U.S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission File No. 0-20879
PYR ENERGY CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 95-4580642
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(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1675 Broadway, Suite 1150, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (303) 825-3748
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Check whether the issuer (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___
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of each of the issuer's classes of common
equity as of July 14, 2000 is as follows:
$.001 Par Value Common Stock 16,339,639
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PYR ENERGY CORPORATION
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 3
Balance Sheet - May 31, 2000 and August 31, 1999............ 3
Statement of Operations - Three Months and Nine Months Ended
May 31, 1999, May 31, 2000 and Inception through
May 31, 2000................................................ 4
Statement of Cash Flows - Nine Months Ended May 31, 1999,
May 31, 2000 and Inception through May 31, 2000............. 5
Notes to Financial Statements............................... 6
Summary of Significant Accounting Policies.................. 6
Item 2. Management's Discussion and Analysis or
Plan of Operation...................................... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................... 13
Item 2. Changes in Securities.................................. 13
Item 3. Defaults Upon Senior Securities........................ 13
Item 4. Submission of Matters to a Vote of Security Holders.... 13
Item 5. Other Information...................................... 14
Item 6. Exhibits and Reports on Form 8-K....................... 14
Signatures...................................................... 14
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
PYR ENERGY CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
5/31/00 8/31/99
(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 1,526,596 $ 117,905
Marketable Securities -- 5,111,062
Receivables 10,300 3,082
Yard inventory 373,170 --
Deposits and prepaid expenses 29,055 10,347
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Total Current Assets 1,939,121 5,242,396
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PROPERTY AND EQUIPMENT, at cost
Furniture and equipment, net 34,140 43,777
Undeveloped oil and gas prospects 8,787,767 5,063,070
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8,821,907 5,106,847
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OTHER ASSETS
Reimbursable property costs 430,500 410,000
Deposit 3,278 3,278
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433,778 413,278
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$ 11,194,806 $ 10,762,521
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 116,643 $ 179,839
Current portion of capital lease obligation 1,340 1,600
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Total Current Liabilities 117,983 181,439
Capital lease obligation -- 1,062
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Total Liabilities 117,983 182,501
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value
Authorized 1,000,000 shares
Authorized 25,000 shares Series A;
Issued and outstanding 14,270shares
at 5/31/00 and 22,979 shares at 8/31/99 14 23
Common stock, $.001 par value
Authorized 50,000,000 shares
Issued and outstanding - 16,310,889 shares
at 5/31/00 and 14,408,620 shares at 8/31/99 16,311 14,409
Capital in excess of par value 13,131,270 11,925,537
Treasury Stock, at cost, 2,500 shares
at 5/31/00 and no shares at 8/31/99 (10,313) --
Retained earnings/(accumulated deficit) (2,060,459) (1,359,949)
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11,076,823 10,580,020
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$ 11,194,806 $ 10,762,521
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<TABLE>
<CAPTION>
PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three Nine Nine
Months Months Months Months Inception
Ended Ended Ended Ended Through
5/31/99 5/31/00 5/31/99 5/31/00 5/31/00
<S> <C> <C> <C> <C> <C>
REVENUES
Consulting Fees $ -- $ -- $ -- $ -- $ 127,528
Interest 31,211 21,226 46,813 105,516 263,969
------------ ------------ ------------ ------------ ------------
31,211 21,226 46,813 105,516 391,497
OPERATING EXPENSES
General and administrative 216,359 202,917 528,433 684,755 2,246,794
Dry hole, impairment and abandonments -- -- -- -- 321,369
Interest 46,115 59 158,151 180 184,275
Depreciation and amortization 6,628 4,581 19,421 13,838 61,685
------------ ------------ ------------ ------------ ------------
269,102 207,557 706,005 698,773 2,814,123
OTHER INCOME
Gain on asset sale -- -- -- -- 556,197
------------ ------------ ------------ ------------ ------------
(237,891) (186,331) (659,192) (593,257) (1,866,429)
INCOME APPLICABLE TO
PREDECESSOR LLC -- -- -- -- (35,868)
------------ ------------ ------------ ------------ ------------
NET (LOSS) $ (237,891) $ (186,331) $ (659,192) $ (593,257) $ (1,902,297)
