-----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, EvaYD0sqSEGftk4NEoE2FFDe7fc9VJGJsYSnog22+q4qT0EkWzAdK+AMyOJDyHHu zppPPG10zfRPN0A67PDsgw== 0000914760-96-000156.txt : 19960816 0000914760-96-000156.hdr.sgml : 19960816 ACCESSION NUMBER: 0000914760-96-000156 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAYNARD OIL CO CENTRAL INDEX KEY: 0000063528 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 751362284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05704 FILM NUMBER: 96612722 BUSINESS ADDRESS: STREET 1: 8080 N CENTRAL EXPWY STE 660 CITY: DALLAS STATE: TX ZIP: 75206 BUSINESS PHONE: 2148918880 MAIL ADDRESS: STREET 1: 8080 N CENTRAL EXPWY STE 660 CITY: DALLAS STATE: TX ZIP: 75206 FORMER COMPANY: FORMER CONFORMED NAME: HOMA OIL & GAS CO DATE OF NAME CHANGE: 19710902 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ending June 30, 1996 Commission File #0-5704 MAYNARD OIL COMPANY (Exact name of registrant as specified in its charter) Delaware 75-1362284 -------- ---------- (State or other jurisdic- (IRS Employer tion of incorporation) Identification No.) 8080 N. Central Expressway, Suite 660, Dallas, Texas 75206 Registrant's telephone number, including area code: (214) 891-8880 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of August 5, 1996. 4,889,680 shares of common stock, par value $0.10 MAYNARD OIL COMPANY AND SUBSIDIARIES Index to Consolidated Financial Statements and Schedules Part I. Financial Information Consolidated Balance Sheets June 30, 1996 and December 31, 1995 Consolidated Statements of Operations Six Months and Three Months ended June 30, 1996 and 1995 Consolidated Statements of Shareholders' Equity Six Months ended June 30, 1996 Consolidated Statements of Cash Flows Six Months ended June 30, 1996 and 1995 Notes to Consolidated Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. Other Information and Reports on Form 8-K Item 4. Submission of Matters to a Vote of Security Holders Signatures MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Balance Sheets
June 30, December 31, 1996 1995 (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $11,420,739 $ 6,138,903 Accounts receivable, trade 4,502,974 3,297,933 Other current assets 395,528 465,426 Total current assets 16,319,241 9,902,262 Property and equipment, at cost: Oil and gas properties, successful efforts method 111,159,533 111,473,388 Other property and equipment 514,881 507,953 111,674,414 111,981,341 Less accumulated depreciation and amortization (53,400,367) (49,045,024) Net property and equipment 58,274,047 62,936,317 $74,593,288 $72,838,579 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 5,000,000 $ 4,812,500 Accounts payable 4,540,280 4,126,013 Accrued expenses 1,241,951 920,653 Income taxes payable 983,596 412,695 Total current liabilities 11,765,827 10,271,861 Deferred income taxes 2,012,510 2,212,510 Long-term debt 18,750,000 21,250,000 Shareholders' equity: Preferred stock of $.50 par value. Authorized 1,000,000 shares; none issued -- -- Common stock of $.10 par value. Authorized 20,000,000 shares; 4,889,720 and 4,889,970 shares issued and outstanding 488,972 488,997 Additional paid-in capital 18,831,138 18,831,138 Retained earnings 22,744,841 19,784,073 Total shareholders' equity 42,064,951 39,104,208 Contingencies and commitments $74,593,288 $72,838,579 See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Statements of Operations
Six Months ended Three Months ended June 30, June 30, 1996 1995 1996 1995 Revenues: Oil and gas sales $14,875,602 $10,104,163 $ 7,608,837 $ 5,873,834 Interest and other 232,372 238,083 168,056 123,103 Gain (loss) on sale of assets 481,244 140,401 480,583 (5,777) 15,589,218 10,482,647 8,257,476 5,991,160 Costs and expenses: Operating expenses 5,026,735 4,018,963 2,555,494 2,223,488 Exploration, dry holes and abandoments 185,667 106,981 84,919 30,127 General and administrative 521,406 434,815 264,919 184,485 Depreciation and amortization 4,728,290 3,234,907 2,302,516 1,779,000 Interest and other 914,486 440,032 460,448 310,700 11,376,584 8,235,698 5,668,296 4,527,800 Income before income taxes 4,212,634 2,246,949 2,589,180 1,463,360 Income tax expense 1,250,000 550,000 770,000 350,000 Net income $ 2,962,634 $ 1,696,949 $ 1,819,180 $1,113,360 Weighted average number of common shares outstanding 4,889,851 4,891,252 4,889,747 4,891,132 Net income (loss) per common share $ .61 $ .35 $ .37 $ .23 See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Statements of Shareholders' Equity Six Months Ended June 30, 1996 (Unaudited) CAPTION> Additional Common Stock Paid-in Capital Retained Shares Amount Amount