<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 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 of (I.R.S. Employer
incorporation or organization) Identification No.)
1090 West Pender Street
Suite 1200
Vancouver, B.C. Canada V6E 2N7
(Address of principal executive offices)
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 March 31,
1999 was 28,262,398 shares.
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<PAGE> 2
PART 1. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements For The Period
Ended March 31, 1999.
INDO-PACIFIC ENERGY LTD.
Consolidated Balance Sheets
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
As at March 31,
1999 1998
<S> <C> <C>
ASSETS
Current
Cash and short-term deposits $ 7,518,233 $ 9,928,141
Accounts receivable 105,742 89,604
Marketable securities 3,249,334 583,775
Due from related parties 76,158 193,903
Prepaid expenses and deposits 12,171 19,432
------------ ------------
10,961,638 10,814,855
Petroleum and natural gas properties 2,926,186 2,156,657
Property and equipment 128,550 117,629
------------ ------------
Total Assets $ 14,016,374 $ 13,089,141
============ ============
LIABILITIES
Current
Accounts payable and accrued
liabilities $ 46,394 $ 40,349
------------ ------------
Total Liabilities 46,394 40,349
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, no par value;
100,000,000 shares authorized;
Issued and outstanding at March 31,
1999 and 1998: 28,262,398 shares 18,253,992 18,313,976
Accumulated deficit (6,500,271) (5,615,449)
Accumulated other comprehensive income 2,216,259 350,265
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 13,969,980 13,048,792
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 14,016,374 $ 13,089,141
============ ============
</TABLE>
<PAGE> 3
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Loss and Comprehensive Income
(Expressed in United States Dollars)
For the Three Month Periods Ended March 31,
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
REVENUES
Petroleum and natural gas sales $ 46,062 $ 68,499
Interest income 63,424 65,127
---------- ----------
109,486 133,626
---------- ----------
COST OF SALES
Production costs 5,362 12,057
Royalties 2,228 2,542
Amortization and depletion 38,563 31,288
---------- ----------
46,153 45,887
---------- ----------
63,333 87,739
---------- ----------
EXPENSES
Accounting and audit 8,448 5,575
Compensation recovery - (62,500)
Consulting fees 2,834 19,259
Corporate relations and development 4,609 3,929
Filing and transfer agency fees 149 2,165
Foreign exchange loss (gain) (14,188) 18,383
Legal fees 14,046 28,676
Management fees - -
Office and miscellaneous 36,673 13,373
Printing 13,313 10,681
Rent 16,766 17,299
Telephone 10,334 11,061
Travel 16,698 25,824
Wages and benefits 22,353 17,599
Recovery of general and administrative
expenses (39,983) -
---------- ----------
92,052 111,324
---------- ----------
NET LOSS FOR THE PERIOD (28,719) (23,585)
Other comprehensive income:
Unrealized gain on marketable securities 654,459 262,698
---------- ----------
COMPREHENSIVE INCOME FOR THE PERIOD $ 625,740 $ 239,113
========== ==========
BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00)
=========== ==========
</TABLE>
<PAGE> 4
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
For the Three Month Periods Ended March 31,
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Operating Activities
Net loss for the period $ (28,719) $ (23,585)
Adjustments to reconcile net loss to
cash applied to operating activities:
Amortization and depletion 38,563 31,288
Compensation recovery -
(62,500)
Changes in non-cash working capital:
Accounts receivable (3,548) 44,870
Due from related parties (29,997) (41,530)
Prepaid expenses and deposits (3,136) (9,963)
Accounts payable and accrued
liabilities (110,502) (5,355)
----------- ------------
Net cash used in operating activities (137,339) (66,775)
----------- ------------
FINANCING ACTIVITIES
Common shares issued for cash - -
----------- ------------
Net cash provided by financing activities - -
----------- ------------
INVESTING ACTIVITIES
Purchase of marketable securities (400,000) -
Petroleum and natural gas properties (130,638) (245,020)
Property and equipment (8,639) (15,471)
----------- ------------
Net cash used in investing activities (539,277) (260,491)
----------- ------------
NET DECREASE IN CASH (676,616) (327,266)
CASH POSITION - BEGINNING OF PERIOD 8,194,849 10,255,407
----------- ------------
CASH POSITION - END OF PERIOD $ 7,518,233 $ 9,928,141
=========== ============
</TABLE>
<PAGE> 5
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Changes in Stockholders' Equity
(Expressed in United States Dollars)
For the Three Month Periods Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Accumulated Total
Other Compre- Stock-
Common Stock Accumulated hensive holders'
Shares Amount Deficit Income Equity
<S> <C> <C> <C> <C> <C>
Balance at
12/31/98 28,262,398 $18,253,992 $(6,471,552) $1,561,800 $13,344,240
Net loss during
the period (28,719) (28,719)
Unrealized gain
on marketable
securities 654,459 654,459
---------- ----------- ----------- ----------- -----------
Balance at
03/31/99 28,262,398 $18,253,992 $(6,500,271) $2,216,259 $13,969,980
========== =========== =========== ========== ===========
Balance at
12/31/97 28,262,398 $18,376,476 $(5,591,864) $ 87,567 $12,872,179
Net compensation
recovery from
stock options (62,500) (62,500)
Net loss during
the period (23,585) (23,585)
Unrealized gain
on marketable
securities 262,698 262,698
---------- ----------- ------------ ----------- ------------
Balance at
03/31/98 28,262,398 $18,313,976 $ (5,615,449) $ 350,265 $ 13,048,792
========== =========== ============ =========== ============
</TABLE>
<PAGE> 6
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 losses in each fiscal period reported
on. Its main source of capital is the issuance of equity securities. Total
losses incurred from incorporation to December 31, 1998 were $6,471,552.
