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 ended June 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
-----------------
Commission File No. 1-14754
-----------------
PENDARIES PETROLEUM LTD.
(Exact name of registrant as specified in its charter)
-----------------
PROVINCE OF NEW BRUNSWICK, CANADA
(State or other jurisdiction of incorporation)
Internal Revenue Service - Employer Identification No. 52-2051576
8 Greenway Plaza, Suite 910, Houston, Texas 77046
(713) 355-2900
-----------------
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 total number of shares of the registrant's Common Shares, no par
value, outstanding on June 30, 2000, was 9,113,370.
1
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PENDARIES PETROLEUM LTD.
PART I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000
(Unaudited) and December 31, 2000....................................3
Consolidated Statements of Operations and Deficit for the
three and six months ended June 30, 2000 (Unaudited)
With Comparative Figures for the Preceding Year......................4
Consolidated Statements of Cash Flow for the
six months ended June 30, 2000 (Unaudited)
With Comparative Figures for the Preceding Year......................5
Notes to Consolidated Financial Statements (Unaudited)...............6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk........None
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................None
Item 2. Changes in Securities and Use of Proceeds........................None
Item 3. Defaults Upon Senior Securities..................................None
Item 4. Submission of Matters to a Vote of Security Holders..............None
Item 5. Other Information................................................None
Item 6. Exhibits and Reports of Form 8-K.................................None
SIGNATURES....................................................................14
2
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PART I:
Item 1. FINANCIAL STATEMENTS
PENDARIES PETROLEUM LTD.
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and December 31, 1999
(All figures are in U.S. dollars)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
ASSETS (Unaudited)
------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 3,499,055 $ 6,983,680
Accounts receivable 2,524 43,577
Prepaid expenses and other assets 221,828 231,651
------------- ----------------
3,723,407 7,258,908
------------- ----------------
PROPERTY AND EQUIPMENT
Oil and gas properties, recorded under the full cost method
Proved 20,737,934 17,761,478
Unproved 2,626,003 2,565,343
Furniture, fixtures and office equipment 233,660 172,517
Accumulated depreciation, depletion and amortization (95,830) (76,484)
------------- ----------------
Net property and equipment 23,501,767 20,422,854
------------- ----------------
Total assets $ 27,225,174 $ 27,681,762
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ - $ 36,845
Accrued liabilities 21,143 40,962
------------- ----------------
Total current liabilities 21,143 $ 77,807
------------- ----------------
SHAREHOLDERS' EQUITY
Common shares
Authorized, unlimited number of common shares
Issued 9,113,370 and 8,879,470 common shares, respectively 32,930,654 32,580,051
Retained Deficit (5,726,623) (4,976,096)
----------- ----------
Total shareholders' equity 27,204,031 27,603,955
------------- -------------
Total liabilities and shareholders' equity $ 27,225,174 $ 27,681,762
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
3
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PENDARIES PETROLEUM LTD.
------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(All figures are in U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three-Month Six-Month
Period Ended Period Ended
June 30, June 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
---------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
REVENUE
Oil and gas revenue $ - $ 71,050 $ - $ 172,265
---------------- ---------------- --------------- ----------------
EXPENSES
Oil and gas operating expenses - 61,208 - 156,849
General and administrative expenses 448,134 381,357 840,283 757,277
Depreciation, depletion and amortization 10,451 42,301 19,345 90,053
Exchange (gain)/loss 22,617 (25,691) 28,982 (35,846)
---------------- ---------------- --------------- ---------------
$ 481,202 $ 459,175 $ 888,610 $ 968,333
---------------- ---------------- --------------- ---------------
OTHER INCOME
Interest income 59,757 76,036 138,083 164,599
---------------- ---------------- --------------- ---------------
NET LOSS $ (421,445) $ (312,089) $ (750,527) $(631,469)
============== =============== ============== ===============
NET LOSS PER SHARE
Basic $ (.05) $ (.04) $ (.08) $ (.07)
============== ============== ============== ===============
Fully diluted $ (.05) $ (.04) $ (.08) $ (.07)
============== ============== ============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
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PENDARIES PETROLEUM LTD.