============ ============ ============ ============ ============
NET INCOME (LOSS) PER COMMON
SHARE -BASIC AND DILUTED $ (.023) $ (.012) $ (.068) $ (.038) $ (.216)
============ ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,255,910 16,163,083 9,640,407 15,571,912 8,822,799
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PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
Nine Months Nine Months from Inception
Ended 5/31/99 Ended 5/31/00 to 5/31/00
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (659,192) $ (593,257) $ (1,866,429)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Gain on sale of assets -- -- (556,197)
Depreciation and amortization 19,421 13,838 61,685
Amortization of deferred financing costs 41,034 -- 26,939
Contributed services -- -- 36,000
Dry hole, impairment and abandonments -- -- 321,369
Amortization of marketable securities -- -- (20,263)
Common stock issued for interest on debt -- -- 116,822
Changes in assets and liabilities
(Increase)/decrease in receivables -- (7,218) (10,300)
(Increase)/decrease in inventory -- (373,170) (373,170)
(Increase)/decrease in deposits and prepaids (104,913) (18,708) (37,450)
Increase/(decrease) in accounts payable and
accrued liabilities 61,916 (52,196) 113,210
Other -- -- 6,249
------------ ------------ ------------
Net cash provided/(used) by operating activities (641,734) (1,030,711) (2,181,535)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of oil and gas interests -- -- 1,050,078
Cash paid for furniture and equipment (1,875) (4,200) (90,155)
Cash paid for undeveloped oil and gas properties (2,651,031) (3,724,700) (8,952,459)
Cash paid for marketable securities -- -- (5,090,799)
Proceeds received from marketable securities -- 5,111,062 5,111,062
Cash paid for reimbursable property costs -- (20,500) (430,500)
------------ ------------ ------------
Net cash provided/(used) in investing activities (2,652,906) 1,361,662 (8,402,773)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Members capital contributions -- -- 28,000
Distributions to members -- -- (66,000)
Cash from short-term borrowings -- -- 285,000
Repayments of short-term borrowings -- -- (285,000)
Proceeds from sale of common stock 7,000,000 715,000 9,738,750
Cash paid for offering costs (60,133) -- (407,291)
Proceeds from convertible debentures 2,500,000 -- 2,500,000
Proceeds from exercise of warrants -- 364,062 371,874
Payments on capital lease (1,065) (1,322) (3,855)
Cash received upon recapitalization and merger -- -- 336
Preferred dividends paid -- -- (50,910)
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Net cash (used) provided by financing activities 9,438,802 1,077,740 12,110,904
------------ ------------ ------------
NET INCREASE/(DECREASE) IN CASH 6,144,162 1,408,691 1,526,596
CASH, BEGINNING OF PERIODS 373,100 117,905 --
------------ ------------ ------------
CASH, END OF PERIODS $ 6,517,262 $ 1,526,596 $ 1,526,596
============ ============ ============
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PYR ENERGY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
May 31, 2000
The accompanying interim financial statements of PYR Energy Corporation are
unaudited. In the opinion of management, the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for the interim period.
We have prepared the financial statements included herein pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosure normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. We believe the
disclosures made are adequate to make the information not misleading and
recommend that these condensed financial statements be read in conjunction with
the financial statements and notes included in our Form 10-KSB as of August 31,
1999.
PYR Energy Corporation (formerly known as Mar Ventures Inc. ("Mar")) was
incorporated under the laws of the State of Delaware on March 27, 1996. Mar had
been a public company which had no significant operations as of July 31, 1997.
On August 6, 1997, Mar acquired all the interests in PYR Energy LLC ("PYR LLC")
(a Colorado Limited Liability Company organized on May 31, 1996), a development
stage company as defined by Statement of Financial Accounting Standards (SFAS)
No. 7. PYR LLC, an independent oil and gas exploration company, had been engaged
in the acquisition of undeveloped oil and gas interests for exploration and
exploitation in the Rocky Mountain region and California. As of August 6, 1997,
PYR LLC had acquired only non-producing leases and acreage and no exploration
had been commenced on the properties. Upon completion of the acquisition of PYR
LLC by Mar, PYR LLC ceased to exist as a separate entity. Mar remained as the
legal surviving entity and, effective November 12, 1997, Mar changed its name to
PYR Energy Corporation.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
CASH EQUIVALENTS - For purposes of reporting cash flows, we consider as
cash equivalents all highly liquid investments with a maturity of three months
or less at the time of purchase. At May 31, 2000, there were no cash
equivalents.
