<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-29344
INDO-PACIFIC ENERGY LTD.
(Exact name of registrant as specified in its charter)
YUKON TERRITORY, CANADA NOT APPLICABLE
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Suite 1200, 1090 West Pender Street
Vancouver, B.C. Canada V6E 2N7
(Address of principal executive offices, including postal code.)
Registrant's telephone number including area code: (604) 682-6496
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common shares without par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
The number of common shares without par value outstanding on June 30,
1999 was 28,262,398 shares.
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<PAGE>
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PART 1. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements for the Period
Ended June 30, 1999.
INDO-PACIFIC ENERGY LTD.
Consolidated Balance Sheets
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
As at June 30, 1999 1998
<S> <C> <C>
ASSETS
Current
Cash and short-term deposits $ 6,779,143 $ 8,613,665
Accounts receivable 139,926 89,713
Marketable securities 1,638,850 1,748,933
Due from related parties 108,957 132,222
Prepaid expenses and deposits 11,897 8,586
------------ ------------
8,678,773 10,593,119
Petroleum and natural gas
properties 3,458,355 3,088,521
Property and equipment 168,601 133,576
------------ ------------
Total Assets $ 12,305,729 $ 13,815,216
============ ============
LIABILITIES
Current
Accounts payable and
accrued liabilities $ 34,925 $ 40,935
------------ ------------
TOTAL LIABILITIES 34,925 40,935
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, no par value;
100,000,000 shares authorized;
Issued and outstanding at June 30,
1999 and 1998: 28,262,398 shares 18,245,867 18,247,476
Accumulated deficit (6,560,838) (5,738,618)
Accumulated other
comprehensive income 585,775 1,265,423
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 12,270,804 13,774,281
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 12,305,729 $ 13,815,216
============ ============
</TABLE>
1
<PAGE> 3
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Loss and Comprehensive Income (Loss)
(Expressed in United States Dollars)
For the Six Month Periods Ended June 30,
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
REVENUES
Petroleum and natural gas sales $ 107,690 $ 129,808
Interest income 137,196 216,822
------------ -----------
244,886 346,630
------------ -----------
COST OF SALES
Production costs 17,577 22,109
Royalties 5,167 2,410
Amortization and depletion 78,441 68,902
------------ -----------
101,185 93,421
------------ -----------
143,701 253,209
------------ -----------
EXPENSES
Accounting and audit 10,109 19,798
Compensation recovery (8,125) (129,000)
Consulting fees 9,064 22,230
Corporate relations and development 39,235 36,813
Filing and transfer agency fees 1,743 4,456
Foreign exchange loss (gain) (17,536) 140,504
Legal fees 22,385 65,171
Management fees - -
Office and miscellaneous 56,672 19,474
Printing 66,668 88,207
Rent 29,917 33,097
Telephone 21,144 23,616
Travel 35,021 46,015
Wages and benefits 57,004 29,582
Recovery of general and
administrative expenses (90,314) -
------------ -----------
232,987 399,963
------------ -----------
Net loss for the period (89,286) (146,754)
Other comprehensive income (loss):
Unrealized gain (loss) on
marketable securities (976,025) 1,177,856
------------ -----------
Comprehensive income (loss) for
the period $ (1,065,311) $ 1,031,102
============ ===========
Basic and diluted loss per share $ (0.00) $ (0.01)
============ ===========
</TABLE>
2
<PAGE> 4
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
For the Six Month Periods Ended June 30,
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES
Net loss for the period $ (89,286) $ (146,754)
Adjustments to reconcile net loss to
cash applied to operating activities:
Amortization and depletion 78,441 68,902
Compensation recovery (8,125) (129,000)
Changes in non-cash working capital:
Accounts receivable (37,732) 44,761
Due from related parties (62,796) 20,151
Prepaid expenses and deposits (2,862) 883