Net loss for the quarter ending March 31, 1999 was $28,719 ($0.00 per
share).
Operating Revenue
Gross production revenue from PMP 38148 for the first quarter ending
March 31, 1999 was $46,062 (first quarter 1998: $68,499). The decrease is
largely due to a fall in the average oil sale price of $3.70 per barrel
of oil to $8.78 per barrel and a change in production volume from 5,481
barrels to 4,893 barrels.
Interest Income
Interest income for the first quarter ending March 31, 1999 was
$63,424 (first quarter 1998: $65,127).
<PAGE> 7
Costs and Expenses
Property exploration expenses and New Zealand development expenses
were:
Country Expense for Quarter Expense at last completed year
Ending March 31, 1999 Ending December 31, 1998
New Zealand
Exploration $72,643 $957,990
Development $18,570 Nil
Australia
Exploration $20,571 $923,757
Papua New Guinea
Exploration $18,854 $ 32,692
China Nil Nil
General and administrative expenses for the year ended December 31,
1998 were $510,384. For the quarter ending March 31, 1999 general and
administrative expenses were $92,052 (first quarter 1998: $111,324).
Amortization and depletion expense for the year ended December 31,
1998 was $148,875, while the amortization and depletion expense for the
quarter ending March 31, 1999 was $38,563 (March 31, 1998: $31,288).
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 March 31,
1999 working capital was $10,915,244 (March 31, 1998: $10,774,506) while
cash reserves were $7,518,233 (March 31, 1998: $9,928,141). Expenditures
to the Registrant's properties for the first quarter ending March 31, 1999
were $130,638.
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
<PAGE> 8
additional $356,000 above the obligatory amount on exploration projects
meriting the extra expenditure. The Registrant has 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 first quarter
were:
NORTH ISLAND, NEW ZEALAND, ONSHORE EAST COAST BASIN
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
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. The new
seismic data is currently being processed.
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 quarter ending March 31, 1999,
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 sights. The
participants in this permit are currently planning to drill a well to test
the Whakatu Prospect during July/August of 1999.
<PAGE> 9
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 ending 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 favourable 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.
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 joint venture participants have approved a work over of the
Ngatoro-1 and Ngatoro-6 production wells. The Registrant's portion of
costs for the work over of the Ngatoro-1 well is budgeted at $29,000. The
Registrant's portion of costs for the work over of the Ngatoro-6 well is
budgeted at $3,000.
Drilling 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 is to be drilled to a total depth
of 13,000 feet in order to test several target zones. 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 have reduced
exposure to about 8.5% of well cost which is estimated at $3 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 38723 (40%), Operator: Indo-Pacific
Energy Ltd.
The Company 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%).
Under the original permit grant, the participants in the permit were
required, on or before January 31, 1999, to reprocess a minimum of 50 km
of seismic data, re-evaluate prospects and leads, review relevant existing
wells to identify a potential Mount Messenger sand play and develop a sand
distribution model in conjunction with the seismic interpretation,
<PAGE> 10
identify any high grade leads for further seismic acquisition and either
make a firm commitment to continue the work program or surrender the
permit.
