U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________
AMENDED FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b) or 12(g) of
the Securities Act of 1934
Oilex, Inc.
(Name of Small Business Issuer in Its Charter)
Nevada 33-0194489
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3050 Post Oak Blvd.,Suite 1760 Houston, Texas 77056
(Address of Principal Executive Offices) (Zip Code)
713.629.5998
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
Not applicable Not applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
Page 1 of 120 pages contained in the sequential numbering system.
The Exhibit Index may be found on page 71 of the sequential
numbering system.
<PAGE>
TABLE OF CONTENTS
Page
Part I
Item 1. Description of Business ........................ 3
Item 2. Plan of Operation .............................. 6
Item 3. Description of Property......................... 9
Item 4. Security Ownership of Certain Beneficial
Owners and Management ..................... 11
Item 5. Directors, Executive Officers, Promoters
and Control Persons ....................... 13
Item 6. Executive Compensation ........................ 14
Item 7. Certain Relationships and Related
Transactions ............................. 14
Item 8. Description of Securities...................... 14
Part II
Item 1. Market Price of and Dividends on the
Registrant's Common Equity and Other
Stockholder Matters ....................... 15
Item 2. Legal Proceedings ..............................16
Item 3. Changes in and Disagreements With
Accountants ............................... 16
Item 4. Recent Sales of Unregistered Securities ........16
Item 5. Indemnification of Directors and Officers ......17
Part F/S Financial Statements and Exhibits ......... 19
Part III
Item 1. Index to Exhibits ..............................71
PART I
Item 1. Description of Business
General
Oilex, Inc. (the "Company") was incorporated under the laws of
the State of Nevada on June 10, 1986 under the name of "Akteck,
Inc." The Company later changed its name to Oilex International
Investments, Inc. on December 31, 1991 and to Oilex, Inc. on July
3, 1996.
Oilex, Inc is an oil and gas exploration and production
company. Present management acquired the controlling interest in
Oilex in November 1994, including $5.4 million in tax loss
carry-forwards along with a minority lease interest (2%) in five
wells in Clark and Smith Counties, Mississippi (which are under
contract for sale in 1996). Oilex is a non-operating participant
in these wells. In 1995 management began acquiring additional
assets, and since December 1995 the company has added oil, gas
and mineral leases and wells in Texas, Colorado, Utah and West
Virginia through acquisitions and lease purchases.
In December, 1995, the Company acquired the fee mineral
interest in and under 83,751 acres situated in Greenbriar and
Pocahontas Counties, West Virginia. Also in December, 1995, the
Company acquired 35 existing oil and gas wells together with 780
acres of oil and gas leasehold property on which to conduct
future operations. The company has further acquired 11,535 acres
of oil and gas leasehold interest under the White River Dome NE
Prospect in Rio Blanco County, Colorado in 1996. Exploration
activities are scheduled to begin in the fourth quarter, 1996.
The Company acquired approximately 5,885 oil and gas
leasehold acres in Carbon, San Juan and Uintah Counties, Utah, in
1996.
The Company recently has acquired an additional 935 acres
with 19 existing oil and gas wells in the Big Foot Field, Frio
County, Texas adjacent to its initial Big Foot Field holdings.
Management intends to continue adding to reserves through
acquisitions while it undertakes drilling programs, the first of
which is slated to begin in October, 1997, in the Big Foot field
in Frio County, Texas.
In May of 1996, the company acquired one Klaeger Oil
Retrieval system from Klaeger Manufacturing, for cash. This
equipment has now been eclipsed in the marketplace by more
efficient and less expensive competitive equipment and is no
longer competitive with the machinery produced by Titan Energy
Corp., Inc., of Fort Worth, Texas. Based upon this obsolescence,
the company has abandoned any further purchase of the
Klaeger-built units.
World Interactive Networks Transaction.
In December of 1994, the company entered into a contract with
World Interactive Networks ("WIN") to exchange the company's
Class A Preferred stock for preferred stock of WIN, with purchase
prices determined by reference to the then-current Private
Placement of Series "A" Cumulative Convertible Preferred shares
being conducted by WIN. Under the terms of the agreement, the
Company issued 2,500,000 shares of its Series A, 10% Cumulative
Convertible Preferred Stock to World Interactive Networks, Inc.
in exchange for 149,200 shares of WIN's Series A Cumulative
Convertible Preferred Stock, valued at $16.67 per share as a
liquidation preference. The Oilex preferred stock carried a
liquidation preference of $2.00 per share. WIN's business plan
called for the development of entertainment, home shopping and
interactive television programming to be aired over a new network
to bear the call letters "WIN". The business approach would be
the providing of audio, video and graphical content for cable,
broadcast, CD-Rom and on-line services for entertainment,
information, merchandising, advertising and educational services.
WIN was to acquire FCC low-power television and Multiple
Multi-Point Distribution Services licenses related to future
programming distribution. WIN planned to have accomplished its
licensing by December 31, 1995, and then actual airing of product
during 1996. As of December of 1995, WIN was severely delayed in
its licensing progress, and creation of suitable programming,
creation of network distribution, and the Company elected, in the
first quarter of 1996, to terminate its agreements with WIN,
effective June 1, 1996. This was accomplished and WIN no longer
has any shares of stock in the company, and the company has no
interest in any of WIN's activities or the entity itself.
Products
The Company intends to conduct exploratory drilling activities
with the aim of producing and selling oil, casinghead gas
(produced in conjunction with oil) and natural gas from its
holdings in Texas, Utah and Colorado.
The Company currently sells its oil, at the lease sites, to major
oil refining companies, under contract with the Company to
purchase the oil at pre-negotiated benchmark prices, adjusted
daily based upon world market price fluctuations, and
specifically spot market prices for the quality of oil being
produced at each location. The current buyers for the oil are
Sun Oil Company, Howell Oil, EOTT, Texaco, and Northridge Energy
and Marketing. There are several buyers of oil in each region,
all of which pay the "market price", with the only negotiation
being the benchmark price against which fluctuations will be
measured for the Company's actual quality or grade of crude oil
being delivered.
From January through June of 1996, the Company had no operations.
All income was derived from passive investments in the
Mississippi leases as interest holders, which resulted in income
of of less than $100. Beginning in the third quarter of 1996,
the Company commenced actual operation of its own leases, with
the Frio Lease being the initial subject of application of
swabbing techniques. The Company secured limited production from
these leases.
Expansion Strategy
The Company intends to continue its acquisition of oil and gas
properties and leases primarily in, but not limited to, Texas,
Utah and Colorado.
Competition
The search for viable oil and gas prospects and leases is
intensely competitive. It is likely that in seeking future
acquisitions, the company will compete with firms which have
substantially greater financial and management resources than the
company. The Company focuses on mineral leases and lease
acquisition opportunities in known, proven, producing fields, and
any drilling that the Company undertakes, is generally associated
with "in-fill" of existing, producing leases, to more rapidly
exploit the identified reservoirs of oil contained within those
fields. The Company does not focus on the identification and
location of unknown, unproven territories or leases and does not
drill "wildcat" wells (wells with no contiguous producing
wellsites). The Company's competition is widely diverse, and
comes primarily from two sources of funds: (1) those competitors
that are seeking fields for expansion, further drilling, or
increasing production through improved engineering techniques
(generally direct competitors of the Company) and (2)
income-seeking entities purchasing a predictable stream of
earnings based upon historic production from the field being
acquired. Because Oilex (the Company) believes that it can
operate a field more efficiently than most other companies in the
oil and gas business, it can usually acquire fields at market
prices that have been established by less efficient
owner/operators, and therefore at prices well below a reasonable
rate of return for Oilex. There are very few companies buying
older, stripper fields with the intent to increase production by
engineering and drilling improvements, and even those are
generally only willing to pay market prices based upon actual,
current income, utilizing existing costs for operations.
Employees
The Company currently employs four full time people, including
the President, Secretary/Treasurer and support staff. The
President and Secretary/Treasurer of the Company have not drawn a
salary to date and do not intend to do so until the Company is
profitable. None of the Company's employees is represented by a
labor union. The Company has experienced no work stoppages and
believes that its employee relations are good.
Item 2. Plan of Operation
The Company's general business plan is to acquire additional
petroleum leases on older, low-production, low-profit fields, and
improve the operation of the fields by altering the extraction
methods, primarily by utilizing a much more efficient swabbing
and recovery process. By reduction of the costs of operation,
existing flow rates will be more profitable for the Company than
for the previous owners, who were not able to improve their cost
structure, because they did not have access to newer
technologies, such as swabbing extraction via motorized
collection equipment, at an economy of scale that allows for
application of the technology across hundreds of wells rather
than on a well-by-well basis.
The Company is a licensed operator in all of the states in which
it owns leases, and will become licensed in any states in which
it acquires leases in the future.
The Company complies with all requirements for operating fields
in the various states and local jurisdictions, and in all cases
has indemnity bonds, plugging and abandonment bonds and similar
assurances from state or private insurance facilities. For
example, the Texas leases are governed by the Texas Railroad
Commission, which regulates environmental aspects of extraction
throughout the State of Texas. On a yearly basis, the Company
pays a portion of its proceeds derived from Texas-based wells to
the Railroad Commission for participation in a State-mandated and
managed environmental program. The Company is not aware of any
non-compliance as to existing properties with any environmental
regulations governing any of its leased properties.
Research and Development. The Company has not allocated any of
its resources to research and development during the previous two
years, and does not plan on any research and development
expenditures during fiscal 1997. The Company is continually
seeking new technologies for application to its operations, but
acquires these technologies either by purchase or lease from
third parties, rather than by internal development.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
Shown below is certain selected consolidated financial data
of the Company for the years ended December 31, 1994 and 1995,
and the third quarter, 1996. This data should be read in
conjunction with the Company's financial statements and notes
included elsewhere herein. The Company's auditors, Simonton,
Kutac & Barnidge, have issued a "going concern" qualification of
their opinion, which notes that the significant operating losses
and working capital deficit raise substantial doubt about the
company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from
the outcome of that particular uncertainty.
During the fourth quarter of 1994, the current management of
Oilex took control of the Company, modifying and altering the
Company's approach to business. Generally, the then-existing
lines of business of the Company were sold, and the new
management embarked on a plan of oil and gas lease acquisitions,
exchanging equity in the company for the lease rights acquired.
Several executive positions were eliminated and overhead was cut
substantially, from $241,498 to $42,817. During 1995, the
Company's revenues were derived from its interests in the
Mississippi leases, in which the Company has a very minor
interest. In 1995, the Company acquired significant additional
lease properties, but none in a production mode. These
properties were acquired with the intent of reactivating them,
utilizing the Company's ability to improve operating profits by
lowering costs of operations.
During 1996, the Company, in addition to receiving small
amounts of income from the Mississippi leases, has also been
selling off surplus, used oilfield equipment, in anticipation of
operating with the portable swabbing units. As of December 31,
1996, 2 swabbing units have been acquired and placed in operation
on the company's leases. Revenues from these low-production,
low-overhead, low yield fields are just starting to occur in the
fourth quarter of 1996.
As of July 1, 1997, the company was preparing to commence
drilling operations in its Big Foot Field holdings in Frio
County, Texas. The Company plans to initially re-enter 55
existing wells and place them back into production. Once the
initial phase of operations is completed, the Company plans to
initiate a drilling program to fully develop the 3,100 foot Olmos
"B" sand underlying its Frio County, acreage.
STATEMENT OF OPERATIONS:
For the Years Ended
December 31,
1996 1995 1994
(9 Mos) (Full Yr) (Full yr)
Revenue:
Oil and gas sales 8,315 41,349 $37,753
Other -- -- 140
8,315 41,349 37,893
Expenses:
Lease operating 69,627 4,349 8,818
General and administrative 920,106 42,817 241,493
Depreciation, depletion and
amortization 17,520 80,375 71,533
Interest 16,506 26,198 41,116
1,023,759 153,739 362,960
Loss before income taxes (1,015,444) (112,390) (325,067)
Provision for income taxes -- -- --
Net loss (1,015,444) (112,390) (325,067)
Net loss per share (0.04) $(0.01)
BALANCE SHEET DATA:
LIABILITIES AND STOCKHOLDERS EQUITY
December 31,
1996 1995 1994
Current Liabilities (9Mos)
Bonds payable 259,369 $ 244,577 $226,014
Accounts payable 260 -- --
Notes payable to related parties 34,981 33,475 26,992
Total Current Liabilities 294,610 278,052 252,906
Deferred income tax liability 721,439
Stockholders' Equity
Preferred stock, Series A,
$.001 par value 10% cumulative
convertible; 2,500,000 shares
authorized, issued and outstanding; 0 2,500<fn1>
Common stock, $.001
par value; 25,000,000 shares
authorized 24,726,775, 14,327,570,
and 13,812,570 shares issued and
outstanding at December 31, 1995,
and 1994, respectively 24,727 14,328 13,813
Paid-in capital 12,768,434 11,229,414 7,396,445
Accumulated deficit (7,556,506) (6,541,062)(6,450,746)
Total Stockholders' Equity 5,236,655 4,705,180 959,512
Total Liabilities and
Stockholders' Equity 6,252,704 4,983.232 1,212,418
<FN1> Effective June 1, 1996, the Company and World Interactive
Networks, Inc. entered into an agreement to terminate the Stock
Exchange Agreement dated January 5, 1995 and to return the
149,970 shares of Series 'C' Preferred stock issued pursuant
thereto. WIN will return the 2,500,000 shares of Series 'A'
Preferred stock issued by Oilex. Both parties will release and
hold harmless the other from all future claims and causes of
action. See Note 4 - Stockholders Equity of the 1996 Audited
Financial Statement.
Item 3. Description of Non-oil and Gas Property
The Company's executive offices occupy approximately 2,200
square feet of office space in Houston, Harris County, Texas,
under a multi year lease which provides for rent of approximately
$2,150 per month. These facilities are adequate for the
Company's purposes, and will expire on May 31, 1998. In the
event additional space is required, the Company believes it will
be readily available. The Company also leases a 1995 Jeep 4-door
Sport Limited, at a monthly cost of $527.63. The lease expires
on January 1, 1998.
Description of Oil and Gas Property
(Guide 2, Item 4)
The only productive properties owned or leased by the Company as
of September 30, 1996 were a series of very minor working
interests in Mississippi, generally described as:
1) "Burns Baptist Church": A 2.6166% Working Interest insofar
and only insofar as to the portion of the leases listed below
which fall within the boundary of the unit for the Norcen
Explorer, Inc. Burns Baptist Church et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated September 7, 1990 and
recorded in Book No. 325, Page 676 of the records of Smith
County, Mississippi and further limited to the depths between the
surface and 9,986 feet subsurface.
2) "Henderson": A 2.6166% Working Interest insofar and only
insofar as to the portion of the leases listed below which fall
within the boundary of the unit for the Norcen Explorer, Inc.
John C. Henderson et al No. I as evidenced by Declaration of
Pooled Oil Unit dated July 22, 1991 and recorded in Book No. 338,
Page 126 of the records of Smith County, Mississippi and further
limited to the depths between the surface and 10,644 feet
subsurface.
3) "Kearney": A 3.4016% Working Interest insofar and only
insofar as to the portion of the leases listed below which fall
within the boundary of the Unit for the Norcen Explorer, Inc.
Allan P. Kearney et al No. 1 as evidenced by Declaration of
Pooled Oil Unit dated April 27, 1992 and recorded in the records
of Smith County, Mississippi and further limited to the depths
between the surface and 10,644 feet subsurface).
4) "Gladstone-Winstead": A 2.6166% Working Interest (insofar
and only insofar as to the portion of the leases listed below
which fall within the boundary of the unit for the Norcen
Explorer, Inc.-Gladstone-Winstead et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated of the records of Smith
County, June 2, 1992 and recorded in the records of Smith County,
Mississippi and further limited to the depths between the surface
and 10,644 feet subsurface).
and a much larger working interest position in a series of leases
in Frio County, Texas, identified as:
A One Hundred Percent (100%) Gross Working Interest and a
Seventy Percent (70%) Net Revenue Interest in and to the oil
rights down to 3,330 feet and all rights below 3,300 feet in and
under the acreage covered by the following Oil, Gas and Mineral
Leases 1 through 5 and all rights in and under the acreage
covered by the following Oil, Gas and Mineral Leases 6 through
10:
1. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 150 acres of
land, a Memorandum of which is recorded in Volume 886, Page 245,
Deed Records of Frio County, Texas.
2. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 310.68 acres
of land, a Memorandum of which is recorded in Volume 886, Page
249, Deed Records of Frio County, Texas.
3. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 80 acres of
land, a Memorandum of which is recorded in Volume 886, Page 247,
Deed Record of Frio County, Texas.
4. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 160 acres of
land, a Memorandum of which is recorded in Volume 886, Page 243,
Deed Records of Frio County, Texas.
5. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 77.65 acres
of land, a Memorandum of which is recorded in Volume 886, Page
241, Deed Records of Frio County, Texas.
6. Oil, Gas and Mineral Lease dated February 14, 1996, executed
by Jim Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 268, Deed
Records of Frio County, Texas.
7. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Fay Brown, as Lessors, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 285, Deed
Records of Frio County, Texas.
8. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Theresa Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 276, Deed
Records of Frio County, Texas.
9. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Helen Branham, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 259, Deed
Records of Frio County, Texas.
10. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Connie Bradley, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 251, Deed
Records of Frio County, Texas.
Total production from the Frio County leases amounted to 54
barrels of oil as of September 30, 1996. This was based upon a
price per barrel of $19.90 and an average lifting cost of $12.00
per barrel.
Total production attributable to Oilex's minority interest from
the Mississippi leases was 693 barrels of oil through September
30, 1996, and was based upon a price per barrel of $18.00 and a
lifting cost per barrel of $11.00.
Item 4. Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth information as of October 23,
1996, relating to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to be the
beneficial owner of more than five percent of the Company's
outstanding Common Stock, (ii) each of the Company's directors,
(iii) the Company's Chief Executive Officer, and (iv) all
officers and directors of the Company as a group.
Name and Address of Amount of Percent
Beneficial Owner Beneficial Ownership of Class
Oliver H. Timmins III 1,823,845 9.34%
Cynthia C. Timmins
3050 Post Oak Blvd., Suite 1760
Houston, Texas 77056
Richard G. Clark 50,000 .26%
2 Saddle River Road
Saddle River, New Jersey 07458
Deborah K. Sacrey 50,000 .26%
7035 W. Tidwell, Ste J103
Houston, Texas 77092
All directors and officers 1,923,845 9.86%
as a group (5 people)
Phoenix Reserves, Inc. 8,685,378 44.47%
P. O. Box 460767
Houston, Texas 77056
Brush Prairie Minerals, Inc. 1,256,265 6.43%
905 Pines Road, Suite A
Spokane, Washington 99214
Pioneer Oil and Gas 1,125,000 5.76%
1225 Ft. Union Blvd., Suite 100
Midvale, Utah 84047
Phoenix Reserves, Inc., a Nevada corporation, obtained its
holdings in 1994, by virtue of a private placement pursuant to
Rule 506 under Regulation D, wherein Phoenix exchanged the
entirety of its interest in the Wilson leases, in consideration
of the issuance to it of 8,685,378 shares of restricted common
stock of the Company. Willie C. Davis and John Craig, who are
officers and directors of the Company, did not and do not own any
shares of Phoenix. Allen Burditt II, owns 100% of Phoenix.
Brush Prairie Minerals, Inc., a Washington corporation
having 20 shareholders, obtained its holdings in December of
1995, under a private placement transaction pursuant to Rule 505
of Regulation D, by which Brush Prairie obtained 1,256,265 shares
of the Company's restricted common stock in exchange for 100% of
Brush Prairie's holdings in Greenbriar and Pocahontas Counties,
West Virginia. Fred C. Rahn was president and William Campbell
was the vice-president of Brush Prairie during 1996. No single
shareholder of group of shareholders of Brush Prairie owns a
controlling interest in Brush Prairie. In December of 1996,
Western Continental, Inc., a public company, acquired all of the
assets of Brush Prairie, to include the 1,256,265 shares of Oilex
common stock.
Pioneer Oil and Gas, a Nevada corporation, obtained its
1,125,000 shares of restricted common stock in the Company on
April 17, 1996 in exchange for 100% of Pioneer's interest in the
White River Dome leases in Colorado. This transaction was
conducted under the private placement exemption of Rule 505 of
Regulation D. Don J. Colton, is the President, and Gregg B.
Colton is the Vice President and Secretary of Pioneer, and
together control over 51% of Pioneer's equity interests. John
Anderson, Gregg Colton, and Don Colton are the only directors of
the company. None of the other officers or directors of Pioneer
owns more than 10% of Pioneer.
There are no contracts, option agreements, warrants or other
agreements outstanding by which any individual or entity can
increase its interest in the Company in reliance on pre-existing
terms and conditions.
Item 5. Directors, Executive Officers,
Promoters and Control Persons
The company has a 5-person board of directors (with one
vacancy), each member of which is described below, serving for
terms of one year, or until the annual shareholder's meeting, at
which time they could be replaced. The officers and directors of
the Company are:
Name Age Position with the C`ompany
Oliver H. Timmins III 43 President and Director
Richard G. Clark 69 Director
Deborah K. Sacrey 43 Director
Cynthia C. Timmins 36 Secretary/Treasurer and Director
Oliver H. Timmins III, President & Director, is a graduate of
Saint Mary s School of Law (Juris Doctor). Mr. Timmins has been
an attorney practicing in oil and gas related areas for over 16
years, during which period of time he has worked on the
negotiation of mergers and acquisitions, preparation of
securities filings, SEC filings for reporting and non-reporting
companies, title examination, preparation of gas purchase
contracts and preparation of joint operating agreements. In
addition, Mr. Timmins has specific experience in both exploration
and production, as well as supervising of day to day operations
of oil and gas related service companies. During the past 5
years, Mr. Timmins worked directly in the oil and gas industry,
serving as counsel at Chase Energy, Navarro Gas, Wellington
Funding Group, and Carancahua Resources, Inc. His primary
responsibility was title examination, preparation of and
negotiation for purchase contracts, preparation of Joint
Operating Agreements, and litigation support for clients who had
oil and gas related disputes. Commencing in 1994, he has been
working for Oilex, initially as general counsel and then as
President from 1995 to the present.
Richard G. Clark, Director - For the past 30 years, Mr. Clark has
been involved in dealer finance Banking, investment banking,
management related to institutional sales, branch management and
national marketing. A graduate of New York University s School
of Business and Finance, Mr. Clark has consulted for numerous
companies. His expertise and experience include corporate under
writings, financing, merger activities relating to retail
facilities, as well as numerous activities related to the oil and
gas, mining, and rail transportation industries, computer
products, and environmental issues and in negotiating the
acquisition of a New York Stock Exchange brokerage house.
Deborah K. Sacrey, Director - Ms. Sacrey is President of a full
service geological, drafting, geotechnical support facility with
in-house Diazo (printing and mylars), autocad with Terra Sciences
capabilities. Geological consulting areas include southern
Louisiana, Texas Gulf Coast, Mississippi, Arkansas and West
Virginia. Ms. Sacrey has a Bachelor of Science degree in Geology
and Geophysics.
Cynthia C. Timmins, Secretary/Treasurer & Director - Mrs.
Timmins, the wife of Oliver Timmins (see above), is an elementary
school assistant teacher and has assisted Oliver Timmins in
numerous corporate businesses over the past 14 years. Mrs.
Timmins attended the University of Texas at Austin.
Item 6. Executive Compensation
None of the executive officers or directors of the Company
receives a salary or other compensation from the Company. Mr.
Timmins, the President of the Company, does not intend to request
any compensation unless and until the Company is profitable. In
the future, the Company intends to pay fees and grant stock
options to its non-employee directors. There are no outstanding
options nor claims of deferred salary as of June 30, 1997.
The Company does not currently have any stock option plans
or long term incentive compensation plans. In addition, the
Company does not award stock appreciation rights, restricted
stock awards or long term incentive plan pay-outs.
Item 7. Certain Relationships and
Related Transactions
None.
Item 8. Description of Securities
The Company's authorized capital stock consists of
50,000,000 shares of Common Stock (as of July 3, 1996), par value
$.001 per share, of which 19,531,835 are presently issued and
outstanding. Each share of Common Stock is entitled to one vote
on all matters to be voted on by stockholders, including the
election of directors. At each election for directors, every
stockholder entitled to vote at such election has the right to
vote, in person or by proxy, the number of shares owned by them
for as many persons as there are directors to be elected and for
whose election they have a right to vote.
Common Stock
Subject to preferential rights with respect to any
outstanding Preferred Stock, holders of Common Stock are entitled
to receive ratably such dividends as may be declared by the Board
of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities and satisfaction of
preferential rights and have no rights to convert their Common
Stock into any other securities. All shares of Common Stock have
equal, noncumulative voting rights, and have no preference,
exchange, preemptive or redemption rights. The outstanding
shares of Common Stock are fully paid and nonassessable.
PART II
Item 1. Market Price of and Dividends
on the Registrant's Common Equity
and Related Stockholder Matters
The Company's common stock is listed on the OTC Bulletin
Board of the NASD under the symbol "OLEX". No assurance can be
given that the present market for the Company's common stock will
continue.
The high and low bid quotations per share published by the
National Quotation Bureau Inc. for the quarterly periods
indicated are set forth below:
Fiscal Year High Low
1993
Second Quarter .0625 .0625
Third Quarter 1.00 .05
Fourth Quarter .25 .25
1994
First Quarter .25 .125
Second Quarter .125 .03125
Third Quarter .03125 .03125
Fourth Quarter 2.875 .03125
1995
First Quarter 1.75 .375
Second Quarter .5625 .125
Third Quarter .8125 .09375
Fourth Quarter .75 .20
1996
First Quarter 1.06 0.44
Second Quarter 0.44 1.34
Third Quarter 0.91 0.47
The over-the-counter market quotations set forth in the
foregoing table reflect inter-dealer prices, without retail
markup, markdown or commission, and may not necessarily represent
actual transactions.
As of September 30, 1996, the Company had 121 holders of
record of its shares of Common Stock, although many more holders
may exist under "street names."
The Company has not paid any cash dividends and does not
anticipate that it will pay any cash dividends on its Common
Stock in the foreseeable future. Payment of dividends is within
the discretion of the Company's Board of Directors and will
depend, among other factors, upon the Company's earnings,
financial condition and capital requirements.
Item 2. Legal Proceedings
The Company is not a party to any legal proceedings which
could have a material adverse effect on its business.
Item 3. Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure
None.
Item 4. Recent Sales of Unregistered Securities for Acquisition
of Properties
During the period from January 1, 1995 to September 30,
1996, the Company acquired various assets and properties in
exchange for its common stock. The following tabular
presentation is a summary of those transactions.
Date: Asset Securities
Issued
Jan 96 Oil and Gas leaseholds in the Big Foot Field
areas of Frio County, Texas 500,000
Jan 96 100% mineral rights in 83,751 acres in Pocahontas
and Greenbriar Counties, West Virginia 1,256,265
Mar 96 1,939 acres of oil and gas leases in
Carbon County, Utah. 100,000
Mar 96 3,945 acres of oil and gas leases in the Uintah
Basin area of Utah. 42,000
Apr 96 100% working interest in White River Dome Prospect
in Rio Blanco County, Colorado (11,535 acres) 1,500,000
Item 5. Indemnification of Directors and Officers
Section 78.751(l) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director,
officer, employee, or corporate agent "who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the
right of the corporation" due to his corporate role. Section
78.751(1) extends this protection "against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification
of the reasonable defense or settlement expenses of a corporate
director, officer, employee or agent who is sued, or is
threatened with a suit, by or in the right of the corporation.
The party must have been acting in good faith and with the
reasonable belief that his actions were not opposed to the
corporation's best interests. Unless the court rules that the
party is reasonably entitled to indemnification, the party
seeking indemnification must not have been found liable to the
corporation.
To the extent that a corporate director, officer, employee,
or agent is successful on the merits or otherwise in defending
any action or proceeding referred to in Section 78.751 (1) or
78.751(2), Section 78.751(3) of the NRS requires that he be
indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the
defense."
Section 78.751(4) of the NRS limits indemnification under
Sections 78.751(1) and 78.751(2) to situations in which either
(1) the stockholders, (2) the majority of a disinterested quorum
of directors, or (3) independent legal counsel determine that
indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation
may advance an officer's or director's expenses incurred in
defending any action or proceeding upon receipt of an
undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement,
stockholder vote or vote of disinterested directors. Section
78.751(6)(b) extends the rights to indemnification and
advancement of expenses to former directors, officers, employees
and agents, as well as their heirs, executors, and
administrators.
Each of the Company's officers and directors is serving
subject to and in reliance upon the provisions of Nevada law
granting indemnification for company-related activities as set
forth above, and the board of directors has approved such
indemnity to the maximum extent allowable.
PART F/S
Index to Audited Financial Statements
Financial Statements Sequential
Page No.
(I) Financial Statements December 31,
1195, 1994 (Audited)
Independent Auditor's Report 23
Balance Sheets, December 31, 1995,
1994, 24
Statement of Operations, December 31,
1995, 1994 26
Statement of Changes in Stockholder's
Equity, January 1, 1994 through
December 31, 1995 27
Statement of Cash Flows, December 31,
1995, 1994 28
Notes to Annual Financial Statements 30
Statements for the Third Quarter, 1996:
Balance Sheet 38
Statement of Operations 40
Statement of Changes in Stockholders'
Equity, September 30, 1996 41
Statement of Cash Flows, Sep 30, 1996 42
1996 Audited Statement 44
PART III
Item 1. Index to Exhibits 64
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Oilex, Inc.
By: /s/ Oliver H. Timmins
Oliver H. Timmins III,
President
Dated: July 29,1996
OILEX INTERNATIONAL INVESTMENTS, INC.
FINANCIAL STATEMENTS
December 31, 1995, 1994,
and September 30, 1996
SIMONTON, KUTAC
& BARNIDGE, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
909 Fannin, Suite 2050
Houston, Texas 77010-1007
Telephone:(713) 658-9755 Facsimile: (713) 658-0298
Independent Auditors' Report
March 1, 1996
Board of Directors and Stockholders
Oilex International Investments, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Oilex
International Investments, Inc. as of December 31, 1995, 1994 and
1993, and the related statements of operations, stockholders'
equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Oilex International Investments, Inc. at December 31, 1995,
1994 and 1993, and the results of its operations and its cash
flows for the years then ended, in conformity with generally
accepted accounting principles.
As discussed in Note 6 to these financial statements, the Company
has incurred net losses since its inception and has negative
working capital balances in each of the three years being
reported on herein. The Company is in technical default of the
payment terms of its convertible subordinated bonds. The
Company's continuation of its operations is contingent upon
management's ability to infuse an adequate amount of working
capital funds into the Company. The accompanying financial
statements have been prepared assuming that the Company will
continue as a going concern and do not include any adjustments
that might be necessary should the Company be unable to continue
as a going concern.
/s/ Simonton, Kutac & Burnidge
OILEX INTERNATIONAL INVESTMENTS, INC.
<PAGE>
BALANCE SHEET
ASSETS
December 31,
1995 1994 1993
Current Assets:
Cash $15,272 $ 1,764 $ 5,802
Oil and gas receivables -- -- 1,349
Total Current Assets 15,272 1,764 7,151
Property and Equipment:
Oil and gas properties - full cost method
Subject to amortization 7,969,529 6,688,264 5,598,012
Accumulated depreciation, depletion
and amortization (5,567,407) (5,550,034)(5,521,099)
2,402,122 1,138,230 76,913
Investment in marketable
securities 2,500,000 -- --
Organization costs, net of
amortization 65,838 72,424 79,010
Total Assets 4,983,232 1,212,418 $ 163,074
The accompanying notes are an integral part of these financial
statements.
<PAGE>
OILEX INTERNATIONAL INVESTMENTS, INC.
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1995 1994 1993
Current Liabilities
Bonds payable 244,577 $ 226,014 239,848
Accounts payable -- -- 125,185
Notes payable to related
parties 33,475 26,892 24,900
Total Current Liabilities 278,052 252,906 389,933
Stockholders' Equity
Preferred stock, Series A, $.001
par value 10% cumulative convert-
ible; 2,500,000 shares authorized,
issued and outstanding 2,500 -- --
Common stock, $.001 par value;
25,000,000 shares authorized
14,327,570, 13,812,570 and 1,144,252
shares issued and outstanding
at December 31, 1995, 1994 and
1993, respectively 14,328 13,813 1,144
Paid-in capital 11,229,414 7,396,445 5,897,676
Accumulated deficit (6,541,062) (6,540,746) (6,125,679)
Total Stockholders' Equity 4,705,180 959,512 ( 226,859)
Total Liabilities and
Stockholders' Equity $4,983,232 $1,212,418 $ 163,074
The accompanying notes are an integral part of these financial statements.