Accounts payable and accrued
liabilities (121,971) (4,769)
----------- ------------
Net cash used in operating activities (244,331) (145,826)
----------- ------------
FINANCING ACTIVITIES
Common shares issued for cash - -
----------- ------------
Net cash provided by financing
activities - -
----------- ------------
INVESTING ACTIVITIES
Purchase of marketable securities (420,000) (250,000)
Petroleum and natural gas properties (687,174) (1,201,963)
Property and equipment (64,201) (43,953)
----------- ------------
Net cash used in investing activities (1,171,375) (1,495,916)
----------- ------------
NET DECREASE IN CASH (1,415,706) (1,641,742)
CASH POSITION - BEGINNING OF PERIOD 8,194,849 10,255,407
----------- ------------
CASH POSITION - END OF PERIOD $ 6,779,143 $ 8,613,665
=========== ============
</TABLE>
3
<PAGE> 5
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Changes in Stockholders' Equity
(Expressed in United States Dollars)
For the Six Month Periods Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Accumulated
Shares Amount Deficit
<S> <C> <C> <C>
Balance at
December 31, 1998 28,262,398 $ 18,253,992 $ (6,471,552)
Net compensation
recovery from
stock options (8,125)
Net loss during the
period (89,286)
Unrealized loss on
marketable securities
---------- ------------ ------------
Balance at June 30, 1999 28,262,398 $ 18,245,867 $ (6,560,838)
========== ============ ============
Balance at
December 31, 1997 28,262,398 $ 18,376,476 $ (5,591,864)
Net compensation
recovery from
stock options (129,000)
Net loss during the
period (146,754)
Unrealized gain on
marketable securities
---------- ------------ ------------
Balance at June 30, 1998 28,262,398 $ 18,247,476 $ (5,738,618)
========== ============ ============
4-a
<PAGE> 6
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Changes in Stockholders' Equity
(Expressed in United States Dollars)
For the Six Month Periods Ended June 30, 1999 and 1998
Accumulated
Other Total
Comprehensive Stockholders'
Income Equity
<S> <C> <C>
Balance at
December 31, 1998 $ 1,561,800 $ 13,344,240
Net compensation
recovery from
stock options (8,125)
Net loss during the
period (89,286)
Unrealized loss on
marketable securities (976,025) (976,025)
------------ ------------
Balance at June 30, 1999 $ 585,775 $ 12,270,804
============ ============
Balance at
December 31, 1997 $ 87,567 $ 12,872,179
Net compensation
recovery from
stock options (129,000)
Net loss during the
period (146,754)
Unrealized gain on
marketable securities 1,177,856 1,177,856
------------ ------------
Balance at June 30, 1998 $ 1,265,423 $ 13,774,281
============ ============
</TABLE>
4-b
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The Registrant (OTCBB symbol: INDX) is an independent oil and gas
exploration and production company focused exclusively in the Austral-
Pacific region. The business of the Registrant was organized in 1996.
In New Zealand, the Registrant has varying participating interests in
6,620,000 acres of onshore exploration permits and a five percent
participating interest in onshore petroleum mining permit 38148,
Taranaki Basin, North Island. In China the Registrant has a 50%
interest in a 2,500,000 acre area under negotiation, in Australia
varying interests in 522,160 acres of offshore exploration permits, and
in Papua New Guinea interests in 2,170,000 acres of onshore exploration
permits.
The business and securities of the Registrant are speculative. For
other information regarding the Registrant, see (1) other EDGAR filings
in SEC file number 0-29344, www.sec.gov (2) Canadian SEDAR filings at
www.sedar.com and (3) the Registrant's website at www.indopacific.com.
Property maps: see www.indopacific.com
Shareholder relations:
Mr. Gary Saik
Tel: 604-609-3361
Fax: 604-682-1174
Email: [email protected]
The Registrant has experienced net losses in each fiscal period on
which it has reported. Its main source of capital is the issuance of
equity securities. Total losses incurred from incorporation to June 30,
1999 were $6,560,838. Net loss for the six month period ended June 30,
1999 was $89,286 ($0.00 per share).