Earnings Total Balance at December 31, 1995 4,889,970 $488,997 $18,831,138 $19,784,073 $39,104,208 Net income -- -- -- 2,962,634 2,962,634 Purchase of common stock (250) (25) -- (1,866) (1,891) Balance at June 30, 1996 4,889,720 $488,972 $18,831,138 $22,744,841 $42,064,951 See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 1995 Cash flows from operating activities: Net income $2,962,634 $1,696,949 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,728,290 3,234,907 Deferred income taxes (200,000) 150,000 Dry holes and abandonments 170,349 84,388 Current year costs of dry holes and abandonments (80,641) (84,388) (Gain) on disposition of assets (481,244) (140,401) (Increase) decrease in current assets: Accounts receivable (1,205,041) (1,003,556) Inventories (142) 41,019 Prepaid expenses and other current assets 70,040 141,684 Increase (decrease) in current liabilities: Accounts payable 414,267 2,308,940 Accrued expenses 321,298 468,429 Income taxes payable 570,901 404,369 Net cash provided by operating activities 7,270,711 7,302,340 Cash flows from investing activities: Proceeds from disposition of assets 1,393,989 297,610 Additions to property and equipment (1,068,473) (13,001,180) Net cash provided (used) by investing activities 325,516 (12,703,570) Cash flows from financing activities: Proceeds from issuance of long-term debt -- 9,500,000 Purchase of common stock (1,891) (5,514) Principal payments on long-term debt (2,312,500) (875,000) Net cash provided (used) by financing activities (2,314,391) 8,619,486 Net increase (decrease) in cash and cash equivalents 5,281,836 3,218,256 Cash and cash equivalents at beginning of year 6,138,903 5,836,389 Cash and cash equivalents at end of period $11,420,739 $ 9,054,645 See Accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1996 1. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of all recurring adjustments, necessary to present fairly the Company's financial position as of June 30, 1996 and December 31, 1995, the results of operations for the six months ended June 30, 1996 and 1995 and changes in cash and cash equivalents for the six months ended June 30, 1996 and 1995. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 1995 Annual Report to Shareholders. 2. Net income for the six months ended June 30, 1996 is not necessarily indicative of the results of the operations of Maynard Oil Company and Subsidiaries for the year ending December 31, 1996, and is subject to audit adjustments at year-end. 3. Net income (loss) per common share is based on the weighted average number of shares outstanding in each period, which was 4,889,720 and 4,890,442 shares at June 30, 1996 and 1995, respectively. The difference between primary and fully diluted earnings per share, which assumes the exercise of stock options, is not significant. 4. In March 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of." This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No. 121 establishes guidelines for determining recoverability based on future net cash flows from the use of the asset and for the measurement of the impairment loss. Impairment loss under SFAS 121 is calculated as the difference between the carrying amount of the asset and its fair value. Any impairment loss is recorded in the period in which the recognition criteria are first applied and met. Under the successful efforts method of accounting for oil and gas operations, the Company periodically assessed its proved properties for impairments by comparing the aggregate net book carrying amount of all proved properties with their aggregate future net cash flows. At December 31, 1995, the future net cash flows of these proved properties was $86.47 million as compared to the net book carrying amount of $62.67 million. The new statement requires the impairment review be performed at the lowest level of asset groupings for which there are identifiable cash flows. In the case of the Company, this results in a field by field impairment review. The Company adopted SFAS 121 on January 1, 1996 recognizing a $57,000 impairment loss which is included in depreciation and amortization expense on the Consolidated Statement of Operations for the six months ended June 30, 1996. The loss was recorded as the difference between the asset book carrying amounts and future cash flow projections, giving consideration to recent prices, pricing trends, probable and possible reserve recoveries, and discount rates. These projections represent the Company's best estimate of fair value based on the information available. 