<PAGE>
OILEX INTERNATIONAL INVESTMENTS, INC.
STATEMENT OF OPERATIONS
For the Years Ended
December 31,
1995 1994 1993
Revenue:
Oil and gas sales $41.349 37,753 15,132
-- 140 91,953
41,349 37,893 107,085
Expenses:
Lease operating 4,349 8,818 8,271
General and administrative 42,817 241,493 295,812
Depreciation, depletion and
amortization 80,375 71,533 3,423,097
Interest 26,198 41,116 20,590
153,739 362,960 3,747,770
Loss before income taxes 112,390 325,067 3,640,685
Provision for income taxes -- -- --
Net loss $112,390 $325,067 $3,640,685
The accompanying notes are an integral part of these financial statements
<TABLE>
OILEX INTERNATIONAL INVESTMENTS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock Common Stock Paid-In
Accumulated
Shares Amount Shares Amount Capital
Deficit Total
<C> <C> <C> <C> <C> <C>
<C>
Balance,
January 1, 1993 -- $ -- 1,059,002 $1,059 $5,745,611
$(2,484,942) $3,261,728
Issuance of common
stock -- -- 85,250 85 152,065
-- 152,150
Net loss -- -- -- -- --
(3,640,685)(3,640,685)
Balance,
December 31,1993 -- -- 1,144,252 1,144 5,897,676
(6,125,679) ( 226,859)
Issuance of common
stock in exchange for
oil & gas properties -- -- 12,668,318 12,669 1,498,769
-- 1,511,438
Net loss -- -- -- -- --
(325,067) (325,067)
Balance,
December 31, 1994 -- -- 13,812,570 13,813 7,396,445
(6,450,746) 959,512
Issuance of Series
A Preferred Stock 2,500,000 2,500 -- -- 2,497,500
-- 2,500,000
Issuance of common
stock in exchange
for oil and gas
properties -- -- 515,000 515 1,335,469
-- 1,358,058
Net loss -- -- -- -- --
(112,390) (112,390)
Balance,
December 31,1995 2,500,000 2,500 14,327,570 $14,328 $11,229,414
(6,541,062) 4.705.180
</TABLE>
OILEX INTERNATIONAL INVESTMENTS, INC.
STATEMENT OF CASH FLOWS
For the Years Ended
December 31
1995 1994 1993
Cash Flows from Operating Activities:
Net loss $(112,390) $(325,067)$(3,640,685)
Adjustments to reconcile net
loss to net cash provided
(used) by operating
activities:
Depreciation, depletion and
amortization 86,961 78,119 3,429,683
Decrease in oil and gas receivables -- 1,349 1,590
Decrease in accounts payable -- (125,185) (13,300)
Increase (decrease) in bonds
payable 18,563 (13,834) 118,750
Increase in notes payable to
related parties 6,583 1,992 1,400
Net cash (used) by operating
activities (283) (385,324) (102,562)
Cash Flows Used in Investing
Activities:
Acquisition of oil and gas
properties 1,281,265 1,090,252 --
Investment in marketable
securities 2,500,000 -- --
Other 63,002 39,900 45,887
Net cash provided (used) by
investing activities (3,844,267) (1,130,152) (45,887)
Cash Flows from Financing Activities:
Issuance of common stock 1,358,058 1,511,438 152,150
Issuance of preferred stock 2,500,000 -- --
Net Cash Provided (Used) by
Financing Activities 3,858,058 1,511,438 152,150
Net Change in Cash and Cash
Equivalents 13,508 ( 4,038) 3,701
Cash and cash equivalents,
beginning of year 1,764 5,802 1,381
Cash and cash equivalents,
end of year $ 15,272 $ 1,764 $ 5,082
The accompanying notes are an integral part of these financial statements.
OILEX INTERNATIONAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPALS
Organization --- Oilex International Investments, Inc. ("Company") was
incorporated under the laws of the State of Nevada on June 10, 1986 under
the name of "Akteck, Inc." The Company later changed its name on December
31, 1991.
Description of the Business --- The primary business activities of Oilex
International Investments, Inc. is oil and gas exploration, development and
acquisitions. The Company currently owns oil and gas leaseholds in Texas,
Louisiana, Mississippi, West Virginia and Utah.
Oil and Gas Properties --- The Company follows the full cost method of
accounting whereby all costs, including direct general and administrative
expenses, associated with property acquisition, exploration and development
activities are capitalized. Cost associated with proved reserves are
amortized by the unit-of- production method using independent engineers'
estimates of unrecovered proved oil and gas reserves. The costs of
unproved properties are excluded from amortization until the properties are
evaluated. Interest is capitalized on oil and gas properties not subject
to amortization and in the process of development. Proceeds from the sale
of properties are accounted for as reductions to capitalized costs unless
such sales involve a significant change in the relationship between costs
and the estimated value of proved reserves or the underlying value of
unproved properties in which case, a gain or loss is recognized.
Unamortized costs of proved properties are subject to a ceiling which
limits such costs to the estimated present value of oil and gas reserves
reduced by future operating expenses, development expenditures and income
taxes.
Income Taxes --- The Company has incurred operating losses in each of the
last five years. As the utilization of such losses can not be anticipated,
a corresponding benefit has not been recorded.
OILEX INTERNATIONAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
NOTE 2 - BONDS PAYABLE
Bonds payable consists of the following:
December 31,
1995 1994 1993
10.0% bonds payable, secured
by certain of the Company's oil
and gas properties; due on demand
and convertible into common
stock at $2.00 per share. $ 154,848 $ 143,598 $ 132,848
9.75% bonds payable to an insurance
company; secured by certain of the
Company's oil and gas properties;
due on demand and convertible in
common stock at $2.00 per share. 89,521 82,416 --
10.0% bonds payable, secured by
certain of the Company's oil and
gas properties; due April, 1994
and convertible into common stock
at $2.00 per share. -- -- 107,500
$ 244,577 $ 226,014 $239,848
NOTE 3 - STOCKHOLDERS' EQUITY
On October 31, 1994, the Company issued 10,919,220 shares of common stock
in exchange for oil and gas leases in Jefferson County, Texas. This
acquisition effectively transferred control of the Company to Phoenix
Reserves, Inc. ("Phoenix"). This transaction made Phoenix the largest
stockholder of Oilex with 63.1% and 64.6% ownership of the outstanding
common stock at December 31, 1995 and 1994, respectively.
On December 21, 1995, Oilex exchanged 1,256,265 shares of its common stock
in exchange for 100% mineral rights in 83,751 acres located in Pocahontas
and Greenbriar Counties, West Virginia. Oilex has retained the voting
rights to these common shares.
On December 16, 1995, Oilex issued 500,000 shares of common stock in
exchange for oil and gas leaseholds and equipment located in the Big Foot
Field areas of Frio County, Texas. Oilex has retained the voting fights to
these common shares.
OILEX INTERNATIONAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
NOTE 3 - STOCKHOLDERS' EQUITY (Continued)
In December, 1994, the Company issued 2,500,000 shares of its Series A, 10%
Cumulative Convertible Preferred Stock to World Interactive Networks, Inc.
("WIN') in exchange for 149,200 shares of WIN's Series A Cumulative
Convertible Preferred Stock valued at $16.67 per share. The Oilex
preferred stock has a liquidation preference of $2.00 per share.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company is currently in dispute with a corporation owned by certain
stockholders of the Company. These stockholders were formerly part of the
management team of Oilex. They contend that Oilex owes the Corporation
approximately $141,000 on a demand note. The Company has recorded a
$33,475 note payable to it at December 31, 1995. The amount in dispute is
related to certain general and administrative expense reimbursements.
Although no lawsuit has been filed, the management of Oilex intends to
vigorously defend its position in this matter should a lawsuit be
instituted. It believes that the amounts recorded in its financial
statements at December 31, 1995 for this note payable is correct and
accurate. Accordingly, no provision has been made for the disputed
difference herein.
NOTE 5 - SIGNIFICANT SUBSEQUENT EVENTS
On March 26, 1996, the Company acquired 5,840 acres of oil and gas leases
in Carbon County and the Uintah Basin area of Utah.
Effective May 1, 1996, the Company has acquired a 70% working interest in
certain oil and gas leases located in the Tin Cup Mesa Field, Utah. The
Company will exchange 1,000,000 shares of common stock for this interest.
Additionally, the Seller will be required to sign an agreement whereby
these shares will be voted accordance with current management.
On April 17, 1996, Oilex entered into an agreement to acquired 100% of the
working interest in the White River Dome Prospect located in Rio Blanco
County, Colorado. This prospect consists of 11,535 acres. Oilex,"ill
exchange 1,500,00 shares of its common stock along with $25,000 cash for
these leaseholds. Additionally, the Seller will be required to sign an
agreement whereby these shares will be voted accordance with current
management.
NOTE 6 - GOING CONCERN
The Company has incurred net losses since its inception. For the
three years ended December 31, 1995, it has a negative working capital
balance in each of those years. Additionally, the Company is in technical
default of the payment terms of its convertible subordinated bond
agreements.
These factors raise substantial doubt about the Company's ability to
continue as going concern. Management intends to infuse additional
working capital into the Company so that it can exploit and develop its
newly acquired oil and gas properties, thereby generating a positive cash
flow. Management is also in negotiations with the bondholders to amend
their payment terms.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the ordinary course of business, and
therefore do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
NOTE 7 - OIL AND GAS PROPERTIES
Capitalized Costs --- The following table presents the aggregate
capitalized cost subject to amortization relating to the Company's oil and
gas acquisition, exploration and development activities, and the aggregate
related accumulated depreciation, depletion and amortization ("DD&A").
For the Years Ended
December 31,
1995 1994 1993
Proved properties $ 7,969,529 $6,688,264 $5,598,012
Accumulated DD&A (5,567,407) (5,550,034)(2,138,930)
Full-cost ceiling write down -- -- (3,382,169)
Net capitalized costs $ 2,402 122 $1,138,230 $ 76,913
In 1993, the Company made a significant downward revision to its oil and
gas property accounts. The resulting balances reflected the effective net
production of the remaining hydrocarbons to be realized by Oilex. These
leaseholds are currently being marketing for sale by the Company.
NOTE 7 - OIL AND GAS PROPERTIES (Continued)
Cost Incurred --- The Company's oil and gas acquisition, exploration and
development activities are conducted in Mississippi, Texas and the Gulf
Coast regions. The following table summarizes the costs incurred in
connection therewith.
For the Years Ended
December 31,
1995 1994 1993
Property acquisition costs:
Unproved properties -- -- --
Proved properties 1,281,265 1,090,252 --
Exploration costs -- -- --
Development costs -- -- --
1,281,265 1,090,252 --
Cost Not Subject to Amortization --- The Company had $1,000,000 of
acquisition cost not subject to amortization at December 31, 1992 and 1991.
Unproved properties not subject to amortization consists mainly of lease
costs and seismic data related to Unproved areas. The Company will
continue to evaluate these properties over the lease term; however, the
timing of the ultimate evaluation and disposition of a significant portion
of properties has not been determined. Costs associated with seismic data
and all other costs will become subject to amortization as the
prospects to which they relate are evaluated.
NOTE 8 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited)
The following information summarized the Company's net proved reserves of
oil (including condensate and natural gas liquids) and gas and the present
values thereof for the years ended December 31, 1995, 1994 and 1993. The
reserve estimates are based upon reports of Ultra Engineering, Inc., an
independent oil and gas reserve engineering firm. The estimates are in
accordance with regulations prescribed by the Securities and Exchange
Commission. Future net revenue is estimated by the independent petroleum
engineers using oil and gas prices in effect as of the end of each
respective year. Price escalations are permitted only for those properties
which have contracts allowing for specific increases. Future operation
costs are based upon the average level of expenses during each year.
NOTE 8 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited) (Continued)
The reliability of any reserve estimate is function of the quality of
available information and of engineering interpretation and judgment. In
management's opinion, the reserve estimates presented herein, in accordance
with generally accepted engineering and evaluation principles consistently
applied, are believed to be reasonable. These reserves should be accepted
with the understanding that drilling activities or additional information
subsequent to the date of this report might require their revision. More
over, certain quantities of the reserves included in this study were
estimated using the volummetric method, and such estimates are particularly
susceptible to revision as a result of subsequent drilling activities or
production information.
Estimated Quantities of Oil and Gas Reserves (unaudited) --- The following
table sets forth certain data pertaining to the Company's proved and proved
developed reserves for the years ended December 31, 1995, 1994 and 1993.
<TABLE>
NOTE 8 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited) (Continued)
December 31,
1995 1994
1993
Gas Oil Gas Oil Gas
Oil
(Mcf) (Bbl) (Mcf) (Bbl) (Mcf)
(Bbl)
<S> <C> <C> <C> <C> <C>
<C>
Proved Reserves:
Beginning balance 27,930,944 1,208,804 -- 4,514
308,217 203,678
Purchase of reserves
in place 8,144,498 2,775,433 27,930,994 1,206,298 --
--
Production -- (2,506) -- (2,008) --
(1,515)
Revisions -- -- -- --
(308,217) (197,649)
Ending balance 36,075,492 3,981,731 27,930,994 1,208,804 --
4,514
December 31,
1995 1994
1993
Gas Oil Gas Oil Gas
Oil
(Mcf) (Bbl) (Mcf) (Bbl) (Mcf)
(Bbl)
Proved Developed
Reserves:
Beginning balance 5,565,696 595,582 -- 4,514
33,511 25,061
Purchase of reserves
in place 2,045,000 766,816 5,565,696 593,076 --
--
Production -- (2,506) -- (2,008) --
(1,515)
Revisions -- -- -- --
(33,511) (19,032)
Ending balance 7,610,696 1,359,952 5,565,696 595,582 --
4,514
</TABLE>
OILEX INTERNATIONAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
NOTE 8 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited) (Continued)
Standard Measure of Discounted Future Net Cash Flows (unaudited) --- The
standardized measure of discounted future net cash flows relating to proved
oil and gas reserves at is presented below:
December 31,
1995 1994 1993
Future cash inflows $134,803,769 $73,045,272 $90,280
Future development costs (15,279,040) (5,729,040) --
Future production costs (25,902,840) (9,596,785) (21,438)
Future income tax expense (32,000,000) (20,000,000) (23,000)
Future net cash flows 61,621,889 37,719,447 45,852
Discounted at 10% per year (23,786,049) (19,387,795) (17,699)
Standardized measure of discounted
future net cash flows $37,855,840 $18,331,652 28,153
The "standardized measure" does not purport to represent and is generally
unrelated to the fair market value of the Company's oil and gas reserves.
The principle sources of changes in the standardized measure of future net
cash flows are as follows:
December 31,
1995 1994 1993
Balance, beginning of year $ 2,178,648 $ (588,565) $ 1,649,508
Sales, net of production costs (37,000) (28,935) ( 6,861)
Purchase of reserves in-place 26,616,225 41,540,244 --
Revisions of previous estimates -- -- (3,382,169)
Accretion of discount (4,398,245)(19,370,096) --
Net change in income taxes (12,000,000)(19,977,000) 1,150,957
Balance, end of year $12,359,612 2,178,648 $ (588,565)
OILEX INTERNATIONAL INVESTMENTS, INC.
BREAK-UP VALUATION
December 31, 1995
Oil and Gas Properties:
Discounted future net cash flows $ 37,835,840
less: reduction for proved undeveloped (15%) (5,675,376)
32,160,464
Fair market value of production equipment 200,000
Total Oil and Gas Properties 32,360,464
Net working capital deficit (262,780)
Marketable securities, discounted 10% 2,250,000
Subtotal 34,347,684
less: Preferred Stock liquidation preference 5,000,000
Net Breakup Value $ 29,347,684
Common shares outstanding 14,327,570
Net Breakup Value per common share $2.05
OILEX, INC.
