-----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, U72lqlvdxA09//I7LIDEDOZBE+KkwsGQsHAEMwmNvATeqW098EjlzSO3DTTAeh+h Kur4H/A7wmnSt0itsUrIMA== 0000788965-05-000009.txt : 20050516 0000788965-05-000009.hdr.sgml : 20050516 20050516150700 ACCESSION NUMBER: 0000788965-05-000009 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050516 DATE AS OF CHANGE: 20050516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALLADOR PETROLEUM CO CENTRAL INDEX KEY: 0000788965 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 841014610 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14731 FILM NUMBER: 05833696 BUSINESS ADDRESS: STREET 1: 1660 LINCOLN ST STE 2700 CITY: DENVER STATE: CO ZIP: 80264 BUSINESS PHONE: 3038395505 MAIL ADDRESS: STREET 1: 1660 LINCOLN STREET STREET 2: SUITE 2700 CITY: DENVER STATE: CO ZIP: 80264 FORMER COMPANY: FORMER CONFORMED NAME: KIMBARK OIL & GAS CO /CO/ DATE OF NAME CHANGE: 19900102 FORMER COMPANY: FORMER CONFORMED NAME: KIMBARK INC DATE OF NAME CHANGE: 19860624 10QSB 1 s033105qsb.txt MARCH 31, 2005 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, 2005 OR [ ] TRANSITION REPORT UNDER 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 the filing requirements for the past 90 days: Yes [X] No[ ] Shares outstanding as of May 16, 2005; 7,093,150 PART I - FINANCIAL INFORMATION Consolidated Balance Sheet (in thousands)
March 31, December 31, 2005 2004* ------ ------ ASSETS Current assets: Cash and cash equivalents $18,122 $19,927 Oil and gas operator bonds 253 252 Accounts receivable- Oil and gas sales 602 573 Well operations 130 117 E&B account receivable 36 230 E& B - note receivable 3,600 3,569 ------ ------ Total current assets 22,743 24,668 ------ ------ Oil and gas properties, at cost (successful efforts): Unproved properties 1,511 220 Proved properties 2,155 2,155 Less - accumulated depreciation, depletion, amortization and impairment (1,748) (1,740) ------ ------ 1,918 635 ------ ------ Investment in Catalytic Solutions 150 150 Investment in CELLC 325 Other assets 68 67 ------ ------ $25,204 $25,520 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 642 $ 642 Oil and gas sales payable 904 922 Income tax payable 300 300 Partnership options payable 407 ------ ------ Total current liabilities 1,846 2,271 ------ ------ Minority interest 9,784 9,742 ------ ------ 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 (4,558) (4,625) ------ ------ 13,574 13,507 ------ ------ $25,204 $25,520 ====== ====== *Derived from the Form 10-KSB.
See accompanying notes. Consolidated Statement of Operations (in thousands)
Three months ended March 31, 2005 2004 ------ ------ Revenue: Gas $ 167 $ 158 Natural gas liquids 44 32 Oil 25 20 Interest 133 6 ------ ------ 369 216 ------ ------ Costs and expenses: Lease operating 48 43 Delay rentals 4 30 Depreciation, depletion and amortization 10 12 General and administrative 168 186 ------ ------ 230 271 ------ ------ Loss (loss) from continuing operations before minority interest 139 (55) Minority interest (42) 16 ------ ------ Income (loss) from continuing operations 97 (39) Income tax-current (30) Income from discontinued operations net of minority interest of $213 498 ------ ------ Net income $ 67 $ 459 ====== ====== Income (loss) per share - basic Continuing operations $ .01 $ (.01) Discontinued operations .07 ------ ------ Net earnings per share $ .01 $ .06 ====== ====== Weighted average shares outstanding-basic 7,093 7,093 ====== ======
See accompanying notes. Consolidated Statement of Cash Flows (in thousands)
Three months ended March 31, 2005 2004 ------ ------ Net cash provided by operating activities: $ 222 $ 1,027 ------ ------ Cash flows from investing activities: Properties (1,292) (132) Investment in COALition (325) Other (3) ------ ------ (1,620) (132) Cash flows from financing activities: Repurchase of partnership options (407) ------ ------ Net (decrease) increase in cash and cash equivalents (1,805) 895 Cash and cash equivalents, beginning of period 19,927 3,319 ------ ------ Cash and cash equivalents, end of period $18,122 $ 4,214 ====== ======