MARKETABLE SECURITIES - At August 31, 1999, we held investments in
marketable securities which were classified as held-to-maturity. Securities
classified as held-to-maturity consisted of securities with a maturity date
within one year, and are classified as Marketable Securities as a part of
Current Assets. These securities, which consisted of U.S. Government backed
discount notes, are stated at amortized cost. At May 31, 2000, all marketable
securities previously held by the Company had matured.
PROPERTY AND EQUIPMENT - Furniture and equipment is recorded at cost.
Depreciation is provided by use of the straight-line method over the estimated
useful lives of the related assets of three to five years. Expenditures for
replacements, renewals, and betterments are capitalized. Maintenance and repairs
are charged to operations as incurred.
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OIL AND GAS PROPERTIES - We follow the full cost method to account for our
oil and gas exploration and development activities. Under the full cost method,
all costs incurred which are directly related to oil and gas exploration and
development are capitalized and subjected to depreciation and depletion.
Depletable costs also include estimates of future development costs of proved
reserves. Costs related to undeveloped oil and gas properties may be excluded
from depletable costs until such properties are evaluated as either proved or
unproved. The net capitalized costs are subject to a ceiling limitation. Gains
or losses upon disposition of oil and gas properties are treated as adjustments
to capitalized costs, unless the disposition represents a significant portion of
the Company's proved reserves.
Undeveloped oil and gas properties consists of ongoing exploratory drilling
costs for which no results have been obtained and leases and acreage we acquire
for our exploration and development activities. The cost of these non-producing
leases is recorded at the lower of cost or fair market value.
We have adopted SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of" which requires that
long-lived assets to be held and used be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. During the fiscal year ended August 31, 1999, we recorded an
impairment loss of approximately $285,000. No impairment losses have been
recorded during the nine months ended May 31, 2000.
INCOME TAXES - We have adopted the provisions of SFAS No. 109, "Accounting
for Income Taxes". SFAS 109 requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax liabilities and assets are determined based on the difference between the
financial statement and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We are an independent oil and gas exploration company whose strategic focus
is the application of advanced seismic imaging and computer-aided exploration
technologies in the systematic search for commercial hydrocarbon reserves,
primarily in the onshore western United States. We attempt to leverage our
technical experience and expertise with seismic technology to identify
exploration and exploitation projects with significant potential economic
return. We intend to participate in selected exploration projects as a
non-operating, working interest owner, sharing both risk and rewards with our
joint interest partners. We have and will continue to pursue exploration
opportunities in regions where we believe significant opportunity for discovery
of oil and gas exists. By reducing drilling risk through seismic technology, we
seek to improve the expected return on our investment in oil and gas exploration
projects.
We paid approximately $3,724,700 and $2,651,000, respectively, during the
nine months ended May 31, 2000 and May 31, 1999 for acquisition of acreage,
direct geological and geophysical costs, drilling costs and other related direct
costs with respect to our identified exploration and exploitation projects. We
have not recorded any revenues from oil and gas production.
We currently anticipate that we will participate in the drilling of at
least four exploration/exploitation wells during the next twelve months,
although the number of wells may increase as additional projects are added to
our portfolio. However, there can be no assurance that any such wells will be
drilled and if drilled that any of these wells will be successful.
It is anticipated that our future business development will require
additional (and possibly substantial) capital expenditures. Depending upon the
level of industry participation in our exploration projects, the continuing
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exploration and potential development results at East Lost Hills, the Deep
Temblor exploration program and in any other exploration projects, we may
require from $5,000,000 to over $10,000,000 for capital expenditures relating to
exploration and potential development of our projects during the next months. We
intend to attempt to limit net capital expenditures by forming industry
alliances in our additional exploration projects by exchanging an appropriate
portion of our ownership interest for cash and/or a carried interest in these
projects. Currently, there are no commitments for additional funding and,
depending on our ability to sell additional prospects for cash, we may need to
raise additional funds to cover capital expenditures.
The following provides a summary and status of our exploration areas and
significant projects. While actively pursuing specific exploration activities in
each of the following areas, we continually review additional opportunities in
these core areas and in other areas that meet certain exploration and
exploitation criteria. There is no assurance that drilling opportunities will
continue to be identified in the current project portfolio or will be successful
if drilled. Our primary focus area is the San Joaquin Basin of California.
