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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 November 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
--------------- ---------------
Commission File No. 0-20879
PYR ENERGY CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 95-4580642
------------------------------ -------------------
(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
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 January 16, 2001 is as follows:
$.001 Par Value Common Stock 22,091,857
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PYR ENERGY CORPORATION
FORM 10-QSB
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................. 3
Balance Sheet - August 31, 2000 and November 30, 2000............ 3
Statement of Operations - Three Months Ended
November 30, 1999 and November 30, 2000 and
Inception Through November 30, 2000.............................. 4
Statement of Cash Flows - Three Months Ended November 30, 1999
and November 30, 2000 and Cumulative Amounts From Inception
Through November 30, 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................................................ 10
Item 2. Changes in Securities; Recent Sales of Unregistered Securities... 10
Item 3. Defaults Upon Senior Securities.................................. 10
Item 4. Submission of Matters to a Vote of Security Holders.............. 10
Item 5. Other Information................................................ 10
Item 6. Exhibits and Reports on Form 8-K................................. 11
Signatures................................................................ 11
</TABLE>
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
PYR ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
08/31/00 11/30/00
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash $ 8,598,016 $ 4,618,899
Other Receivables -- 40,562
Prepaid Expenses 20,835 38,806
------------ ------------
Total Current Assets 8,618,851 4,698,267
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Furniture and equipment, net 29,650 24,572
Undeveloped oil and gas prospects 11,293,589 15,640,362
------------ ------------
11,323,239 15,664,934
------------ ------------
$ 19,942,090 $ 20,363,201
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 165,289 $ 65,747
Current portion of capital lease obligation 920 --
------------ ------------
Total Current Liabilities 166,209 65,747
------------ ------------
Total Liabilities 166,209 65,747
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; Authorized
1,000,000 shares Series A - Issued and
outstanding - 14,263 shares at 8/31/00-$100
face value, 10% coupon 14 --
Common stock, $.001 par value
Authorized 50,000,000 shares
Issued and outstanding - 19,069,019 shares
at 8/31/00 and 21,689,053 shares at 11/30/00 19,069 21,689
Capital in excess of par value 22,048,384 22,714,569
Deficit accumulated during development stage (2,291,586) (2,438,804)
------------ ------------
19,775,881 20,297,454
------------ ------------
$ 19,942,090 $ 20,363,201
============ ============
</TABLE>
3
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PYR ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Three
Months Months Inception
Ended Ended Through
11/30/99 11/30/00 11/30/00
<S> <C> <C> <C>
REVENUES
Consulting fees $ -- $ -- $ 127,528
Interest 56,842 111,128 434,993
------------ ------------ ------------
56,842 111,128 562,521
------------ ------------ ------------
OPERATING EXPENSES
General and administrative 217,845 254,248 2,745,708
Dry hole, impairment and abandonments -- -- 521,369
Interest 66 -- 184,306
Depreciation and amortization 4,558 4,098 70,271
------------ ------------ ------------
222,469 258,346 3,521,654
------------ ------------ ------------
OTHER INCOME
Gain on sale of oil and gas prospects -- -- 556,197
------------ ------------ ------------
(165,627) (147,218) (2,402,936)
INCOME APPLICABLE TO
PREDECESSOR LLC (NOTE 1) -- -- (35,868)
------------ ------------ ------------
NET (LOSS) (165,627) (147,218) (2,438,804)
Less dividends on preferred stock -- -- (229,531)
------------ ------------ ------------
NET (LOSS)COMMON STOCKHOLDERS $ (165,627) $ (147,218) $ (2,668,335)
============ ============ ============
NET (LOSS) PER
COMMON SHARE - BASIC AND DILUTED $ (.011) $ (.007) $ (.237)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 14,536,370 19,532,027 10,302,421
============ ============ ============
</TABLE>
4
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PYR ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
Amounts from
Three Months Ended Inception
11/30/99 11/30/00 Through 11/30/00
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (165,627) $ (147,218) $ (2,402,936)
Adjustments to reconcile net (loss) to
net cash provided by operating activities
Depreciation and amortization 4,558 4,098 70,272
Contributed services -- -- 36,000
Gain on sale of oil and gas prospects -- -- (556,197)
Dry hole, impairment and abandonments -- -- 521,369
Common stock issued for interest on debt -- -- 116,822
Common stock issued for consulting fees 20,000 -- 20,000
Amortization of financing costs -- -- 26,939
Amortization of marketable securities -- -- (20,263)
Changes in assets and liabilities
Decrease (increase) in accounts and other receivables (55,196) (39,996) (40,562)
(Increase) in prepaids (14,100) (18,537) (43,923)
(Decrease) increase in accounts payable (122,211) (99,542) (39,939)
Other -- 980 7,229
------------ ------------ ------------
Net cash (used) by operating activities (332,576) (300,215) (2,305,189)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for furniture and equipment -- -- (90,155)
Cash paid for undeveloped oil and gas properties (1,557,898) (4,346,773) (15,503,800)
Proceeds from sale of oil and gas properties -- -- 1,050,078
Cash paid for marketable securities -- -- (5,090,799)
Proceeds received from marketable securities 1,916,552 -- 5,111,062
Cash paid for reimbursable property costs (20,500) -- (410,000)
------------ ------------ ------------
Net cash (used) in investing activities 338,154 (4,346,773) (14,933,614)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Members capital contributions -- -- 28,000
Distributions to members -- -- (66,000)
Cash from short-term borrowings -- -- 285,000
Repayment of short-term borrowings -- -- (285,000)
Proceeds from sale of common stock -- -- 19,188,750
Proceeds from sale of convertible debt -- -- 2,500,001
Proceeds from exercise of warrants -- 666,385 1,120,292
Proceeds from exercise of options -- 2,406 18,406
Cash paid for offering costs -- -- (875,978)
Cash received upon recapitalization and merger -- -- 336
Payments on capital lease (385) (920) (5,195)
Preferred dividends paid -- -- (50,910)
------------ ------------ ------------
Net cash (used) provided by financing activities (385) 667,871 21,857,702
------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH 5,193 (3,979,117) 4,618,899
CASH, BEGINNING OF PERIODS 117,905 8,598,016 --
------------ ------------ ------------
CASH, END OF PERIODS $ 123,098 $ 4,618,899 $ 4,618,899
============ ============ ============
</TABLE>
5
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PYR ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 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 for the year
ended August 31, 2000.
