FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
----------------------------------------
[ ] 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 1-4668
COASTAL CARIBBEAN OILS & MINERALS, LTD.
................................................................................
Exact name of registrant as specified in its charter)
BERMUDA NONE
................................ ....................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House, Church Street, Hamilton, Bermuda NONE
................................................................................
(Address of principal executive offices) (Zip Code)
441-295-1422
................................................................................
(Registrant's telephone number, including area code)
................................................................................
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
l934 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.
X Yes No
The number of shares outstanding of the issuer's single class of common
stock as of July 17, 1997 was 40,056,358.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 218,718 $ 424,330
Accounts and interest receivable 139,081 105,115
U.S. Government securities 2,672,611 3,341,820
Prepaid insurance 134,388 178,868
------------- ------------
Total current assets 3,164,798 4,050,133
------------- ------------
U.S. Government securities 2,000,346 2,001,441
Unproved oil, gas and mineral properties (full cost method) 4,273,879 3,943,520
Other 26,503 25,644
------------- ------------
$ 9,465,526 $10,020,738
============ ===========
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 65,693 $ 262,422
------------- ------------
Minority interests
- -
Shareholders' equity:
Common stock, par value 12(cent) per share:
Authorized - 250,000,000 shares
Outstanding - 40,056, 358 and 40,046,358 shares 4,806,763 4,805,563
Capital in excess of par value 28,693,033 28,442,983
------------ ------------
33,499,796 33,248,546
Deficit accumulated during development stage (24,099,963) (23,490,230)
------------- -------------
Total shareholders' equity 9,399,833 9,758,316
------------ ------------
$ 9,465,526 $10,020,738
============ ===========
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. dollars)
(unaudited)
<TABLE>
<CAPTION>
From inception
Three months ended Six months ended (Jan. 31, 1953)
------------------ ----------------
June 30, June 30, to June 30,
-------- -------- -----------
1997 1996 1997 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Interest and other income $72,159 $34,344 $154,617 $35,192 $3,381,274
------- ------- -------- ------- ----------
Expenses:
Legal fees and costs 162,939 121,741 321,151 221,509 10,744,275
Administrative expenses 103,021 81,413 226,411 166,004 6,147,938
Salaries 39,000 36,167 78,000 75,667 2,672,278
Shareholder communications 93,934 47,604 128,733 61,175 3,377,120
Exploration costs 2,503 5,628 10,055 5,651 710,091
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,865
Contractual services - - - - 2,155,728
-------------- -------------- -------------- -------------- ---------
401,397 292,553 764,350 530,006 27,481,237
------- -------- ------- --------- ----------
Net loss $(329,238) $(258,209) $(609,733) $(494,814)
========== ========== ========== ==========
Deficit accumulated during
development stage $(24,099,963)
Average number of shares
outstanding 40,056,358 36,709,995 40,054,929 35,275,839
========== ========== ========== ==========
Net loss per share $(.01) $(.01) $(.02) $(.01)
====== ====== ====== ======
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
(unaudited)
<TABLE>
<CAPTION>
From inception
Six months ended (Jan. 31, 1953)
June 30, to June 30,
1997 1996 1997
----- ----- ----
<S> <C> <C> <C>
Operating activities:
Net loss $(609,733) $(494,814) $(24,099,963)
Adjustments to reconcile net loss
to net cash used for operating activities:
Minority interest - - (632,974)
Exploration and other - - 755,974
Net change in:
Accounts receivable (33,966) (19,090) (139,081)
U.S. Government securities 669,209 (497,969) (2,672,611)
Prepaid insurance 44,480 7,183 (134,388)
Current liabilities (196,729) 22,185 65,693
Other (859) 34,321 472,402
---------- ----------- ------------
Net cash used for operating activities (127,598) (948,184) (26,384,948)
---------- ----------- ------------
Investing activities:
Additions to oil, gas, and mineral
properties net of assets acquired
for common stock (330,359) (18,837) (4,273,879)
Reimbursement of lease rentals and
other expenses - - 1,243,086
Sale (purchase) U.S. Government securities 1,095 - (2,000,346)
Purchase of fixed assets - - (61,649)
---------- ----------- ------------
Net cash provided by (used for) investing activities
(329,264) (18,837) (5,092,788)
---------- ----------- ------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - 6,357,313 26,342,205