California Exploration, San Joaquin Basin
The San Joaquin Basin of California has proven to be one of the most
productive hydrocarbon producing basins in the continental United States. To
date, the approximately 14,000 square mile basin has produced in excess of 13
billion barrels of oil equivalent, and contains 25 fields classified as giant,
with cumulative production of more than 100 million barrels of oil equivalent
("MMBoe"). In calculating barrels of oil equivalent, we use the ratio of six
thousand cubic feet ("Mcf") of gas for one barrel of oil.
The San Joaquin Basin contains six of the 25 largest oil fields in the U.S.
All six of these fields were discovered between 1890 and 1911, a full decade
prior to the discovery of the first giant Texas oil field. The basin accounts
for 34 percent of California's actively producing fields, yet produces more than
75 percent of the state's total oil and gas production. Most of the production
within the basin is located along the western and southern end of Kern County.
San Joaquin Basin production totals for 1998 reported by the California
Department of Oil and Gas for all producers in the aggregate indicate total
production of 254.62 MMBoe. Of this figure, Kern County accounts for over 90
percent of the oil production from the San Joaquin Basin.
For the 100 plus years of its productive life, the San Joaquin Basin has
been dominated by major oil companies and large fee acreage holdings. As a
result of these conditions, the basin has generally been under-explored by
independent exploration and production companies, which are the groups that
usually bring advanced technologies to their exploration efforts. The large
fields in the basin were all discovered on surface anticlines and produce mostly
heavy oil from depths of less than 5,000 feet. As a consequence, basin operators
have employed only those advanced engineering technologies related to enhanced
production practices, including steam floods and, most recently, horizontal
drilling.
With only limited exploration in the San Joaquin Basin since the "boom"
days of the early 1980s, we believe that multiple exploration opportunities are
available. Deep basin targets, both structural and stratigraphic in nature,
remain largely untested. In addition, retrenchment of the major oil companies in
the basin has caused many of them to rethink their policies regarding their
large fee acreage positions. For the first time in history, many of these
companies are opening up these fee acreage positions to outside exploration by
aggressive independent companies.
East Lost Hills. During 1997, we identified and undertook the initial
technical analysis of a deep, large untested structure in the footwall of the
Lost Hills thrust. This prospect lies directly east of and structurally below
the existing Lost Hills field, which has produced in excess of 350 MMBoe from
shallow pay zones in a large thrusted anticlinal feature.
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This unconventional deep prospect had significant structural and reservoir
risk, but the potential for large reserves made it an attractive play. In a
joint effort with Denver based Armstrong Resources LLC ("Armstrong"), over 350
miles of high-resolution 2-D seismic data was analyzed to help refine the
structural mapping of the prospect. Advanced pre-stack depth migration and
interpretation clearly defines a deep sub-thrust structure. Two wells drilled to
the east of the prospect, in the mid-1970s, proved the productivity potential of
free oil (42 degree API) and gas at depths below 17,000 feet. Ongoing source
rock and maturation modeling suggests that the oil generation window exists at
depths between 15,000 and 17,000 feet, and that early migration of hydrocarbons
should preserve reservoir quality at East Lost Hills.
In early 1998, PYR and Armstrong entered into an exploration agreement with
a number of established Canadian joint interest partners to participate in the
drilling of an initial exploratory well to fully evaluate the feature. We
received a cash consideration for our share of acreage in this play and a
carried 6.475% working interest through the tanks in the initial exploration
well. We also own an additional 4.1% working interest for a total working
interest of 10.575%. We own a 10.575% working interest in the entire nine
township Area of Mutual Interest ("AMI"), including the approximate 30,000 acres
at East Lost Hills.
On May 15, 1998, an initial exploration well, the Bellevue Resources et al.
#1-17 East Lost Hills well, located in SE1/4, Sec 17, T26S, R21E, Kern County,
California, commenced drilling. The well was designed to test prospective
Miocene sandstone reservoirs in the Temblor Formation below 17,000 feet. During
September 1998, the well was sidetracked in an attempt to gain better structural
position and delineate potential uphole pay. On November 23, 1998, the well was
drilling at 17,600 feet toward a total depth of 19,000 feet when it blew out and
ignited. No personal injuries resulted, and an expert well control team was
engaged to contain the fire. Surface containment facilities were installed and
liquid and gas production were contained and were transported to processing and
disposal facilities. A snubbing unit was deployed to attempt a surface control
kill of the Bellevue #1-17, but, after eight kill attempts, was not successful.