See accompanying notes. Notes to Financial Statements 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 2004 Form 10-KSB. This quarterly report should be read in conjunction with that annual report. 3. As allowed in SFAS 123, Accounting for Stock-Based Compensation, we continue to apply APB 25, Accounting for Stock Issued to Employees, and related interpretations in recording compensation related to our plan. The pro forma effect on our net income was not material for any of the periods presented. No grants were issued during the 2004 period. On April 15, 2005, we issued 750,000 options at an exercise price of $2.25, which were valued based on a March 2005 private transaction between one of our shareholders and a third party. These options vest at 1/3 per year for the next three years. There are no more options available for issuance. 4. On August 10, 2004, we entered into an agreement with E&B Natural Resources Management Corporation (a private company) to sell all of our interest in the South Cuyama field and adjacent exploration areas, all located in Santa Barbara County, California, for $23 million; consisting of $19.5 million in cash and an interest bearing (3.5%) note of $3.5 million due on September 30, 2005. Closing occurred on September 30, 2004 and we recorded a pre-tax gain of about $14 million. Results from the South Cuyama field have been presented as discontinued operations in the accompanying Consolidated Statement of Operations. Revenue and expenses before the minority interest were about $2.1 million and $1.4 million, respectively for the three months ended March 31, 2004. Due to the sale, the joint board of directors of Hallador Petroleum Company and the Executive Committee of the Partnership, voted to discontinue new partnership operations effective October 1, 2004. Currently, the Partnership's assets consist of cash, the $3.5 million note receivable, oil and gas properties in New Mexico and Texas, and other miscellaneous assets. On October 1, 2004, the joint board of directors of Hallador Petroleum Company, and the Executive Committee of the Partnership, valued the oil and gas properties in New Mexico and Texas and the other miscellaneous assets at $4 million. On May 6, 2005 we made a cash distribution of about $5 million to the limited partners. During the second quarter 2005, we will offer to purchase the limited partners interest in the Partnership for about $1.2 million. This does not include their interest in the $3.5 million note receivable which is due September 30, 2005. Upon collection of the note a final distribution will be made to the limited partners. 5. In late March 2005, we invested $325,000 for a 29% interest in a newly formed entity called COALition Energy, LLC (CELLC). CELLC was formed to pursue coal investments. To date CELLC has not commenced significant operations. We account for this investment using the equity method of accounting. Four of our directors, David Hardie, Steven Hardie, Cortlandt Dietler, and Victor Stabio, who is also our CEO and CFO, acquired, at the same proportionate cost, and on the same terms as us, membership interests of 3.09%, 3.09%, 4.64%, and 3.09%, respectively, based on personal invests of $33,333, $33,333 , $50,000 and $33,334, respectively, in COALition. There are 12 other members of COALition, with Cortlandt Dietler, Victor Stabio, and three other individuals, constituting the initial directors of COALition. Kestrel Energy Partners, which is 82.64% owned by Yorktown Energy Partners, VI, L.P., acquired, through a wholly-owned subsidiary, a 20% interest in COALition for $224,490. Yorktown Energy Partners VI, L.P. and Yorktown Energy Partners II, L.P., as well as their respective general partners and Yorktown Partners LLC, the manager of both of these partnerships, are under common control. Yorktown Energy Partners II., L.P. owns approximately 32% of our common stock. HALLADOR PETROLEUM COMPANY Management's Discussion and Analysis or Plan of Operation RESULTS OF OPERATIONS - --------------------- Overview - -------- The following discussion updates the MD&A section of our 2004 Form 10-KSB which was filed on April 15, 2005 and should be read in conjunction thereto. There have been no significant changes or developments to report. North Dakota ------------- As disclosed in the 2004 Form 10-KSB, in February 2005 we invested $1.3 million in a 2,500 acre oil development prospect in McKenzie County, North Dakota, located on the mid-western Montana border. On April 25, 2005 we purchased additional acres for $111,000. We have a 37.5% WI (.328 NRI), Kodiak Oil and Gas, the operator also has a 37.5% WI, the remaining 25% is owned by others. Kodiak is headquartered in Denver and its stock trades on the TSX Venture Exchange under the symbol KOG. We hope to drill the first oil well in late 2005, at a cost of about $2.5 million to the 100%. This is a horizontal play so a vertical well is drilled to 8,000 feet and then two horizontal laterals are drilled at distance of 4,000 - 6,000 feet in opposite directions. Headington Oil Company is a major operator in this area on the Montana