-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, a63KCyXYt+fw2EOKbk9huTSvIaKvMqV/MifnTx9dDaBrZnMU1W+G9NEURd1x2vBb bKAQDfKWtzKLnTZm/aInEQ== 0000033325-95-000012.txt : 19950508 0000033325-95-000012.hdr.sgml : 19950508 ACCESSION NUMBER: 0000033325-95-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950505 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: 95534700 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 1ST QUARTER 1995 FORM 10Q FORM 10Q 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, 1995 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: 12,537,100 ITEM I: Financial Statements EQUITY OIL COMPANY Statement of Operations For the three months ended March 31, 1995 and 1994 (Unaudited) 1995 1994 ------------ -------- REVENUES Oil and gas sales $3,022,602 $2,622,442 Partnership income 75,000 74,300 Interest income 60,259 50,613 Other 178,553 3,039 --------- --------- 3,336,414 2,750,394 EXPENSES Operating costs 1,153,138 1,195 031 Depreciation, depletion and amortization 1,150,000 1,050,000 Leasehold abandonments 11,200 13,850 Exploration 308,699 408,183 3-D Seismic 237,604 - General and administrative 402,445 410,200 Interest 14,006 20,796 --------- --------- 3,277,092 3,098,060 Income (loss) before income taxes 59,322 (347,666) Provision (benefit) for income taxes (50,783) (110,708) NET INCOME (LOSS) $ 110,105 $ (236,958) ========== =========== Net income per common share $ 0.01 $(0.02) ========== =========== Cash dividends per share declared $.00 $.00 Weighted average shares outstanding 12,541,011 12,537,700 The accompanying notes are an integral part of these statements. EQUITY OIL COMPANY Balance Sheet as of March 31, 1995, and December 31, 1994 (Unaudited) March 31, December 31, ASSETS 1995 1994 - ------ ---------- ------- Current assets: Cash and cash equivalents $ 583,947 $ 363,342 Temporary cash investments 1,987,106 2,466,728 Accounts and advances receivable 3,587,299 3,434,955 Income taxes receivable 293,440 293,440 Deferred income taxes 48,281 48,281 Other current assets 486,265 389,613 ---------- ---------- 6,986,338 6,996,359 Property and equipment 95,555,065 95,048,505 Less accumulated depreciation, depletion and amortization 55,386,588 54,236,588 40,168,477 40,811,917 Other assets: Investment in and notes receivable from Symskaya Exploration 3,903,435 3,415,123 Other assets 43,633 - Investment in Raven Ridge Pipeline Partnership 643,528 684,937 --------- ---------- 4,590,596 4,100,060 TOTAL ASSETS $51,745,411 $51,908,336 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,265,687 $ 1,156,611 Accrued liabilities 153,041 151,948 Federal, state, and foreign income taxes payable 109,482 50,931 Deferred lease rental income - 178,553 Accrued profit sharing 39,000 157,073 Current portion - note payable - 460,000 --------- --------- 1,567,210 2,155,116 Note payable - 460,000 Revolving credit facility 920,000 920,000 Deferred income taxes 9,952,973 10,088,189 ---------- ---------- 10,872,973 10,548,189 Stockholders' Equity Common stock 12,593,631 12,583,631 Paid in capital 2,934,792 2,934,792 Retained earnings 23,898,923 23,788,818 Less cost of treasury stock (122,118) (112,210) ---------- ---------- 39,305,228 39,205,031 Total liabilities and stockholders' equity $51,745,411 $51,908,336 ========== ========== The accompanying notes are an integral part of these statements. EQUITY OIL COMPANY Statement of Cash Flows For the three months ended March 31, 1995 and 1994 (Unaudited) 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 110,105 $ (236,958) Adjustments Depreciation, depletion and amortization 1,150,000 1,050,000 Partnership distributions in excess of income 41,409 39,869 Property dispositions 11,201 13,850 Decrease in deferred income taxes (135,216) (74,378) Increase (decrease) from changes in: Accounts and advances receivable (152,344) 192,662 Other current assets (96,652) 1,074 Accounts payable and accrued liabilities 110,169 201,192 Income taxes receivable/payable 58,551 (99,180) Deferred lease revenue (178,553) - Accrued profit sharing (118,073) (113,550) ---------- ---------- Net cash provided by operating activities 800,596 974,581 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (517,760) (1,202,108) Advances to Symskaya Exploration (488,312) (125,077) Sale of temporary cash investments 479,622 - ---------- ---------- Net cash used in investing activities (526,450) (1,327,185) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (9,908) - Increase in other assets (43,633) - Proceeds from credit facility 920,000 - Payment of long term debt (920,000) - ---------- ---------- Net cash used in financing activities (53,541) - ----------- ---------- NET INCREASE (DECREASE) IN CASH 220,605 (352,604) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 363,342 5,194,013 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 583,947 $ 4,841,409 ========== ========== CASH, CASH EQUIVALENTS AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 2,571,053 $ 4,841,409 ========== ========== Supplemental disclosures of cash flow information: Cash paid during the period for: Income Taxes $ 25,882 --- Interest $ 14,006 $ 20,796 The accompanying notes are an integral part of these statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Interim Financial Statements The accompanying consolidated financial statements of Equity Oil Company (the Company) have not been audited by independent accountants, except for the Balance Sheet at December 31, 1994. 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 March 31, 1995, and the results of its operations and its cash flows for the three month periods ended March 31, 1995 and 1994. 