Operating Revenue
Gross oil production revenue from PMP 38148 for the six month
period ended June 30, 1999 was $101,278 (period ended June 30, 1998:
$129,808). The decrease is due to a fall in production volume from
10,553 barrels to 9,390 barrels, plus a fall in the average oil sale
price of $1.50 per barrel of oil to $10.80 per barrel. Additional gas
production revenue was received for the six month period ended June 30,
1999 of $6,412 (period ended June 30, 1998: $Nil).
Interest Income
Interest income for the six month period ended June 30, 1999 was
$137,196 (period ended June 30, 1998: $216,822).
Costs and Expenses
Property exploration expenditure and New Zealand development
expenditure were:
<PAGE> 8
Expenditure for the Expenditure for
Six Months Ended last completed year
Country June 30, 1999 Ending December 31, 1998
New Zealand
Exploration $ 594,768 $ 957,990
Development $ 41,557 $ Nil
Australia
Exploration $ 32,254 $ 923,757
Papua New Guinea
Exploration $ 18,595 $ 32,692
China $ Nil $ Nil
General and administrative expenses for the year ended December
31, 1998 were $510,384. For the six month period ended June 30, 1999
general and administrative expenses were $232,987 (period ended June
30, 1998: $399,963).
Amortization and depletion expense for year ended December 31,
1998 was $148,875, while the amortization and depletion expense for the
six month period ended June 30, 1999 was $78,441 (period ended June 30,
1998: $68,902).
Interest Expense
There is no borrowing and consequently no interest expense.
Liquidity
The Registrant has maintained adequate liquidity to fund its
expenditure programs in the past and has no reason to conclude that
this will not continue for fiscal 1999. The Registrant is satisfied
with its ability to access capital through private placements, public
offerings, and convertible securities in order to preserve liquidity.
Joint venture arrangements reduce exposure on exploration and
development programs.
As of December 31, 1998 the Registrant had $10,390,218 in working
capital as compared with $10,827,096 on December 31, 1997. At June 30,
1999 working capital was $8,643,848 (June 30, 1998: $10,522,184) while
cash reserves are $6,779,143 (June 30, 1998: $8,613,665). Expenditures
to the Registrant's properties for the six month period ended June 30,
1999 were $687,174.
Capital Resources
Material capital commitments to December 31, 1999 are more
described in Item 1 Business - Plan of Operations of the Form 10-K as
at December 31, 1998. For the Registrant's 1999 fiscal year ending
December 31, 1999, the Registrant's permit obligations require
$1,613,000 in total work commitments to the properties. The Registrant
plans on spending an additional $356,000 above the obligatory amount on
exploration projects meriting the extra expenditure. The Registrant has
<PAGE> 9
no other anticipated capital expenditures of a material amount.
However, the Registrant intends to acquire additional petroleum
interests which may give rise to further capital expenditures.
The Registrant has no agreements respecting additional financing
at this time. Because of the nature of the Registrant's business, there
are no trends in the nature of its capital resources which could be
considered predictable. To date, the Registrant's capital resources
have consisted solely of the issuance of common shares pursuant to
either public distributions, private placements or the exercise of
convertible securities.
Results of Operations
The Registrant's primary focus is the acquisition and exploration
of unproven oil and gas properties. The Registrant's policy is to
acquire interests and, where possible, minimize its risk exposure by
farming out or joint venturing property interests to other industry
participants.
Material changes on petroleum properties during the six month period
ended June 30, 1999 were:
NORTH ISLAND, NEW ZEALAND, ONSHORE EAST COAST BASIN
Petroleum Exploration Permit 38330 (34%), Operator: Indo-Pacific Energy
Ltd.
On March 12, 1999, the Registrant was granted a Certificate of
Change of Conditions by the New Zealand government. This moved the
requirement to commit to drill a well to the end of year four (July 1,
2000) rather than the end of year three (July 1, 1999). The well must
be drilled in year five (2001) of the permit.
Petroleum Exploration Permit 38328 (40%), Operator: Indo-Pacific Energy
Ltd.
