UNITED STATES
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 ended March 31, 1998
---------------------------------------
[ ] 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 April 20, 1998 was 40,056,358.
<PAGE>
PART I - 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>
March 31, December 31,
1998 1997
------------ ------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 517,782 $ 316,333
Accounts and interest receivable 63,407 77,302
U.S. Government securities 2,945,302 3,433,035
Prepaid insurance 181,580 213,840
------------ ------------
Total current assets 3,708,071 4,040,510
------------ ------------
Unproved oil, gas and mineral properties (full cost method) 4,444,336 4,395,132
Other 26,894 26,765
------------ ------------
Total assets $ 8,179,301 $ 8,462,407
============ ============
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 56,865 $ 63,975
------------ ------------
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 4,806,763
Capital in excess of par value 28,693,033 28,693,033
------------ ------------
33,499,796 33,499,796
Deficit accumulated during development stage (25,377,360) (25,101,364)
------------ ------------
Total shareholders' equity 8,122,436 8,398,432
------------ ------------
Total liabilities, minority interests and shareholders' equity $ 8,179,301 $ 8,462,407
============ ============
</TABLE>
<PAGE>
PART I - 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 (Jan. 31, 1953)
March 31, to March 31,
1998 1997 1998
--------- --------- ---------------
<S> <C> <C> <C>
Interest and other income $ 51,974 $ 82,458 $3,558,100
--------- --------- ----------
Expenses:
Legal fees and costs 113,939 158,212 11,583,842
Administrative expenses 133,290 123,390 6,502,439
Salaries 39,000 39,000 2,789,278
Shareholder communications 34,260 34,799 3,470,291
Exploration costs 7,481 7,552 760,075
Lawsuit judgments - - 1,941,916
Minority interests - - (632,974)
Other - - 364,865
Contractual services - - 2,155,728
--------- --------- ----------
327,970 362,953 28,935,460
--------- --------- ----------
Net loss $(275,996) $(280,495)
========== ==========
Deficit accumulated during
development stage $25,377,360
===========
Average number of shares
Outstanding (Basic & Diluted) 40,056,358 40,053,858
========== ==========
Net loss per share (Basic & Diluted) $(.01) $(.01)
====== ======
</TABLE>
<PAGE>
PART I - 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
Three months ended (Jan. 31, 1953)
March 31, to March 31,
1998 1997 1998
--------- --------- ---------------
Operating activities:
<S> <C> <C> <C>
Net loss $(275,996) $(280,495) $ (25,377,360)
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 13,895 (19,924) (63,407)
U.S. Government securities 487,733 289,839 487,733
Prepaid insurance 32,260 23,015 (181,580)
Current liabilities (7,109) (179,586) 56,865
Other (130) (730) 472,011
--------- --------- -------------
Net cash provided by (used for) operating
activities 250,653 (167,881) (24,482,738)
--------- --------- -------------
Investing activities:
Additions to oil, gas, and mineral
Properties net of assets acquired
for common stock (49,204) (193,036) (4,444,336)
Reimbursement of lease rentals and
other expenses - - 1,243,086
U.S. Government securities sold (purchased) - 198,064 (3,433,035)
Purchase of fixed assets - - (61,649)
--------- --------- -------------
Net cash provided by (used for) investing
activities (49,204) 5,028 (6,695,934)
--------- --------- -------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - - 26,342,205
Shares issued upon exercise of
options - 11,250 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares - - 3,720,000
--------- --------- -------------
Net cash provided by financing activities - 11,250 31,696,454
--------- --------- -------------
Net increase (decrease) in cash
and cash equivalents 201,449 (151,603) 517,782
Cash and cash equivalents at
beginning of period 316,333 424,330 -
--------- --------- -------------
Cash and cash equivalents at
end of period $ 517,782 $ 272,727 $ 517,782
========= ========= =============
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
March 31, 1998
ITEM 1 - Financial Statements
The information for the three month periods ended March 31, 1998 and
1997 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").
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby identified as "forward looking statements"
for purposes of the "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995. The Company cautions readers that forward looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward looking
statements.
The Company's principal assets are oil, gas, and mineral leases, the
costs of which total $4.4 million at March 31, 1998. The Company has been and
continues to be involved in several legal proceedings against the State of
Florida 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 March 31, 1998, Coastal Caribbean had cash and securities of
approximately $3.5 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.
March 31, 1998
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 $1
million for the 1998-1999 period, and is subject to the outcome of the Florida
litigation. During the quarter ended March 31, 1998, the Company has spent
approximately $50,000 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 (including the cost of the
recommended surety), which is estimated to cost approximately
$5.5 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>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Results of Operations
Three month period ended March 31, 1998 vs. March 31, 1997
The Company incurred a loss of $276,000 for the 1998 quarter, compared
to a loss of $280,000 for the comparable 1997 quarter.
Interest income and other income decreased 37% from $82,000 in 1997 to
$52,000 in 1998 because less funds were available for investment during the 1997
period and interest rates were lower.
Legal fees and costs decreased 28% to $114,000 for the 1998 quarter,
compared to $158,000 in the prior period. In the 1997 period, the Company had
been involved in various appeals and hearings in opposition to the issuance of a
drilling permit. During the current period, the Company was awaiting a decision.
Administrative expenses increased 9% to $133,000 in 1997 from $122,000
in the prior quarter. The amount of directors' and officers' liability insurance
was increased in July 1997.
<PAGE>
PART II - OTHER INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
March 31, 1998
ITEM 5 - Other Information
On April 8, 1998, a Florida Administrative Law Judge recommended that
the Coastal Petroleum Company is entitled to an offshore drilling permit for its
St. George Island prospect, with a recommended surety of $225 million. The
Department of Environmental Protection ("DEP") had recommended a $4.25 billion
surety. The Company expects that on May 12, 1998, the Administration Commission
will take action regarding the judge's recommendations. In addition, the DEP
must act on the recommendations before May 26, 1998.
On March 24, 1998, Coastal Petroleum Company filed a petition for a
Formal Administrative Hearing to resolve the dispute with the DEP regarding
their denial of the 12 drilling permit applications (excluding the St.
George Island prospect above).
ITEM 6 - Exhibits and Reports on Form 8-K
--------------------------------
On January 28, 1998, the Company filed a Current Report on Form 8-K to
report that the Florida Supreme Court refused to review the First District Court
of Appeals decision denying Coastal Petroleum Company's claim that a
compensatory taking of its royalty interest acreage had occurred.
On March 26, 1998, the Company filed a Current Report on Form 8-K to
report that the Florida DEP denied 12 drilling permit applications which were
submitted in1997 by Coastal Petroleum Company.
<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: May 8, 1998 By /s/ James R. Joyce
------------------------------------
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 517,782
<SECURITIES> 2,945,302
<RECEIVABLES> 63,407
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,708,071
<PP&E> 4,444,336
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,179,301
<CURRENT-LIABILITIES> 56,865
<BONDS> 0
0
0
<COMMON> 4,806,763
<OTHER-SE> 3,315,673
<TOTAL-LIABILITY-AND-EQUITY> 8,179,301
<SALES> 0
<TOTAL-REVENUES> 51,974
<CGS> 0
<TOTAL-COSTS> 327,970
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (275,996)
<INCOME-TAX> 0
<INCOME-CONTINUING> (275,996)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (275,996)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
