<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 25049
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-7261
CHAPARRAL RESOURCES, INC.
621 - 17th Street, Suite 1301
Denver, Colorado 80293
Phone: (303) 293-2340
Colorado 84-0630863
(State of Incorporation) (I.R.S. Employer Identification No.)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Sections 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 [ ]
As of October 13, 1995, the Registrant had 20,396,692 shares of its $0.10 par
value common stock issued and outstanding.
Total Pages 9
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<TABLE>
PART I - SUMMARIZED FINANCIAL INFORMATION
CHAPARRAL RESOURCES, INC.
Consolidated Statements of Operations
Unaudited
<CAPTION>
For the three months ended For the nine months ended
-------------------------- -------------------------
August 31, August 31, August 31, August 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Oil and gas sales $ 64,000 $ 95,000 $ 200,000 $ 292,000
--------- ---------- ----------- ----------
64,000 95,000 200,000 292,000
Costs and expenses:
Production costs 22,000 37,000 89,000 184,000
Depreciation and depletion 24,000 44,000 85,000 128,000
General and administrative (5,000) 8,000 55,000 94,000
---------- --------- --------- ----------
41,000 89,000 229,000 406,000
---------- ---------- ---------- -----------
Earnings (loss from operations) 23,000 6,000 (29,000) (114,000)
Other income (expenses):
Interest income 1,000 2,000 4,000 11,000
Interest expense - - - (4,000)
Other, net 3,000 25,000 42,000 60,000
Minority interest in net income of
consolidated joint venture - - - 2,000
--------- --------- --------- ---------
4,000 27,000 46,000 69,000
--------- ---------- ---------- ---------
Net income (loss) $ 27,000 $ 33,000 $ 17,000 $ (45,000)
========= ========== ========== ============
Earnings (loss) per common
share $ 0.001 $ 0.002 $ 0.001 $ (0.003)
========== ========== ========== ===========
Average number of
outstanding shares 20,296,692 14,945,855 18,319,817 14,945,855
=========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
<TABLE>
CHAPARRAL RESOURCES, INC.
Consolidated Balance Sheets
<CAPTION>
August 31,
1995 November 30,
(Unaudited) 1994
---------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 77,000 $ 318,000
Certificates of deposit - 20,000
Investment in U.S. Treasury securities
(at cost) 135,000 199,000
Accounts receivable
Joint interest participants 27,000 231,000
Oil and gas purchasers 41,000 64,000
Prepaid expenses - 2,000
--------- ----------
Total current assets 280,000 834,000
PROPERTY AND EQUIPMENT AT COST:
Oil and gas properties - full cost
United States
Subject to depletion 16,320,000 16,115,000
Not subject to depletion 60,000 40,000
Foreign
Not subject to depletion 3,826,000 256,000
Less accumulated depletion and
impairment (15,114,000) (15,032,000)
----------- -----------
5,092,000 1,379,000
Furniture and fixtures and
equipment 198,000 337,000
Less accumulated depreciation (177,000) (324,000)
---------- -----------
21,000 13,000
---------- -----------
5,113,000 1,392,000
OTHER ASSETS
Long-term investments in U.S.
Treasury securities (at cost) - 100,000
Cash value of insurance and annuities 8,000 48,000
Equipment inventory 13,000 14,000
---------- -----------
21,000 162,000
----------- -----------
$ 5,414,000 $ 2,388,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade $ 58,000 $ 151,000
Joint interest
participants - revenue 25,000 41,000
Accrued liabilities 80,000 145,000
----------- ------------
Total current liabilities 163,000 337,000
Minority interest in joint venture - 16,000
3
<CAPTION>
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Common stock authorized 50,000,000 shares
of $.10 par value; issued and outstanding,
20,396,692 and 15,782,317 shares at August
31, 1995 and November 30, 1994 2,030,000 1,572,000
Capital in excess of par value 12,205,000 9,464,000
Preferred stock - authorized,
1,000,000 shares, no shares issued
or outstanding at August 31, 1995
or November 30, 1994
Retained earnings (deficit) (8,984,000) (9,001,000)
------------- -----------
Total stockholders' equity 5,251,000 2,035,000
------------- -----------
Total liabilities and
stockholders' equity $ 5,414,000 $ 2,388,000
============= ==========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
<TABLE>
CHAPARRAL RESOURCES, INC.