Through the past acquisition of nearly 200 miles of new seismic,
reprocessing of over 200 miles of existing seismic and the completion
of a variety of geological studies, a number of exploration leads and
prospects have been identified. During the year the Registrant
concentrated its exploration efforts within this permit on three
prospects: the Napier, Whakatu and Mai Mai by collecting 25 miles of
new seismic data over these areas. Subsequent processing and mapping of
the seismic confirms Whakatu as a drillable prospect with the other
prospects also considered as possible future drilling sites. During the
quarter ended June 30, 1999, the participants in this permit negotiated
land access and are currently obtaining resource consents to drill a
well to test the Whakatu Prospect. It is expected the consents should
be received in September or October of 1999, which would enable
drilling in October or November.
<PAGE> 10
Petroleum Exploration Permit 38332 (42.5%), Operator: Indo-Pacific
Energy Ltd.
Through the past acquisition of nearly 68 miles of new seismic,
reprocessing of over 100 miles of existing seismic and the completion
of a variety of geological studies, a number of exploration leads and
prospects have been identified. During the quarter ended March 31,
1999, the Registrant acquired a further 43 miles of seismic data over
the Tukipo Lead. Subsequent processing and mapping of the seismic has
ruled out the Tukipo lead as a favorable drilling prospect. However,
the Boar Hill prospect which has been defined by earlier seismic
mapping is being considered as a possible drilling target by the permit
participants. During the quarter ended June 30, 1999, reservoir
studies were undertaken on samples from the area around this prospect.
The field studies are being conducted with the goal of determining a
suitable future drilling location.
Petroleum Exploration Permit 38335 (10.0%), Operator: Everest Energy
Inc.
The Registrant acquired a 10% interest in this 101,887 acre permit
on November 29, 1998 in an award from New Zealand's Minister of Energy.
The permit is situated in the onshore East Coast over an area
previously covered by Petroleum Prospecting Licence 38312, in which the
Registrant participated in the drilling of the Waitaria-1 well. It is
intended to acquire seismic over the area of the Waitaria prospect to
better delineate the prospect for drilling in the future.
Petroleum Exploration Permit 38339 (50%), Operator: Indo-Pacific Energy
Ltd.
The Registrant acquired a 50% interest in this 814,771 acre permit
on November 26, 1998 in an award from New Zealand's Minister of Energy.
The permit is situated both onshore and offshore of the northern coast
of the South Island, at the southern end of the East Coast basin.
Trans-Orient Petroleum Ltd. holds the remaining 50% interest in the
permit.
The initial focus of exploration on this permit has been the
onshore Blind River Anticline, a feature that BP geologists mapped as
an area of interest several decades ago. The Registrant and its partner
acquired 15 miles of new seismic data over the Blind River area in
March 1999. Processing and interpretation of new seismic data acquired
in March 1999 is continuing.
NORTH ISLAND, NEW ZEALAND, ONSHORE TARANAKI BASIN
Petroleum Mining Permit PMP 38148 (5%), Operator: New Zealand Oil & Gas
See Operating Revenue for petroleum sales.
The Ngatoro-1 well workover was completed successfully in mid-
June, adding approximately 280 barrels of oil per day to production.
The Registrant's share of the cost of the workover is currently $35,000.
The joint venture participants have also approved a workover of the
Ngatoro-9 and Ngatoro-6 production wells. The Registrant's
<PAGE> 11
portion of costs for the work over of the Ngatoro-9 well is budgeted at
$5,000. The Registrant's portion of costs for the workover of the
Ngatoro-6 well is budgeted at $3,000.
Drilling of two new wells to test separate oil prospects is being
considered.
Petroleum Exploration Permit PEP 38716 (19.8%), Operator: Marabella
Enterprises Ltd.
On March 31, 1999, drilling of the Huinga-1 well on the Crown
Prospect commenced. The Huinga-1 well was drilled to a total depth of
13,000 feet in order to test several target zones. The well was plugged
and suspended for later re-entry should the participants determine that
a re-entry is warranted.
The Registrant holds a 19.8% interest in the well and permit area.