On March 12, 1999 the Registrant was granted a Certificate of Change
of Conditions by the New Zealand government. The change in conditions
effectively extended the date under which the Registrant had to complete
these exploration commitments on the permit from January 31, 1999 to March
31, 1999. 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. The remaining work program
requires the participants to collect a minimum of six kilometers of 3D
seismic data or equivalent 2D swathe coverage 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.
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") began a 120 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 are being 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 new survey concentrates on three areas that the earlier seismic
survey had identified as prospective. The first area is called the Hinds
Trough, located in the south of the permit, which was revealed as a deep,
fault bounded sedimentary basin. Preliminary computer processing of the
first lines of the second phase survey clearly demonstrates that the
sedimentary basin in the Hinds area is at least 5,000m (17,000 feet) deep,
which is deeper than predicted, and bodes well for generation of
hydrocarbons in the south of the permit.
The second area, in the centre of the permit, is the Rakaia Lead.
The Rakaia Lead is recognized as a large high feature located on the north
flank of the Rakaia Trough. Two seismic lines have now also been acquired
over the Rakaia Lead with interpretation of this data expected to be
completed soon.
The third area of interest is located in the north of the permit
where a grid of seismic lines have been placed in an area covering the
Bennetts, Cust/Mairangi and Loburn Highs. Early processing of some of
these lines indicates that the Bennetts High is a closed structure, and
has also delineated another large new lead further to the north, near the
Garry River.
<PAGE> 11
Preliminary analysis of the newly acquired seismic data from the
second stage seismic program has identified several leads but more seismic
data is required to identify drilling targets.
AMG Oil earned a 30% interest in the permit by funding an initial
120 mile seismic survey which was completed in late 1998. By paying
additional required seismic and the dry hole costs of drilling two
exploration wells, AMG Oil will earn another 50% interest in the permit.
At December 31, 1998, the Registrant owned 1,000,000 shares of AMG (7.7%
undiluted) and had an option to buy another 1,000,000 shares for US$0.50
before July 31, 2000. On March 10, 1999 the Registrant partially exercised
the option to acquire 800,000 shares of AMG Oil for US$0.50 per share to
now hold 1,800,000 shares (12.7% undiluted).
PAPUA NEW GUINEA: Petroleum Prospecting Licence PPL 215 (40%)
Operator: Indo-Pacific Energy Ltd.
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 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.
CHINA: Technical Study Area, Nanling and Wuwei Basins, Anhui Province,
China (50%) Operator: Indo-Pacific Energy Ltd.
On January 12, 1999, the Registrant and SINOPEC (China Petrochemical
Corporation) signed a memorandum of understanding which reflected results
of the parties ongoing negotiations. Within the memorandum of
understanding, both parties agreed mutually, inter alia, that:
1. the exploration term is seven years [subject to being confirmed by
SINOPEC] divided into three phases in the manner of 3-2-2 years;
2. the Registrant should finish a minimum of 150 kilometers of seismic
lines and one well in the first phase. The main work commitment of
the first phase will concentrate on the Nanling area. Whether or not
there is a commercial discovery in the first phase, the registrant
should add new work commitments in the second phase. Detailed work
commitments shall be determined through discussions by both parties;
<PAGE> 12
3. the Registrant shall pay a signature bonus of US$100,000 within
thirty days after the signing of a production sharing contract and
US$200,000 should be paid at the start of the second phase of
exploration while an additional US$200,000 should be paid after a
commercial discovery; and
4. the Registrant is to pay US$30,000 per year for assistance, training
and joint member committee costs.
Negotiations will continue on any outstanding points with a view to
finalizing the terms of the Production Sharing Contract over the area.
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 Company 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 have deteriorated
significantly during 1998 as a result of declining oil prices and
weakening gas prices. There is an excess supply of, and reduced demand
for, crude oil worldwide. This excess supply has placed downward pressure
on oil prices worldwide. Natural gas prices have declined, primarily due
to decreased demand and normal seasonal conditions. While there has been
some small improvement in oil & gas prices during the first four months
of 1999, 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
<PAGE> 13
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.
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.
On March 30, 1999 the Board of Directors of the Registrant approved
the granting of options to directors, officers and employees to acquire
up to 5.6 million shares of the common stock of the Registrant at a price
of US$0.85 per share, calculated as the approximate average closing price
for the last 90 days. The options are for a term of two years and were
approved by the shareholders at the last Annual General Meeting of
Shareholders held on June 24, 1998. The options have yet to be allocated
amongst the directors, officers and employees of the Registrant.
