-----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, HrA2MbXWwWZ8sXQ7QgXSGAtTCNt2IkIIQpo7SqZ+yBi0ZtpYIRyP8RxN1SqipYu+ NVPVJCAot5mEKlcADAnudA== 0000788965-99-000004.txt : 19990520 0000788965-99-000004.hdr.sgml : 19990520 ACCESSION NUMBER: 0000788965-99-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990519 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: SEC FILE NUMBER: 000-14731 FILM NUMBER: 99630647 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 FIRST QTR FORM 10QSB U.S. 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, 1999 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT Commission File Number 0-14731 HALLADOR PETROLEUM COMPANY (Exact name of small business issuer as specified in its charter) COLORADO 84-1014610 (State of incorporation) (IRS Employer Identification No.) 1660 Lincoln Street, Suite 2700, Denver, Colorado 80264 (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 to be filed by Section 13 or 15(d) of the 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 17, 1999: 7,093,150 PART I. FINANCIAL INFORMATION HALLADOR PETROLEUM COMPANY Consolidated Balance Sheet(in thousands)
March 31, December 31, 1999 1998* ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 1,436 $ 3,073 Marketable securities (cost-$1,793 and $2,029) 1,230 1,224 Accounts receivable- Oil and gas sales 207 226 Well operations 129 186 Right-of-way rental 166 Water disposal 441 AFE prepayments 151 48 Prospect sale 167 ------- ------ Total current assets 3,594 5,090 ------- ------ Oil and gas properties (successful efforts), at cost: Unproved properties 230 264 Proved properties 19,052 18,878 Less - accumulated depreciation depletion, amortization and impairment (13,599) (13,508) ------- ------- 5,683 5,634 ------- ------- Oil and gas operator bonds 155 155 Investment in Catalytic Solutions 70 70 Other assets 113 113 ------- ------- $ 9,615 $ 11,062 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Brokerage account-marketable securities $ 174 $ 284 Accounts payable and accrued liabilities 507 224 Oil and gas sales payable 66 70 ------- ------- Total current liabilities 747 578 ------- ------- Bank debt 1,385 3,231 ------- ------- Key employee bonus plan 223 218 ------- ------- Other 101 101 ------- ------- Minority interest 4,609 4,614 ------- ------- Stockholders' equity: Preferred stock, $.10 par value; 10,000,000 shares authorized; no shares 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 Net unrealized loss on marketable securities (63) (305) Accumulated deficit (15,519) (15,507) ------- ------- 2,550 2,320 ------- ------- $ 9,615 $ 11,062 ======= =======
- ----------------------------- *Derived from the Form 10-KSB. See accompanying notes. HALLADOR PETROLEUM COMPANY Consolidated Statement of Operations (in thousands, except per share amounts)
Three months ended March 31, 1999 1998 ------ ------ Revenue: Oil $ 441 $ 673 Gas 95 99 NGLs 44 85 Gain on sale of prospects 320 Interest and other 30 109 Non-recurring water disposal fee, net 208 Gain on stock sales 75 ------ ------ 893 1,286 Costs and expenses: ------ ------ Lease operating 523 680 General and administrative 150 140 Exploration costs 92 73 Interest 54 120 Depreciation, depletion and amortization 91 100 ------ ------ 910 1,113 ------ ------ Income (loss) before minority interest (17) 173 Minority interest 5 (52) ------ ------ Net income (loss) $ (12) $ 121 ====== ====== Net income (loss) per share (1) $ .02 ====== Weighted average shares outstanding 7,093 7,093 ====== ======
(1) Less than $.01. See accompanying notes. HALLADOR PETROLEUM COMPANY Consolidated Statement of Cash Flows (in thousands)
Three months ended March 31, 1999 1998 ------ ------ Net cash provided by operating activities $ 176 $ 343 ------ ------ Cash flows from investing activities: AFE prepayments (124) Marketable securities 236 1,800 Evaluated properties (105) (126) Prospect sales 201 ------ ------ Net cash provided by investing activities 208 1,674 ------ ------ Cash flows from financing activities: Repayments of debt (1,846) Brokerage account (110) Other (65) ------ Net cash used in financing activities (2,021) ------ Net increase (decrease) in cash and cash equivalents (1,637) 2,017 Cash and cash equivalents, beginning of period 3,073 6,047 ------ ------ Cash and cash equivalents, end of period $ 1,436 $ 8,064 ====== ======
See accompanying notes. HALLADOR PETROLEUM COMPANY Notes to Financial Statements 1. The interim financial data is unaudited; however, in the opinion of management, the interim data 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 by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company's financial statements filed as part of the Company's 1998 Form 10- KSB. This quarterly report should be read in conjunction with such annual report. 2. Comprehensive loss for the three-month period ended March 31, 1999 was approximately $56,000. HALLADOR PETROLEUM COMPANY Management's Discussion and Analysis or Plan of Operation RESULTS OF OPERATIONS YEAR-TO-DATE COMPARISON The table below provides sales data and average prices for the period.
