were completed as gas wells. The Company currently has 15 additional wells scheduled to be drilled in California before the end of the year, including the first well at its Davis Ranch prospect, which should spud by the end of July. In drilling outside of California, the Company completed 5 of 7 wells during the first half of 1997. Included in the successful well count is a development well at the Company's Siberia Ridge field in Wyoming, where the Company owns a 50% working interest. The Company completed additional development wells in Alberta, Wyoming and North Dakota, and completed 1 exploratory well in Texas. During the first half of 1996, the Company participated in 8 wells, 7 of which were completed as producing wells. CAPITAL RESOURCES AND LIQUIDITY Cash, cash equivalents, and temporary cash investments totaled $576,106 as of June 30, 1997, a decrease of $261,657 since year-end 1996. Working capital at June 30, 1997 was $2,736,708, compared to $2,809,084 at December 31, 1996. The Company's ratio of current assets to current liabilities improved from 2.17 to 1 at December 31, 1996 to 2.73 to 1 at June 30, 1997. Cash provided by operating activities was $2,791,539 in the first six months of 1997, compared to $2,685,795 during the same period of 1996. Investment in property and equipment for the first six months of 1997 of $3,142,196 was 20% higher than the investment made during the first half of 1996, reflecting the Company's increased drilling activity domestically. During the fist half of 1996, the Company made advances to Symskaya Exploration of $1,577,729, compared to $143,837 during 1997, reflecting Symskaya's reduced activity in 1997. The investment activity was partially funded by proceeds from the sale of properties in 1997, and by the sale of temporary cash investments in both years. The Company purchased 35,000 shares of its stock on the open market during the first half of 1997, at an average price of $3.04 per share. No treasury stock was purchased during the first half of 1996. During the first half of 1997, the Company did not increase borrowings under its credit facility, compared to borrowings of $2,210,000 in 1996, which were used to fund investments in properties and equipment. At June 30, 1997, the Company had approximately $10.1 million of availability on the facility. The Company believes that existing cash balances, cash flow, and borrowing capacity under the revolving credit facility will provide adequate resources to meet its capital, exploration, and acquisition spending objectives. COMPARISON OF SECOND QUARTER 1997 WITH SECOND QUARTER 1996 Oil and gas sales in the second quarter of 1997 of $3,903,440 were slightly lower than the $3,910,332 recorded for the same quarter of last year. Increases in oil production were offset by lower crude oil prices, while decreases in gas production were offset by higher gas prices. The average net price for crude oil received by the Company during the quarter was $18.64 per barrel, compared to $20.30 during the second quarter of 1996, a decrease of 8%. Average gas prices received during the second quarter of 1997 were $1.85 per Mcf, compared to $1.38 per Mcf during the second quarter of 1996. Total production increased slightly year-to-year on an equivalent barrel basis. Oil production increased from 158,000 barrels in the second quarter of 1996 to 163,000 during the same quarter of 1997, while gas production dropped from 549,000 Mcf in 1996 to 526,000 Mcf in 1997. During the second quarter of 1997, the Company recorded a gain on the sale of certain oil and gas properties of approximately $325,000. The properties sold had proved reserves of less than 15,000 barrels of oil. There was no corresponding event in 1996. Total expenses in 1997 increased 24% over 1996 second quarter levels. Lease operating costs increased 16%, primarily as a result of increased oil production and non-recurring workover expenses. Depreciation, depletion and amortization increased 22%, primarily due to increased oil production in 1997 and the new properties added to the depletion base during 1997 and 1996. Exploration expense increased due to higher dry hole costs, which were approximately $185,000 higher in the second quarter of 1997 compared to the same period in 1996. During 1996, because of its ongoing exploration project in Russia, the Company was required to capitalize interest on its investment in this project. With activity in Russia curtailed in 1997 as a result of the Lemok #1 being abandoned in the fourth quarter of 1996, interest is now being expensed. Interest expense during the 2nd quarter of 1997 was $173,849, compared to no interest expense during the 2nd