------------------------
CONSOLIDATED STATEMENTS OF CASH FLOW
------------------------------------
(Unaudited)
(All figures are in U.S. dollars)
<TABLE>
<CAPTION>
For the For the
Six-Month Six-Month
Period Ended Period Ended
June 30, June 30,
2000 1999
----- ----
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (750,527) $ (631,469)
Items not affecting cash
Depreciation, depletion and amortization 19,345 90,053
Changes in non-cash working capital items-
Accounts receivable 41,053 (42,561)
Accounts payable (36,845) (7,227)
Accrued liabilities 10,181 (48,820)
Prepaid expenses and other assets 9,823 (44,202)
----- -------
Net cash used in operating activities (706,970) (684,226)
-------- --------
CASH FLOW USED IN INVESTING ACTIVITIES
Net additions to proved and unproved oil and gas
properties (3,037,116) (507,261)
Additions to furniture, fixtures and office equipment
(61,143) 557
--------- ------------
Net cash used in investing activities (3,098,259) (506,704)
CASH FLOW FROM FINANCING ACTIVITIES
Net proceeds from exercise of common stock options 320,604 50,000
Net cash provided by financing activities 320,604 50,000
--------- ------------
DECREASE IN CASH AND CASH EQUIVALENTS (3,484,625) (1,140,930)
CASH AND CASH EQUIVALENTS, beginning of period 6,983,680 7,873,280
---------- ------------
CASH AND CASH EQUIVALENTS, end of period $ 3,499,055 $ 6,732,350
========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated statem
5
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PENDARIES PETROLEUM LTD.
------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
JUNE 30, 2000
-------------
(Unaudited)
(All figures are in U.S. dollars)
1. NATURE OF OPERATIONS
--------------------
Pendaries Petroleum Ltd. ("Pendaries" or "the Company"), a New Brunswick,
Canada corporation, is a holding company whose primary interests are in
exploration, development and production of oil and gas properties in the
People's Republic of China.
2. NATURE OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
------------------------------------------------------
The Company completed an initial public offering and became a public
company in Canada on December 12, 1996.
The consolidated interim financial statements included herein have been
prepared by the Company without audit and reflect all adjustments which
are, in the opinion of management, necessary to present a fair statement of
the results of the interim period pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"). These statements are
presented on a basis consistent with annual audited consolidated financial
statements. Certain information, accounting policies and footnote
disclosures normally included in consolidated financial statements prepared
in accordance with generally accepted accounting principles have been
omitted, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These consolidated interim
financial statements should be read in conjunction with the consolidated
financial statements and the summary of significant accounting policies and
notes thereto included in the Company's latest annual report on Form 10-K
for the year ended December 31, 1999 filed with the SEC.
The consolidated financial statements include the accounts of Pendaries,
Pendaries Production, Inc., Sino-American Energy Corporation
(Sino-American) and Sino-American Overseas Energy Corporation. All
significant intercompany transactions and balances have been eliminated.
The Company's registration statement filed on Form 20-F was declared
effective by the U.S. Securities and Exchange Commission in June 1998. This
permitted the Company to list its common shares for trading on the American
Stock Exchange.
3. OIL AND GAS PROPERTIES - ALBERTA, CANADA
----------------------------------------
In November 1996, the Company purchased an interest in three producing oil
and gas properties located in Alberta, Canada for $1,966,088. In November
1999, Pendaries sold all of its interest in the Alberta properties for
approximately $1,200,000, which approximated its book value. The Company
will use the proceeds to partially fund exploration and development
activities in the two core Bohai Bay blocks.
