-----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, PYDCnZ3JZ1t1UzWMoc0mFg6CTqWnuZF7AJ+EyIRvT/4EtX60JETg6rCftMwUAXcM 6ByUNjJCN7z7lgK5Xrcjmg== 0000788965-99-000006.txt : 19990817 0000788965-99-000006.hdr.sgml : 19990817 ACCESSION NUMBER: 0000788965-99-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 99690297 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 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 June 30, 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 August 13, 1999: 7,093,150 PART I. FINANCIAL INFORMATION HALLADOR PETROLEUM COMPANY Consolidated Balance Sheet (in thousands)
June 30, December 31, 1999 1998* -------- ----------- ASSETS Current assets: Cash and cash equivalents $ 1,682 $ 3,073 Marketable securities (cost-$1,343 and $2,029) 1,007 1,224 Accounts receivable- Oil and gas sales 279 226 Well operations 184 234 Right-of-way rental 166 Prospect sale 167 ------- ------- Total current assets 3,152 5,090 ------- ------- Oil and gas properties (successful efforts), at cost: Unproved properties 256 264 Proved properties 19,383 18,878 Less - accumulated depreciation depletion, amortization and impairment (13,747) (13,508) ------- ------- 5,892 5,634 ------- ------- Oil and gas operator bonds 228 155 Investment in Catalytic Solutions 70 70 Other assets 122 113 ------- ------- $ 9,464 $ 11,062 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Brokerage account-marketable securities $ 339 $ 284 Accounts payable and accrued liabilities 226 224 Oil and gas sales payable 40 70 ------- ------- Total current liabilities 605 578 ------- ------- Bank debt 1,385 3,231 ------- ------- Key employee bonus plan 226 218 ------- ------- Other 101 101 ------- ------- Minority interest 4,540 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 gain (loss) on marketable securities 155 (305) Accumulated deficit (15,680) (15,507) ------- ------- 2,607 2,320 ------- ------- $ 9,464 $ 11,062 ======= =======
- ----------------------------- *Derived from the Form 10-KSB. See accompanying notes. HALLADOR PETROLEUM COMPANY Consolidated Statement of Operations (in thousands, except per share amounts)
Six months ended Three months ended June 30, June 30, 1999 1998 1999 1998 ------ ------ ------ ------ Oil $1,102 $1,383 $ 661 $ 710 Gas 184 321 89 222 NGLs 91 170 47 85 Gain on sale of prospects 343 23 Interest and other 45 197 15 88 Non-recurring water disposal fee, net 208 Gain on stock sales 216 141 ----- ----- ----- ----- 1,846 2,414 953 1,128 ----- ----- ----- ----- Costs and expenses: Lease operating 1,175 1,395 652 715 General and administrative 329 330 179 190 Exploration costs 266 102 174 29 Interest 84 229 30 109 Depreciation, depletion and amortization 239 242 148 142 ----- ----- ----- ----- 2,093 2,298 1,183 1,185 ----- ----- ----- ----- Income (loss) before minority interest (247) 116 (230) (57) Minority interest 74 (35) 69 17 ----- ----- ----- ----- Net income (loss) $ (173) $ 81 $ (161) $ (40) ===== ===== ===== ===== Net income (loss) per share $ (.02) $ .01 $ (.02) (1) ===== ===== ===== Weighted average shares outstanding 7,093 7,093 7,093 7,093 ===== ===== ===== =====
(1) Less than $.01. See accompanying notes. HALLADOR PETROLEUM COMPANY Consolidated Statement of Cash Flows (in thousands)
Six months ended June 30, 1999 1998 ------- ------- Net cash provided by operating activities $ 99 $ 524 ------ ------ Cash flows from investing activities: Marketable securities 471 1,135 Properties (263) (878) Other assets (82) (24) Prospect sales 175 ------ ------ Net cash provided by investing activities 301 233 ------ ------ Cash flows from financing activities: Repayments of debt (1,846) (1,941) Brokerage account 55 115 ------ ------ Net cash used in financing activities (1,791) (1,826) ------ ------ Net decrease in cash and cash equivalents (1,391) (1,069) Cash and cash equivalents, beginning of period 3,073 6,047 ------ ------ Cash and cash equivalents, end of period $ 1,682 $ 4,978 ====== ====== Notes to Financial Statements 1. The interim financial data is unaudited; however, in our opinion, 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 data has been prepared pursuant to the SEC's rules and regulations; accordingly, certain information and footnote disclosures normally included in annual financial statements have been omitted. We strongly encourage readers of this quarterly report to read our 1998 Form 10-KSB which includes information about the company's organization and accounting policies. 2. Commencing January 1, 1999, we began amortizing, using the units-of- production method, the estimated future costs to P&A the Field's 276 wells. 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 90,300 $12.20 116,750 $11.84 Gas - mcf 103,000 1.79 153,850 2.08 NGLs - barrels 9,500 9.62 14,500 11.72
Because of low oil prices in the early part of the year, we performed a study to weigh the benefits of higher production versus higher LOE. Consequently even though our oil production levels have dropped, so has the LOE. During the first half of 1998 we had 20 field employees compared to 17 for the 1999 period. Furthermore, our electrical expenses dropped by more than 1/3. We continue to monitor this relation. If higher oil prices continue, we will bring on to production wells that are currently shut-in just as long as the incremental revenue is greater than the incremental LOE. Gas production continues to decline in the field. New production from the Merlin prospect has offset this to some degree; however, production from these wells has dropped compared to last year. During the third quarter we expect the two new South Texas gas wells to alleviate part of our declining gas production. The Field's oil price on August 12, 1999 was $18.30/bbl. Gas prices in the Merlin prospect are currently $2.30/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. We recently decided to begin amortizing, using the units-of-production method, the estimated future costs to P&A the Field's 276 wells. Included in DD&A expense for the six months ended June 30, 1999 is $37,000 associated with these estimated future costs. QUARTER-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 46,000 $14.37 63,250 $11.22 Gas - mcf 53,000 1.67 109,900 2.02 NGLs - barrels 4,970 9.60 7,990 10.58