On March 30, 1999 the Board of Directors of the Registrant approved
the amending of all outstanding share purchase warrants to purchase a
total of 1,950,000 shares. Warrants to purchase 950,000 common shares
exercisable at an approximate price of US$2.32 until May 27, 1999 have
been amended to be exercisable at a price of US$0.90 per share until May
27, 2000. Warrants to purchase 1,000,000 common shares exercisable at a
price of US$2.00 until July 3, 1999, and thereafter exercisable at a price
of US$2.10 per share until July 3, 2000 have been amended to be
exercisable at a price of US$0.90 per share until July 3, 2000.
<PAGE> 14
Item 3. Defaults Upon Senior Securities.
The Registrant has no debt securities outstanding.
Item 4. Submission of Matters to a Vote of Security Holders.
There was no matter submitted to a vote of security holders in the
quarter.
Item 5. Other Information.
There is no other material information.
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter ended March 31,
1999.
(b) Exhibits
EXHIBIT INDEX
Exhibit
No. Description.
27 Financial Data Schedule
99.7 Certificate of Change of Conditions for PEP 38723
<PAGE> 15
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 May 13, 1999
Alex Guidi, Chairman
By: /s/ Mark Katsumata May 13, 1999
Mark Katsumata, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statemetn of Financial Condition at March 31, 1999 (Unaudited)
and the Consolidated Statement of Income for the three months ended March
31, 1999 (Unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 7,518,233
<SECURITIES> 3,249,334
<RECEIVABLES> 181,900
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,961,638
<PP&E> 3,420,200
<DEPRECIATION> 365,464
<TOTAL-ASSETS> 14,016,374
<CURRENT-LIABILITIES> 46,394
<BONDS> 0
0
0
<COMMON> 18,253,992
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,016,374
<SALES> 46,062
<TOTAL-REVENUES> 109,486
<CGS> 46,153
<TOTAL-COSTS> 46,153
<OTHER-EXPENSES> 92,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (28,719)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,719)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 17
EXHIBIT 99.7
CERTIFICATE OF CHANGE OF CONDITIONS
IN THE MATTER of the Crown Minerals Act 1991
AND
IN THE MATTER OF Petroleum Exploration Permit
38723 in the name of Indo-Pacific Energy (NZ)
Limited, Trans-Orient Petroleum Company (NZ)
Limited and Gondwana Energy (NZ) Limited
PURSUANT to section 36(1) of the Crown Minerals Act 1991, and acting
under delegations of 4 November 1997 and 9 November 1998, the
conditions specified in the second schedule to the above mentioned
permit are hereby replaced with those attached to this certificate.
DATED at Wellington this 12th day of March, 1999.
SIGNED by Barrie John Fowke, Manager Crown Minerals
/s/ Barrie John Fowke
SECOND SCHEDULE
PETROLEUM EXPLORATION PERMIT (PEP) 38723
1. The permit holder shall make all reasonable efforts to explore
and delineate the petroleum resource potential of the permit
area in accordance with good exploration and mining practice.
2. The permit holder shall comply with the work programme as
detailed below:
(a) within 17 months of the commencement date of the permit:
i. reprocess a minimum of 50km of seismic data, in a manner
consistent with the 1996 reprocessing exercise:
ii reevaluate prospects and leads on a seismic workstation,
including quantification of amplitude anomalies and
structural mapping;
iii review relevant existing wells to identify potential net Mt
Messenger sand pay and develop a sand distribution model in
conjunction with the above workstation seismic
interpretation;
ii identify and high-grade leads for further seismic
acquisition; and
<PAGE> 18
either
make a firm commitment by notice in writing to the Secretary of
Commerce to complete the work programme detailed in (b) below or
surrender the permit.
(b) within 30 months of the commencement date of the permit:
i. acquire a minimum of 6km(2) of 3D seismic data, or 2D
swathe coverage of equivalent detail, or proceed direct to
the work proposed under the stage three;
ii interpret the new data and identify and consider drilling
targets;
either
make a firm commitment by notice in writing to the Secretary of
Commerce to complete the work programme under (c) below and
carry out the permitting of a well location
or
surrender the permit.
(c) within 36 months of the commencement date of the permit:
i. drill an exploration well to a minimum depth of 1600m
unless geological or engineering constraints encountered
whilst drilling make this unreasonable; and
either
submit to the Secretary of Commerce a satisfactory work
programme for the remainder of the permit term
or
surrender the permit.