Shares issued upon exercise of
options 11,250 13,500 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares 240,000 240,000 3,720,000
----------- ---------- -----------
Net cash provided by
financing activities 251,250 6,610,813 31,696,454
----------- ---------- -----------
Net increase (decrease) in cash
and cash equivalents (205,612) 5,643,792 218,718
Cash and cash equivalents at
beginning of period 424,330 247,452 -
----------- ---------- -----------
Cash and cash equivalents at
end of period $ 218,718 $5,891,244 $ 218,718
=========== ========== ===========
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1997
ITEM 1 - Financial Statements
The information for the three and six month periods ended June 30, 1997
and 1996 is unaudited, but includes all adjustments which Coastal Caribbean Oils
& Minerals, Ltd. (the "Company") considers necessary for a fair statement of the
results of operations for those periods. The consolidated financial statements
include the Company's 59.25% owned subsidiary, Coastal Petroleum Company
("Coastal Petroleum").
The Company's principal assets are oil, gas, and mineral leases, the
costs of which total $4.3 million at June 30, 1997. The Company has been and
continues to be involved in several legal proceedings which have limited the
Company's ability to commence development activities on its unproved oil and gas
properties or obtain compensation for certain property rights it believes have
been confiscated. These consolidated financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or amounts and classification of liabilities that may
result from the outcome of this uncertainty.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation
--------------------
Liquidity and Capital Resources
Short Term Liquidity
At June 30, 1997, Coastal Caribbean had working capital of
approximately $5.1 million. These funds are expected to be used for general
corporate purposes, including exploration and development and to continue the
litigation against the State of Florida.
<PAGE>
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1997
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Long Term Liquidity
The Company estimates that as much as $500,000 per year may be required
in connection with the Florida litigation. The Company expects that the Florida
litigation could continue at least through 1998, although the State may take
actions that could shorten or lengthen that period. The Company has a program to
evaluate the Company's leases which is estimated to cost approximately $500,000
for 1997 and $1 million for the 1998-1999 period, and is subject to the outcome
of the Florida litigation. During 1997, the Company has spent approximately
$330,000 under its continuing program to identify potential drilling prospects.
The Company's oil and gas properties are currently unproved and
undeveloped. The Company has applied for a drilling permit from the State of
Florida to drill an exploratory well in the water near Apalachicola, Florida.
The State of Florida has resisted the issuance of a drilling permit. If the
Company is successful in obtaining a state drilling permit, then the Company
must also do the following:
1. Obtain a federal drilling permit.
2. Finance drilling of the well, which is estimated to cost between
$10-15 million.
3. Begin drilling the well within one year of the date the state
permit is issued.
The Company does not currently have assets sufficient to fund these
expenditures to drill the exploration well, if a permit were granted. If oil
and/or gas is discovered in commercial quantities, a production program would
require additional permitting and construction of production, storage and
delivery systems. The Company would be required to seek additional financing or
partners to fund these expenditures.
<PAGE>
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1997
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Results of Operations
Three month period ended June 30, 1997 vs. June 30, 1996
The Company incurred a loss of $329,000 for the 1997 quarter, compared
to a loss of $258,000 for the comparable 1996 quarter.
Interest income and other income increased from $34,000 in 1996 to
$72,000 in 1997 due to the funds available for investment from the May 1996
rights offering to shareholders.
Legal fees and costs increased 34% to $163,000 for the 1997 quarter,
compared to $122,000 in the prior period. These costs increased due to (1) the
various appeals filed in connection with the State of Florida's opposition to
the issuance of a drilling permit, (2) the appeal of the adverse decision that
there has not been a taking of the Company's royalty interests, and (3)
preparation for the September 29, 1997 administrative hearing regarding the
issuance of the pending drilling permit.