A majority of the costs associated with the blow out have been covered by
insurance policies in effect when the blowout occurred. A portion of the claims
have not yet been reimbursed through one of the insurance policies. We have
advanced $430,500 for our proportionate share of the claims in order that these
claims be paid directly to the claimants. We believe that most, if not all, of
these claims will ultimately be reimbursed through insurance proceeds. We carry
the advanced funds as Reimbursable Property Costs on our May 31, 2000 Balance
Sheet.
On December 18, 1998, a relief well, the Bellevue #1-17R, began drilling.
This well was initially expected to intersect the wellbore of the Bellevue #1-17
at a depth of about 13,500 feet. However, as drilling continued and the
characteristics of the blowout were examined, it was determined that it would be
necessary to intersect the wellbore below 16,000 feet. The relief well was
drilled to 16,668 feet, where it intersected the original well bore. On May 29,
1999, the Bellevue #1-17 well was killed by pumping heavy mud and cement into
the well bore. This Bellevue #1-17 well bore has been plugged and abandoned and
the Bellevue #1-17R relief well was used to sidetrack a replacement well into
the targeted Temblor Zone. After initial production testing of this replacement
well, the participants have temporarily suspended operations on this well until
more information is available from additional ongoing drilling efforts at East
Lost Hills. It is possible that the operator may sidetrack this well again or
may drill a new well from the surface.
On August 26, 1999, the participants in this prospect commenced drilling a
second well (the Berkley ELH#1) at East Lost Hills to further explore the
Temblor Formation. We have been and continue to pay for our full 10.575% working
interest for the costs of this well. This well, also operated by Berkley, is
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approximately two miles to the northwest of the original well. In order to have
a better chance to reach total depth, a drilling rig capable of drilling to
30,000 feet was brought in to drill this well. On April 12, 2000, this well had
drilled to a total depth of 19,724 feet. After electronic log analysis, the
participants in the project had agreed to commence completion operations.
According to the operator, a total of 2,474 feet of the Temblor Formation was
penetrated. Completion operations commenced, which included running a production
liner to total depth.
Production testing commenced on May 28, 2000 and was completed on June 16,
2000. Production and pressure build up data has been interpreted and analyzed
with results supporting the participants' plan to tie in this well and proceed
with a developmental drilling plan. The process of designing and building
wellsite facilities and transportation pipeline has begun and production is
anticipated to commence by December 1, 2000.
The participants commenced drilling the Berkley ELH #2 well on July 11,
2000. This well targets the same structure encountered by the Bellevue 1-17,
1-17R and the BKP #1 wells, and is located approximately 1.5 miles northwest of
the Berkley ELH #1. The total depth of this well is anticipated to be 17,300
feet and is expected to be reached within 100 days from spud date.
On June 19, 2000, the participants at East Lost Hills commenced drilling
the Berkley ELH #3 well. This well is located approximately one mile southwest
of the Bellevue 1-17R location and is designed to test a geologically separate
structure than the structure encountered by the Bellevue 1-17 blowout well, the
Bellevue 1-17R replacement well, the BKP #1 well and the structure targeted by
the BKP #2 well. The total projected depth of this well is approximately 18,000
feet. As of the date of this report, this well is drilling at a depth of 8,300
feet.
Deep Temblor Exploration Program - Cal Canal, Lucky Dog and Pyramid Power.
In April 1999, we purchased a working interest in three additional deep
exploration projects in the San Joaquin basin of California. These three
projects are in addition to the exploration program initiated by the recent deep
drilling at East Lost Hills, and all three are outside the East Lost Hills joint
venture area. Pursuant to the agreement, we purchased working interests, ranging
from 3.00% to 3.75%, in each of the three exploration prospect areas. Our
interest will be carried (non-cost bearing) "through the tanks" in the initial
test well in each of the three separate exploration prospects.
The three exploration prospects in this program, target the Temblor
Formation at depths ranging from 15,000 to 19,000 feet. Berkley will also
operate these exploration projects in the Deep Temblor Exploration Program.
The first exploration well in the program (Cal Canal) began drilling on
June 15, 1999. This well was drilled to a total depth of 18,100 feet. Non
commercial hydrocarbon flow rates were obtained from a perforated 10 foot zone
in the lower McDonald. Operations on this well have been temporarily suspended.