1999 1998 Sales Volume Average Price Sales Volume Average Price ------------ ------------- ------------ ------------- Oil - barrels 45,390 $9.71 53,509 $12.58 Gas - mcf 50,120 1.90 43,950 2.24 NGLs- barrels 4,550 9.60 6,518 13.10
Significantly lower oil prices and production caused the reduction in oil revenues. On April 9, 1998, we restructured the debt with Trust Company of the West resulting in the relinquishment of their 18% net profits interest (NPI) in the South Cuyama field (the "Field"). Production would have been higher this period compared to last year due to the NPI relinquishment that resulted in us having a higher net revenue interest; however, due to historically low oil prices, several of the wells in the Field were shut-in. With the increase in oil prices, we have started to bring wells back on line. Gas production for the Field in 1999 was less than 5,000 mcf compared to 14,000 mcf for 1998. Gas production from the Merlin prospect was 14,000 mcf in 1998 compared to 28,000 mcf in 1999. The Field's oil price on May 14, 1999 was $14.92/bbl. Gas prices in the Merlin prospect are currently $2.25/mcf. During January 1999, we earned over $242,000 in non-recurring fees for allowing a third party to dispose water in the Field's disposal system from a blowout gas well 80 miles away. Associated expenses were approximately $34,000. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash, short-term investments, and cash to be provided from operations are expected to enable the Company to meet its obligations as they come due and fund current planned activities. The Field, our principal asset, is pledged to U. S. Bank under a $3,000,000 revolving line of credit executed on March 10, 1999. The proceeds from this revolver were used to payoff Trust Company of the West. The principal is due on March 31, 2002. On March 15, 1999, at our discretion, we paid down $2,000,000 on the revolver. THE FOLLOWING DISCUSSION UPDATES THE MD&A CONTAINED IN ITEM 6 OF THE 1998 FORM 10-KSB AND THE TWO DISCUSSIONS SHOULD BE READ TOGETHER. PROSPECT DEVELOPMENT AND EXPLORATION ACTIVITY - --------------------------------------------- South Cuyama Field ------------------ During the next twelve months we plan to shoot 3-D seismic in the Field and adjacent property which is budgeted for $500,000. In addition, certain drilling and completion projects are budgeted for $600,000. San Juan Basin --------------- We may participate in a 14,000' exploratory well which Burlington Resources plans to drill in June. Our share of the dry hole costs are estimated to be $100,000 and the completion costs another $50,000. Merlin Prospect of the Sac Basin - Northern California ------------------------------------------------------- The two wildcats drilled in March and April resulted in one dry hole and one successful well. In June, we plan to participate in another wildcat. Our share of the dry hole costs are estimated to be $50,000 and completion costs another $30,000. If successful, three more development wells may be drilled in the prospect. Big Horn Basin - Wyoming ------------------------ The horizontal planned for June has been cancelled, and we plan to sell all of our interest in this area. South Texas ----------- We plan to participate in the drilling of three wells in June. Indexgeo & Associates will be the operator. Our share of the dry hole costs are estimated to be $50,000 and completion costs another $45,000. Paradox Basin - Utah -------------------- There has been no change from what we discussed in the Form 10-KSB. Catalytic Solutions Investment - ------------------------------ There has been no change from what we discussed in the Form 10-KSB. Available-For-Sale Securities - ----------------------------- During the second quarter of 1998, we made several investments in certain publicly traded drilling and service companies. During the fourth quarter of 1998 we recognized an impairment of $400,000 for the R&B Falcon investment and an impairment of $100,000 for the Rowan investment. The table below shows the positions at March 31, 1999 and May 14, 1999. Trading profits of $75,000 were recognized during the first quarter and from April 1 through May 14, they were $87,000. Cumulative trading profits through May 14, 1999 have been $252,000.