Administrative expenses increased 27% to $103,000 in 1997 from $81,000
in the prior quarter. The primary reason for the increase is the first time
purchase of directors' and officers' liability insurance in 1996.
Shareholder communications increased 97% from $48,000 in 1996 to
$94,000 in 1997. In 1996, the Company saved the cost of printing and mailing a
separate annual report by utilizing the May 1996 rights offering prospectus in
lieu of an annual report. In addition, the cost of printing and mailing also
increased in 1997 because of the size of the documents and the number of
mailings.
<PAGE>
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1997
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Six month period ended June 30, 1997 vs. June 30, 1996
The Company incurred a loss of $610,000 for the 1997 period, compared
to a loss of $495,000 for the comparable 1996 period.
Interest income and other income increased from $35,000 in 1996 to
$155,000 in 1997 due to the funds available for investment from the May 1996
rights offering to shareholders.
Legal fees and costs increased 45% to $321,000 for the 1997 period,
compared to $222,000 in the prior period. These costs increased due to (1) the
various appeals filed in connection with the State of Florida's opposition to
the issuance of a drilling permit, (2) the appeal of the adverse decision that
there has not been a taking of the Company's royalty interests, and (3)
preparation for the September 29, 1997 administrative hearing regarding the
issuance of the pending drilling permit.
Administrative expenses increased 36% to $226,000 in 1997 from $166,000
in the prior period. The primary reason for the increase is the first time
purchase of directors' and officers' liability insurance in 1996. In addition,
accounting and auditing fees also increased during the 1997 period.
Shareholder communications increased 110% from $61,000 in 1996 to
$129,000 in 1997. In 1996, the Company saved the cost of printing and mailing a
separate annual report by utilizing the May 1996 rights offering prospectus in
lieu of an annual report. In addition, the cost of printing and mailing also
increased in 1997 because of the size of the documents and the number of
mailings.
Exploration costs increased from $6,000 in 1996 to $10,000 in 1997 in
connection with the Company's continuing program to identify potential drilling
prospects.
<PAGE>
PART II - OTHER INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1997
ITEM 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) On June 23, 1997, the Company held its Annual Meeting of
Shareholders. The meeting was adjourned until July 25, 1997 with respect to the
proposal to amend and restate the Bye-laws of the Company.
(b) Directors Charles T. Collis, Nicholas B. Dill, Benjamin W. Heath,
John D. Monroe and Phillip W. Ware were reelected. In accordance with the
amended and restated Bye-laws of the Company, a classified Board of Directors
was elected. The results of the votes cast by the Company's shareholders were
as follows:
<TABLE>
<CAPTION>
Number of Shares Voted Number of Shareholders Voting
Nominee For Withheld For Withheld
<S> <C> <C> <C> <C>
Class I Directors - Terms Expire at the 1998 Annual Meeting
Nicholas B. Dill 28,699,489 5,573,600 2,981 170
Class II Directors - Terms Expire at the 1999 Annual Meeting
Benjamin W. Heath 28,697,762 5,575,327 2,980 171
Phillip W. Ware 28,717,588 5,555,501 2,981 170
Class III Directors - Terms Expire at the 2000 Annual Meeting
Charles T. Collis 28,513,974 5,759,115 2,808 173
John D. Monroe 28,703,870 5,569,219 2,980 171
</TABLE>
(c) The firm of Ernst & Young LLP was approved as the Company's
independent auditors for the fiscal year ending December 31, 1997. The results
of the votes cast by the Company's shareholders were as follows:
<TABLE>
<CAPTION>
Number of Shares Voted Number of Shareholders Voting
---------------------- -----------------------------
For Against Abstain For Against Abstain
--- ------- ------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C>
29,278,974 4,620,292 343,823 2,804 86 91
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1997
ITEM 4 - Submission of Matters to a Vote of Security Holders (Cont'd)
------------------------------------------------------------
(d) The vote on the proposal to amend and restate the Company's
Bye-laws which was adjourned until July 25, 1997 was as follows:
<TABLE>
<CAPTION>
Number of Shares Voted Number of Shareholders Voting
---------------------- -----------------------------
For Against Abstain For Against Abstain
--- ------- ------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C>
14,446,907 14,121,382 852,519 3,078 299 90
</TABLE>
(e) The proposal to Increase the Authorized Common Stock to
250,000,000 shares was approved. The results of the votes cast by the Company's
shareholders were as follows:
<TABLE>
<CAPTION>
Number of Shares Voted Number of Shareholders Voting
---------------------- -----------------------------
For Against Abstain For Against Abstain
--- ------- ------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C>
18,610,750 15,134,976 527,363 2,386 413 182
</TABLE>
(f) The proposal to Authorize 10,000,000 Shares of Preferred Stock was
not approved. The results of the votes cast by the Company's shareholders were
as follows:
<TABLE>
<CAPTION>
Number of Shares Voted Number of Shareholders Voting
---------------------- -----------------------------
For Against Abstain For Against Abstain
--- ------- ------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C>
10,838,290 15,252,149 661,452 2,325 469 187
</TABLE>
ITEM 5 - Other Information
On May 28, 1997, the Oil and Gas Drilling Bill (SB550) was enacted in
Florida. The new legislation requires that a surety will now be based on the
projected cleanup costs and possible natural resource damage associated with
offshore drilling as estimated by the Department of Environmental Protection and
as set up by the Governor and Cabinet. Previously, the required surety was
satisfied by a payment of $4,000 to the Mineral Trust Fund in the first year,
with a maximum $30,000 per year and a payment of $1,500 per well for each
subsequent year.
The Governor and Cabinet are scheduled to meet on August 26, 1997 to
set a surety amount with respect to the Company's drilling permit.
<PAGE>
PART II - OTHER INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1997
ITEM 5 - Other Information (Cont'd)
--------------------------
The Company believes that the law does not apply to its drilling
permits. If it is determined that the new law does apply, then the Company
believes the surety should be based on objective and supportable criteria and
facts.
ITEM 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) On April 9, 1997, the Company filed a Current Report on Form 8-K to
report that Mr. Nicholas B. Dill was elected a director to fill the vacancy on
the board created by Mr. C. Dean Reasoner's resignation on March 20, 1997.
(b) On June 27, 1997, the Company filed a Current Report on Form 8-K to
report the following: (1) five directors were re-elected at the Company's Annual
Meeting on June 23, 1997, (2) the appointment of Ernst & Young LLP as auditors
was approved, (3) the proposal to increase the authorized common stock to 250
million shares was approved, (4) the proposal to authorize 10 million shares of
preferred shares was not approved, and (5) the meeting was adjourned until July
25, 1997 for additional consideration of the proposal to amend and restate the
Bye-laws of the Company.
(c) On July 2, 1997, the Company filed a Current Report on Form 8-K to
report that on June 27, 1997, an administrative judge denied a motion to
relinquish jurisdiction for a hearing scheduled on September 29, 1997 regarding
Coastal Petroleum Company's drilling permit.
<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.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
Registrant
Date: July 28, 1997 By /s/ James R. Joyce
------------------
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000021239
<NAME> COASTAL CARIBBEAN OILS & MINERALS, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 218,718
<SECURITIES> 2,672,611
<RECEIVABLES> 139,081
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,164,798
<PP&E> 4,273,879
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,465,526
<CURRENT-LIABILITIES> 65,693
<BONDS> 0
0
0
<COMMON> 4,806,763
<OTHER-SE> 4,593,070
<TOTAL-LIABILITY-AND-EQUITY> 9,465,526
<SALES> 0
<TOTAL-REVENUES> 154,617
<CGS> 0
<TOTAL-COSTS> 764,350
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (609,733)
<INCOME-TAX> 0
<INCOME-CONTINUING> (609,733)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (609,733)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