The participants have decided to defer deepening or further testing of this well
until information regarding reservoir quality and performance is obtained from
on-going drilling efforts in the San Joaquin Basin.
The next exploration well in this program is expected to spud in the fourth
quarter of calendar year 2000.
Wedge Prospect and Bull Dog Prospect. We created these exploration
opportunities and are in the process of presenting these prospects to potential
industry partners. These prospects will target the Temblor Formation in the San
Joaquin Basin, similar to the East Lost Hills and Deep Temblor Exploration
Program. We currently control 100% of the gross acreage in these areas and
intend to sell a portion of our interest to industry partners for a cash
consideration while retaining a working interest in the exploration wells and
adjoining acreage. We control approximately 28,000 acres in these prospects and
anticipate drilling at least one exploration well within the next 12 months.
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Rectange Force Prospect. We own a 30% interest in approximately 5,500 acres
in this San Joaquin basin prospect. This is another prospect that targets the
Temblor Formation. We may elect to participate in the drilling of an initial
exploration well here at our current 30% ownership interest, or may elect to
sell down our interest for cash and/or a carried working interest in the initial
well. This prospect is still in the development stage and no drilling plans
currently are in place.
Southeast Maricopa. We hold a 100% working interest in this acreage. During
1998, we acquired new 3-D seismic data over approximately 56 square miles using
Western Geophysical Company as the seismic contractor. We are presenting this
prospect to potential industry participants and intend to generate a cash
consideration and/or a carried working interest in an initial exploration well
here. Through lease and option, we have a 100% working interest in approximately
3,000 gross acres in this project.
Rocky Mountain Areas.
We are in the process of developing exploration plays in three separate
high potential prospect areas. We intend to replicate the approach taken with
the California projects by controlling the pre-drill exploration phase including
developing the geological background, identifying potential oil and/or gas
reservoirs via seismic imaging, and controlling the land position. After these
tasks are complete, we intend to take each prospect to potential industry
partners in order to generate a cash consideration and drilling activity. We
have begun to present one of these projects to potential industry participants.
We currently control, through lease or option, approximately 140,000 net acres
in these projects.
On May 25, 2000, we completed a private placement resulting in receipt of
$715,000 (less fees and related expenses estimated to be approximately $9,000)
of funding through the sale of 220,000 shares of common stock and 22,000 3-year
warrants. Each warrant entitles the holder to purchase one share of common stock
at a price of $4.25 until it expires on May 25, 2003. We may, upon 30-days
notice, repurchase any outstanding warrants for $.001 per warrant at any time
after the weighted average trading price of the common stock has been at least
$7.50 for a 30-day period.
During the quarter ended May 31, 2000, the Company acquired treasury stock
only as the result of stock option exercises.
On October 26, 1999, we met specific requirements to enable us to seek to
repurchase one-third of our then-outstanding Series A Preferred Stock. Rather
than allow their shares to be repurchased at $0.60 per underlying common share,
the holders of the preferred stock converted one third of their shares into
common stock. This resulted in 7,709.64 shares of Series A Preferred Stock being
converted into a total of 1,284,937 shares of common stock. Previous conversions
resulted in an aggregate of 3,016.76 shares of Series A Preferred Stock being
converted into a total of 502,793 shares of common stock. At May 31, 2000, there
remained a total of 14,273.60 shares of Series A Preferred Stock outstanding,
which may be converted into 2,378,933 shares of common stock.
At May 31, 2000, we had a working capital amount of approximately
$1,821,000. We had no outstanding long-term debt at May 31, 2000 and have not
entered into any commodity swap arrangements or hedging transactions. Although
we have no current plans to do so, we may enter into commodity swap and/or
hedging transactions in the future in conjunction with oil and gas production.
Nevertheless, there can be no assurance that we will ever have oil and gas
production.
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Results of Operations
The quarter ended May 31, 2000 compared with the quarter ended May 31,
1999.
Operations during the quarter ended May 31, 2000 resulted in a net loss of
($186,331) compared to a net loss of ($237,891) for the quarter ended February
28, 1999.
Oil and Gas Revenues and Expenses. We have not owned any producing or
proved oil and gas properties. Accordingly, no oil and gas revenues or expenses
have been recorded.