Quarterly Report on Form 10-QSB
Index
Part I. Financial Information
Item I. Financial Statements (unaudited)
Balance Sheet - September 30, 1996
Statements of Operations -
Nine Months Ended September 30, 1995 and 1996
Statement of Operations -
Three Months Ended September 30, 1995 and 1996
Statement of Cash Flows -
Nine Months Ended September 30, 1995 and 1996
Statement of Cash Flows -
Three Months Ended September 30, 1995 and 1996
Notes to Financial Statements
BALANCE SHEET
ASSETS
(Unaudited)
September
30,
1996
Current Assets:
Cash $3,079
Due from related parties 232,725
Prepaid expenses 17,832
Total Current Assets 253,636
Property and Equipment:
Oil and gas properties - full cost method
Subject to amortization 9,944,421
Undeveloped properties 1,217,000
Production equipment 300,584
Furniture and equipment 61,081
Accumulated depreciation, depletion
and amortization (5,584,927)
Net Property and Equipment 5,938,159
Investment in marketable securities --
Organization costs, net of amortization 60,899
Total Assets $6,252,704
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
September
30,
1996
Current Liabilities
Bonds payable 259,369
Accounts payable 260
Note payable to related parties 34,981
Total Current Liabilities 294,610
Deferred income tax liability 721,439
Commitments and contingencies--
Stockholders' Equity
Preferred stock, Series A, $.001 par value
10% cumulative convertible; 2,500,000
shares authorized, issued and outstanding
--
Common stock, $.001 par value; 25,000,000
shares authorized; 24,726,775 shares
issued and outstanding 24,727
Paid-in capital 12,768,434
Accumulated deficit (7,556,506)
Total Stockholders Equity 5,236,655
Total Liabilities and Stockholders' Equity 6,252,704
STATEMENT OF OPERATIONS
(Unaudited)
For the Nine Months Ended September 30,
1996 1995
Revenue:
Oil and gas sales 8,315 31,425
Expenses:
Lease operating 69,627 3,436
General and administrative 920,106 42,817
Depreciation, depletion and amortization 17,520 61,085
Interest 16,506 19,059
1,023,759 126,397
Loss before income taxes (1,015,444) (94,972)
Provision for income taxes -- --
Net loss $(1,015,444) $(94,972)
Loss per common share:
Primary and fully diluted $ (0.04) $(0.01)
Weighted average common shares outstanding:
Primary and fully diluted 24,726,775 14,327,570
<PAGE>
STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months Ended
September 30,
1996 1995
Revenue:
Oil and gas sales $ 3,585 $ 11,578
Expenses:
Lease operating 42,871 1,261
General and administrative 144,844 13,916
Depreciation, depletion and amortization 7,554 22,505
Interest 5,502 6,484
200,771 44,166
Loss before income taxes (197,186) (32,588)
Provision for income taxes -- --
Net loss $(197,186) $(32,588)
Loss per common share:
Primary and fully diluted $(0.01) $nil
Weighted average common shares outstanding:
Primary and fully diluted 24,726,775 14,327,570
<PAGE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30, 1996
(Unaudited)
<TABLE>
Preferred Stock Common Stock Paid-In
Accumulated
Shares Amount Shares Amount Capital
Deficit Total
<C> <C> <C> <C> <C> <C>
<C>
Balance,
Janaury 1, 1996 2,500,000 2,500 14,327,570 14,328 11,229,414
(6,541,062) 4,705,180
Retirement of
Series A
Preferred Stock (2,500,00) (2,500) -- -- (2,497,500)
-- (2,500,000)
Common stock
issued in
exchange for
oil and gas
properties -- -- 6,898,265 6,898 2,239,411
-- 2,246,309
Common stock
issued for
personal
services -- -- 3,500,940 3,501 1,797,109
-- 1,800,610
Net loss -- -- -- -- --
(1,015,444) (1,015,444)
Balance,
September 30,
1996 -- -- 24,726,775 24,727 12,768,434
(7,556,506) 5,236,655
</TABLE>
<PAGE>
STATEMENT OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
1996 1995
Cash Flows from Operating Activities:
Net loss (1,015,444) (94,972)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Depreciation, depletion and amortization 17,520 61,085
Increase in prepaid expenses (17,832) --
Increase in advances from related party (232,725) --
Increase in accounts payable 260 --
(Decrease) increase in bonds payable 14,792 13,766
Increase in notes payable to related
parties 1,506 5,294
Net cash used by operating activities (1,231,923) (14,827)
Cash Flows Used in Investing Activities:
Increase in oil and gas properties, net (3,191,892) --
Purchase of production equipment (300,584) --
Purchase of furniture and equipment (61,081) --
(Disposal) investment in marketable
securities 2,500,000 (2,500,000)
Increase in deferred income tax liability 721,439 --
Other 4,949 27,013
Net cash used by investing activities (327,189) (2,472,987)
Cash Flows from Financing Activities:
Issuance of common stock for services
rendered 1,800,610 --
Issuance of common stock for oil and
gas properties 2,246,309 --
(Cancellation) issuance of preferred stock (2,500,000) 2,500,000
Net Cash Provided by Financing Activities 1,546,919 2,500,000
Net Change in Cash ( 12,193) 12,186
Cash, beginning of year 15,272 1,764
Cash, end of year 3,079 13,950
<PAGE>
STATEMENT OF CASH FLOWS
(Unaudited)
For the Three Months Ended
September 30,
1996 1995
Cash Flows from Operating Activities:
Net loss (197,186) (32,589)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 7,554 22,505
Increase in prepaid expenses 5,168 --
Increase in advances from related party 153,898 --
(Decrease) increase in bonds payable 5,000 4,589
Increase in notes payable to related parties 502 1,895
Net cash used by operating activities (25,064) (3,600)
Cash Flows Used in Investing Activities:
Increase in oil and gas properties, net (762,326) --
Increase in deferred income tax liability (721,102) --
Other 1,646 4,646
Net cash used by investing activities 1,481,782 4,646
Cash Flows from Financing Activities:
Issuance of common stock for services
rendered 1,002,000 --
Issuance of common stock for oil and
gas properties 476,453 --
Net Cash Provided by Financing Activities 1,478,453 --
Net Change in Cash (28,393) 1,046
Cash, beginning of year 31,472 12,904
Cash, end of year 3,079 13,950
<PAGE>
NOTE 1 - GENERAL
The unaudited financial statements included herin for Oilex, Inc.
("Company") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission and include
all adjustments which are, in the opinion of management,
necesssary for a fair presentation. Certain information and
footnote disclosure required by generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. Certain 1995 balances have been reclassified to
conform to the 1996 presentation. These financial statements
include the accounts of the Company.
The Company was incorporated under the laws of the State of
Nevada on June 10, 1986 under the name of "Akteck, Inc." The
Company later changed its name to "Oilex International
Investments, Inc.," and in July, 1996 changed its name to "Oilex,
Inc."
The primary business activities of Oilex, Inc. is oil and gas
exploration, development and acquisitions. The Company currently
owns oil and gas leaseholds and fee property interests in Texas,
Mississippi, Colorado, West Virginia and Utah.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
There were no cash payments for interest nor income taxes during
the nine months ended September 30, 1996.
NOTE 3 - GOING CONCERN
The Company has incurred net losses since its inception creating
an accumulated deficit balance of $7,556,506 as of September 30,
1996. Additionally, there is a working capital deficit of
$40,974 at September 30, 1996.
These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management intends to make an
equity financing which will infuse additional working capital
into the Company so that it can exploit and develop its newly
acquired oil and gas properties, thereby generating a positive
cash flow.
The accompanying financial statements have been prepared on a
going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the
ordinary course of business, and therefore do not include any
adjustments that result from the outcome of this uncertainty.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company is currently in dispute with a corporation owned by
certain stockholders of the Company. These stockholders were
formerly part of the management team of Oilex. They contend
that Oilex owes the company approximately $141,000 on a demand
note. The Company has recorded a $34,981 note payable to the
company at September 30, 1996. The amount in dispute is related
to certain general and administrative expense reimbursements.
Although no lawsuit has been filed, the management of Oilex
intends to vigorously defend its position in this matter should a
lawsuit be instituted. It believes that the amounts recorded in
its financial statements at September 30, 1996, for this note
payable is correct and accurate. Accordingly, no provision has
been made for the disputed difference herein.
NOTE 5 - SIGNIFICANT SUBSEQUENT EVENTS
On February 20, 1997, the holders of the 15.0% Convertible
Subordinated Bonds elected to convert their bonds into 238,000
shares of Oilex common stock, par value $0.001 per share, at
$0.28 per share.
Additionally, on February 20, 1997, the Company issued 198,000
shares of Oilex common stock, par value $0.001 per share, to
three individual investors.
In January, 1997, the Board of Directors approved the acquisition
from a related party of a 20% interest it owned in Oil Retrieval
Systems, Inc. ("ORS") an Arizona corporation. ORS designs,
engineers, produces and sells portable swabbing units to the oil
and gas industry. ORS is a development stage company. Oilex
issued 3,000,000 shares of common stock to the related party in
exchange for its ownership of 1,205,420 common shares of ORS.
In May, 1997, Funscape Corp. (formerly Imperial Energy Corp.), a
Colorado corporation, acquired ORS. Funscape Corp. issued 2.5
million shares of its common stock in exchange for all of the
outstanding shares of ORS.
Funscape Corp. has stockholders and management who are also
stockholders and have management responsibilities in Oilex and
ORS.
OILEX, INC.
FINANCIAL STATEMENTS
December 31, 1996 and 1995
Independent Auditors' Report
SIMONTON, KUTAC
& BARNIDGE, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
909 Fannin, Suite 2050
Houston, Texas 77010-1007
Telephone:(713) 658-9755 Facsimile: (713) 658-0298
May 1, 1997
Board of Directors and Stockholders
Oilex, Inc.
Houston, Texas
We have audited the accompanying balance sheets of Oilex, Inc. as
of December 31, 1996 and 1995, and the related statements of
operations, changes in stockholders' equity, and cash flows for
the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Oilex, Inc. at December 31, 1996 and 1995, and the results of
its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 8 to the financial statements, the Company's significant
operating losses and working capital deficit raises substantial
doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Simon, Kutac & Barnidge
<PAGE>
OILEX, INC.
BALANCE SHEET
(December 31, 1996)
ASSETS
December 31,
1996 1995
Current Assets:
Cash 14,630 15,272
Oil and gas receivables 9,929 --
Prepaid Expenses 11,503 --
Total Current Assets 36,062 15,272
Property and Equipment:
Oil and gas properties -
full cost method
Subject to amortization 7,519,000 7,969,529
Undeveloped properties 1,217,000 --
Production equipment 300,584 --
Furniture and equipment 61,081 --
Accumulated depreciation, depletion
and amortization (66,549) (5,567,407)
Net Property and Equipment 9,031,116 2,402,122
Investment in marketable securities -- 2,500,000
Organization costs, net of amortization 59,252 65,838
Total Assets $9,126,430 $4,983,232
<PAGE>
OILEX, INC.
BALANCE SHEET
(December 31, 1996)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1996 1995
Current Liabilities
Amounts due for oil and gas
properties $925,000 $ --
Bonds payable 233,161 244,577
Advances from related parties 11,610 --
Accounts payable 250 --
Note payable to related parties 35,484 33,475
Total Current Liabilities 1,205,505 278,052
Deferred income tax liability 3,032,000 --
Commitments and contingencies -- --
Stockholders' Equity
Preferred stock, Series A, $.001 par
value 10% cumulative convertible;
2,500,000 shares authorized, issued
and outstanding -- 2,500
Common stock, $.001 par value; 50,000,000
and 25,000,000 shares authorized at
December 31, 1996 and 1995,
respectively, 24,726,775, and
14,327,570 shares issued and out-
standing at December 31, 1996 and 1995,
respectively 24,727 14,328
Paid-in capital 12,768,434 11,229,414
Accumulated deficit (7,904,236)( 6,541,062)
Total Stockholders' Equity 4,888,925 4,705,180
Total Liabilities and
Stockholders' Equity $9,126,430 $4,983,232
<PAGE>
STATEMENT OF OPERATIONS
(December 31, 1996)
For the Years Ended
December 31,
1996 1995
Revenue:
Oil and gas sales $ 34,236 $ 41,349
Other income 22,289 --
56,525 41,349
Expenses:
Lease operating 181,906 4,349
General and administrative 1,143,276 42,817
Depreciation, depletion and amortization 72,135 80,375
Interest 22,382 26,198
1,419,699 153,739
Loss before income taxes (1,363,174) (112,390)
Provision for income taxes -- --
Net loss (1,363,174) (112,390)
Weighted average common shares outstanding:
Primary and fully diluted 19,004,250 13,898,750
Loss per common share:
Primary and fully diluted $ (0.07) $ (0.01)
<TABLE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (December 31, 1996)
Preferred Stock Common Stock Paid-In
Accumulated
Shares Amount Shares Amount Capital Deficit
Total
<C> <C> <C> <C> <C> <C> <C>
<C>
Balance,
December 31, 1994 -- -- 13,812,570 $13,813 $7,396,445
$(6,428,672) $ 981,586
Issuance of Series
A Preferred Stock 2,500,000 2,500 -- -- 2,497,500 --
2,500,000
Issuance of common
stock in exchange
for oil and gas
properties -- -- 515,000 515 1,335,469 --
1,335,984
Net loss -- -- -- -- -- (
112,390) (112,390)
Balance,
December 31, 1995 2,500,000 2,500 14,327,570 14,328 11,229,414
(6,541,062) 4,705,180
Retirement of Ser
A Preferred Stock (2,500,00) (2,500) -- -- (2,497,500) --
(2,500,000)
Common stock issued
in exchange for oil
and gas properties -- -- 6,898,265 6,898 2,239,411 --
2,246,309
Common stock issued
for personal
services -- -- 3,500,940 3,501 1,797,109 --
1,800,610
Net loss -- -- -- -- --
(1,363,174) (1,363,174)
Balance,
December 31, 1996 -- $ -- 24,726,775 $24,727 12,768,434
(7,904,236) 4,888,925
</TABLE>
STATEMENT OF CASH FLOWS
(December 31, 1996)
For the Years Ended
December 31,
1996 1995
Cash Flows from Operating Activities:
Net loss (1,363,174) $(112,390)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation, depletion and amortization 72,135 80,375
Increase in oil and gas receivables (9,929) --
Increase in prepaid expenses (11,503) --
Increase in advances from related party 11,610 --
Increase in amounts due for oil and gas
properties acquired 925,000 --
Increase in accounts payable 250 --
(Decrease) increase in bonds payable (11,416) 18,563
Increase in notes payable to
related parties 2,009 6,583
Net cash used by operating activities (385,018) (6,869)
Cash Flows Used in Investing Activities:
Increase in oil and gas properties, net (766,471)(1,281,265)
Purchase of production equipment (300,584) --
Purchase of furniture and equipment (61,081) --
Disposal (investment) in marketable
securities 2,500,000 (2,500,000)
Decrease in accumulated depreciation,
depletion and amortization (5,500,858) --
Increase in deferred tax liability 3,032,000 --
Other (65,549) (56,416)
Net cash used by investing activities (1,162,543)(3,837,681)
Cash Flows from Financing Activities:
Issuance of common stock for services
rendered 1,800,610 1,358,058
Issuance of common stock for oil and
gas properties 2,246,309 --
(Cancellation) issuance of
preferred stock (2,500,000) 2,500,000
Net Cash Provided by Financing Activities 1,546,919 3,858,058
Net Change in Cash (642) 13,508
Cash, beginning of year 15,272 1,764
Cash, end of year 14,630 15,272
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization --- Oilex, Inc. ("Company") was incorporated under
the laws of the State of Nevada on June 10, 1986 under the name
of "Akteck, Inc." The Company later changed its name to "Oilex
International Investments, Inc.," and in July, 1996 changed its
name to "Oilex, Inc."
Description of the Business --- The primary business activities
of Oilex, Inc. is oil and gas exploration, development and
acquisitions. The Company currently owns oil and gas leaseholds
and fee property interests in Texas, Mississippi, Colorado, West
Virginia and Utah.
Oil and Gas Properties --- The Company follows the full cost
method of accounting whereby all costs, including direct,
general and administrative expenses, associated with property
acquisition, exploration and development activities are
capitalized. Cost associated with proved reserves are amortized
by the unit-of-production method using independent engineers'
estimates of unrecovered proved oil and gas reserves. The costs
of unproved properties are excluded from amortization until the
properties are evaluated. Interest is capitalized on oil and gas
properties not subject to amortization and in the process of
development. Proceeds from the sale of properties are accounted
for as reductions to capitalized costs unless such sales involve
a significant change in the relationship between costs and the
estimated value of proved reserves or the underlying value of
unproved properties, in which case, a gain or loss is recognized.
