-----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, S6n9sasSZfmnYFy4amvG+tdQUubRVzLpUi8Kpre+wJYRDJmGkdPf7Czjha8LLJjt BOlo4tw3tYku3+sJ7Q6adQ== 0000033325-96-000006.txt : 19960515 0000033325-96-000006.hdr.sgml : 19960515 ACCESSION NUMBER: 0000033325-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 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: 96562988 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 1996 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, 1996 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: 12,717,600 1 ITEM I: Financial Statements EQUITY OIL COMPANY Statement of Operations For the three months ended March 31, 1996 and 1995 (Unaudited) 1996 1995 ------------ -------- REVENUES Oil and gas sales $3,658,346 $3,022,602 Partnership income 75,000 75,000 Interest income 38,749 60,259 Other 60,577 178,553 --------- --------- 3,832,672 3,336,414 --------- --------- EXPENSES Operating costs 1,333,996 1,153,138 Depreciation, depletion and amortization 900,000 1,150,000 Leasehold abandonments 10,000 11,200 Exploration 506,500 308,699 3-D Seismic 304,097 237,604 General and administrative 621,009 402,445 Interest - 14,006 --------- --------- 3,675,602 3,277,092 --------- --------- Income before income taxes 157,070 59,322 Provision (benefit) for income taxes 51,363 (50,783) ---------- ---------- NET INCOME $ 105,707 $ 110,105 ========== ========== Net income per common share $ 0.01 $ 0.01 ========== ========== Cash dividends per share declared $.00 $.00 ========== ========== Weighted average shares outstanding 12,714,350 12,541,011 The accompanying notes are an integral part of these statements. 2 EQUITY OIL COMPANY Balance Sheet as of March 31, 1996, and December 31, 1995 March 31, December 31, ASSETS 1996 1995 - ------ ---------- ------- (Unaudited) Current assets: Cash and cash equivalents $ 504,332 $ 511,252 Temporary cash investments 253,201 955,967 Accounts and advances receivable 3,294,704 3,253,865 Income taxes receivable 278,871 264,300 Other current assets 353,523 378,594 ---------- ---------- 4,684,631 5,363,978 Property and equipment 100,536,099 99,242,754 Less accumulated depreciation, depletion and amortization 58,449,855 57,549,855 42,086,244 41,692,899 Other assets: Investment in and notes receivable from Symskaya Exploration 6,976,120 6,160,442 Other assets 178,983 189,511 Investment in Raven Ridge Pipeline Partnership 503,290 540,220 --------- ---------- 7,658,393 6,890,173 TOTAL ASSETS $54,429,268 $53,947,050 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,112,317 $ 1,182,877 Accrued liabilities 432,978 145,422 Federal, state, and foreign income taxes payable 141,471 155,063 Deferred income taxes 10,796 10,796 Accrued profit sharing 48,000 148,771 --------- --------- 1,745,562 1,642,929 Revolving credit facility 5,218,830 4,918,830 Deferred income taxes 8,595,263 8,654,698 ---------- ---------- 13,814,093 13,573,528 Stockholders' Equity Common stock 12,717,600 12,711,100 Paid in capital 3,512,300 3,485,487 Retained earnings 22,639,713 22,534,006 ---------- ---------- 38,869,613 38,730,593 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $54,429,268 $53,947,050 ========== ========== The accompanying notes are an integral part of these statements. 3 EQUITY OIL COMPANY Statement of Cash Flows For the three months ended March 31, 1996 and 1995 (Unaudited) 1996 1995 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 105,707 $ 110,105 Adjustments Depreciation, depletion and amortization 900,000 1,150,000 Partnership distributions in excess of income 36,930 41,409 Property dispositions 10,000 11,201 Common stock issued for services 33,312 - Change in other assets 10,528 - Decrease in deferred income taxes (59,435) (135,216) Increase (decrease)from changes in: Accounts and advances receivable (40,839) (152,344) Other current assets 25,071 (96,652) Accounts payable and accrued liabilities 216,996 110,169 Income taxes receivable/payable (28,163) 58,551 Deferred lease revenue - (178,553) Accrued profit sharing (100,771) (118,074) ---------- ---------- Net cash provided by operating activities 1,109,336 800,596 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1,303,344) (517,760) Advances to Symskaya Exploration (815,678) (488,312) Sale of temporary cash investments 702,766 479,622 ---------- ---------- Net cash used in investing activities (1,416,256) (526,450) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock - (9,908) Increase in other assets - (43,633) Proceeds from revolving credit facility 300,000 920,000 Payments on long term debt - (920,000) ---------- ---------- Net cash provided by (used in) financing activities 300,000 (53,541) ----------- ---------- NET INCREASE (DECREASE) IN CASH (6,920) 220,605 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 511,252 363,342 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 504,332 $ 583,947 ========== ========== CASH, CASH EQUIVALENTS AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 757,533 $ 2,571,053 ========== ========== Supplemental disclosures of cash flow information: Cash paid during the period for: Income Taxes $ 195,800 $ 25,882 Interest $ - $ 14,006 The accompanying notes are an integral part of these statements. 4 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, 1995. In the opinion of the Company's management, the financial statements reflect the necessary adjustments, all of which are of a normal and recurring nature, to present fairly the financial position of the Company as of March 31, 1996, and the results of its operations and its cash flows for the three month periods ended March 31, 1996 and 1995. 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 1995 Annual Report on Form 10-K. The results for the three month period ended March 31, 1996 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 outstanding during the period. Primary and fully diluted earnings per share are essentially the same. Note 3. Accounting for Stock Based Compensation The Company adopted SFAS #123, Accounting for Stock Based Compensation, effective January 1, 1996. The Company has elected to follow the disclosure method of reporting for its stock based compensation. 