6
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4. OIL AND GAS PROPERTIES - CHINA
------------------------------
At the end of 1998, the Company owned an interest in five oil and gas
exploration petroleum contracts covering blocks in the Gulf of Bohai and
the Pearl River Mouth Basin of the South China Sea. A wholly-owned
subsidiary of Kerr-McGee serves as the operator of all five blocks. The
Company, the operator, and in one concession an additional partner, as
owners of the working interests, serve as the foreign contractors under
these petroleum contracts. In addition, a Chinese government company serves
as the Chinese counter party to each petroleum contract. For each block
covered by a petroleum contract, the foreign contractors maintain an
operating agreement among themselves for handling the operational issues.
During 1999 the Company and the operator decided to concentrate its
resources and efforts on the two primary blocks in the Bohai Bay which have
exhibited the most potential for success, Block 04/36 and Block 05/36. As a
result, the Company and the operator relinquished the other two smaller
blocks in the Bohai Bay and the block in the South China Sea.
Originally three companies held interests in Block 04/36. Effective
September 1, 1999, Murphy Exploration & Petroleum Company ("Murphy"), which
owned a 45% interest in Block 04/36, dropped out of the block. This allowed
Pendaries and Kerr-McGee, the two remaining foreign contractors, to pick up
Murphy's interest without cost, other than the obligation to pay the
increased proportional shares of prospect expenses. As a result, the
Company increased its proportionate interest from 10% to 18.2%. The
operator, Kerr-McGee, increased its proportionate interest from 45% to
81.8%. Thus, the Company and the operator are the only foreign contractors
under the petroleum contract for Block 04/36. The China National Offshore
Oil Corporation, or CNOOC, is the Chinese counter party under the contract.
In Block 05/36, Pendaries owns a 15% interest, the operator owns a 50%
interest, and Newfield Exploration Company, another U.S. independent oil
and gas company, owns the remaining 35% interest. CNOOC is the Chinese
counter party under this petroleum contract as well.
Oil and gas exploration in the two Bohai Bay blocks are governed by
separate petroleum contracts. The table below provides details on the
Company's interest in each of each of these two concessions.
Block Pendaries Original Current Concession End of
Interest Acreage Acreage Date Exploration Period
--------------------------------------------------------------------------------
04/36 Block 18.2% 560,000 420,000 August 1994 August 2001
05/36 Block 15.0% 416,000 312,000 January 1996 January 2003
In each block, CNOOC has the option to obtain as much as a 51% working
interest during the development and production periods by paying its
proportionate share of the development and operating costs and receiving
its proportionate share of oil and gas production. Although the foreign
contractors bear 100% of the exploration costs, they receive up to a 68%
share of the oil and gas produced, (rather than the 45% share that they
would otherwise be entitled to) until they have recovered these exploration
costs.
7
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5. RELINQUISHMENT
--------------
At the end of phase one of the exploration period, the foreign contractors
must relinquish 25% of the contract area acreage, excluding the development
and/or production areas. At the end of phase two of the exploration period,
the foreign contractors must relinquish 25% of the remaining contract area
acreage, excluding the development and/or production areas. At the end of
phase three of the exploration period, the foreign contractors must
relinquish all contract areas not under development or production. After
completion of all work and financial obligations, the foreign contractors
may relinquish their entire interest in any block at the end of its
exploration period.
Due to the extensive exploration efforts expended on Block 04/36, at the
beginning of the second phase, CNOOC did not require relinquishment of 25%
of the contract area. The second phase continued until August 1999. Upon
entry into the third phase in September 1999, the foreign contractors
relinquished 25% of the contract area acreage.
In March 1999, the foreign contractors entered into phase two on Block
05/36 and relinquished 25% of the contract area acreage. We do not believe
that the potential for production on either block was harmed by the
relinquishment of the contract areas.
6. COMMON SHARES
-------------
Issuance of Stock Options
-------------------------
On March 9, 1999, certain outside directors of the Company were granted
stock options for a total of 84,500 common shares. The exercise price is
U.S. $0.59 per common share and the options expire on March 9, 2004. No
stock options were granted in the first quarter of 2000.