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
surviving legal 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 November 30, 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 November 30, 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
6
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repairs are charged to operations as incurred.
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, 2000, we recorded an
impairment loss of approximately $200,000. No impairment losses have been
recorded during the three months ended November 30, 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 with a strategic
focus on exploring for and developing significant oil and gas reserves in deep,
structurally complex formations. To date, the primary focus of our activity has
been in the San Joaquin Basin of California. We are involved in a number of high
potential exploration projects in this area, the most notable being our East
Lost Hills project. We initiated this project in 1997 and brought in industry
partners in 1998. We also are active in the Rocky Mountain region, where we
continue to acquire acreage positions in exploration areas we have identified as
having significant oil and gas production and reserve potential.
Our activities have been focused on prospect generation, the acquisition of
acreage, geological and geophysical work, securing partners and drilling
exploration wells. To date, we have not had oil and gas production or operating
revenues. In February 2001, we anticipate the start of production from our first
well at East Lost Hills.
Our future financial results continue to depend primarily on (1) our
ability to discover commercial quantities of oil and gas; (2) the market price
for oil and gas; (3) our ability to continue to generate potential projects; and
(4) our ability to fully implement our exploration and development program.
There can be no assurance that we will be successful in any of these respects or
that the prices of oil and gas prevailing at the time of production will be at a
level allowing for profitable production.
7
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During the three months ended November 30, 2000, we paid approximately
$4,346,000 for the cost of acquiring an additional 1.5443% working interest at
East Lost Hills, drilling and completion costs, transportation pipeline costs,
production facilities costs, delay rentals, and other related direct costs with
respect to our exploration and development projects.
During the three months ended November 30, 1999, we paid approximately
$1,558,000 for drilling costs, delay rentals, acquisition of acreage, direct
geological and geophysical 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 up to
six exploration/development wells during the next 12 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 the future development of our business will require
additional, and possibly substantial, capital expenditures. Depending upon the
extent of success of our ability to sell additional prospects for cash, the
level of industry participation in our exploration projects, the continuing
results at East Lost Hills and the deep Temblor exploration program, we
anticipate spending from approximately $8 million up to approximately $24
million for capital expenditures relating to exploration and development of our
projects during calendar 2001. To limit capital expenditures, we intend to form
industry alliances and exchange an appropriate portion of our interest for cash
and/or a carried interest in our exploration projects. We may need to raise
additional funds to cover capital expenditures. These funds may come from cash
flow, equity or debt financing, or from sales of interests in our properties
although there is no assurance additional funding will be available.
At November 30, 2000, we had a working capital amount of approximately
$4,633,000. We had no outstanding long-term debt at November 30, 2000 and had
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.
The following provides a summary update at our East Lost Hills project in
the San Joaquin Basin of California.
On August 26, 1999, we and other working interest owners began drilling the
Berkley ELH #1 well, approximately two miles northwest of the #1-17R well. On
April 12, 2000, this well had drilled to a total depth of 19,724 feet.
Production testing began on May 28, 2000, and on July 6, 2000, based on the
results of the production testing and other analysis, we announced a natural gas
discovery at the East Lost Hills field. Currently, construction of production
facilities and a connection pipeline are in the final stages of completion. We
believe that commercial production of natural gas and liquid hydrocarbons from
this well will begin in February 2001.
On July 11, 2000, the participants commenced drilling the Berkley ELH #2
well. This well is located approximately 1.5 miles northwest of the Berkley ELH
#1 and has been drilled and cased to a measured depth of 18,011 feet. We
currently are in the process of completing the well for testing as a potential
natural gas producer.