Unamortized costs of proved properties are subject to a ceiling
which limits such costs to the estimated present value of oil and
gas reserves reduced by future operating expenses, development
expenditures and income taxes.
Income Taxes --- The Company accounts for income taxes in
accordance with Statement of Financial Accounting Standards No.
106, "Accounting for Income Taxes," which requires the use of the
"liability method" of accounting for income taxes. Deferred
taxes are provided using the liability method whereby deferred
tax assets are recognized for deductible temporary differences
and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of
enactment.
The Company has incurred operating losses in each of the last
seven years. As the utilization of such losses can not be
anticipated, a corresponding benefit has not been recorded.
The Company has Net Operating Loss Carryforwards which will be applied to
income
and which lapse according to the following schedule:
Year Generated Earnings NOL Amount Year Expires
1991 ( 7,478) ( 6,730) 2006
1992 (112,082) (100,874) 2007
1993 (137,229) (123,506) 2008
1994 (129,045) (116,141) 2009
1995 (112,390) (101,151) 2010
Sub Total (498,224) (448,402)
Accounting Estimates --- The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and the
accompanying notes. The actual results could differ from those
estimates.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)
The Company's financial statements are based on a number of
significant estimates including selection of the useful lives for
property and equipment and oil and gas reserve quantities which
are the basis for the calculation of depreciation, depletion and
impairment of oil and gas properties. Management emphasizes that
reserve estimates are inherently imprecise and that estimates of
more recent discoveries and reserves associated with
non-producing properties are more imprecise than those for
producing properties with long production histories.
Accordingly, the Company's estimates are expected to change as
future information becomes available.
Other Property and Equipment --- Depreciation of property and
equipment, other than oil and gas properties, is provided
generally on the straight-line basis over the estimated useful
lives of the assets as follows:
Office equipment 3-7 years
Oilfield service equipment 3-7 years
Ordinary maintenance and repairs are charged to income and
expenditures which extend the physical or economic life of the
assets are capitalized. Gains or losses on disposition of assets
other than oil and gas properties and equipment are recognized in
income, and the related assets and accumulated depreciation
accounts are adjusted accordingly.
Other Non-Current Assets --- Other non-current assets include
organization costs, which are being amortized over five years.
Reclassification --- Certain reclassifications have been made to
the 1995 financial statements to conform to the 1996
presentation.
Loss Per Common Share --- Primary earnings per common share are
based upon the weighted average number of common and common
equivalent shares outstanding. Fully diluted earnings per common
share are based on the assumption that all convertible debentures
and stock options were converted at the beginning of the year.
Common stock equivalents were excluded from the calculation of
loss per common share as such inclusion would have had an
anti-dilutive effect; therefore, fully diluted earnings per share
is considered to be the same as primary earnings per share.
NOTE 2 - AMOUNTS DUE FOR OIL AND GAS PROPERTIES
Effective November 1, 1996, Oilex entered into an agreement to
acquire an approximate 75% gross working interest in the Walker
(Queen) Field) in Pecos County, Texas. This prospect consist of
3,040 acres of oil and gas leases, for which Oilex will pay
$925,000.
At December 31, 1996, $800,000 of the total $925,000 of amounts
due for oil and gas properties is payable solely from the 25%
gross working interest of net oil and gas revenues derived from
the Walker (Queen) Field. The remainder is to be paid by the
issuance of 125,000 shares of Oilex common stock, valued by
management at $1 per share.
NOTE 3 - BONDS PAYABLE
Bonds payable consists of the following:
December 31,
1996 1995
10.0% bonds payable, secured by certain of the
Company's oil and gas properties; due on
demand and convertible into common
stock at $2.00 per share. $ 166,098 $ 154,848
9.75% bonds payable to an insurance
company; secured by certain of the
Company's oil and gas properties;
due on demand and convertible into
common stock at $2.00 per share. -- 89,729
15.0% convertible subordinated bonds
payable, due April, 1997, and
convertible into common stock
at $0.28 per share. 67,063 --
$ 233,161 $ 244,577
In February, 1997, the 15.0% convertible bonds were converted
into 238,000 shares of Oilex common stock.
NOTE 4 - STOCKHOLDERS' EQUITY
Effective in January, 1996, Oilex exchanged 1,256,265 shares of
its common stock in exchange for 100% mineral rights in 83,751
acres located in Pocahontas and Greenbriar Counties, West
Virginia. These shares are included in stockholders' equity at
December 31, 1996. Oilex has retained the voting rights to these
common shares. The purchase price was valued at approximately
$1,256,265.
Effective in January, 1996, Oilex issued 500,000 shares of common
stock in exchange for oil and gas leaseholds and equipment
located in the Big Foot Field areas of Frio County, Texas. Oilex
has retained the voting rights to these common shares. The
purchase price was approximately $500,000.
In December, 1994, the Company agreed to issue 2,500,000 shares
of its Series A, 10% Cumulative Convertible Preferred Stock to
World Interactive Networks, Inc. ("WIN") in exchange for 149,200
shares of WIN's Series A Cumulative Convertible Preferred Stock
valued at $16.67 per share, which was the quoted market value of
these securities at the transaction date. The Oilex preferred
stock had a liquidation preference of $2.00 per share. This
transaction was subsequently rescinded on June 1, 1996, as Oilex
management decided to terminate all non-oil and gas related
activities.
On March 24, 1996, the Company issued 100,000 shares of its
common stock in exchange for 1,939 acres of lease rights in the
Carbon County, Utah field. The value of the acreage was
approximately $50 per acre.
On March 24, 1996, the Company acquired 3,945 acres of oil and
gas leases in the Unitah Basin area of Utah. The Company issued
42,000 shares of its common stock for these lease rights, which
were valued at approximately $11 per acre.
On April 17, 1996, Oilex entered into an agreement to acquired
100% of the working interest in the White River Dome Prospect
located in Rio Blanco County, Colorado. This prospect consists
of 11,535 acres. Oilex exchanged 1,500,00 shares of its common
stock along with $25,000 cash for these leaseholds.
Additionally, the Seller signed an agreement whereby these shares
will be voted in accordance with current management.
On November 12, 1996, the Company entered into an agreement with
a financial consulting firm whereby, as consideration for
services rendered, the Company has granted an option to purchase
300,000 shares at $0.50 per share. The agreement expired on May
15, 1997. No options were exercised.
At various times during 1996, the Company issued shares of its
common stock in the amounts and for the types of services as
follows: 46,240 common shares for leasing, geological and
engineering; 100,000 common shares for investor relations;
702,000 common shares for financial consulting and public
relations; and 10,000 common shares for other services rendered.
See Note 6 - Related Parties for additional disclosure regarding
stockholders' equity.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company is currently in dispute with a corporation owned
by certain stockholders of the Company. These stockholders were
formerly part of the management team of Oilex. They contend
that Oilex owes the company approximately $141,000 on a demand
note. The Company has recorded a $35,484 note payable to the
company at December 31, 1996. The amount in dispute is related
to certain general and administrative expense reimbursements.
Although no lawsuit has been filed, the management of Oilex
intends to vigorously defend its position in this matter should a
lawsuit be instituted. It believes that the amounts recorded in
its financial statements at December 31, 1996, for this note
payable is correct and accurate. Accordingly, no provision has
been made for the disputed difference herein.
NOTE 6 - LEASES
The Company, as lessee, has entered into and/or assumed various
operating leases for office equipment, vehicles, and office
facilities.
Future minimum lease payments under operating leases at December
31, 1996 are as follows:
Year Ending December 31,
1997 $ 45,666
1998 20,371
1999 10,864
2000 10,475
2001 6,354
Thereafter --
Total minimum lease payments $93,730
Rent expense during the years ended December 31, 1996 and 1995
for operating leases was $29,025 and $13,420, respectively, and
is included in general and administrative expenses.
NOTE 7 - RELATED PARTIES
In 1996, a corporate stockholder, Phoenix Reserves, Inc.
("Phoenix"), who owns 36.5% of Oilex's outstanding common stock
advanced $790,210 to Oilex. As payment, Oilex issued 1,200,000
shares of its common stock to Phoenix and are included in total
stockholders' equity at December 31, 1996. The funds were used
for working capital purposes. Phoenix has common management with
Oilex and it was a majority shareholder of Oilex in prior years.
During 1996, the Company received advances from its President
totaling $186,386 for which Oilex issued 500,000 shares of its
common stock as payment. The funds were used for working capital
purposes. Additionally, another 640,000 shares of common stock
were issued to the President of Oilex as compensation for
personal services.
A stockholder of the Company is a principal in a firm that
provides oil and gas reserve evaluation services to the Company.
A total of 152,700 shares of Oilex common stock was issued during
1996 in exchange for oil and gas reserve evaluation services.
As discussed in Note 4, the Company had a note payable of $35,484
and $33,475 as of December 31, 1996 and 1995, respectively, due
to a company owned by certain stockholders of Oilex who were
formerly part of the management of Oilex.
During 1996, the Company purchased oil and gas properties and
tangible equipment from Phoenix in exchange for 3,500,000 shares
of Oilex common stock.
During 1996 Oilex paid $52,949 for legal services to its
President and Director who is an attorney.
In 1996, the Company issued 150,000 shares of common stock for
directors' fees to three of its directors.
See Note 9 - Significant Subsequent Events, for additional
related parties transactions.
NOTE 8 - GOING CONCERN
The Company has incurred net losses since its inception creating
an accumulated deficit balance of $7,904,236 and $6,541,062 at
December 31, 1996 and 1995, respectively. Additionally, there is
a working capital deficit of $1,169,443 and $262,780 at December
31, 1996 and 1995, respectively.
These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management intends to make an
equity financing which will infuse additional working capital
into the Company so that it can exploit and develop its newly
acquired oil and gas properties, thereby generating a positive
cash flow.
The accompanying financial statements have been prepared on a
going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the
ordinary course of business, and therefore do not include any
adjustments that result from the outcome of this uncertainty.
NOTE 9 - SIGNIFICANT SUBSEQUENT EVENTS
On February 20, 1997, the holders of the 15.0% Convertible
Subordinated Bonds elected to convert their bonds into 238,000
shares of Oilex common stock, par value $0.001 per share, at
$0.28 per share.
Additionally, on February 20, 1997, the Company issued 198,000
shares of Oilex common stock, par value $0.001 per share, to
three individual investors.
In January, 1997, the Board of Directors approved the acquisition
from Phoenix of a 20% interest it owned in Oil Retrieval Systems,
Inc. ("ORS") an Arizona corporation. ORS designs, engineers,
produces and sells portable swabbing units to the oil and gas
industry. ORS is a development stage company.
Oilex issued 3,000,000 shares of common stock to Phoenix in
exchange for its ownership of 1,205,420 common shares of ORS.
In May, 1997, Funscape Corp. (formerly Imperial Energy Corp.), a
Colorado corporation, acquired ORS. Funscape Corp. issued 2.5
million shares of its common stock in exchange for all of the
outstanding shares of ORS.
Funscape Corp. has stockholders and management who are also
stockholders and have management responsibilities in Oilex,
Phoenix and ORS.
Reference is made here to Note 7 - Related Parties of these
financial statements.
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION
There were no cash payments for interest nor income taxes during
the years ended December 31, 1996 and 1995.
NOTE 11 - OIL AND GAS PROPERTIES
Capitalized Costs --- The following table presents the aggregate
capitalized cost subject to amortization relating to the
Company's oil and gas acquisition, exploration and development
activities, and the aggregate related accumulated depreciation,
depletion and amortization ("DD&A").
December 31,
1996 1995
Proved properties $ 7,519,000 $ 7,969,529
Unproved properties 1,217,000 --
Accumulated DD&A -- (5,567,407)
Net capitalized costs $ 8,736,000 $ 2,402,122
Cost Incurred --- The Company's oil and gas acquisition,
exploration and development activities are conducted in Texas,
Mississippi, Colorado, West Virginia and Utah. The following
table summarizes the costs incurred in connection therewith.
December 31,
1996 1995
Property acquisition costs:
Unproved properties $ 1,217,000 $ --
Proved properties 6,506,801 1,281,265
Exploration costs -- --
Development costs -- --
$ 7,723,801 $ 1,281,265
<PAGE>
NOTE 11 - OIL AND GAS PROPERTIES (Continued)
Cost Not Subject to Amortization --- The Company had $1,217,000
of acquisition cost not subject to amortization at December 31,
1996. Unproved properties not subject to amortization consists
mainly of lease costs and seismic data related to unproved areas.
The Company will continue to evaluate these properties over the
lease term; however, the timing of the ultimate evaluation and
disposition of a significant portion of properties has not been
determined. Costs associated with seismic data and all other
costs will become subject to amortization as the prospects to
which they relate are evaluated.
NOTE 12 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited)
The following information summarize the Company's net proved
reserves of oil (including condensate and natural gas liquids)
and gas and the present values thereof for the years ended
December 31, 1996 and 1995. The reserve estimates are based upon
reports of Ultra Engineering, Inc., an oil and gas reserve
engineering firm whose principal is a stockholder and director of
Oilex. The estimates are in accordance with regulations
prescribed by the Securities and Exchange Commission. Future net
revenue is estimated by the petroleum engineers using oil and gas
prices in effect as of the end of each respective year. Price
escalations are permitted only for those properties which have
contracts allowing for specific increases. Future operating
costs are based upon the average level of expenses during each
year.
The reliability of any reserve estimate is function of the
quality of available information and of engineering
interpretation and judgment. In management's opinion, the
reserve estimates presented herein, in accordance with generally
accepted engineering and evaluation principles consistently
applied, are believed to be reasonable. These reserves should be
accepted with the understanding that drilling activities or
additional information subsequent to the date of this report
might require their revision. Moreover, certain quantities of
the reserves included in this study were estimated using the
volumetric method, and such estimates are particularly
susceptible to revision as a result of subsequent drilling
activities or production information.
<PAGE>
NOTE 12 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited)
(Continued)
Estimated Quantities of Oil and Gas Reserves (Unaudited) --- The
following table sets forth certain data pertaining to the
Company's proved and proved developed reserves for the years
ended December 31, 1996 and 1995.
December 31,
1996 1995
Gas Oil Gas Oil
(Mcf) (Bbl) (Mcf) (Bbl)
Proved Reserves:
Beginning balance 36,075,492 3,981,731 27,930,994 1,208,804
Purchase of reserves
in place -- 1,725,594 8,144,498 2,775,433
Production -- (2,054) -- (2,506)
Revisions (36,066,040)(3,259,506) -- --
Ending balance 9,452 2,445,765 36,075,492 3,981,731
December 31,
1996 1995
Gas Oil Gas Oil
(Mcf) (Bbl) (Mcf) (Bbl)
Proved Developed
Reserves:
Beginning balance 7,610,696 1,359,952 5,565,696 595,582
Purchase of reserves
in place -- 1,725,594 2,045,000 766,876
Production -- (2,054) -- (2,506)
Revisions (7,601,244) (637,727) -- --
Ending balance 9,452 2,445,765 7,610,696 1,359,952
NOTE 12 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited)
(Continued)
Standard Measure of Discounted Future Net Cash Flows (Unaudited)
- --- The standardized measure of discounted future net cash flows
and changes therein relating to proved oil and gas reserves is
presented below:
December 31,
1996 1995
Future cash inflows $ 48,933,726 $ 134,803,769
Future development costs (760,000) (15,279,040)
Future production costs (25,291,508) (25,902,840)
Future income tax expense (8,580,832) (32,000,000)
Future net cash flows 14,301,386 61,621,889
Discounted at 10% per year (8,951,208) (23,786,049)
Standardized measure of discounted future
net cash flows $ 5,350,178 $ 37,835,840
The "standardized measure" does not purport to represent and is
generally unrelated to the fair market value of the Company's oil
and gas reserves.
The principle sources of changes in the standardized measure of
future net cash flows are as follows:
December 31,
1996 1995
Balance, beginning of year $ 12,359,619 $ 2,178,648
Sales, net of production costs (26,019) (37,000)
Purchase of reserves in-place 8,560,285 26,616,225
Revisions of previous estimates (12,333,600) --
Accretion of discount -- (4,398,245)
Net change in income taxes ( 3,210,107) (12,000,000)
Balance, end of year $ 5,350,178 $ 12,359,628
<PAGE>
The following Exhibits are filed as a part of this
Registration Statement:
Exhibit Sequential
Number Description* Page No.