On April 20, 2000, certain directors, officers and employees of the Company
were issued options to purchase an aggregate of 122,000 common shares. The
exercise price is U.S. $2.00 per common share, the market price on the date
of issuance, with an expiration date of April 20, 2005. No options were
granted in the comparable period for 1999.
Issuance of Common Shares
-------------------------
On March 9, 1999, certain outside directors of the Company were granted
47,500 common shares as compensation, the value of which was U.S. $28,209.
There were no such shares issued in the first quarter of 2000.
On April 20, 2000, certain outside directors of the Company were issued
15,000 common shares as compensation valued at U.S. $2.00 per common share
for a total of U.S. $30,000.
No other compensatory shares were issued in 1999 or 2000.
Stock Option Exercise and Cancellations
---------------------------------------
On June 16, 2000, 25,900 Pendaries shares were exercised at an exercise
price of Cdn. $0.90. Total proceeds to Pendaries from this exercise were
U.S. $15,853.
8
<PAGE>
During the second quarter of 2000, 193,000 Sino-American options were
exercised and exchanged for Pendaries shares with exercise prices ranging
from U.S. $1.00 to U.S. $2.00. Total proceeds to the Company from these
exercises were U.S. $304,750.
As of June 30, 2000, 28,000 Sino-American options expired unexercised.
After the above-mentioned exercises and expirations, 90,000 Sino-American
options remain outstanding with an exercise price of U.S. $1.25 per share.
These remaining options expire on August 17, 2000. As a result of the
above-mentioned exercises and expirations, at June 30, 2000, the number of
outstanding shares is 9,113,370 and the number of outstanding shares on a
fully diluted basis is 9,801,470.
7. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
---------------------------------------------------------------------------
These consolidated financial statements are expressed in U.S. dollars,
which is the functional currency in all areas of operation, and are
prepared in accordance with generally accepted accounting principles in
Canada ("Canadian GAAP") which conform in all material respects with those
in the United States ("U.S. GAAP") for the years presented, except as
outlined below.
Oil and Gas Properties
----------------------
In Canada, if the net capitalized costs of oil and gas properties in a cost
center exceed an amount equal to the sum of estimated future net revenues
from proved oil and gas reserves in the cost center and the costs of
properties not being amortized, both adjusted for income tax effects, such
excess is charged to expense. Also, the total capitalized costs of all cost
centers are subject to a further recoverability test which includes, among
other things, provision for site development and restoration and future
general, administrative and financial costs. This is not consistent with
U.S. GAAP. For U.S. GAAP, if the net capitalized costs of oil and gas
properties in a cost center exceed an amount equal to the sum of estimated
discounted present value at 10% of future net revenues from proved oil and
gas reserves in the cost center and the costs of properties not being
amortized, both adjusted for income tax effects, such excess is charged to
expense. Included in the estimated future net cash flows are Canadian
provincial tax credits expected to be realized beyond the date at which the
legislation, under its provisions, could be repealed. To date, the Canadian
provincial government has not indicated an intention to repeal this
legislation.
There were no material differences between Canadian GAAP and U.S. GAAP
during the quarters and six months ended June 30, 2000 and 1999.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
unaudited consolidated financial statements included elsewhere and with the
Company's Annual Report filed on Form 10-K for the year ended December 31, 1999.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2000 and 1999:
------------------------------------------
The Company incurred a net loss of $421,445(.05 per share) and $312,089 (.04 per
share) for the quarters ended June 30,2000 and 1999, respectively. The $109,356
increase in net loss was a result of the following:
Oil and gas revenue from the Company's properties located in Alberta, Canada of
$71,050 in the second quarter ended June 30, 1999 was zero for the same period
in 2000 due to the sale of these oil and gas properties in November of 1999.
Oil and gas operating expenses of $61,208 for the second quarter of 1999 were
zero for the same period in 2000 for the same reason.