Consolidated Statements of Cash Flows
Unaudited
<CAPTION>
For the Nine Months Ended
----------------------------
August 31, August 31,
1995 1994
--------- ---------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities
Net income (loss) $ 17,000 $ (45,000)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and depletion 85,000 128,000
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 227,000 -
Prepaid expenses 2,000 2,000
Other assets 140,000 40,000
Equipment inventory 1,000 -
Increase (decrease) in:
Accounts payable (109,000) 136,000
Accrued liabilities (65,000) (62,000)
----------- --------
Net cash provided from (used in) operating activities 298,000 199,000
Cash flows from investing activities:
Additions to property and equipment - U.S. (225,000) (238,000)
Additions to property and equipment - Foreign (3,570,000) -
Change in certificate of deposit 20,000 147,000
Increase (decrease) in minority interest (16,000) (3,000)
Investment in stocks & bonds 64,000 (300,000)
------------- ---------
Net cash provided from (used in) investing activities (3,727,000) (394,000)
Cash flows from financing activities:
Proceeds from stock acquisition of CAP(D) 3,188,000 -
-------------- --------
Net cash provided from (used in) financing activities 3,188,000 -
Net increase (decrease) in cash (241,000) (195,000)
Cash and cash equivalents at beginning of year 318,000 522,000
-------------- --------
Cash and cash equivalents at end of 3rd quarter $ 77,000 $ 327,000
============= ========
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
CHAPARRAL RESOURCES, INC.
Notes to Consolidated Financial Information
Unaudited
(1) The information furnished in this Quarterly Report on Form 10-Q reflects
all adjustments, all of which are of a normal recurring nature, which, in the
opinion of management, are necessary to a fair statement of the results for the
interim periods presented.
(2) Non-cash Financing and Investment Activities
a) There was no interest paid for the period ended August 31, 1995.
6
<PAGE>
MANAGEMENT'S' DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(1) Liquidity and Capital Resources
Net cash and cash equivalents decreased $241,000 from November 30, 1994 to
August 31, 1995. The decrease was due to additions to property and
equipment, both foreign and domestic.
At August 31, 1995, the Company's working capital position was positive
with total current assets of $280,000 and total current liabilities of
$163,000 for a working capital ratio of 1.7 to 1. The Company's primary
source of capital is from oil and gas sales.
The Company has a 45% beneficial ownership interest in Central Asian
Petroleum Guernsey Limited ("CAP-G"). CAP-G has a 50% beneficial ownership
interest in Karakuduk-Munay, Inc. ("KKM"), the operating company for the
development of the Karakuduk Field. On August 30, 1995, the Ministry of
Oil and Gas Industries of the Republic of Kazakstan signed the Agreement
approving the development of the Karakuduk Field. The Company, through its
45% beneficial ownership interest in CAP-G, has a 22.5% beneficial
ownership interest in the Karakuduk Field. CAP-G's share of the initial
capitalization of KKM is $100,000. The Company's share, $45,000, has been
paid.
By November 28, 1995, the Company, in order to retain its 45% beneficial
ownership interest in CAP-G, must commit to fund $4,000,000 to be used for
the Company's share of KKM's operating budget for the remainder of 1995
($695,000) and 1996 (estimated to be $5,385,000). The Company is working
with a New York investment banking firm that has expressed its intention to
obtain for the Company funding for this commitment. However, there are no
assurances the Company will obtain the necessary funding.
The Company's share of the 1995 budget for CAP-G is $136,125, of which
$135,000 has been paid to CAP-G to date. The 1996 budget for CAP-G has not
been submitted as of this time.