Interest Income. We recorded $21,226 and $31,211 in interest income for the
quarters ended May 31, 2000 and May 31, 1999, respectively.
Depreciation, Depletion and Amortization. We recorded no depletion expense
from oil and gas properties for the quarters ended May 31, 2000 and May 31,
1999. We do not own any proved reserves and have had no oil or gas production.
We recorded $4,581 and $6,628 in depreciation expense associated with
capitalized office furniture and equipment during the quarters ended May 31,
2000 and May 31, 1999, respectively.
General and Administrative Expense. We incurred $202,917 and $216,359 in
general and administrative expenses during the quarters ended May 31, 2000 and
May 31, 1999, respectively.
Interest Expense. We recorded nominal interest expense for the quarter
ended May 31, 2000. We incurred $46,115 in interest expense for the quarter
ended May 31, 1999, primarily associated with the then-outstanding convertible
debentures. These debentures were converted into Series A Convertible Preferred
Stock on April 16, 1999. We are obligated to pay a 10 percent dividend on this
outstanding preferred stock.
The nine months ended May 31, 2000 compared with the nine months ended May 31,
1999.
Operations during the nine months ended May 31, 2000 resulted in a net loss
of ($593,257) compared to a net loss of ($659,192) for the nine months ended May
31, 1999.
Oil and Gas Revenues and Expenses. We do not own any producing or proved
oil and gas properties. Accordingly, no oil and gas revenues or expenses have
been recorded.
Interest Income. We recorded $105,516 and $46,813 in interest income for
the nine months ended May 31, 2000 and May 31, 1999, respectively. The increase
is attributable to remaining additional cash on hand during the nine months
ending May 31, 2000 from the private placement completed in May of 1999.
Depreciation, Depletion and Amortization. We recorded no depletion expense
from oil and gas properties for the nine months ended May 31, 2000 and May 31,
1999. We have not owned any proved reserves and have had no oil or gas
production. We recorded $13,838 and $19,421 in depreciation expense associated
with capitalized office furniture and equipment during the nine months ended May
31, 2000 and May 31, 1999, respectively.
General and Administrative Expense. We incurred $684,755 and $528,433 in
general and administrative expenses during the nine months ended May 31, 2000
and May 31, 1999, respectively. The difference is primarily attributable to
increases in personnel and salary increases to enable us to continue to pursue
our exploration activities and to increases in shareholder relations and
business promotion costs resulting from our expanding investor and shareholder
base and from moving the trading of our common stock to the American Stock
Exchange.
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Interest Expense. We recorded nominal interest expense for the nine months
ended May 31, 2000. We incurred $158,151 in interest expense for the nine months
ended May 31, 1999, primarily associated with the then outstanding convertible
debentures. These debentures were converted into Series A Convertible Preferred
Stock on April 16, 1999. We are obligated to pay a 10 percent dividend on this
outstanding preferred stock. On January 1, 2000, we paid dividends to holders of
preferred stock of approximately $107,000 by issuing a total of 24,914 shares of
our common stock.
Year 2000 Compliance
Year 2000 compliance is the ability of computer hardware and software to
respond to the problems posed by the fact that computer programs traditionally
have used two digits rather than four digits to define an applicable year. As a
consequence, any of our computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. As of
the date of this report, we have not experienced any year 2000 problems with the
Company's systems or with outside vendors. However, as part of our continuing
contingency plan, we perform periodic backups of our seismic and accounting
files and retain paper copies of important data. Additionally, other vendors
have been identified in the event that a significant vendor is disrupted by a
year 2000 failure.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Name Exhibit Number
------------ --------------
Financial Data Schedule 27
(b) During the Quarter ended May 31, 2000, we filed three reports
on Form 8-K.
A Form 8-K was filed on April 17, 2000 reporting news releases
dated April 12, 2000.
A Form 8-K was filed on April 20, 2000 reporting a news
release dated April 19, 2000.
A Form 8-K was filed on May 31, 2000 reporting a news release
dated May 30, 2000.
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SIGNATURES
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.
PYR ENERGY CORPORATION
Signatures Title Date
---------- ----- ----
/s/ D. Scott Singdahlsen President, Chief Executive July 17, 2000
------------------------- Officer and Chairman
D. Scott Singdahlsen Of The Board
/s/ Andrew P. Calerich Vice-President and July 17, 2000
----------------------- Chief Financial Officer
Andrew P. Calerich
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