General and administrative expense increased from $381,357 in the second quarter
of 1999 to $448,134 in the second quarter of 2000. The $66,777 increase was
due to outside professional costs, primarily a separate company audit of
Pendaries' wholly owned subsidiary, Sino-American Energy Corporation, for the
years 1994-1999 which was required by the Chinese taxing authorities. There was
no similar audit expense for the comparable period in 1999.
Depreciation, depletion and amortization decreased by $31,850 from $42,301 in
1999 to $10,451 in 2000 due to the sale of the Canadian oil and gas properties.
The Company incurred an exchange loss of $22,617 for the three months ending
June 30, 2000 as compared to an exchange gain of $25,691 in the same period of
1999 due to the strengthening of the U.S. dollar in relation to the Canadian
dollar in the 2000 period.
Interest income decreased by $16,279 from $76,036 in the second quarter of 1999
to $59,757 in the second quarter of 2000. The decrease was due to the reduction
of cash available for investment in the 2000 period.
Six Months Ended June 30, 2000 and 1999:
----------------------------------------
The Company incurred a net loss of $750,527 (.08 per share) and $631,469 (.07
per share) for the six months ended June 30, 2000 and 1999, respectively. The
$119,058 increase in net loss was due to the following:
Oil and gas revenue from the Company's properties located in Alberta, Canada of
$172,265 for the six months ended June 30, 1999 was zero for the same period in
2000 due to the sale of the Canadian properties in November of 1999. For the
same reason, oil and gas operating expenses of $156,849 for the six months ended
June 30, 1999 were zero for the same period in 2000.
10
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General and administrative expense increased from $757,277 in the first six
months of 1999 to $840,283 for the comparable period of 2000. The $83,006
increase was primarily due to increased outside professional costs, principally
the separate company audit of Sino-American Energy Corporation discussed above.
Depreciation, depletion and amortization decreased by $70,708 from $90,053 in
1999 to $19,345 in 2000 due to the sale of the Canadian oil and gas properties
in November 1999.
The Company incurred an exchange loss of $28,982 for the six months ended June
30, 2000 as compared to an exchange gain of $35,846 for the same period in 1999
as a result of the strengthening of the U.S. dollar against the Canadian dollar
in the 2000 period.
Interest income decreased by $26,516 from $164,599 in the second quarter of 1999
to $138,083 in the second quarter of 2000. The decrease was due to the reduction
of cash available for investment in the 2000 period.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
From inception(July 5, 1994) the Company's equity transactions by year are shown
below. Of the total, $31,378,364 represents cash raised by issuance of common
equity, $1,325,000 represents oil and gas properties paid for by issuance of
common equity, and $227,290 represents services paid for by issuance of common
equity.
Common
Share Exercise of Exercise of
Period Equity Warrants Options Total
------ ------ -------- ------- -----
1995 $ 3,287,500 $ - $ - $ 3,287,500
1996 22,812,658 - 20,000 22,832,658
1997 68,000 944,488 5,196,115 6,208,603
1998 131,081 - 42,000 173,081
1999 28,209 - 50,000 78,209
Yr to Date 2000 30,000 - 320,603 350,603
----------- ----------- ---------- --------------
Totals $26,357,448 $ 944,488 $5,628,718 $ 32,930,654
=========== ======== ========== ============
During the same periods, the Company incurred capital expenditures as follows:
Oil and Gas Oil and Gas Furniture,
Properties Properties Fixtures and
Period Canada China Equipment Total
------ ------ ----- --------- -----
1995 $ - $ 3,597,631 $ 59,758 $ 3,657,389
1996 1,966,088 2,981,853 62,613 5,010,554
1997 - 7,739,641 105,286 7,844,927
1998 - 4,843,827 (57,719) 4,786,108
1999 (1,966,088)(1) 1,163,869 (2,579) (804,798)
Yr to Date 2000 - 3,037,116 66,301 3,103,417
---------- ----------- --------- -----------
Totals $ - $23,363,937 $ 233,660 $23,597,597
=========== =========== ========= ===========
(1) The Company received proceeds from the sale of its Canadian
properties of $1,200,000. The difference of $766,088 is due
to accumulated depletion on the properties.
