10QSB 1 smarch2002q.txt MARCH 31, 2002 FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-14731 HALLADOR PETROLEUM COMPANY (Exact name of registrant as specified in its charter) Colorado 84-1014610 (State of incorporation) (I.R.S. Employer Identification No.) 1660 Lincoln Street, Suite 2700, Denver, Colorado 80264-2701 (Address of principal executive offices) 303-839-5504 FAX: 303-832-3013 (Issuer's telephone numbers) Check whether the issuer (1) filed all reports required by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days: Yes [x] No [ ] Shares outstanding as of May 14, 2002: 7,093,150 PART I. FINANCIAL INFORMATION Consolidated Balance Sheet (in thousands)
March 31, December 31, 2002 2001* ------- ------- ASSETS Current assets: Cash and cash equivalents $ 1,857 $ 2,078 Accounts receivable- Oil and gas sales 861 706 Well operations 167 174 ------ ------ Total current assets 2,885 2,958 ------ ------ Oil and gas properties at cost (successful efforts): Unproved properties 251 204 Proved properties 24,756 24,687 Less - accumulated depreciation, depletion, amortization and impairment (17,109) (16,497) ------ ------ 7,898 8,394 ------ ------ Oil and gas operator bonds 329 366 Investment in Catalytic Solutions 175 175 Other assets 40 44 ------ ------ $11,327 $11,937 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 418 $ 833 Oil and gas sales payable 333 180 ------ ------ Total current liabilities 751 1,013 ------ ------ Key employee bonus plan 341 335 ------ ------ Future site restoration-South Cuyama Field 420 344 ------ ------ Minority interest 5,387 5,516 ------ ------ Stockholders' equity: Preferred stock, $.10 par value; 10,000,000 shares authorized; none issued Common stock, $.01 par value; 100,000,000 shares authorized; 7,093,150 shares issued 71 71 Additional paid-in capital 18,061 18,061 Accumulated deficit (13,704) (13,403) ------ ------ 4,428 4,729 ------ ------ $11,327 $11,937 ====== ====== ------------------------------ *Derived from the Form 10-KSB.
See accompanying notes. Consolidated Statement of Operations (in thousands, except per share amounts)
Three months ended March 31, 2002 2001 ------ ------ Revenue: Oil $1,275 $1,287 Gas 257 485 NGLs 47 128 Interest and other 8 43 ----- ----- 1,587 1,943 ----- ----- Costs and expenses: Lease operating 1,075 1,120 Delay rentals 19 18 Depreciation, depletion and amortization 692 214 General and administrative 225 247 Purchase of employee stock options 300 Interest 6 14 ----- ----- 2,017 1,913 ----- ----- (Loss) income before minority interest (430) 30 Minority interest 129 (9) ----- ----- Net (loss) income $ (301) $ 21 ===== ===== Basic and diluted (loss) income per share $ (.04) $ * ===== ===== Weighted average shares outstanding-basic 7,093 7,093 ===== ===== Weighted average shares outstanding-diluted 7,093 7,438 ===== ===== ----------------------------------------- *Not meaningful, less than $.01 per share.
See accompanying notes. Consolidated Statement of Cash Flows (in thousands)
Three months ended March 31, 2002 2001 ------ ------ Net cash provided by operating activities $ 121 $ 545 ----- ----- Cash flows from investing activities: Properties (379) (373) Other assets 37 ----- ----- Net cash used in investing activities (342) (373) ----- ----- Net (decrease) increase in cash and cash equivalents (221) 172 Cash and cash equivalents, beginning of year 2,078 2,489 ----- ----- Cash and cash equivalents, end of period $1,857 $2,661 ===== =====
1. The interim financial data is unaudited; however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods. The financial statements included herein have been prepared pursuant to the SEC's rules and regulations; accordingly, certain information and footnote disclosures normally included in GAAP financial statements have been condensed or omitted. 2. Our organization and business, the accounting policies we follow and other information are contained in the notes to our financial statements filed as part of our 2001 Form 10-KSB. This quarterly report should be read in conjunction with that annual report. HALLADOR PETROLEUM COMPANY Management's Discussion and Analysis or Plan of Operation RESULTS OF OPERATIONS YEAR-TO-DATE COMPARISON ----------------------- The table below (in thousands) provides sales data and average prices for the period.
2002 2001 Sales Average Sales Average Volume Price Revenue Volume Price Revenue ------- ------- ------ ------ ----- ------- Oil - barrels South Cuyama field 53 $18.61 $986 53 $24.13 $1,279 Cox #41-5 (1) 14 18.36 257 South Texas-Bonus 1.3 20.00 26 Other * * 6 * * 8 Gas - mcf South Cuyama field 4 2.50 10 14 7.00 98 Cox #41-5 (1) 23 2.40 55 South Texas - Bonus 56 2.47 138 San Juan-New Mexico 13 1.47 19 16 7.31 117 Merlin Prospect(2) 6 1.84 11 18 11.67 210 Other 11 2.19 24 9 6.67 60 NGLs - barrels South Cuyama field 3.3 11.22 37 3.7 27.30 101 San Juan-New Mexico 1.1 9.10 10 1.2 21.67 26 Other * * 1 ------------------------ * Not meaningful
(1) This well is part of the South Cuyama field, due to its significance we present it separately. (2) This field located in northern California is near the end of its economic life. Current prices for (i) the South Cuyama field are about $26.03 for oil and $3.44 for gas (ii) South Texas-Bonus are about $28.00 for oil and $3.70 for gas and (iii) San Juan gas is about $3.00. The table below (in thousands) shows lease operating expenses (LOE) for our primary fields.
2002 2001 ---- ---- South Cuyama field: LOE excluding electricity $ 688 $ 832 Electricity 319 234 ----- ----- 1,007 1,066 South Texas - Bonus 14 San Juan - New Mexico 16 29 Other 38 25 ----- ----- Total $1,075 $1,120 ===== =====
Gas and NGL revenue is down compared to last year due to lower prices. DD&A increased due to the downward revision in our oil reserves during the fourth quarter of 2001. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Cash and cash flow from operations are expected to enable us to meet our obligations as they become due during the next several years. Bank Debt ---------- The SC Field, our principal asset, is pledged to U. S. Bank National Association under a $2,200,000 revolving line of credit which was renewed on March 31, 2002. Presently, we owe $31,000 under this line. THE FOLLOWING DISCUSSION UPDATES THE MD&A CONTAINED IN ITEM 6 OF THE 2001 FORM 10-KSB AND THE TWO DISCUSSIONS SHOULD BE READ TOGETHER. PROSPECT DEVELOPMENT AND EXPLORATION ACTIVITY --------------------------------------------- South Cuyama Field ------------------ The production from the Cox #41-5 well is declining. During March 2002 the well was producing 500 mcf per day and 275 barrels per day; currently the gas production is 250 mcf per day and the oil production is 120 barrels per day. We are monitoring this decline and if necessary will reduce the reserves assigned to this well in the second quarter. There are no other significant changes or developments to report from what we disclosed in the 2001 Form 10-KSB. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 Second Amendment of Credit Agreement by and among Santa Barbara Partners, Hallador Petroleum, LLP and U. S. Bank Revolving Credit Agreement. (b) No reports on Form 8-K were filed during the quarter. SIGNATURE In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HALLADOR PETROLEUM COMPANY Dated: May 14, 2002 By: /s/VICTOR P. STABIO Chief Executive Officer and Chief Financial Officer Signing on behalf of registrant and as principal financial officer.