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 1994 Annual Report on Form 10-K. The results for the three month period ended March 31, 1995 are not necessarily indicative of future results. Note 2. Net Income (Loss) Per Share Net income (loss) per share is based on the weighted average number of common shares outstanding during the period. Primary and fully diluted earnings per share are essentially the same. Note 3. Reclassifications Certain balances in the March 31, 1994 financial statements have been reclassified to conform with the current year presentation. These changes had no effect on previously reported net income, total assets, liabilities or stockholders' equity. PART I ITEM 2 Managements Discussion and Analysis of Financial Condition and Results of Operation RESULTS OF OPERATIONS First quarter 1995 oil prices reversed their weakening trend from the first quarter of 1994, combining with income from a lease option agreement and an income tax benefit to enable the Company to record net income of $91,584, or $.01 per share. This compares to a net (loss) of $(236,958), or $(.02) per share, in 1994. The posted price for Western Colorado crude oil, which accounts for 64% of the Company's total oil production, averaged $18.11 during the first quarter of 1995, an increase of 20% from $15.04 during the same quarter of 1994. Prices at other Company properties increased at similar levels. As a result, total revenues of $3,336,414 were up 21% from 1994 revenues of $2,750,394. Total production increased year-to-year on an equivalent barrel basis. The Company maintained its oil production level from year to year, with 149,000 barrels produced in both 1995 and 1994. Gas production rose from 289,012 Mcf in 1994 to 310,633 Mcf in 1995. Other income includes the recognition in the first quarter of 1995 of income arising from a lease option agreement that was deferred in 1994. Total expenses increased 7% over 1994 first quarter levels, primarily as a direct result of 3-D seismic expenses incurred in connection with the Company's California exploration programs. The largest of these 3-D programs is a 41.5 square mile survey for which data acquisition was completed in March of 1995. Processing and interpretation of the data is expected to be completed by the end of the first half of 1995, and result in the development of a minimum of seven drillable gas prospects with per-well targeted reserves of 1.5 billion cubic feet in the Forbes formation at depths of 7,000 to 8,000 feet. The project is adjacent to the Grimes field, which has been a prolific gas producer in the Sacramento Basin for many years. Depending on the results of the work currently underway, the 3-D survey may be expanded to include an additional 17 square miles to be undertaken in the fall of 1995. Equity has a 25% working interest in this program. Three other Sacramento Basin prospects were set up in 1994. One incorporates a three square mile 3-D survey to be completed in March of 1995. If the results are positive, the survey will be followed by an initial 5,000 foot Forbes test drilled in the second quarter of the year. The second prospect is also a Forbes play, developed on 2-D seismic leads, and should be drilled in the first half of 1995. Equity has a 25% working interest in each prospect. The third prospect, where Equity has a 50% working interest, is based on 2-D seismic data purchased by the Company in 1994, and should yield a drillable Forbes test in 1995. Other exploration expenses decreased over 1994 because of reduced drilling activity in 1995. During the 1st quarter of 1994, the Company participated in the drilling of eight wells, compared to one well in 1995. Two exploratory wells were plugged and abandoned in 1994, and there were no dry holes in 1995. Drilling in 1995 has been conducted at the Company's Retlaw prospect in Alberta, Canada. The first Retlaw well, the Retlaw No. 14-13-12-19 drilled in 1974, identified 26 billion cubic feet of gross gas reserves, or 3.2 billion cubic feet net to Equity. Market availability and regulatory production allowances have until this year curtailed production from this well to 2 million cubic feet per day. With the intention of accelerating the production of these reserves, the operator proposed the drilling of the second well, and obtained regulatory approval to produce both wells at 5.5 million cubic feet per day, for a combined rate of 11 million cubic feet per day. Both wells should be on production at the new rate by April of 1995. The increased production has the potential to increase Equity's 1995 gas production by 500 million cubic feet. Equity has a net working interest of 14.1% in the wells. Further development drilling will take place at the Siberia Ridge and Cessford fields, where the Company expects to participate in the drilling of up to eight wells in 1995. Depreciation, depletion, and amortization charges increased year-to-year as the result of reserve write-downs on marginal properties which occurred at the end of 1994. The Company's tax provision for the first quarter of 1995 is lower than the statutory rate because of excess allowable percentage depletion and the use of foreign tax credits. CAPITAL RESOURCES AND LIQUIDITY Cash, cash equivalents, and temporary cash investments totaled $2,571,052 as of March 31, 1995, a decrease of 9% since year-end 1994. Working capital at March 31, 1995 was $5,407,857, up 12% from working capital of $4,841,243 at December 31, 1994. For the first three months of 1995, cash provided by operating activities decreased 18% over the same period of 1994 to $800,596, primarily due to increases in receivables and the recognition of deferred lease revenue. During the first quarter of 1995, the Company established a revolving credit facility with a $20 million borrowing base to facilitate the acquisition of oil and gas reserves as a key element in the Company's growth strategy. The facility was used to pay off the Company's $920,000 Note Payable. Investment in property and equipment, including advances to Symskaya Exploration, for the first three months of 1995 totaled $1,006,072, a 24% decrease from the amount recorded during the corresponding three months of 1994. This decrease in capital spending is a reflection of the Company's reduced drilling program to date in 1995. The Company believes that existing cash balances, cash flow, and funds available under the Company's credit facility will provide adequate resources to meet all of its current capital and exploration spending objectives. PART II OTHER INFORMATION The answers to items listed under Part II are inapplicable or negative. 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: May 4, 1995 By /s/ Paul M. Dougan ---------------------- ------------------- Paul M. Dougan, President DATE: May 4, 1995 By /s/ Clay Newton ----------------------- ---------------- Clay Newton, Treasurer -----END PRIVACY-ENHANCED MESSAGE-----