11
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After capital expenditures and funds used in operations, the Company had cash of
approximately $3.5 million at June 30, 2000. The Company has no credit facility
with any financial institution or any other outstanding debt. We expect the cash
on hand at June 30,2000, to be sufficient to meet cash calls for exploration in
the Bohai Bay through most of the fourth quarter of 2000. Prior to the end of
2000, the Company will be required to raise additional capital in order to meet
its cash calls for exploration and development expenditures in the Bohai Bay,
China.
Management currently estimates that the Company will need $10.2 million for pre-
production exploration drilling and seismic costs (with first production
currently expected in the second quarter of 2002), plus another $10.0 million
for pre- production development drilling and construction of production
facilities anticipated to be spent from the second quarter of 2001 through the
first quarter of 2002. During these same periods, the Company expects to incur
general and administrative costs of approximately $2.6 million. Management is
actively pursuing various alternatives for raising the required capital.
Management believes that it will be successful in its efforts.
We anticipate focusing most of our expenditures during the next year on the
three oil fields discovered to date (the 11-1 field in Block 04/36, the 12-1
field in Block 05/36, and the 2-1 field in Block 04/36) in order to speed the
declaration of commerciality and the commencement of development drilling and
construction of production facilities on both the 11-1 and 12-1 fields during
the second and third quarters of 2001. Once production begins, management
believes that it will be able to secure any additional capital needed through
conventional debt financing, for which it hopes to have a commitment in place
during the first half of 2001. After 2003 the Company believes that all capital
costs in the Bohai Bay and its general and administrative expenses can be funded
from internal cash flow.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
-----------------------------------------------
The statements contained in this Quarterly Report on Form 10-Q ("Quarterly
Report") that are not historical facts, including, but not limited to,
statements found in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, are forward-looking statements, as that
term is defined in Section 21E of the Securities and Exchange Act of 1934, as
amended, that involve a number of risks and uncertainties. Such forward-looking
statements may be or may concern, among other things, sources of future capital,
capital expenditures, drilling activity, acquisition plans and proposals and
dispositions, development activities, cost savings, production efforts and
volumes, hydrocarbon reserves, hydrocarbon prices, liquidity, regulatory matters
and competition. Such forward-looking statements generally are accompanied by
words such as "plan," "estimate," "expert," "predict," "anticipate, "
"projected, " "should, " "assume, " "believe, " or other words that convey the
uncertainty of future events or outcomes. Such forward-looking information is
based upon management's current plans, expectations, estimates and assumptions
and is subject to a number of risks and uncertainties that could significantly
affect current plans, anticipated actions, the timing of such actions and the
Company's financial condition and results of operations. As a consequence,
actual results may differ materially from expectations, estimates or assumptions
expressed in or implied by any forward-looking statements made by or on behalf
of the Company. Among the factors that could cause actual results to differ
materially are: fluctuations of the prices received or demand for the Company's
oil and natural gas, the uncertainty of drilling results and reserve estimates,
operating hazards, acquisition risks, requirements for capital, general economic
conditions, competition and government regulations, as well as the risks and
uncertainties discussed in this Quarterly Report, including, without limitation,
the portions referenced above, and the uncertainties set forth from time to time
in the Company's other public reports, filings and public statements.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - N/A
Item 2. Changes in Securities - N/A
Item 3. Defaults Upon Senior Securities - N/A
Item 4. Submission of Matters to a Vote of Security Holders - N/A
Item 5. Other Information - N/A
Item 6. Exhibits and Reports on Form 8-K - N/A
13
<PAGE>
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, thereunto duly authorized.
PENDARIES PETROLEUM LTD.
Date: July 7, 2000 By: /s/Bobby J. Fogle
--------------------
Bobby J. Fogle
Vice President, Finance and
Chief Financial Officer
14
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