5. The provision for income taxes consists of the following (thousands of dollars): Six Months Ended Three Months Ended June 30, June 30, 1996 1995 1996 1995 ---- ---- ---- ---- Current $1,450 $400 $1,050 $350 Deferred (benefit) (200) 150 (280) -- $1,250 $550 $ 770 $350 6. Certain reclassification of 1995 accounts have been made to conform to the 1996 presentation. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995 The Company reported net income of $2,962,634, or sixty-one cents per share, on revenues of $15,589,218 for the six months ended June 30, 1996 compared with net income of $1,696,949, or thirty-five cents per share, on revenues of $10,482,647 for the same period a year ago. Earnings for the 1996 period were favorably impacted by the results of operations on the property acquisition consummated during December, 1995 and by the gain of $481,000 resulting from a property sale. Oil volumes rose 163,542 barrels during the current period with 84% of the increase coming from the newly acquired properties. Oil pricing increases also helped current period results; the average price received during the 1995 period was $17.43 compared to $19.72 per barrel during the 1996 period, a 13% increase. Gas volumes remained almost constant during the current period, while gas prices improved thirty-nine cents per thousand cubic feet of gas sold (mcf), or a 25% increase. On a dollar basis, operating expenses reflected an increase of $1,007,772. However, when converted to a net equivalent barrel basis ("NEB", conversion of 6 mcf equal to 1 NEB), the amounts are virtually unchanged - $5.93 per NEB during 1996 compared to $5.86 per NEB in 1995. Exploration costs, which include dry holes and abandonments, climbed 74% between the two six month periods. During the first quarter of 1996, the Company impaired a portion of its undeveloped leasehold associated with its three-dimensional seismic programs and during the second quarter of 1996, the Company drilled an exploratory dry hole, while the prior period included only the results of a dry hole. General and administrative expenses rose 20% to reflect the accrual of employee phantom stock options relating to an increase in the Company's common stock price from $6.75 per share at the beginning of the year to $8.25 per share at June 30, 1996. Depreciation and amortization expense, which includes an impairment of $57,000 related to the adoption of SFAS 121 (see Note 4 to the Consolidated Financial Statements), rose from $4.72 per NEB in 1995 to $5.58 per NEB in 1996, an 18% increase. Interest expense increased from $440,032 in the 1995 period to $914,486 in the current year period, reflecting the increase in bank debt from $15,625,000 a year ago to $23,750,000 currently. Quarter Ended June 30, 1996 Compared with Quarter Ended June 30, 1995 For the quarter ended June 30, 1996, the Company earned $1,819,180, or thirty-seven cents per share, compared with net income of $1,113,360, or twenty-three cents per share, for the same quarter a year ago. The current quarter s results improved because of the operating results related to the prior year property acquisition and the proceeds received from a property sale discussed above. Liquidity and Capital Resources The Company ended its first six months of 1996 with working capital of approximately $4,553,000 compared to working capital of approximately $3,561,000 a year ago. The improvement in working capital is attributable to the proceeds received from the property sale mentioned above. The Company believes that it has sufficient cash being generated from operating activities or additional borrowing capacity to fund its planned development and exploratory work or further property acquisitions. PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Stockholders was held on May 21, 1996. (b) Not applicable. (c) 1. Set forth below is the tabulation of the votes on each nominee for election of a director: WITHOLD NAME FOR AUTHORITY Ralph E. Graham 4,507,425 6,889 Robert B. McDermott 4,507,425 6,889 James G. Maynard 4,507,425 6,889 2. Not applicable. (b) Not applicable. ITEM 6. Exhibit and Reports on Form 8-K (a) Exhibits: Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MAYNARD OIL COMPANY By: /s/ Glenn R. Moore ------------------------------- Glenn R. Moore President By: /s/ Kenneth W. Hatcher ------------------------------- Kenneth W. Hatcher Vice President of Finance Dated: August 14, 1996 EX-27 2
5 6-MOS DEC-31-1996 JUN-30-1996 11,421 0 4,553 50 285 16,319 111,674 53,400 74,593 11,766 0 0 0 489 41,576 74,593 14,876 15,589 5,027 11,377 0 0 914 4,213 1,250 2,963 0 0 0 2,963 0.61 0.61
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