-----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, M+vTL1NT3cTvlxeA4ZFH92yztRp/OjV+zDCS5nyvVk3z8FabIZWq5DOVDuJmUCHG kdWzXwmuDUpCuCuRBAJRuw== 0001060830-01-500034.txt : 20010516 0001060830-01-500034.hdr.sgml : 20010516 ACCESSION NUMBER: 0001060830-01-500034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESERVE PETROLEUM CO CENTRAL INDEX KEY: 0000083350 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 730237060 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-08157 FILM NUMBER: 1634434 BUSINESS ADDRESS: STREET 1: 6801 N BROADWAY STE 300 CITY: OKLAHOMA CITY STATE: OK ZIP: 73116-9092 BUSINESS PHONE: 4058487551 MAIL ADDRESS: STREET 1: 6801 NORTH BROADWAY STREET 2: SUITE 300 CITY: OKLAHOMA STATE: OK ZIP: 73116-9092 FORMER COMPANY: FORMER CONFORMED NAME: FARMERS ROYALTY HOLDING CO DATE OF NAME CHANGE: 19751015 10-Q 1 res10q.txt FORM 10-Q FOR RESERVE PETROLEUM COMPANY SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-8157 THE RESERVE PETROLEUM COMPANY (Exact name of small business issuer as specified in its charter) Delaware 73-0237060 ------------------------------ ------------------ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 6801 N. Broadway, Suite 300, Oklahoma City OK 73116-9092 (Address of principal executive offices) (405) 848-7551 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ As of May 8, 2001, 167,411.73 shares of the Registrant's $.50 par value common stock were outstanding. Transitional Small Business Disclosure Format (check one) Yes No X --- --- PART 1 FINANCIAL INFORMATION 1 THE RESERVE PETROLEUM COMPANY BALANCE SHEETS (Unaudited) ASSETS ------
March 31, December 31, 2001 2000 --------- ---------- Current Assets: Cash and Cash Equivalents $ 564,678 $ 330,178 Available for Sale Securities 5,135,106 4,951,277 Trading Securities 253,598 400,371 Receivables 420,258 443,933 Prepayments & Deferred Income Taxes 42,252 5,625 --------- --------- 6,415,892 6,131,384 --------- --------- Investments: Partnership and Limited Liability Companies 526,850 544,081 Other 15,298 15,298 --------- --------- 542,148 559,379 --------- --------- Property, Plant & Equipment: Oil & Gas Properties, at Cost Based on the Successful Efforts Method of Accounting Unproved Properties 504,067 531,093 Proved Properties 4,755,567 4,561,075 --------- --------- 5,259,634 5,092,168 Less-Valuation Allowance and Accumulated Depreciation, Depletion & Amortization 3,980,139 3,959,762 --------- --------- 1,279,495 1,132,406 --------- --------- Other Property & Equipment, at Cost 334,780 330,490 Less-Accumulated Depreciation & Amortization 165,820 175,846 --------- --------- 168,960 154,644 --------- --------- 1,448,455 1,287,050 --------- --------- Other Assets 446,623 494,868 --------- --------- $8,853,118 $8,472,681 ========= =========
(continued) See Accompanying Notes 2 THE RESERVE PETROLEUM COMPANY BALANCE SHEETS (Unaudited) (Concluded) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
March 31, December 31, 2001 2000 --------- ---------- Current Liabilities: Accounts Payable $ 88,959 $ 41,321 Income Taxes Payable 111,615 118,500 Other Current Liabilities- Gas Balancing Commitment 35,111 35,111 Deferred Income Taxes and Other 15,000 30,641 --------- --------- 250,685 225,573 --------- --------- Dividends Payable 124,953 128,037 --------- --------- Stockholders' Equity: Common Stock 92,368 92,368 Additional Paid-in Capital 65,000 65,000 Retained Earnings 8,512,887 8,154,158 --------- --------- 8,670,255 8,311,526 Less - Treasury Stock, at Cost 192,775 192,455 --------- --------- 8,477,480 8,119,071 --------- --------- $8,853,118 $8,472,681 ========= =========
See Accompanying Notes 3 THE RESERVE PETROLEUM COMPANY STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, 2001 2000 --------- --------- Operating Revenues: Oil and Gas Sales $ 931,396 $ 418,947 Lease Bonuses and Other 80 8,713 --------- --------- 931,476 427,660 --------- --------- Operating Costs and Expenses: Production 110,448 83,706 Exploration 145 64,632 Depreciation, Depletion, Amortization and Valuation Provisions 66,540 47,383 General, Administrative and Other 164,892 153,879 --------- --------- 342,025 349,600 --------- --------- Income from Operations 589,451 78,060 Other Income (Loss), Net (115,846) 175,619 --------- --------- Income Before Income Taxes 473,605 253,679 Provision for Income Taxes 114,876 68,964 --------- --------- Net Income $ 358,729 $ 184,715 ========= ========= Per Share Data Net Income, Basic and Diluted $ 2.14 $ 1.10 ========= ========= Weighted Average Shares Outstanding, Basic and Diluted 167,436 167,623 ========= =========