side and Burlington Resources is a major operator on the North Dakota side. Depending on the success of the first well, our total commitment could be an additional $2 million. San Juan Basin -------------- As disclosed in the Form 10-KSB two more development gas wells are planned for July 2005. The estimated costs to drill and complete these two wells are about $1 million each to the 100%. We have a .056 WI (.047 NRI) in each of the wells. Coal ---- As disclosed in the 2004 Form 10-KSB, in late March 2005, we invested $325,000 for a 29% interest in a newly formed entity called COALition Energy, LLC (CELLC). To date, CELLC has not commenced significant operations. Four of our directors, David Hardie, Steven Hardie, Cortlandt Dietler, and Victor Stabio, who is also our CEO and CFO, acquired, at the same proportionate cost, and on the same terms as us, membership interests of 3.09%, 3.09%, 4.64%, and 3.09%, respectively, based on personal invests of $33,333, $33,333, $50,000 and $33,334, respectively, in COALition. There are 12 other members of COALition, with Cortlandt Dietler, Victor Stabio, and three other individuals, constituting the initial directors of COALition. Kestrel Energy Partners, which is 82.64% owned by Yorktown Energy Partners, VI, L.P., acquired, through a wholly-owned subsidiary, a 20% interest in COALition for $224,490. Yorktown Energy Partners VI, L.P. and Yorktown Energy Partners II, L.P., as well as their respective general partners and Yorktown Partners LLC, the manager of both of these partnerships, are under common control. Yorktown Energy Partners II., L.P. owns approximately 32% of our common stock. Liquidity and Capital Resources - -------------------------------- Cash and cash to be provided from operations are expected to enable us to meet our obligations as they become due during the next several years. We have no bank debt, no special purpose entities and no off-balance sheet arrangements. Results Of Continuing Operations - -------------------------------- Year-To-Date Comparison ----------------------- The table below (in thousands) provides sales data and average prices for the period.
2005 2004 -------------------------- ---------------------- Sales Average Sales Average Volume Price Revenue Volume Price Revenue ------- ------- ------- ------ ----- ------- Gas - mcf San Juan 17 $ 5.95 $101 16 $ 4.74 $76 Other 11 6.00 66 14.8 5.56 82 NGLs - barrels San Juan 1.5 29.47 44 1.6 20.00 32 Oil - barrels Other .533 45.97 25 .608 32.92 20
Revenue increased due to higher prices. Interest income increased due to investing the proceeds from the sale that occurred in September 2004 and interest income earned on the $3.5 million note due September 30, 2005. General and administrative expenses declined due to the termination of two employees after the California property sale, and salary reductions in the Denver office. Victor P. Stabio's salary was reduced 26% and certain other employees' salaries were reduced 10%. After the $5 million distribution to the limited partners on May 6, 2005, interest income will decrease for the remainder of the year. ITEM 3. CONTROLS AND PROCEDURES We maintain a system of disclosure controls and procedures that are designed for the purposes of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our CEO as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our CEO, who is also our CFO, concluded that our disclosure controls and procedures are effective for the purposes discussed above. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation. PART II-OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 31 -- SOX 302 Certification 32 -- SOX 906 Certification 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 16, 2005 By: /s/VICTOR P. STABIO CEO AND CFO Signing on behalf of registrant and as principal financial officer. EX-31 2 exh31.txt SOX 302 CERTIFICATION EXHIBIT 31 CERTIFICATION I, Victor P. Stabio, certify that: 1. I have reviewed the report on Form 10-QSB of Hallador Petroleum Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and I have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors; a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 16, 2005 /s/VICTOR P. STABIO CEO and CFO EX-32 3 exh32.txt SOX 906 CERTIFICATION EXHIBIT 32 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Hallador Petroleum Company (the "Company"), on Form 10-QSB for the period ended March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacities and dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 16, 2005 By: /s/ Victor P. Stabio CEO and CFO -----END PRIVACY-ENHANCED MESSAGE-----