A farm out agreement with Australian Worldwide Exploration N.L. and
sale of a five percent interest for US$150,000 to Antrim Oil and Gas
Limited, Calgary reduced exposure to about 10% of well cost of
approximately $3.4 million.
Seismic has also detailed the shallower Oru Prospect to the south
of the Crown Prospect. The Oru Prospect may be drilled late in 1999.
Petroleum Exploration Permit PEP 38720 (50%), Operator Indo-Pacific
Energy Ltd.
The Registrant has a 50% participating interest in, and is the
operator of, PEP 38720. The other participant in PEP 38720 is Trans-
Orient Petroleum Ltd. (50%). The Registrant is required to commence
site preparations for a well in the license by September 2, 1999. It is
currently anticipated this will be a well to a shallow Mt Messenger
depth of around 5,000 feet. However the permit includes the significant
Waitoriki Prospect, which could hold potential reserves of 200 Bcf of
gas at 13,000 feet, and is situated directly under a major gas
pipeline. Permitting and planning preparation is underway for this
drilling project, and the Registrant is in negotiations to secure farm-
in partners.
An amended Joint Venture Operating Agreement was executed on June
30, 1999. This amendment enables assignment to related companies and
also facilitates third party assignment, thus avoiding pre-emption by
existing parties at a lesser deal than offered by a third party
Petroleum Exploration Permit PEP 38723 (40%), Operator: Indo-Pacific
Energy Ltd.
The Registrant has a 40% participating interest in, and is the
operator of, PEP 38723. The other participants in PEP 38723 are Trans-
Orient Petroleum Ltd. (40%) and Gondwana Energy, Ltd. (20%).
The Registrant and the other participants have completed the work
program required, which included reprocessing and interpreting a
minimum of 50 kilometers of seismic data. On June 2, 1999, the Ministry
approved a change in conditions of the Permit such that the remaining
<PAGE> 12
work program requires the participants to collect a minimum of eight
kilometers of 2D seismic data at a cost of approximately US$60,000
prior to April 30, 2000 and either commit by April 30, 2000 to drill an
exploration well by October 30, 2000 or surrender the permit. The
Registrant has committed to the new stage of the seismic.
SOUTH ISLAND, NEW ZEALAND, CANTERBURY BASIN
Petroleum Exploration Permit PEP 38256 (35%); Operator: Indo-Pacific
Energy Ltd.
In February 1999, the Registrant and its joint venture partners,
AMG Oil Ltd. (30%) ("AMG Oil") and Trans-Orient Petroleum Ltd. (35%)
("Trans-Orient") completed a 165 mile 2D seismic program as a second
stage follow up survey to the joint venture's earlier 120 mile seismic
survey. The second phase of seismic surveys were paid solely by AMG Oil
in return for the other joint venture participants, Trans-Orient
Petroleum Ltd. and the Registrant, extending the time for AMG Oil to
exercise the drilling option to acquire a further 50% interest on PEP
38256 until October 31, 1999. AMG Oil's funding of the ongoing costs
includes an independent evaluation of the permit by the Geology
Department of the University of Canterbury, New Zealand. The
participants are currently conducting interpretation and mapping of the
recently acquired seismic.
PAPUA NEW GUINEA
Petroleum Prospecting License PPL 192 (40%), Operator: Indo-Pacific
Energy Ltd
The Registrant has a 40% participating interest in, and is the
operator of, PPL 192. The other participants in PPL 192 are Trans-
Orient Petroleum Ltd. (20%), Durum Cons. Energy Corp (20%) and Mosaic
Oil NL. (20%).
The participants are to acquire approximately 60 miles of 2D
seismic to delineate two prospects: Kamu and Douglas and to further
evaluate the Langia gas discovery. The seismic should also tie the
Kamu and Douglas prospects to the Langia gas discovery. The cost to
acquire the seismic is estimated to be $1.3 million of which the
Registrant's proportionate share is $600,000. The acquisition of the
seismic will more than meet the license requirement to acquire 30 miles
of seismic in Year 3.
Social mapping and logistics planning is currently underway in
preparation for the seismic program.