See Accompanying Notes 4 THE RESERVE PETROLEUM COMPANY STATEMENTS OF CASH FLOW (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Three Months Ended March 31, 2001 2000 --------- --------- Net Cash Provided by Operating Activities $ 626,927 $ 183,429 --------- --------- Cash Flows Applied to Investing Activities: Purchase of Available for Sale Securities (2,951,695) (887,453) Sales of Available for Sale Securities 2,767,865 853,779 Property Dispositions 21,119 10,674 Property Additions (234,563) (113,473) Cash Distributions from Equity Investments 8,250 8,250 --------- --------- Net Cash Applied to Investing Activities (389,024) (128,223) --------- --------- Cash Flows Applied to Financing Activities: Decrease in Dividends Payable (3,083) (744) Purchase of Treasury Stock (320) (320) --------- --------- Total Cash Applied to Financing Activities (3,403) (1,064) --------- --------- Net Change in Cash and Cash Equivalents 234,500 54,142 Cash and Cash Equivalents, Beginning of Period 330,178 367,963 --------- --------- Cash and Cash Equivalents, End of Period $ 564,678 $ 422,105 ========= ========= Supplemental Disclosures of Cash Flow Information, Cash Paid During the Periods for: Interest $ 3,750 $ ---- Income Taxes $ 116,000 $ ----
See Accompanying Notes 5 THE RESERVE PETROLEUM COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 2001 (Unaudited) Note 1 - BASIS OF PRESENTATION In the opinion of Management, the accompanying financial statements reflect all adjustments which are necessary for a fair statement of the results of the interim periods presented. The results of operations for the current interim periods are not necessarily indicative of the operating results for the full year. Note 2 - COMPREHENSIVE INCOME Total comprehensive income was $358,729 for the three months ended March 31, 2001. Total comprehensive income for the three months ended March 31, 2000, was $141,564. Note 3 - UNREALIZED LOSS ON TRADING SECURITIES The statement of operations for the period ended March 31, 2001, included unrealized losses on trading securities of $139,592. Through May 7, 2001, there were no sales of trading securities in inventory at March 31, 2001. The fair value of trading securities on hand at March 31, 2001, and still in inventory at May 7, 2001, had increased $53,974. 6 THE RESERVE PETROLEUM COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS March 31, 2001 (Unaudited) The discussion and analysis of financial condition and results of operations should be read with reference to a similar discussion in the Company's December 31, 2000, Form 10-KSB filed with the Securities and Exchange Commission, as well as the condensed financial statements included in this Form 10-QSB. 1. Liquidity and Capital Resources. ------------------------------- The Company's cash, cash equivalents and available for sale securities at March 31, 2001, totaled $5,699,784, an amount which, along with the cash flow from operations, is adequate to fund all currently budgeted investing and financing activities. Management is unaware of any additional material trends, demands, commitments, events or uncertainties which would impact liquidity and capital resources to the extent that the discussion presented in Form 10-KSB for December 31, 2000, would not be representative of the Company's current position. 