March 31, 1999 Shares Cost Market Value ------ ---- ------------ R&B Falcon Corporation (FLC-NYSE) 44,000 $ 756,000 $ 379,000 Rowan Companies Inc.(RDC-NYSE) 29,000 550,000 368,000 Pool Energy Services Company (PESC-NASDAQ) 15,000 186,000 230,000 Ensco International Inc. (ESV-NYSE) 19,000 301,000 253,000 Impairment recorded in 1998 (500,000) --------- --------- $1,293,000 $1,230,000 ========= =========
May 14, 1999 Shares Cost Market Value ------ ----- ------------ R&B Falcon Corporation (FLC-NYSE) 32,000 $ 652,000 $ 344,000 Rowan Companies Inc. (RDC-NYSE) 20,000 415,000 308,000 Pool Energy Services Company (PESC-NASDAQ)10,000 118,000 163,000 Ensco International Inc. (ESV-NYSE) 5,000 91,000 86,000 Impairment recorded in 1998 (500,000) -------- --------- $ 776,000 $ 901,000 ========= =========
Y2K - --- There has been no change from what we discussed in the Form 10-KSB. New Accounting Pronouncements - ----------------------------- None of the new accounting pronouncements that have been released will affect our 1999 financial reporting. 1999 Outlook - ------------ If the recent increase in oil prices is sustained, we expect positive cash flow from operations before exploration and G & G costs for the remainder of the year. Environmental and Regulation - ---------------------------- We are directly affected by changing environmental rules and regulations. Although we believe our operations and facilities are in compliance with applicable environmental regulations, risk of substantial cost and liabilities resulting from an unintentional breach of environmental regulations are inherent to oil and gas operations. It is possible that other developments, such as increasingly strict environmental laws, regulations, and enforcement policies or claims for damages could result in significant costs and liability in the future. The California legislature passed a bill, which will increase our operator's bond from $100,000 to $250,000 to be phased in over a five-year period. In addition, an idle well bill was passed to insure that funds will be available to properly plug and abandon (P&A) California wells upon their depletion. Over the next ten years, we are required to place in an interest-bearing escrow account $500 per year for each idle well in the Field until such well is plugged and abandoned or until $5,000 has been deposited. Our first $60,000 installment is due on or before June 1, 1999. We estimate that after eight annual installments ($480,000) we will have met our current funding obligation of $600,000 because of the interest to be earned. As the Field depletes, and more wells move from the producing category to the idle-well category we will have to make additional annual payments. Presently, there are 276 wells in the field, 120 of which are classified as "idle." We implemented our electrification program for the Field and are 70% complete. Until oil prices increase on a sustained level no further electrification is planned for the Field. PART II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 - Financial Data Schedule; EDGAR filing only 10.1 - Credit Agreement dated as of March 10, 1999, by and among Santa Barbara Partners and Hallador Petroleum, LLP and U.S. Bank National Associtation. (b) No reports on Form 8-K were filed during the quarter. SIGNATURE In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HALLADOR PETROLEUM COMPANY Date: May 17, 1999 By: /s/ Victor P. Stabio -------------------- Victor P. Stabio Chief Executive Officer and Chief Financial Officer Signing on behalf of the registrant and as principal financial officer. EX-27 2 ART. 5 FDS FOR 1ST QUARTER FORM 10-QSB
5 1,000 3-MOS DEC-31-1999 MAR-31-1999 1,436 1,230 928 0 0 3,594 19,052 13,599 9,615 747 1,385 0 0 71 0 9,615 0 893 0 910 0 0 54 (12) 0 (12) 0 0 0 (12) (.002) (.002)
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