Petroleum Prospecting Licence PPL 215 (40%), Operator: Indo-Pacific
Energy Ltd.
On May 6, 1999, the Papua New Guinea Government awarded to the
Registrant and its joint venture partners the exploration permit PPL
215. Aside from the Registrant's 40% interest in this 600,000 acre
permit, the other interest holders are Mosiac Oil (20%) and Trans-
Orient Petroleum Ltd. (40%). PPL 215 is located in a lightly explored
<PAGE> 13
but strategically situated area in the foreland of the Papuan Basin,
where several recent drilling results in offsetting acreage have shown
there is good potential for entrapment of both oil and gas.
Of particular interest is the closest and most recent well, Koko-
1, which was drilled by a consortium including Mobil Oil in
February/March 1999 in the adjoining license area, at a location only
12 miles east of the border of the new PPL 215. While the main target
level in Koko-1, the Toro Sands, had been breached due to the shallow
depth of the prospect, oil was recovered from several sandstones in the
well, making this the first well in the foreland area to produce oil to
surface.
AUSTRALIA
Petroleum Permit Area AC 98-3 Operator: Indo-Pacific Energy Ltd.
On June 3, 1999, the Northern Territory Department of Mines and
Petroleum awarded permit AC 98-3 in the Timor Sea to the Registrant as
Operator (65%) and Mosaic Oil NL (35%).
The Permit, of approximately 18,000 acres is awarded for six years
subject to the Registrant fulfilling the minimum work requirements. In
the first year, these requirements comprise the purchase of geological
and geophysical data and the completion of geological and geophysical
studies. In the second year, they comprise the reprocessing of 30 km of
2D seismic data and completion of AVO and pre-stack depth migration
studies over the test line. In the third year, they comprise the
acquisition of 20 km of new 2D seismic and the integration and
interpretation in the existing database. In year four, the obligation
is to acquire 20 km new 2D seismic to high grade prospects and in the
fifth year, comprises a re-evaluation and re-interpretation of seismic
data. In year six, one well must be drilled.
Trends and Prices
The Registrant's revenues, cash flows and ability to attract farm-
in partners are affected by changes in oil and gas prices. The markets
for oil and gas have historically been, and will continue to be,
volatile. Prices for oil and gas typically fluctuate in response to
relatively minor changes in supply and demand, market uncertainty,
seasonal, political and other factors beyond the control of the
Registrant. The Registrant is unable to accurately predict domestic or
worldwide political events or the effects of such other factors on the
prices received by the Registrant for its oil and gas. The Registrant
historically has not entered into transactions to hedge against changes
in oil and gas prices, but may elect to enter into hedging transactions
in the future to protect against fluctuations in oil and gas prices.
Industry conditions deteriorated significantly during 1998 as a result
of declining oil prices and weakening gas prices. There was an excess
supply of, and reduced demand for, crude oil worldwide. This excess
supply placed downward pressure on oil prices worldwide. Natural gas
prices also declined, primarily due to decreased demand and normal
seasonal conditions. There has been significant improvement
<PAGE> 14
in oil & gas prices during the first seven months of 1999, with current
oil prices (for WTI) being around $20 per barrel. However, there is
substantial uncertainty regarding future oil and gas prices. There can
be no assurance that oil and gas prices will not further decline in the
future. If the decline in crude oil and natural gas prices worsens or
continues for a protracted period, it would adversely affect the
Registrant's revenues, income and cash flows from operations. Also, if
prices stay at present levels for an extended period of time or decline
further, the Registrant may delay or postpone certain of its capital
projects.