2. Material Changes in Results of Operations Three Months Ended March 31, 2001, ---------------------------------------------------------------------------- Compared with Three Months Ended March 31, 2000. - ----------------------------------------------- Operating Revenue. Oil and gas sales were $931,396 in 2001, a $512,449 (122%) increase from 2000. The increase was almost totally the result of an increase in the average unit price of natural gas. The volume of gas, the average unit price and the volume of oil sold remained flat between the periods. The average unit price of gas per thousand cubic feet (MCF) increased $4.61 to $6.83 per MCF, and the volume of gas produced fell 242 MCF to 114,606 MCF. The average unit price per barrel (Bbl) of oil increased $.48 to $27.28 per Bbl, and the volume of oil sales increased 185 Bbls to 6,012 Bbls. Production in the quarter ended March 31, 2001, from properties which first produced after March 31, 2000, was 18,873 MCF of gas and 548 Bbls of oil. This increased volume from new production was offset by the normal decline in volume from older properties by 19,115 MCF of gas and 363 Bbls of oil. Operating Costs and Expenses. Production costs increased $26,742 (32%) to $110,448, for the most part because of a $22,636 (70%) increase in gross production tax. The production tax increase was the result of increased oil and gas sales. 7 Exploration costs charged to expense decreased $64,487 to $145 in 2001. The remaining expenditures for exploration costs totaling approximately $179,000 were capitalized. One Oklahoma well with accumulated cost of approximately $147,000 at March 31, 2001, in which the Company has a 17.5% working interest, was completed as a gas producer. The well is producing at a rate of about 250 MCF per day with additional potential production from another zone. Another Oklahoma well (21% working interest) with accumulated costs of approximately $28,000 at March 31, 2001 was testing as of May 7, 2001. The provisions for depreciation, depletion, amortization and valuation increased $19,157 (40%) to $66,540 mostly because of unit of production depreciation on oil and gas properties which first produced after March 31, 2000. Those properties had depreciation provisions which totaled $19,738 in the first quarter of 2001. General, administrative and other expenses increased $11,013 (7%) to $164,892. The items with the most significant increases were salaries, which increased $4,659 because of salary adjustments and director fees which increased $4,500 as the result of an additional board of directors' meeting. Other Income (Loss), Net. Other income, net declined $291,465 to a loss of $115,846 in 2001 from a gain of $175,619 in 2000. For the most part, the loss was the result of a $258,389 decrease in realized and unrealized gain on trading securities from a gain of $110,908 in 2000 to a loss of $147,481 in 2001. See Note 3, to the accompanying condensed financial statements, for additional information on trading securities. Also contributing to the decline was a $27,077 decrease in gain on sale of property and equipment to a loss of $16,395 in 2001 as well as a $13,899 decline in income from equity investments to a loss of $8,981 in 2001. However, interest income, mostly from available for sale securities, increased $9,079 to $67,937 in 2001. Provision For Income Taxes. The provision for income taxes increased $45,912 (67%) to $114,876 in 2001. The effective Federal income tax rate was 24% in 2001 and 27% in 2000, as compared to the statutory US Federal income tax rate of 35%. For the most part, the effective tax rate was less than the statutory rate each year because of allowable depletion for Federal income tax purposes in excess of depletion for financial statements. In 2001, the Company had an estimated provision for income taxes of $114,876 as estimated current tax expense of $109,115 was increased by estimated deferred tax expense of $5,761. For the comparable period in 2000, the Company had an estimated provision for income taxes of $68,964 as estimated current tax expense of $9,340 was increased by estimated deferred tax expense of $59,624. 8 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (b) No reports on Form 8-K were required to be filed by the Registrant for the three months ended March 31, 2001. 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 thereto duly authorized. THE RESERVE PETROLEUM COMPANY ----------------------------- (Registrant) Date: May 8, 2001 /s/ Mason McLain ------------ ----------------------------- Mason McLain, President Date: May 8, 2001 /s/ Jerry L. Crow ------------- ----------------------------- Jerry L. Crow Principal Financial and Accounting Officer 9 -----END PRIVACY-ENHANCED MESSAGE-----