3.1 Initial Articles of Incorporation
filed June 6, 1986 71
3.2 Articles of Amendment filed January
23, 1992 reflecting a name change
to Oilex International Investments, Inc. 73
3.3 Articles of Amendment filed June 3,
1995 effecting an increase in the
number of authorized shares
to 25,000,000 75
3.4 Bylaws of Oilex, Inc. 77
3.5 Articles of Amendment filed July 8, 1996
changing the name to Oilex, Inc. and effecting
an increase in the number of authorized
shares to 50,000,000 91
99 Guide 2: Disclosure of Oil and Gas
Operations 93
* Summaries of all exhibits contained
within this Registration Statement
are modified in their entirety by
reference to these Exhibits
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
AKTECH, INC.
ARTICLE I
The name of this corporation is AKTECH, INC.
ARTICLE II
This corporation shall have perpetual existence.
ARTICLE III
The purpose of this corporation is to engage in 'any lawful activity
permitted under the laws of the State of Nevada.
ARTICLE IV
The aggregate number of shares which this corporation shall have
authority to issue is 25,000,000 shares of a par value of $0.001 per share.
Fully paid stock of this corporation shall not be liable to any further
call or assessment.
ARTICLE V
The authorized and treasury stock of this corporation may be issued at
such time, upon such terms and conditions. and for such consideration as
the Board of Directors shall determine. Shareholders, shall not have
preemptive' rights to acquire unissued shares of the stock of this
corporation and cumulative voting is denied.
ARTICLE VI
The principal place of business of this corporation in the State of
Nevada is One East First Street, Reno, Nevada 89501.
ARTICLE VII
The number of Directors constituting the initial Board of Directors of
this corporation. is three (3) . The names and addresses of persons who are
to serve as Directors until the first annual meeting of stockholders, or
until their successors are elected and qualified are:
NAME ADDRESS
Mark Kallenberger 180 Newport Center Drive
Suite 180
Newport Beach, California 92660
James R. Lewis 14772 Plaza Drive
Tustin, California 92681
John W. Crane 10 Cresthaven
Irvine, California 92714
The Board of Directors shall be limited in number to no less than
three (3) nor more than nine (9).
ARTICLE VIII
The name and address of the initial Incorporator is as follows: James
R. Lewis, 14772 Plaza Drive, Tustin, California 92681.
IN WITNESS WHEREOF, the undersigned Incorporator has executed
these Articles of Incorporation as indicated below.
Dated: June 6, 1986
original signed by James R. Lewis
James R. Lewis
STATE OF CALIFORNIA
COUNTY OF ORANGE
On June 6, 1986, personally appeared before me, a notary public, who
acknowledged that James R. Lewis executed the above instrument.
Original signed by Betty R. Slipp
Signature of Notary
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF
AKTECK, INC.
We the undersigned, Ron F. Bearden, President and Gwen S. Stallworth,
Secretary of Akteck, Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 16th day of December, 1991, adopted a resolution to
amend the original articles as follows:
Article I is hereby amended to read as follows:
The name of the corporation hereafter is
Oilex International Investments, Inc.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Article of Incorporation is 1,075,000; that
said change and amendment have been consented to and approved by a majority
vote of the stockholders holding a majority of each class of stock
outstanding and entitled to vote thereon.
Original signed by Ron F. Bearden
Ron F. Bearden, President
Original signed by Gwen C. Stallworth
Gwen C. Stallworth, Secretary
STATE OF TEXAS
COUNTY OF HARRIS
This Instrument was acknowledged before me by Ron F. Bearden,
President of Oilex International Investments, Inc..
Signature of Notary illegible
Notary Public, State of Texas
My Commission expires:
STATE OF TEXAS
COUNTY OF HARRIS
On December 20, 1991, personally appeared before me, a Notary Public
Gwen Stallworth, who acknowledged that they executed the above instrument.
Original signed by Rebecca Bearden
My commission expires 6/28/93
Notary Public, State
of Texas
My Commission expires:
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF
OILEX INTERNATIONAL INVESTMENTS, INC.
We the undersigned, Oliver H. Timmins,III, President and Cynthia C.
Timmins, Secretary of Oilex International Investments, Inc. do hereby
certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 5th day of April, 1995, adopted a resolution to amend
the original articles as follows:
Article IV is hereby amended to read as follows:
The aggregate number of shares which this corporation shall have the
authority to issue is 25,000,000 shares of a par value of $0.001 per share.
Fully paid stock of the corporation shall not be liable to any further call
or assessment. The Board of Directors of the corporation is expressly
authorized to determine by resolution classes, series and numbers of each
class or series of the stock of the corporation.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Article of Incorporation is 13,987,470; that
said change and amendment have been consented to and approved by a majority
vote of the stockholders holding a majority of each class of stock
outstanding and entitled to vote thereon.
Original signed by Oliver H. Timmins III
/s/ Oliver H. Timmins III, President
Original signed by Cynthia C. Timmins
/s/ Cynthia C. Timmins, Secretary
STATE OF TEXAS)
COUNTY OF BEXAR)
This Instrument was acknowledged before me on this 3rd day of
June, 1995, by Oliver H. Timmins III, President of Oilex International
Investments, Inc..
Original signed by Dolores Railsback
Notary Public, State of Texas
My Commission expires:
STATE OF TEXAS)
COUNTY OF BEXAR)
This Instrument was acknowledged before me on this 3rd day of
June, 1995, by Cynthia C. Timmins, Secretary of Oilex International
Investments, Inc.
original signed by Dolores Railsback
Notary Public, State of Texas
My Commission expires:
EXHIBIT 3.4
AKTECH, INC.
Bylaws
ARTICLE I
OFFICES
Section 1. The corporation shall maintain a principal office in the
State of Nevada as set forth in the articles of incorporation or determined
from time to time by the board of directors
Section 2. The corporation may also have offices at such other places
both within and without the State of Nevada as the board of directors may f
rom time to time determine or the business of the corporation may require
either inside or outside the State of Nevada.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held at such place as may be fixed from time to time by the board
of directors.
Section 2. Annual meetings of shareholders, commencing with the year
1987, shall be held on the second Monday of June if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 1:00
p.m., at which they shall elect by a plurality vote a board of directors,
and transact such other business as may properly be brought before the
meeting.
Section 3. Written or printed notice of. the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten
nor more than sixty days before the date of the meeting, either personally
or by mail, by or at the direction of the president, the secretary, or the
officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting.
ARTICLE III
SPECIAL MEETING OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose
other than the election of directors may be held at such time and place
within or without the State of Nevada as shall be stated in the notice of
the meeting or in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or
the holders of not less than one-tenth of all the shares entitled to vote
at the meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be delivered not less than ten nor more than
sixty days before the date of the meeting, either personally or
- -2-
by mail, by or at the direction of the president, the secretary, or the
officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING STOCK
Section 1. The holders of one-third of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction
of business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders present in
person or represented by proxy shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum shall be present or represented. At such adjourned meeting at
which. a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2. If a quorum is present, the affirmative vote of a majority
of the shares of stock represented at the meeting shall be the act of the
shareholders unless
- -3-
the vote of a greater number of shares of@stock is required by law or the
articles of incorporation.
Section 3 . Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact.
In all elections for directors every shareholder, entitled to vote, shall
have the right to vote, in person or by proxy, the number of shares of
stock owned by him, for as many persons as there are directors to be
elected.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be three. Directors
need not be residents of the State of Nevada nor shareholders of the
corporation. The directors, other than the first board of directors, shall
be elected at the annual meeting of the shareholders, and each director
elected shall serve until the next succeeding annual meeting and until his
successor shall have been elected and qualified. The first board of
directors shall hold office
- -4-
until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected for the unexpired portion of the term of
his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors shall be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose. A director
elected to fill a newly created directorship shall serve until the next
succeeding annual meeting of shareholders and until his successor shall
have been elected and qualified.
Section 3. The business affairs of the corporation shall be managed by
its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by, statute
or by the articles of incorporation or by these bylaws directed or required
to be exercised or done by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the
State of Nevada, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish
reasonable compensation of all directors for services to the corporation as
directors, officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may
be held inside or outside the State of Nevada.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such
place and time as shall be fixed by the consent in writing of all the
directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by
the president on three days' notice to each director, either personally or
by mail or by telegram; special meetings shall be called by the president
or secretary in like manner and on like notice on the written request of
two directors.
- -6-
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
board of directors need be specified in the notice or waiver of notice of
such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless a greater number is required by law or
by the articles of incorporation. The act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
board of directors, unless the act of a greater number is required by
statute or by the articles of incorporation. If a quorum shall not be
present at any meeting of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 7. Any action required or permitted to be taken by the board
of directors may be taken without a meeting if all members of the board
consent in writing to the action and the consents are filed with the
minutes.
- -7-
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a majority
of the number of directors fixed by the bylaws or otherwise, may designate
two or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and
exercise all of the authority of 'the board of directors in the management
of the corporation, except as otherwise required by law. Vacancies in the
membership of the committee shall be filled by the board of directors at a
regular or special meeting of the board of directors. The executive
committee shall keep regular minutes of its proceedings and report the same
to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these bylaws, notice is required to be
given to any director or shareholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail,
addressed to such director or shareholder, at this address as it appears on
the records of the corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be
- -8-
given by telegram.
Section 2. Whenever any notice whatever is required to be given under
the provisions of the statutes or under the provisions of the articles of
incorporation or these bylaws, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary
and a treasurer. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and assistant
treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of' shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom need be a member
of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and
- -9-
agents of the corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed
by the board of directors may be removed at any time by the affirmative
vote of a majority of the board of directors. Any vacancy occurring in any
office of the corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the
board of directors, shall have general and active management of the
business of the corporation and shall see that all orders and resolutions
of the board of directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required
or permitted by law to be otherwise signed and executed and except where
the signing and execution thereof shall be expressly delegated by the board
of directors to some other officer or agent I of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order de-
- -10-
termined by the board of directors, shall, in the absence or disability of
the president, perform the duties and exercise the powers of the president
and shall perform such other duties and have such other powers as the board
of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the
proceedings of the meetings of the corporation and of the board of
directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause
to be given, notice of all meetings of the shareholders and special
meetings of the board of directors, and shall perform such other duties as
may be prescribed by the board of directors or president, under whose
supervision he shall be. He shall have custody of the corporate seal of
the corporation and he, or an assistant secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may
be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
office to affix the seal of the corporation and to attest the affixing by
his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform
the duties and exercise the powers of the secretary and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the corporation and shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of
directors, at its regular meetings, or when the' board of directors so
requires, an account of all his transactions as treasurer and of the
financial condition of the corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his
possession or
- -12-
under his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice- president and the secretary
or an assistant secretary of the corporation, and may be sealed with the
seal of the corporation or a facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or
tire certificate shall have a statement that the corporation will furnish
to any shareholder upon request and without charge, a full or summary
statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued and, if the
corporation is authorized to issue any preferred or special class in
series, the variations in the relative rights and preferences between the
shares of each such series so far as the same have been fixed and
determined and the authority of the
- -13-
board of directors to fix and determine the relative rights and preferences
of subsequent series.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the corporation
itself or an employee of the corporation. In case any officer who has
signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer at the date of its issue.
LOST CERTIFICATES
Section 3. The board of directors may direct anew certificate to
be issued in place of any certificate theretofore issued by the corporation
alleged to have been lost or destroyed. When authorizing such issue of a
new certificate, the board of directors, in its discretion and as a
condition precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as it
deems adequate, to: protect the corporation : from any claim that may be
made against it with respect to any such certificate alleged to have been
lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or
- -14-
the transfer agent of the corporation of a certificate representing shares
duly endorsed or accompanied by proper evidence of success ion, assignment
or authority to transfer, a new certificate shall be issued to the person
entitled thereto, and the old certificate canceled and the transaction
recorded upon the books of the corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment
thereof or entitled to receive payment of any dividend, or in order to make
a determination of shareholders for any other proper purpose, the board of
directors may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, sixty days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books
shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the board of directors may fix
in advance a date as the record date for any such, determination of
shareholders, such date in any case to be not more than sixty days and, in
case of a meeting of shareholders, not less than ten days prior to the date
on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books ate not closed
and no record date is fixed for the
- -15-
determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend,
the date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise, provided by the laws of Nevada.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, at least ten days before each meeting of
shareholders, a complete list of the
- -16-
shareholders entitled to vote at such meeting, arranged in alphabetical
order, with the address of each and the number of shares held by each,
which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours.
Such list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder during
the whole time of the meeting. The original share ledger or transfer book,
or a duplicate thereof, shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger or transfer book
or to vote at any meeting of the shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of
directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the capital stock, subject
to any provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sum s
as the directors
-17-
from time to time, in their absolute discretion, think proper as a reserve
fund to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other purpose
as the directors shall think conducive to the interest of the corporation,
and the directors may modify or abolish any such reserve in the manner in
which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time
designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate
Seal, Nevada". The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board
of directors at any regular or special meeting of the board.
CERTIFICATION
I hereby certify that the foregoing is the original or a true copy of
the bylaws adopted by Aktech, Inc., pursuant to the organizational action
of its directors.
Dated: June 1986
James R. Lewis, Secretary
- -19-
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF
OILEX INTERNATIONAL INVESTMENTS, INC.
We the undersigned, Oliver H. Timmins, III, President and Cynthia C.
Timmins, Secretary of Oilex International Investments, Inc. do hereby
certify:
That the board of directors of said corporation at a meeting duly convened,
held on the 5th day of June, 1996, adopted a resolution to amend the
original articles as follows:
Article I is hereby amended to read as follows:
The name of this corporation is OILEX, INC.
Article IV is hereby amended to read as follows:
The aggregate number of shares which this corporation shall have the
authority to issue is 50,000,000 shares of a par value of $0.001 per share.
Fully paid stock of the corporation shall not be liable to any further call
or assessment. The Board of Directors of the corporation is expressly
authorized to determine by resolution classes, series and numbers of each
class or series of the stock of the corporation.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 19,531,835; that
said change and amendment have been consented to and approved by a majority
vote of the stockholders holding a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Oliver Timmins III, President
/s/ Cynthia Timmins, Secretary
STATE OF TEXAS
COUNTY OF BEXAR
This instrument was acknowledged before me on this 3rd day of July, 1996,
by Oliver H. Timmins III, President of Oilex International Investments,
Inc.
/s/Dolores C. Railsback
Notary Public, State of Texas
This instrument was acknowledged before me on this 3rd day of July, 1996,
by Cynthia C. Timmins, Secretary of Oilex International Investments, Inc.
/s/Dolores C. Railsback
Notary Public, State of Texas
<PAGE>
Exhibit 99: Disclosure of Oil and Gas Operations/
Guide 2
Item 4:
Mississippi Leases
A 1.022834% Net Working Interest insofar and only insofar as to the portion
of the leases listed below which fall within the boundary of the unit for
the Norcen Explorer, Inc. Burns Baptist Church et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated September 7, 1990 and recorded in Book
No. 325, Page 676 of the records of Smith County, Mississippi and further
limited to the depths between the surface and 9,986 feet subsurface.
Lessor Lessee Date Vol/Page
Ruth Toler Tower Exploration,Inc. 032588 294/657
Oliver Properties Tower Exploration,Inc. 033088 294/64
James Harrison Buchanan Tower Exploration,Inc. 042588 297/13
William Thomas Buchanan Tower Exploration,Inc. 042588 297/15
Sarah Caroline Buchanan Tower Exploration,Inc. 042588 297/20
Fred E. Moss Tower Exploration,Inc. 042188 297/22
Linda M. Moss Tower Exploration,Inc. 042188 295/558
Ridgway Energy, Inc Tower Exploration,Inc. 042188 295/561
Ridgway Management, Inc Tower Exploration,Inc. 042188 295/568
John D. Fournet,Et Ux Tower Exploration,Inc. 050588 295/548
R.N. Turnbow Oil Invest Norcen Explorer, Inc. 072688 301/26
Edith G. Hamilton Mitchell Energy Corp. 122387 291/362
Martha Hamilton Williams Mitchell Energy Corp. 122387 291/364
Fannie Robinson Graham Mitchell Energy Corp. 012288 291/359
Gladstone Winstead, Et Ux Mitchell Energy Corp. 092287 287/236
James P. Michael Mitchell Energy Corp. 111187 287/529
Helen Dow Bryant Mitchell Energy Corp. 111287 291/142
A 2.178866% Net Working Interest insofar and only insofar as to the portion
of the leases listed below which fall within the boundary of the unit for
the Norcen Explorer, Inc. John C. Henderson et al No. I as evidenced by
Declaration of Pooled Oil Unit dated July 22, 1991 and recorded in Book No.