quarter of 1996. Income tax expense rose during the second quarter due to adjustments arising from an audit of the Company's Canadian tax returns. The adjustment resulted in the accrual of approximately $175,000 in additional Canadian taxes related to prior years. COMPARISON OF FIRST HALF 1997 WITH FIRST HALF 1996 Higher oil and gas prices during the first half of 1997 combined with increases in oil production to produce an 20% increase in total revenues over the same period of 1996. Average oil prices received by the Company during the first half of 1997 were $19.47 per barrel, compared to $18.66 per barrel during the first half of 1996. Average gas prices received during the first half of 1996 were $1.37 per Mcf, which compared to $2.22 per Mcf during the first half of 1997. Oil production of 324,000 barrels was up 3% from 1996 production of 314,000 barrels. Natural gas production decreased slightly, from 1,045,000 Mcf in 1996 to 1,028,000 Mcf in 1997. The increase in oil and gas sales for the period was augmented by an increase in other income. During the first half of 1997, the Company recorded a gain on the sale of certain oil and gas properties of approximately $325,000. The properties sold had reserves of less than 15,000 barrels of oil. There was no corresponding event in 1996. Total expenses in 1997 increased 17% over 1996 first half levels. Lease operating costs increased 16%, primarily as a result of increased oil production and non-recurring workover expenses. Depreciation, depletion and amortization increased 22%, primarily due to increased oil production in 1997 and the new properties added to the depletion base during 1997 and 1996. Exploration expense remained constant from year to year, as lower 3-D seismic expenses were offset by higher dry hole costs. General and administrative expenses decreased by 9% from 1996 first half levels. The decrease was mainly due to reduced compensation expense during 1997. During 1996, because of its ongoing exploration project in Russia, the Company was required to capitalize interest on its investment in this project. With activity in Russia curtailed in 1997, interest is now being expensed. Interest expense during the first half of 1997 was $324,172, compared to no interest expense during the same period of 1996. Income tax expense rose during the first half due to adjustments arising from an audit of the Company's Canadian tax returns. The adjustment resulted in the accrual of approximately $175,000 in additional Canadian taxes related to prior years. OTHER ITEMS In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share. This statement establishes standards for computing and presenting earnings per share ("EPS") and applies to entities with publicly-held common stock or potential common stock. This statement simplifies the standards for computing EPS and makes them comparable to international EPS standards. This statement is effective for financial statements for both interim and annual periods ending after December 15, 1997. The Company is currently evaluating the impact of the recently issued statement and will adopt the requirements for the year ending December 31, 1997. The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on the results of operations or financial position of the Company. Based on that review, the Company believes that none of these pronouncements will have a significant effect on current or future earnings or operations. PART II OTHER INFORMATION The answers to items listed under Part II are inapplicable or negative, except as shown below. Item 4. Submission of Matters to a Vote of Security Holders. At the Company's annual meeting, held on May 14, 1997, stockholders were asked to elect Mr. William D. Forster and Mr. Randolph G. Abood to serve three year terms on the Board of Directors. The following votes were recorded. Forster Abood Affirmative votes 10,433,574 10,455,153 Withhold authority 159,982 138,403 Each director nominee received at least 98% of the shares voted at the meeting. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITY OIL COMPANY (Registrant) DATE: August 8, 1997 By /s/ Paul M. Dougan --------------- ------------------------- Paul M. Dougan, President DATE: August 8, 1997 By /s/ Clay Newton --------------- ------------------------- Clay Newton, Treasurer EX-27 2 ARTICLE 5 FDS FOR 2ND QUARTER 1997 FORM 10Q
5 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 576,106 0 3,296,784 0 0 4,321,453 109,066,076 63,764,028 50,081,309 1,584,745 0 0 0 12,761,100 0 50,081,309 8,745,718 9,531,393 0 7,759,789 0 0 324,172 1,447,432 505,847 941,585 0 0 0 941,585 .07 .07
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