8
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On June 19, 2000, the participants at East Lost Hills commenced drilling
the Berkley ELH #3 well. Currently, intermediate casing is being installed at a
depth of approximately 18,900 feet with the intent of drilling deeper.
On November 26, 2000, the participants commenced drilling the Berkley ELH
#4 well. This well is projected to drill to a total depth of 20,000 feet. We
have set intermediate casing to 10,000 feet and are currently drilling below
12,400 feet.
The participants may drill up to six additional wells in this prospect
during calendar year 2001, although there is no assurance this will occur.
RESULTS OF OPERATIONS
THE QUARTER ENDED NOVEMBER 30, 2000 COMPARED WITH THE QUARTER ENDED
NOVEMBER 30, 1999.
Operations during the quarter ended November 30, 2000 resulted in a net
loss of $147,218 compared to a net loss of $165,627 for the quarter ended
November 30, 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 $111,128 and $56,842 in interest income for
the quarters ended November 30, 2000 and November 30, 1999, respectively. The
increase in interest income results from an increase in cash on hand from a
private placement completed in August 2000.
DEPRECIATION, DEPLETION AND AMORTIZATION. We recorded no depletion expense
from oil and gas properties for the quarters ended November 30, 2000 and
November 30, 1999. We do not own any proved reserves and have had no oil or gas
production. We recorded $4,098 and $4,558 in depreciation expense associated
with capitalized office furniture and equipment during the quarters ended
November 30, 2000 and November 30, 1999, respectively.
GENERAL AND ADMINISTRATIVE EXPENSE. We incurred $254,248 and $217,845 in
general and administrative expenses during the quarters ended November 30, 2000
and November 30, 1999, respectively. The increase results primarily from
increases in investor and stockholder relations.
INTEREST EXPENSE. We recorded no interest expense in the quarter ended
November 30, 2000 and nominal interest expense for the quarter ended November
30, 1999.
9
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PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities; Recent Sales Of Unregistered Securities
On October 26, 2000, we met specific requirements to enable us to seek to
repurchase of all of the remaining outstanding Series A Convertible Preferred
Stock. Rather than allow their shares to be repurchased at $0.60 per underlying
common share, the fifty-two holders of the preferred stock converted all of the
remaining outstanding Series A Convertible Preferred Stock into common stock.
This resulted in cashless transactions in November 2000 whereby 14,263.41 shares
of Series A Preferred Stock were converted into a total of 2,377,234 shares of
common stock. The conversions were made pursuant to exemptions from registration
in accordance with Rules 505 and/or 506 and/or Sections 3(a)(9), 3(b), and/or
4(2) of the Securities Act. At November 30, 2000 there were no remaining
outstanding shares of Series A Preferred Stock outstanding. In addition,
outstanding warrants to purchase 116,667 shares of common stock were exercised
at the exercise price of $.75 per share. We received $87,500 in cash as the
result of these exercises. There are no additional outstanding warrants
associated with this placement.
During November 2000, we met certain share price requirements to enable us
to repurchase all remaining outstanding warrants issued in conjunction with a
private placement that was completed in May of 1999. During the quarter ended
November 30, 2000, warrants held by five persons were exercised to purchase a
total of 17,125 shares of our common stock at a purchase price of $2.50 per
share. Total proceeds received from these warrant exercises were $42,813. Prior
to the quarter ended November 30, 2000, warrants held by seven persons were
exercised to purchase a total of 160,938 shares of our common stock. Total
proceeds received from these warrant exercises were $402,345. During December
2000, all of the remaining outstanding warrants from the May 1999 placement held
by forty-two persons have been exercised to purchase an aggregate 259,437 shares
of common stock, resulting in aggregate proceeds to us of $648,593. The issuance
of the shares of common stock upon the exercise of the warrants were made
pursuant to exemptions from registration in accordance with Rules 505 and/or 506
and/or Sections 3(b) and/or 4(2) of the Securities Act.
Also during the quarter ended November 30, 2000, warrants issued in
conjunction with the August 2000 private placement had been exercised to
purchase 114,286 shares of common stock at an exercise price of $4.80 per share.
This resulted in proceeds to us of $548,573. The issuance of the shares of
common stock upon the exercise of the warrants were made pursuant to exemptions
from registration in accordance with Rules 505 and/or 506 and/or Sections 3(b)
and/or 4(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) During the Quarter ended November 30, 2000, we filed two reports on
Form 8-K
A Form 8-K was filed on November 28, 2000 reporting a news release
dated November 28, 2000.
A Form 8-K was filed on November 30, 2000 reporting a news release
dated November 30, 2000.
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 Chief Executive Officer; January 16, 2001
------------------------ President and Chairman
D. Scott Singdahlsen Of The Board
/s/ Andrew P. Calerich Chief Financial Officer, January 16, 2001
------------------------ Vice-President and Secretary
Andrew P. Calerich
11