338, Page 126 of the records of Smith County, Mississippi and further
limited to the depths between the surface and 10,644 feet subsurface.
Lessor Lessee Date Vol/Page
Ruth Toler Tower Exploration, Inc. 032588 294/657
Oliver Properties Tower Exploration, Inc. 033088 294/646
James Harrison Buchanan Tower Exploration, Inc. 042588 297/13
William Thomas Buchanan Tower Exploration, Inc. 042588 297/15
Sarah Caroline Buchanan Tower Exploration, Inc. 042588 297/20
Fred E. Moss Tower Exploration, Inc. 042188 297/22
Linda M. Moss Tower Exploration, Inc. 042188 295/558
Ridgway Energy, Inc Tower Exploration, Inc. 042188 295/561
Ridgway Management, Inc Tower Exploration, Inc. 042188 295/568
John D. Fournet,Et Ux Tower Exploration, Inc. 050588 295/548
Fannie Robinson Graham Mitchell Energy Corp. 012288 291/359
Gladstone Winstead, Et Ux, Mitchell Energy Corp. 092287 287/236
Helen Dow Bryant Mitchell Energy Corp. 111287 291/142
James F. Michael Norcen Explorer, Inc. 111290 329/159
A.P. Kearney, Et Ux Mitchell Energy Corp. 102987 287/551
Arward Winstead, Et Ux Mitchell Energy Corp. 110387 291/14
Carl J. Winstead Hoberr Petro. Resources 081388 297/565
Pauline Winstead Brown Hoberr Petro. Resources 020388 291/301
Dorothy Winstead Robbins Hoberr Petro. Resources 012788 291/303
Dorothy Winstead Robbins Hoberr Petro. Resources 012788 291/303
W.G. Singleton Norcen Explorer, Inc. 022890 317/351
Yvonne Gredler Norcen Explorer, Inc. 022890 317/343
Margaret N. Singleton Norcen Explorer, Inc. 022890 317/349
Ercelle N. Singleton Norcen Explorer, Inc. 022890 317/347
Eva N. Franklin Norcen Explorer, Inc. 022890 317/341
David Singleton Norcen Explorer, Inc. 022890 317/345
John C. Henderson, Et Ux Mitchell Energy Corp. 091487 287/223
Job T. Payne, Et Ux Thomas W. Rogers 111087 287/332
Allan P. Kearney, Et Ux Mitchell Energy Corp. 120286 286/284
James Prentiss Husband Norcen Explorer, Inc. 010290 315/218
James M. Henderson, Et Ux Mitchell Energy Corp. 091187 287/233
A 2.277794% Net Working Interest insofar and only insofar as to the portion
of the leases listed below which fall within the boundary of the Unit for
the Norcen Explorer, Inc. Allan P. Kearney et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated April 27, 1992 and recorded in the
records of Smith County, Mississippi and further limited to the depths
between the surface and 10,644 feet subsurface).
Lessor Lessee Date Vol/Page
Ross Holmes Norcen Explorer, Inc. 081688 299/264
John L. Townsend, Indiv Norcen Explorer, Inc. 081288 299/266
Bruce Dixon, Sr., Et Al Norcen Explorer, Inc. 081588 299/262
George G. Townsend, Indiv Norcen Explorer, Inc. 081288 299/268
Joe L. Townsend, Indiv Norcen Explorer, Inc. 081288 299/465
Mary Alice Smith, Et Al Norcen Explorer, Inc. 040690 319/394
Dorothy West Townsend Norcen Explorer, Inc. 062091 335/161
A.H. Barber Tower Exploration, Inc. 111887 287/377
Wayne H. Wedgeworth, Tower Exploration, Inc. 102087 287/257
A.P. Kearney, et ux Mitchell Energy Corp. 102987 287/551
Herschel Muckelrath Mitchell Energy Corp. 102887 287/361
Wilodyne M. Rhinehart Mitchell Energy Corp. 102887 287/363
Winfred H. Muckelrath Mitchell Energy Corp. 102887 287/359
A 0.512306% Net Working Interest (insofar and only insofar as to the
portion of the leases listed below which fall within the boundary of the
unit for the Norcen Explorer, Inc.-GladstoneWinstead et al No. 1 as
evidenced by Declaration of Pooled Oil Unit dated of the records of Smith
County, June 2, 1992 and recorded in the records of Smith County,
Mississippi and further limited to the depths between the surface and
10,644 feet subsurface).
Lessor Lessee Date Vol/Page
Oliver Properties Tower Exploration,Inc. 033088 294/646
Fannie Robinson Graham Mitchell Energy Corp. 012288 291/359
Gladstone Winstead, et ux, Mitchell Energy Corp. 092287 287/236
James F. Michael Norcen Explorer, Inc. 111290 329/159
Ridgway Management, Inc. Norcen Explorer, Inc. 042191 335/629
Ridgway Energy, Inc. Norcen Explorer, Inc. 042191 335/625
James Prentiss Husband Norcen Explorer, Inc. 010290 315/218
R.N. Turnbow Oil Norcen Explorer, Inc. 042089 307/168
Homer Lynn Norcen Explorer, Inc. 041989 307/174
June C. Coutant Norcen Explorer, Inc. 041989 307/172
Mary S. Reeves, Norcen Explorer, Inc. 041989 307/170
Herman Mcdaniel, Norcen Explorer, Inc. 032789 307/160
Mary Lou Burns Powell, Norcen Explorer, Inc. 032589 303/120
L.B. Porter Norcen Explorer, Inc. 092889 312/170
Betty Sue Glaze Nygren Norcen Explorer, Inc. 080889 311/602
Ruth E. Toler Norcen Explorer, Inc. 072689 311/585
Quin-fournet Oil Properties Norcen Explorer, Inc. 072689 311/599
Jack I. Miles, Norcen Explorer, Inc. 032789 303/412
Jimmy Ray Burns, Norcen Explorer, Inc. 032589 303/114
Ruth H. Miller Norcen Explorer, Inc. 031889 302/43
Betty C. Husbands Norcen Explorer, Inc. 091988 301/396
Ernest C. Husbands Norcen Explorer, Inc. 101988 301/394
Thomas Hallman Sr. Norcen Explorer, Inc. 032789 313/283
Thomas Wilson Hallman Norcen Explorer, Inc. 032589 303/116
Corinne Yelverton Watts Norcen Explorer, Inc. 032589 307/158
Jasper Maurice Yelverton Norcen Explorer, Inc. 032789 313/281
Eloise Burns Flaherty Norcen Explorer, Inc. 033089 303/410
A.H. Barber Norcen Explorer, Inc. 042689 307/331
John H. Townsend Norcen Explorer, Inc. 042389 300/587
Texas Leases
Frio County
A One Hundred Percent (100%) Gross Working Interest and a Seventy
Percent (70%) Net Revenue Interest in and to the oil rights down to 3,330
feet and all rights below 3,300 feet in and under the acreage covered by
the following Oil, Gas and Mineral Leases 1 through 5 and all rights in and
under the acreage covered by the following Oil, Gas and Mineral Leases 6
through 10:
1. Oil, Gas and Mineral Lease dated December 1, 1995, executed by Carol
Thompson Crouch, as Lessor, in favor of Oilex International Investments,
Inc., as Lessee, covering 150 acres of land, a Memorandum of which is
recorded in Volume 886, Page 245, Deed Records ofFrio County, Texas.
2. Oil, Gas and Mineral Lease dated December 1, 1995, executed by Carol
Thompson Crouch, as Lessor, in favor of Oilex International Investments,
Inc., as Lessee, covering 310.68 acres of land, a Memorandum of which is
recorded in Volume 886, Page 249, Deed Records of Frio County, Texas.
3. Oil, Gas and Mineral Lease dated December 1, 1995, executed by Carol
Thompson Crouch, as Lessor, in favor of Oilex International Investments,
Inc., as Lessee, covering 80 acres of land, a Memorandum of which is
recorded in Volume 886, Page 247, Deed Record of Frio County, Texas.
4. Oil, Gas and Mineral Lease dated December 1, 1995, executed by Carol
Thompson Crouch, as Lessor, in favor of Oilex International Investments,
Inc., as Lessee, covering 160 acres of land, a Memorandum of which is
recorded in Volume 886, Page 243, Deed Records of Frio County, Texas.
5. Oil, Gas and Mineral Lease dated December 1, 1995, executed by Carol
Thompson Crouch, as Lessor, in favor of Oilex International Investments,
Inc., as Lessee, covering 77.65 acres of land, a Memorandum of which is
recorded in Volume 886, Page 241, Deed Records of Frio County, Texas.
6. Oil, Gas and Mineral Lease dated February 14, 1996, executed by Jim
Biediger, as Lessor, in favor of Oilex International Investments, Inc., as
Lessee, covering 965.3 acres of land, a Memorandum of which is recorded in
Volume 886, Page 268, Deed Records of Frio County, Texas.
7. Oil, Gas and Mineral Lease dated June 8, 1996, executed by Fay Brown,
as Lessors, in favor of Oilex International Investments, Inc., as Lessee,
covering 965.3 acres of land, a Memorandum of which is recorded in Volume
886, Page 285, Deed Records of Frio County, Texas.
8. Oil, Gas and Mineral Lease dated June 8, 1996, executed by Theresa
Biediger, as Lessor, in favor of Oilex International Investments, Inc., as
Lessee, covering 965.3 acres of land, a Memorandum of which is recorded in
Volume 886, Page 276, Deed Records of Frio County, Texas.
9. Oil, Gas and Mineral Lease dated June 8, 1996, executed by Helen
Branham, as Lessor, in favor of Oilex International Investments, Inc., as
Lessee, covering 965.3 acres of land, a Memorandum of which is recorded in
Volume 886, Page 259, Deed Records of Frio County, Texas.
10. Oil, Gas and Mineral Lease dated June 8, 1996, executed by Connie
Bradley, as Lessor, in favor of Oilex International Investments, Inc., as
Lessee, covering 965.3 acres of land, a Memorandum of which is recorded in
Volume 886, Page 251, Deed Records of Frio County, Texas.
Scurry County
A 75% Working Interest and a 56.25% Net Revenue Interest in and to the
following Oil, Gas and Mineral Leases included within the bounds of the
Revilo Glorieta Unit, Scurry County, Texas.
Lessor: Alex Collins, et al
Lessee: Stanolind Oil and Gas Company
Dated: September 27, 1948
Recorded: Volume 45, Page 5 of the oil and Gas Records of Scurry
County, Texas
Lessor: Alex Collins, et al
Lessee: C. R. Craig
Dated: March 2, 1949
Recorded: Volume 54, Page 219 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: C. R. Craig
Dated: March 2, 1949
Recorded: Volume 54, Page 219 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: Sun Oil Company
Dated: April 8, 1949
Recorded: Volume 38, Page 243 of the Oil and Gas Records of
Scurry County, Texas
Lessor: A. G. Mitchell, et ux
Lessee: Sun Oil Company
Dated: February 26, 1948
Recorded: Volume 37, Page 193 of the Oil and Gas Records of
Scurry County, Texas
Lessor: A. G. Mitchell, et ux
Lessee: Sun Oil Company
Dated: April 12, 1948
Recorded: Volume 37, Page 387 of the Oil and Gas Records of
Scurry County, Texas
Lessor: John W. Nichols, et al
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 157, Page 37 of the Oil and Gas Records of
Scurry County, Texas
Lessor: A. M. Wright
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 157, Page 39 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Ernst M. Loosen, et al
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 160, Page 279 of the Oil and Gas Records of
Scurry County, Texas
Lessor: H. A. Dever, et ux
Lessee: Sun Oil Company
Dated: February 27, 1948
Recorded: Volume 37, Page 177 of the Oil and Gas Records of
Scurry County, Texas
Lessor: C. E. Eastman, et ux
Lessee: Sun Oil Company
Dated: April 14, 1948
Recorded: Volume 37, Page 393 of the Oil and Gas Records of
Scurry County, Texas
Lessor: T. H. Eastman, et ux
Lessee: Sun Oil Company
Dated: April 22, 1948
Recorded: Volume 37, Page 445 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Ruth S. Davis
Lessee: Sun Oil Company
Dated: February 27, 1948
Recorded: Volume 37, Page 163 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Roy G. Woods
Lessee: Sun Oil Company
Dated: June 26, 1953
Recorded: Volume 137, Page 319 of the Oil and Gas Records of
Scurry County, Texas
Lessor: F. M. Walker
Lessee: Sun Oil Company
Dated: February 10, 1956
Recorded: Volume 170, Page 414 of the Oil and Gas Records of
Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded; Volume 29, Page 273 of the Oil and Gas Records of
Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the Oil and Gas Records of
Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the Oil and Gas Records of
Scurry County, Texas
Lessor: C. E. East, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the oil and Gas Records of
Scurry County, Texas
Lessor: George W. Bynum, et al
Lessee: Magnolia Petroleum Company
Dated: September 28, 1948
Recorded: Volume 42, Page 351 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Hugh Boren, et al
Lessee: Magnolia Petroleum Company
Dated: October 4, 1948
Recorded: Volume 43, Page 91 of the Oil and Gas Records of Scurry
County, Texas
Lessor: W. R. Bowden, et al
Lessee: Magnolia Petroleum Company
Dated: October 6, 1948
Recorded: Volume 43, Page 435 of the Oil and Gas Records of
Scurry County, Texas
Lessor: George W. Bynum, et al
Lessee: Magnolia Petroleum Company
Dated: September 28, 1948
Recorded: Volume 42, Page 351 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Hugh Boren, et al
Lessee: Magnolia Petroleum Company
Dated: October 4, 1948
Recorded: Volume 43, Page 91 of the Oil and Gas Records of Scurry
County, Texas
Lessor: W. R. Bowden, et al
Lessee: Magnolia Petroleum Company
Dated: October 6, 1948
Recorded: Volume 43, Page 435 of the Oil and Gas Records of
Lessor: Geraldine Davis
Lessee: J. C. Davis, Jr.
Dated: July 11, 1955
Recorded: Volume 164, Page 259 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Ruth Bell Davis
Lessee: J. C. Davis, Jr.
Dated: June 27, 1955
Recorded: Volume 164, Page 261 of the Oil and Gas Records of
Scurry County, Texas
Lessor: W. A. Vaughn, et ux
Lessee: Intex Oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 31 of the Oil and Gas Records of
Scurry County, Texas
Lessor: George L. Brumley, et al
Lessee: Intex oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 33 of the Oil and Gas Records of
Scurry County,Texas
Lessor: George L. Brumley, et al
Lessee: Intex Oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 33 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Bart Branson, et ux
Lessee: Intex Oil Company
Dated: June 28, 1955
Recorded: Volume 162, Page 285 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Jeanne Bullard, et vir
Lessee: Intex Oil Company
Dated: May 10, 1955
Recorded: Volume 163, Page 290 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals, et ux
Lessee: Sun Oil Company
Dated: June 28, 1948
Recorded: Volume 40, Page 289 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: April 16, 1956
Recorded: Volume 173, Page 84 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated. June 12, 1956
Recorded: Volume 175, Page 54 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: October 1, 1956 e
Recorded: Volume 178, Page 145 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: December 28, 1956
Recorded: Volume 180, Page 435 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: James G. White
Dated: July 21, 1945
Recorded: Volume 28, Page 33 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: Sun Oil Company
Dated: June 28, 1948
Recorded: Volume 40, Page 209 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: Sun Oil Company
Dated: July 12, 1948
Recorded: Volume 41, Page 231 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Von Roeder, Myers
Lessee: A. J. Slagter, Jr.
