-----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, KzbvImwS6Gc41k3aEehgkrJYDd0LikSrRZNznQv49U+F14ebR1FKp4baYFJzzULH 5QynpJZB5dbstznPmFgjTw== 0000914760-96-000256.txt : 19961118 0000914760-96-000256.hdr.sgml : 19961118 ACCESSION NUMBER: 0000914760-96-000256 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96663413 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 September 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 November 11, 1996. 4,889,450 shares of common stock, par value $0.10 MAYNARD OIL COMPANY AND SUBSIDIARIES Index to Consolidated Financial Statements and Schedules Page Part I. Financial Information Consolidated Balance Sheets September 30, 1996 and December 31, 1995 Consolidated Statements of Operations Nine Months and Three Months ended September 30, 1996 and 1995 Consolidated Statements of Shareholders' Equity Nine Months ended September 30, 1996 Consolidated Statements of Cash Flows Nine Months ended September 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 Item 6. Exhibit and Report on Form 8-K Signatures MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Balance Sheets
September 30 December 31, 1996 1995 (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $20,272,042 $ 6,138,903 Accounts receivable, trade 4,725,176 3,297,933 Other current assets 461,874 465,426 Total current assets 25,459,092 9,902,262 Property and equipment, at cost: Oil and gas properties, successful efforts method 102,604,153 111,473,388 Other property and equipment 533,353 507,953 103,137,506 111,981,341 Less accumulated depreciation and amortization (48,378,347) (49,045,024) Net property and equipment 54,759,159 62,936,317 $80,218,251 $72,838,579 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 5,000,000 $ 4,812,500 Accounts payable 3,671,638 4,126,013 Accrued expenses 1,554,492 920,653 Income taxes payable 783,596 412,695 Total current liabilities 11,009,726 10,271,861 Deferred income taxes 2,762,510 2,212,510 Long-term debt 17,500,000 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; 4,889,470 and 4,889,970 shares issued and outstanding at September 30, 1996 and December 31, 1995, respectively 488,947 488,997 Additional paid-in capital 18,831,138 18,831,138 Retained earnings 29,625,930 19,784,073 Total shareholders' equity 48,946,015 39,104,208 Commitments $80,218,251 $72,838,579 See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Statements of Operations
Nine Months ended Three Months ended September 30, September 30, 1996 1995 1996 1995 Revenues: Oil and gas sales and royalties $22,951,258 $15,160,524 8,075,656 $ 5,056,361 Interest and other 382,661 460,633 150,289 222,550 Gain on sale of assets 6,176,109 1,010,806 5,694,865 870,405 29,510,028 16,631,963 13,920,810 6,149,316 Costs and expenses: Operating expenses 7,539,495 6,328,838 2,512,760 2,309,875 Exploration, dry holes and abandonments 196,691 130,407 11,024 23,426 General and administrative 890,137 635,666 368,731 200,851 Depreciation and amortization 7,054,655 4,960,876 2,326,365 1,725,969 Interest and other 1,283,188 719,541 368,702 279,509 16,964,166 12,775,328 5,587,582 4,539,630 Income before income taxes 12,545,862 3,856,635 8,333,228 1,609,686 Income tax expense 2,700,000 945,500 1,450,000 395,500 Net income $ 9,845,862 $ 2,911,135 $ 6,883,228 $1,214,186 Weighted average number of common shares outstanding 4,889,768 4,890,801 4,889,607 4,889,912 Net income per common share $2.01 $ .60 $1.41 $ .25 See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Statements of Shareholders' Equity Nine Months Ended September 30, 1996 (Unaudited)
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 -- -- -- 9,845,862 9,845,862 Purchase of common stock (500) (50) -- (4,005) (4,055) Balance at September 30, 1996 4,889,470 $488,947 $18,831,138 $29,625,930 $48,946,015 See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net income $9,845,862 $2,911,135 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,054,655 4,960,876 Deferred income taxes 550,000 150,000 Dry holes and abandonments 180,224 95,684 Current year costs of dry holes and abandonments (90,514) (95,684) (Gain) on disposition of assets (6,176,109) (1,010,806) (Increase) decrease in current assets: Accounts receivable (1,427,243) (179,394) Recoverable income taxes -- 320,500 Inventories 27,332 54,051 Prepaid expenses and other current assets (23,780) 12,539 Increase (decrease) in current liabilities: Accounts payable (454,375) 2,010,301 Accrued expenses 633,839 465,432 Income taxes payable 370,901 479,369 Net cash provided by operating activities 10,490,792 10,174,003 Cash flows from investing activities: Proceeds from disposition of assets 8,892,728 3,404,198 Additions to property and equipment (1,683,826) (13,717,831) Net cash provided (used) by investing activities 7,208,902 (10,313,633) Cash flows from financing activities: Proceeds from issuance of long-term debt -- 9,500,000 Principal payments on long-term debt (3,562,500) (2,656,250) Purchase of common stock (4,055) (161,818) Exercise of stock options -- 108,000 Net cash provided (used) by financing activities (3,566,555) 6,789,932 Net increase in cash and cash equivalents 14,133,139 6,650,302 Cash and cash equivalents at beginning of year 6,138,903 5,836,389 Cash and cash equivalents at end of period $ 20,272,042 $12,486,691 See Accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements September 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 September 30, 1996 and December 31, 1995, the results of operations for the nine months ended September 30, 1996 and 1995 and changes in cash and cash equivalents for the nine months ended September 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 nine months ended September 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 per common share is based on the weighted average number of shares outstanding in each period, which was 4,889,768 and 4,890,801 shares at September 30, 1996 and 1995, respectively. There is no difference in primary and fully diluted earnings per share since all outstanding stock options were exercised in 1995. 