5 PART I ITEM 2 Managements Discussion and Analysis of Financial Condition and Results of Operation RESULTS OF OPERATIONS Increases in oil and gas production combined with stronger oil prices to help the Company record a 15% increase in revenues during the first quarter of 1996. Total revenues for the period were $3,832,672, compared to $3,336,414 during the first quarter of 1995. Net income for the first quarter of 1996 was $105,707, or $.01 per share, compared to $110,105, or $.01 per share, during the first quarter of 1995. The Company recorded increases in both oil and gas production. Oil production of 156,000 barrels was up 5% from 149,000 barrels in 1995. Gas production increased 60%, from 311,000 Mcf produced in 1995 to 496,000 Mcf produced during the first quarter of 1996, primarily as a result of new gas wells drilled in 1995 and 1996. The net price received for Western Colorado crude oil, which accounts for 60% of the Company's total oil production, averaged $20.60 during the first quarter of 1996, an increase of 8% from $19.02 during the same quarter of 1995. Prices at other Company properties increased at similar levels. Increases in oil and gas sales were offset by lower other income. Other income in 1995 included the recognition of income arising from a lease option agreement that was deferred in 1994. There was no similar transaction during the first quarter of 1996. Total expenses increased 12% over 1995 first quarter levels. Lease operating costs increased 16%, primarily as a result of increased production and higher revenue-based production taxes. Conversely, depreciation, depletion, and amortization (DD&A) charges decreased 22% during the quarter. The majority of the decrease is attributable to the adoption of SFAS #121 in 1995, which removed $2.2 million from the DD&A base that was almost entirely associated with marginally economic, high-cost wells with high depletion rates. The adoption of SFAS #121 was effective July 1, 1995. There was no property impairment charge for the first quarter of 1996. Increases in exploration and administrative costs are primarily due to increased exploratory drilling activity, higher compensation expenses, as well as increased insurance, legal, and investor relations fees. 6 The Company incurred 3-D seismic charges of $304,000 during the first quarter of 1996 compared to $237,000 during the same period of 1995. These charges represent the Company's continued development of its California exploration programs. The Company's tax provision for the first quarter of 1995 is lower than the statutory rate because of percentage depletion carryovers form prior years and the use of foreign tax credits. The carryover benefits were not available to the Company in 1996. During the first quarter of 1996, the Company participated in the drilling of 5 wells, compared to 1 during the same time period of 1995. Of the 5 wells drilled this year, 4 wells have been completed as producers, and 1 well is currently being tested. Included in the 1996 well count is the first well drilled at the Sage Creek Unit, which was acquired in 1995 as part of the Mountain Oil and Gas acquisition. Estimated reserves for the well are 95,500 barrels of oil, drilled at a cost of $1.26 per barrel. Using the result from this well, the Company has identified several potential development locations at the unit. Two wells were also drilled in 1996 at the Company's Orion 3-D seismic project in the Sacramento Basin of California. These wells bring the total drilled at the Orion project to six, five of which have been completed as producing gas wells, for an 83% success ratio. Three of the completed wells are now on production at a combined daily rate of 8,000 Mcf per day. The other two wells are awaiting pipeline connections, and should be on production by the end of the second quarter of 1996. Those two wells were tested at a combined daily rate of 4,000 Mcf per day. The Company expects to drill a total of 9 wells on this project during 1996, with the next two wells scheduled to spud during May. Progress is continuing at the Lemok #1, Symskaya Exploration's initial well in the Krasnoyarsk Krai in Eastern Siberia. Drilling at the well was expected to be completed by the end of the first quarter of 1996, but mechanical drilling problems have further delayed the drilling process. It is now expected that drilling will be completed, and testing at the well initiated, shortly before the end of the second quarter of 1996. CAPITAL RESOURCES AND LIQUIDITY Cash, cash equivalents, and temporary cash investments totaled $757,533 as of March 31, 1996, down from $1,467,219 at year-end 1995. Working capital at March 31, 1996 was $2,939,069, compared to working capital of $3,721,049 at December 31, 1995. For the first three months of 1996, net cash provided by operating activities increased 39% over the same period of 1995, primarily due to the increase in current liabilities which was only partially offset by the net increase in receivables. 7 Investment in property and equipment, including advances to Symskaya Exploration, for the first three months of 1996 totaled $2,119,022, a 110% increase from the amount recorded during the corresponding three months of 1995. This change in capital spending is a reflection of the Company's increased level of drilling activities in 1996. During the three months ended March 31, 1996, the Company borrowed $300,000 on its credit facility, primarily for working capital purposes. During the three months ended March 31, 1995, the Company used $920,000 of borrowing on its credit facility to pay off its long-term debt. 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 13, 1996 By /s/ Paul M. Dougan ---------------------- ------------------- Paul M. Dougan, President DATE: May 13, 1996 By /s/ Clay Newton ----------------------- ---------------- Clay Newton, Treasurer 8 EX-27 2 ARTICLE 5 FDS FOR 1ST QUARTER 1996 10-Q
5 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 504,332 0 3,294,704 0 0 4,684,631 100,536,099 58,449,855 54,429,268 1,745,562 0 12,717,600 0 0 0 54,429,268 3,658,346 3,832,672 0 3,675,602 0 0 0 157,070 51,363 105,707 0 0 0 105,707 .01 .01
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