Dated: May 22, 1947
Recorded: Volume 42, Page 311 of the Oil and Gas Records of
Scurry County, Texas
Lessor: R. J. Randals
Lessee: James G. White
Dated: July 21, 1945
Recorded: Volume 28, Page 33 of the Oil and Gas Records of
Scurry County, Texas
Lessor: Charles S. Stewart, et al
Lessee: James G. White
Dated: June 26, 1945
Recorded: Volume 27, Page 613 of the Oil and Gas Records of
Scurry County, Texas
Pecos County, Texas
A 87.5% Gross Working Interest and a 61.25% Net Revenue Interest in and to
the following Oil, Gas and Mineral Leases included within the bounds of the
Walker (Queen) Field Unit, Pecos County, Texas.
White & Baker 'A" Lease
(1) Oil and Gas Lease executed by G. R. White and J. T. Baker, as
Lessors, to R. L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating Oil Company
and Foster Petroleum Corporation, as Lessors, to R.L. Walker, as Lessee,
dated November 3, 1939, recorded in Volume 127, Page 58, Lease Records of
Pecos County, Texas
(3) Oil and Gas Lease executed by Indian Territory Illuminating Oil Company
and Foster Petroleum Corporation, as Lessors, to R.L. Walker, as Lessee,
dated November 3, 1939, recorded In Volume 127, Page 64, Lease Records of
Pecos County, Texas
(4) Oil and Gas Lease executed by Indian Territory Illuminating Oil Company
and Poster Petroleum, as Lessors, to R.L. Walker, as Losses, dated November
3, 1939, recorded in Volume 127, Page 69, Lease Records of Pecos County,
Texas
White & Baker B" Lease
(1) Oil and Gas Lease executed by G.R. White and I.T. Baker, as
Lessors, to R.L. Walker, an Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating Oil Company
and Poster Petroleum Corporation, as Lessors, to R.L. Walker, an Lessee,
dated November 3, 1939, recorded in Volume 127, Page 64, Lease Records of
Pecos County, Texas
White & Baker C Lease
(1) Oil and Gas Lease executed by G.R. White and J.T. Baker, an
Lessors, to R.L. Walker, an Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Cities Service Oil Company, as Lessor, to
N.V. Hardin, E.L. Martin, and Derwood Langston, as Lessees, dated November
1, 1969, recorded in Volume 386, Page 33, Lease Records of Pecos County,
Texas
White & Baker "D Lease
(1) Oil and Gas Lease dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas, from G.R. White, et al, as
Lessors, to R.L. Walker, an Lessee; and
(2) Oil and Gas Lease dated November 3, 1939, recorded in Volume 127, Page
64, Lease Records of Pecos County, Texas, from Indian Territory
Illuminating Oil Company, et al, as Lessors, to R.L. Walker, as Lessee;
White & Baker E Lease
(1) Oil and Gas Lease dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas, from G.R. White, at al, as
Lessors, to R.L. Walker, as Lessee; and
(2) Oil and Gad Leads dated November 3, 1939, recorded in Volume 127, Page
64, Lease Records of Pecos County, Texas, from Indian Territory
illuminating Oil Company, et al, an Lessors, to R.L. Walker, as Lessee;
White & Baker G Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors, to
R.L. Walker, as Lessee, dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Cities Service Oil company, et al,
am Lessors, to R. Kirk Johnson, as Lessee, dated February 20, 1956,
recorded in Volume 229, Page 206, Lease Records of Pecos County, Texas
White & Baker H Lease
(1) Oil and Gas Lease executed by G.R. White, et al, an Lessors, to
Cardinal Oil Company, an Lessee, dated September 9, 1936, recorded in
Volume 110, Page 129, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Cities Service Oil company, et al, an
Lessors, to F. Kirk Johnson, as Lessee, dated February 20, 1956, recorded
in Volume 229, Page 206, Lease Records of Pecos County, Texas
White & Baker J Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors, to
R.L. Walker, as Lessee, dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas
White & Baker K Lease
(1) Oil and Gas Lease executed by o.R. White, et al, as Lessor, to
R.L. Walker, an Lease&, dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas
White & Baker L Lease
(1) Oil and Gas Loans executed by G.R. White, at al, as Lessors, to
R.L. Walker, as Lessee, dated November 3, 1939, recorded in Volume 127,
Page 101, Loan* Records of Pecos County, Texas
White & Baker M Lease
(2) Oil and Gas Lease executed by G.R. White, at al, as Lessor, to R.L.
Walker, as Lessee, dated November 3, 1939, recorded in Volume 127, Page
101, Lease Records of Pecos County, Texas
White & Baker N Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors, to
R.L. Walker, as Lessee, dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Indian Territory illuminating Oil Company
and Poster Petroleum Corporation, as Lessors, to R.L. Walker, as Lessee,
dated November 3, 1939, recorded in Volume 127, Page 64, Lease Records of
Pecos County, Texas
White & Baker O Lease
(1) Oil and Gas Lease executed by G.R. White, at al, as Lessors, to
R.L. Walker, as Lessee, dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas
White & Baker P Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors, to
R.L. Walker, as Lessee, dated November 3, 1939, recorded in Volume 127,
Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating Oil
Company and Foster Petroleum Corporation, as Lessors, to R.L. Walker, as
Lessee, dated November 3, 1939, recorded in Volume 127, Page 64, Lease
Records of Pecos County, Texas;
White and Baker Lease
The Southeast 40 acres and the Northwest 40 acres of the South 160
acres of Section 84, Block 194, GC&SF Ry. Co. Survey, Pecos County, Texas,
said leasehold interest being the same as recorded in the office of the
County Clerk of Pecos County, Texas, at Volume 580, Page 175, of the lease
records of said County and whereas the said lease and all rights thereunder
or incident thereto are now owned by Sam Chadic, dba Black Badger
Exploration, to a depth of 3,000 feet from the surface thereof
University "B" Lease
State Lease Number 26751 and being Section 24, Block 16, University Land
Survey, Pecos County, Texas.
University "G" Lease
State Lease Number 96991 and being the NE/4 of Section 25, Block 16,
University Land Survey, Pecos County, Texas.
Guide 2: Item 5: UNDEVELOPED ACREAGE
Colorado Leases
Rio Blanco County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Percent (80%) Net Revenue Interest in and to the following Oil, Gas
And Mineral Leases:
1. United States Department of the Interior Lease Number
C-49415, effective January 1, 1989, covering T2N-R96W, 6th P.M., Sec. 33:
S/2SE/4, Sec 34: S/2NE/4, SW/4, Surface to the Base of the Mesa Verde;
2. United States Department of the Interior Lease Number
C-42236, effective February 1, 1986, covering T2N-R96W, 6th P.M., Sec. 17:
NE /4, Sec 22: N/2NW/4, SE/4NW/4, N/2 SE/4, Surface to the Base of the Mesa
Verde;
3. United States Department of the Interior Lease Number
C-50981, effective February 1, 1990, covering T2N-R95W, 6th P.M., Sec. 7:
Lots 1 through 4,5,7, W/2E/2, E/2W/2, Surface to the Base of the Mesa
Verde;
4. United States Department of the Interior Lease Number
C-50983, effective February 1, 1990, covering T2N-R95W, 6th P.M., Sec. 18:
Lots 1 through 4, E/2W/2, Surface to the Base of the Mesa Verde;
5. United States Department of the Interior Lease Number
C-50984, effective February 1, 1990, covering T2N-R95W, 6th P.M., Sec. 19:
Lots 1 and 2, E/2NW/4, Surface to the Base of the Mesa Verde;
6. United States Department of the Interior Lease Number
C-50987, effective February 1, 1990, covering T2N-R95W, 6th P.M., Sec. 30:
Lots 1 through 4, E/2NW/4, NE/4SW/4, Surface to the Base of the Mesa Verde;
7. United States Department of the Interior Lease Number
C-38050, effective March 1, 1984, covering T2N-R96W, 6th P.M., Sec. 1: Lots
15 and 26, E/2SE/4, Sec. 3: Lots 5 through 8,15, SE/4NE/4, SW/4NW/4,
SE/4Sw/4, Se/4, Sec: 4: Lots 5 through 8, S/2N/2, S/2, Sec. 5: Lots 5
through 8, S/2N/2, S/2, Sec. 6: Lots 8 through 12, S/2NE/4, SE/4NW/4, SE/4,
Sec. 9: NE/4, W/2, W/2SE/4, SE/4SE/4, Sec. 10: E/2, E/2W/2, SW/4SW/4, Sec.
12: Lots 1,4,10 NE/4NE/4, S/2NE/4, S/2, Sec. 13: N/2, SE/4, Sec. 14:
NE/4,
Sec. 15: S/2, Sec. 16: SW/4NE/4, Surface to the Base of the Mesa Verde;
8. United States Department of the Interior Lease Number
C-46794, effective March 1, 1988, covering T2N-R96W, 6th P.M., Sec. 22:
N/2NE/4, Surface to the Base of the Mesa Verde;
9. United States Department of the Interior Lease Number
C-56261, effective March 1, 1988, covering T2N-R96W, 6th P.M., Sec. 34: SE,
Surface to the Base of the Mesa Verde;
10. United States Department of the Interior Lease Number C-37308,
effective July 1, 1987, covering T2N-R96W, 6th P.M., Sec. 1: Lots 5 through
8,11,14,20,21,23, SE/4NE/4, SW/4NW/4, NW/4SW/4, Sec. 2: Lots 5 through 8,
S/2N/2,S/2, Sec. 22: All, Sec. 25: SE/4, Surface to the Base of the Mesa
Verde;
11. United States Department of the Interior Lease Number
C-50227, effective August 1, 1989, covering T2N-R96W, 6th P.M., Sec. 23:
E/2, NW/4, E/2SW/4, SW/4SW/4, Sec. 24: W/2, Sec. 26: NE/4, N/2SE/4,
SW/4SE/4, Surface to the Base of the Mesa Verde;
12. United States Department of the Interior Lease Number
C-48855, effective November 1, 1988, covering T2N-R96W, 6th P.M., Sec. 14:
W/2, Sec. 16: N/2N/2, SE/4NE/4, Sec. 22: S/2NE/4, Surface to the Base of
the Mesa Verde;
13. United States Department of the Interior Lease Number
C-56910, effective October 1, 1994, covering T2N-R96W, 6th P.M., Sec. 24:
E/2, Sec. 25: N/2, SW/4, Sec. 26: SE/4SE/4, Surface to the Base of the Mesa
Verde;
Texas Leases
Jackson County
A One Hundred Percent (100%) Gross Working Interest and an Eighty
Percent (72%) Net Revenue Interest in and to an undivided Fifty Percent
(50%) of the acreage covered by the following Oil, Gas And Mineral Lease:
1. Oil, Gas and Mineral Lease dated August 11, 1995, executed by
Allen N. Burditt, Brenda L. Burditt Miller, B. R. Burditt Taylor and Allen
L. Burditt, II, as Lessors, in favor of Phoenix Reserves, Inc., As Lessee,
covering Lessor's undivided one-half interest in and to 534.55 acres, being
out of the John Brown League, Abstract No. 10, Jackson County, Texas, the
said 574.55 acres being more particularly described in a Deed from Mrs.
Mary Dulaney, et al to Allen L. Burditt, dated January 14, 1944, recorded
in Volume 150, Page 269, Deed Records of Jackson County, Texas.
Utah Leases
Carbon County
A One Hundred Percent (100%) Gross Working Interest and an Eighty Five
Percent (85%) Net Revenue Interest in and to the following Oil, Gas And
Mineral Leases:
1. Utah State Mineral Lease dated December 26, 1983, in favor of
Anchor Resources, Inc., Mineral Lease Number ML-46477, covering 1939.42
acres of land described as Township 13 South, Range 7 East, SLB&M, Sec. 1:
Lots 3,4,5,6,S/2N/2, S/2 (All), Sec. 2: Lots 1,2,3,4,5,6,7, S/2NE/4,
SE/4NW/4, E/2SW/4, SW/4 (All), Sec. 3: Lots 1,2,5, SW/4NE/4, Sec. 22:
NE/4SE/4, Sec. 23: SW/4NE/4, Sec. 24: S/2E/4, Sec. 26: E/2NW/4, NW/4SW/4,
SE/4SW/4, Sec. 34: SE/4NE/4, Sec. 35: NW/4NW/4
San Juan County
A One Hundred Percent (100%) Gross Working Interest and an Eighty Six
and One Half Percent (86.5%) Net Revenue Interest in and to the following
Oil, Gas And Mineral Leases:
1. United States Department of the Interior Lease Number UTU
69084 effective January 1, 1992 covering TOWNSHIP 27 SOUTH, RANGE 22 EAST,
SLM being 776.00 acres, more or less, in San Juan County, Utah being
described as Sec. 3, lot 1, SENE (excluding Wilderness Study Area); Sec. 9,
SWNE, N/2NW, SENW, N/2SE, SWSE (excluding Wilderness Study Area); Sec. 10,
SWSW (excluding Wilderness Study Area); Sec. 11, NE (excluding Wilderness
Study Area); Sec. 12, W/2SW, SESW (excluding Wilderness Study Area); Sec.
13, , W/2NE, SENE, NENW, SE (excluding Wilderness Study Area); Sec. 14,
W/2NW, (excluding Wilderness Study Area); Sec. 15, SWNE, N/2NW (excluding
Wilderness Study Area), SENW; Sec. 24, lot 1, SENE, SENW (excluding
Wilderness Study Area).
2. United States Department of the Interior Lease Number UTU
69085 effective January 1, 1992 covering TOWNSHIP 35 SOUTH, RANGE 22 EAST,
SLM being 789.59 acres, more or less, in San Juan County, Utah being
described as Sec. 19, lots 1,2, NE, E/2NW, Sec. 20: NENE, W/2E/2, SESE,
Sec. 21: NW, E/2SW
Uintah County
A One Hundred Percent (100%) Gross Working Interest and an Eighty Six and
One Half Percent (86.5%) Net Revenue Interest in and to the following Oil,
Gas And Mineral Leases:
1. United States Department of the Interior Lease Number UTU 68645
effective October 1, 1991 covering TOWNSHIP 6 SOUTH, RANGE 22 EAST, SLM
being 720 acres, more or less, situated in Uintah County, Utah, described
as Sec. 21: all, Sec. 22: W/2SW/4.
2. United States Department of the Interior Lease Number UTU 68707
effective October 1, 1991 covering TOWNSHIP 4 SOUTH, RANGE 22 EAST, SLM
being 640 acres, more or less, situated in Uintah County, Utah, described
as Sec. 21: SESW, W/2SE, SESE, Sec. 22: N/2NE, NENW, Sec. 28: W/2NE, NW,
N/2SW, NWSE.
3. United States Department of the Interior Lease Number UTU 69083
effective January 1, 1992, covering TOWNSHIP 4 SOUTH, RANGE 22 EAST, SLM
being 159.57 acres, more or less, situated in Uintah County, Utah,
described as Sec. 26: Lots 4 and 5, N/2SW.
4. United States Department of the Interior Lease Number UTU 68703
effective October 1, 1991 covering TOWNSHIP 4 SOUTH, RANGE 21 EAST, SLM
being 235.5 acres, more or less, situated in Uintah County, Utah, described
as Sec. 18: lots 2 through 4, E/2NW, NESW.
5. United States Department of the Interior Lease Number UTU 68647
effective October 1, 1991 covering TOWNSHIP 8 SOUTH, RANGE 22 EAST, SLM
being 585.25 acres, more or less, situated in Uintah County, Utah,
described as Sec. 5: lots 1 through 3, 6 through 8, ten through 14, S/2NE,
SENW, NESW, N/2SE.
6. United States Department of the Interior Lease Number UTU 45465
effective October 1, 1991 covering TOWNSHIP 3 SOUTH, RANGE 1 WEST, USB&M
being 40 acres, more of less, situated in Uintah County, Utah, described as
Sec. 26: SW/4NE/4.
Item 6: Drilling Activity
None.
Item 7: Present Activities
Smith County, Mississippi
Nonoperator working interest in four producing units
Frio County, Texas
As of the date of July 1, 1997, the company was preparing to
commence operations in its Big Foot Field holdings in Frio County, Texas.
The Company plans to initially re-enter 55 existing wells and place them
back into production. Once the initial phase of operations is completed,
the Company plans to initiate a drilling program to fully develop the 3,100
foot Olmos "B" sand underlying its Frio County, acreage.
Rio Blanco County, Colorado
The Company is planning a re-entry on a wellbore situated on its
Rio Blanco acreage prior to October 31, 1998.
Item 8: Delivery Commitments
None.