The explanations above for the year-to-date comparisons also apply to the quarter-to-date comparisons. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash, marketable securities, and cash to be provided from operations are expected to enable the Company to meet its obligations as they come due and fund 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 June and July the permitting and surveying was completed for the initial stage of the 3-D seismic project. During September the shooting will commence. Western Geophysical (a subsidiary of Baker Hughes) has been contracted to perform the shooting and processing. Results of the seismic project will not be known for several months. Two oil wells were drilled during July. One was to test a theory of down- spacing and the second was to test a theory for production in new zones. The first well reached total depth and is still being evaluated. Preliminary results indicate that the well will produce. The second well spud on July 30, and results will not be known for several more weeks. The wells in the field are based on 10-acre spacing. The first well is the first down-spaced well drilled in the field. If it proves successful, up to ten more wells may be drilled using five-acre spacing. The second well was drilled in an unproven area of the field and if it proves successful, up to five additional wells could be drilled next year. We have budgeted over $1,000,000 (a substantial portion of our liquidity) for the seismic and drilling projects described above. These types of investments are high-risk, high-reward. San Juan Basin -------------- During the first quarter, we thought we might participate in a 14,000' exploratory well which Burlington Resources planned to drill in June. Now, we plan to farm out our working interest to Burlington Resources and not participate. A study is in process to investigate down-spacing of some of the wells in the field. This could involve the drilling of five or six additional wells. The results of the study will not be known for several months. 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. The wildcat well originally planned for June has been delayed indefinitely. Equity Oil Company of Salt Lake City, Utah is the operator. Big Horn Basin - Wyoming ------------------------ The horizontal well planned for June has been cancelled. We plan to sell all of our interest in this area. South Texas ----------- The first two wells were drilled and completed in June. Both wells are on production making about 250 mcfpd each. We have a 19% working interest (15% revenue interest). Indexgeo & Associates of Houston, Texas is the operator. A third well, to test the Wilcox sand, should spud before the end of August. Our share of dry-hole costs are estimated to be $50,000 and completion costs another $45,000. Paradox Basin - Utah -------------------- Now that oil prices have rebounded we plan to devote more time in turning this prospect. 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. During the second quarter $9,000 of the $400,000 impairment was recognized as profit due to the sale of certain Falcon shares. The table below shows the positions at June 30, 1999 and August 12, 1999. Trading profits of $216,000 were recognized during the first six months and from July 1, through August 12, they were $83,000. Cumulative trading profits from the second quarter of 1998 through August 12, 1999 have been $388,000.
June 30, 1999 Shares Cost Market Value ------ -------- ------------ R&B Falcon Corporation (FLC-NYSE) 47,000 $ 790,000 $ 441,000 Rowan Companies Inc. (RDC-NYSE) 20,000 415,000 365,000 Pool Energy Services Company (PESC-NASDAQ) 5,000 48,000 101,000 Ensco International Inc. (ESV-NYSE) 5,000 90,000 100,000 --------- --------- Subtotal 1,343,000 1,007,000 Impairment (491,000) --------- --------- $ 852,000 $1,007,000 ========= =========
August 12, 1999 Shares Cost Market Value ------ -------- ------------ R&B Falcon Corporation (FLC-NYSE) 32,000 $ 652,000 $ 392,000 Rowan Companies Inc. (RDC-NYSE) 15,000 316,500 299,000 --------- --------- Subtotal 968,500 691,000 Impairment (491,000) --------- --------- $ 477,500 $ 691,000 ========= ========= Y2K - --- During June 1999, we upgraded our accounting software to be Y2K compliant. The Company has no contingency plans because if necessary, all critical functions can be performed without the aid of computers. The Company has no reason to believe that there will be Y2K type problems with its customers or suppliers. 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 liabilities in the future. The California legislature passed a bill, which increased 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, as the Field's operator, 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. The first $60,000 installment was paid in June 1999. We estimate that after eight annual installments ($480,000) we will have met the current funding obligation of $600,000 considering 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, 119 of which are classified as "idle." We recently decided to begin amortizing, using the units-of-production method, the estimated future costs to P&A the Field's 276 wells. Included in DD&A expense for the first six months ended June 30, 1999 is $37,000 associated with these estimated future costs. PART II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 27 - Financial Data Schedule; EDGAR filing only (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: August 13, 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
5 1,000 6-MOS DEC-31-1999 JUN-30-1999 1,682 1,007 463 0 0 3,152 19,383 13,747 9,464 605 1,385 0 0 71 0 9,464 1,377 1,846 0 2,093 0 0 84 (173) 0 (173) 0 0 0 (173) (.02) (.02)
-----END PRIVACY-ENHANCED MESSAGE-----