If, by November 28, 1995, the Company is unable to commit to fund the
$4,000,000, then the Company's beneficial ownership interest in CAP-G would
be reduced to 25% and the Company's beneficial ownership interest in the
Karakuduk Field would be reduced to 12.5%. The Company's share of the
operating budget for KKM for the remainder of 1995 would then be $173,750
and the Company's estimated share of the 1996 KKM operating budget would be
$2,992,000. If the Company is unable to meet these reduced financial
requirements, it would relinquish the balance of its beneficial ownership
interest in CAP-G and the Karakuduk Field.
The Company has substantially depleted its working capital resources to
obtain its beneficial ownership interests in CAP-G and KKM. Should the
Company be unable to meet the financial requirements described above, it
will be necessary for the Company to reduce its overhead, staff, and other
expenses in order to remain in operation. There are no assurances that if
such reductions in the Company's operating costs occur that it will be able
to remain in operation.
7
<PAGE>
As a result of the signing of the Agreement for the development of the
Karakuduk Field, the former shareholders of Central Asian Petroleum, Inc.
("CAP-D") are entitled to have released from escrow 1,000,000 of the
4,250,000 shares of the Company's restricted common stock placed in escrow
in April, 1995 when the Company acquired all of the outstanding stock of
CAP-D in a tax free exchange. CAP-D has a 20% beneficial ownership
interest in CAP-G. The 1,000,000 shares will be released to the former
shareholders of CAP-D at such time as they agree upon the number of shares
each is to receive. The remaining 3,250,000 shares will be held in
escrow pending the occurrence of certain events relative to the funding and
development of the Karakuduk Field.
The Company has no other material commitments for cash outlay or capital
expenditures other than for normal operations.
(2) Results of Operations
Nine Months Ended August 31, 1995 vs. August 31, 1994
The Company's operations resulted in net income of $17,000 for the nine
months ended August 31, 1995 compared to a net loss of $45,000 during the
same period in 1994.
Revenues from oil and gas sales decreased 31.5% due to lower natural gas
prices and certain producing properties being shut-in due to pricing.
Costs and expenses decreased 43.6%. Production costs decreased 51.6% as
certain producing properties were shut-in due to lower natural gas prices.
Depreciation and depletion decreased 33.6% due to reduced depletion
expenses as a result of the write-down of oil and gas properties at fiscal
year end November 30, 1994. General and administrative costs decreased
41.5% due to increased capitalization of costs related to foreign
activities during the nine months ended August 31, 1995 compared to the
same period during 1994.
Three Months Ended August 31, 1995 vs. August 31, 1995
The Company's operations resulted in net income of $27,000 for the three
months ended August 31, 1995 compared to net income of $33,000 during the
same period in 1994.
Revenues from oil and gas sales decreased 32.6% due to lower natural gas
prices and certain producing properties being shut-in due to pricing.
Costs and expenses decreased 53.9%. Production costs decreased 40.5%,
depreciation and depletion decreased 45.5% and general and administrative
costs decreased 162.5% for the same reasons cited for the nine month period
ending August 31, 1995.
8
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 10, 1995
CHAPARRAL RESOURCES, INC.
A Colorado Corporation
/s/ Paul V. Hoovler
------------------------------
Paul V. Hoovler
President
/s/ Matthew R. Hoovler
------------------------------
Matthew R. Hoovler
Principal Financial Officer
9
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> AUG-31-1995
<CASH> 77
<SECURITIES> 135
<RECEIVABLES> 68
<ALLOWANCES> 0
<INVENTORY> 13
<CURRENT-ASSETS> 280
<PP&E> 5,290
<DEPRECIATION> (177)
<TOTAL-ASSETS> 5,414
<CURRENT-LIABILITIES> 163
<BONDS> 0
<COMMON> 20,397
0
0
<OTHER-SE> 3,221
<TOTAL-LIABILITY-AND-EQUITY> 5,414
<SALES> 200
<TOTAL-REVENUES> 200
<CGS> 89
<TOTAL-COSTS> 89
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (29)
<INCOME-TAX> 0
<INCOME-CONTINUING> 17
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
</TABLE>