4. During 1996, the Company sold its interest in approximately 130 producing wells in Texas and Oklahoma for cash proceeds of $8,892,728, realizing a gain totaling $6,176,109. This gain was generated through transactions with seven separate entities. 5. The provision for income taxes consists of the following (thousands of dollars): Nine Months Ended Three Months Ended September 30, September 30, 1996 1995 1996 1995 Current $2,150 $ 796 $ 700 $ 396 Deferred 550 150 750 -- $2,700 $ 946 $1,450 $ 396 6. 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 nine months ended September 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. 7. 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 Nine Months Ended September 30, 1996 Compared to Nine Months Ended September 30, 1995 The Company reported net income of $9,845,862, or two dollars and one cent per share, on revenues of $29,510,028 for the nine months ended September 30, 1996 compared with net income of $2,911,135, or sixty cents per share, on revenues of $16,631,963 for the same period a year ago. Earnings for the 1996 period were favorably affected by a $6,176,109 gain from the sale of producing properties, $1.26 per share. The prior year nine months included a gain from the sale of producing properties which totaled $1,010,806, or $.21 per share. Oil and gas revenues improved 51% between the two nine month periods presented. Volumes produced and prices received for each product increased as follows: Nine Months Ended September 30, September 30, 1996 1995 Oil Sales Barrels 919,911 700,038 Average Price $19.90 $17.15 Gas Sales MCF (Thousand Cubic Feet) 2,368,235 2,059,217 Average Price $ 1.96 $ 1.45 On a dollar basis, operating expenses reflected an increase of $1,210,657. However, when converted to a net equivalent barrel basis ("NEB", conversion of 6 mcf equal to 1 NEB), the current period reflects a thirty-three cent per barrel reduction - $5.74 per NEB during 1996 compared to $6.07 during 1995. Exploration costs climbed 51% between the two nine month periods. During 1996, the Company impaired a portion of its undeveloped leasehold associated with its three-dimensional seismic programs and also drilled an exploratory dry hole, while the 1995 period included only the results of a dry hole. General and administrative expenses rose 40% 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 $9.625 per share at September 30, 1996. Depreciation and amortization expense, which includes an impairment of $57,000 related to the adoption of SFAS 121 (see Note 6 to the Consolidated Financial Statements), rose from $4.76 per NEB in 1995 to $5.37 per NEB in 1996, a 13% increase. Interest expense increased from $719,541 in the 1995 period to $1,283,188 in the current year period, reflecting the increase in bank debt from $13,843,750 a year ago to $22,500,000 currently. Quarter Ended September 30, 1996 Compared with Quarter Ended September 30, 1995 For the quarter ended September 30, 1996, the Company earned $6,883,228, or one dollar and forty-one cents per share, compared with net income of $1,214,186, or twenty-five cents per share, for the same quarter a year ago. The current quarter's results improved because the majority of the property sales referred to in Note 4 to the Consolidated Financial Statements occurred during this quarter and also because oil and gas revenues rose. Liquidity and Capital Resources The Company ended its first nine months of 1996 with working capital of approximately $14,449,000 compared to working capital of approximately $6,191,000 year ago. The improvement in working capital is attributable to the proceeds received from the property sales mentioned above. At September 30, 1996 the Company's total debt was $22,500,000, which was utilized to finance the acquisition of oil and gas properties over the last year and a half. The Company believes that it has sufficient cash being generated from operating activities or additional borrowing capacity to fund its planned activities. PART II. OTHER INFORMATION ITEM 6. Exhibit and Report on Form 8-K (a) Exhibit: Exhibit 27 - Financial Data Schedule (b) Report on Form 8-K: On October 15, 1996, the Company filed Form 8-K with the Securities and Exchange Commission to report the sale of producing oil and gas properties. Pro forma financial information was included in the report. 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. 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: November 14, 1996 EX-27 2
5 1,000 9-MOS DEC-31-1996 SEP-30-1996 20,272 0 4,775 50 257 25,459 103,138 48,378 80,218 11,010 0 0 0 489 48,457 80,218 22,951 29,510 7,539 16,964 0 0 1,283 12,546 2,700 9,846 0 0 0 9,846 2.01 2.01
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