Year 2000 Compliance
The Registrant is currently conducting a review of its computer
systems to identify the systems that could be affected by the "Year
2000" issue. The Year 2000 problem is the result of computer programs
being written using two digits rather than four to define the
applicable year. Any of the Registrant's programs that have time-
sensitive software may recognize a date using '00' as the year 1900
rather than the year 2000. This could result in a major system failure
or miscalculations. Based upon the Registrant's current review of its
systems, the Registrant does not believe that the Year 2000 problem
will pose a material operations problem for the Registrant. The
Registrant's computer software providers have assured the Registrant
that all of the Registrant's software is or will be Year 2000 compliant
(i.e. will function properly in the year 2000 and beyond). Because the
Registrant believes that it has no material internal Year 2000
problems, the Registrant has not expended and does not expect to expend
a significant amount of funds to address Year 2000 issues. It is the
Registrant's policy to continue to review its suppliers' Year 2000
compliance and require assurance of Year 2000 compliance from new
suppliers; however, such monitoring does not involve a significant cost
to the Registrant. The Registrant's sole source of oil & gas sales
revenue is from its 5% interest in Petroleum Mining Permit ("PMP").
With regard to the Registrant's interest in PMP 38148, the Registrant
is dependent on Fletcher Challenge Energy Limited ("Fletcher") for the
delivery and payment of the Registrant's oil and natural gas revenues.
Fletcher is in turn dependent on various third parties for delivery and
payment. The Registrant will request written assurances from Fletcher
that it has examined their own Year 2000 issues. However, as of the
date of this report, the Registrant has not requested such an
assurance. It should be emphasized that no assurance can be given at
this time that Fletcher is or will be Year 2000 compliant. In the event
that Fletcher was to have a material Year 2000 problem, the Registrant
believes that the foreseeable consequences would be a temporary delay
in revenue collection caused by an interruption in computerized billing
and collecting which may have a short term impact on the Registrant's
revenues. As yet, the Registrant does not have any contingency plan to
address this possibility.
<PAGE> 15
PART II . OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no material legal proceedings commenced or maintained
by, or against, the Registrant.
ITEM 2. CHANGES IN SECURITIES.
There were no changes in securities during the quarter.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The Registrant has no debt securities outstanding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual general meeting (the "Meeting") of the Registrant was
held on June 23, 1999. The matters voted on, and the results of the
votes for, against and withheld with respect to each matter, consisted
of the following:
1. Shareholders appointed Sadovnick Telford & Skov as auditors
for the ensuing year and authorized the directors to fix their
remuneration, votes cast in favor: 22,484,090, against: 250,495 and
withheld: 192,803.
2. The election of the following directors were approved by
Ordinary Resolution:
Votes Votes
For Against Withheld
(a) Dr. David Bennett 22,528,771 0 398,617
(b) Ronald Bertuzzi 22,484,441 0 442,947
(c) Alex Guidi 22,490,652 0 436,736
(d) Brad Holland 22,478,121 0 449,267
3. Providing a general authority to the directors to grant
incentive stock options to insiders of the Registrant and to amend any
existing and future incentive stock option agreements with insiders of
the Registrant on terms and conditions to be determined by the
directors, votes cast in favour: 20,775,387, against: 1,821,713 and
withheld: 327,788.
ITEM 5. OTHER INFORMATION.
There is no other material information.
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed with this Form 10-Q are:
27 Financial Data Schedule
Other documents are incorporated by reference to the filing are
Form 10-K at December 31, 1998, and Form 10-Q at June 30, 1998.
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the six months ended June
30, 1999.
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereto duly authorized.
INDO-PACIFIC ENERGY LTD.
By: /s/ Alex Guidi August 10, 1999
Alex Guidi, Chairman
By: /s/ Mark Katsumata August 10, 1999
Mark Katsumata, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at June 30, 1999 (Unaudited) and
the Consolidated Statement of Income for the six months ended June 30, 1999
(Unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 6,779,143
<SECURITIES> 1,638,850
<RECEIVABLES> 248,883
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,678,773
<PP&E> 4,032,298
<DEPRECIATION> (405,342)
<TOTAL-ASSETS> 12,305,729
<CURRENT-LIABILITIES> 34,925
<BONDS> 0
0
0
<COMMON> 18,245,867
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,305,729
<SALES> 107,690
<TOTAL-REVENUES> 244,886
<CGS> 101,185
<TOTAL-COSTS> 101,185
<OTHER-EXPENSES> 232,987
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (89,286)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (89,286)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
