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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2000.
[ ] 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 0-8532
OAKRIDGE ENERGY, INC.
(Exact name of small business issuer as specified in its charter)
Utah 87-0287176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4613 Jacksboro Highway
Wichita Falls, Texas 76302
(Address of principal executive offices)
(940) 322-4772
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 shares outstanding of each of the issuer's classes of common
equity, as of May 31, 2000: Common Stock, $.04 par value, 4,483,573 shares
Transitional Small Business Disclosure Format (check one);
YES [ ] NO [X]
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INDEX
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Page #
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Part I - Financial Information
1. Financial Statements:
Condensed Balance Sheets at
February 29, 2000 and May 31, 2000 1
Condensed Statements of Operations
For the Three Months Ended May 31, 1999 and 2000 2
Statements of Cash Flows
For the Three Months Ended May 31, 1999 and 2000 3
Notes to Condensed Financial Statements 4
2. Management's Discussion and Analysis or Plan of Operation 5
Part II - Other Information
6. Exhibits and Reports on Form 8-K 8
Signatures 8
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Part I of this Report contains forward looking statements that involve risks and
uncertainties. Accordingly, no assurances can be given that the actual events
and results will not be materially different than the anticipated results
described in the forward looking statements. See "Item 2. - Management's
Discussion and Analysis or Plan of Operation" for a description of various
factors that could materially affect the ability of the Company to achieve the
results described in the forward looking statements.
(i)
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ITEM 1. FINANCIAL STATEMENTS.
OAKRIDGE ENERGY, INC.
CONDENSED BALANCE SHEETS
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ASSETS
As of As of
February 29, 2000 May 31, 2000
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(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,672,543 $ 2,934,651
Trade accounts receivable 196,836 209,380
Investment securities 245,175 309,665
Deferred tax asset 283,925 260,083
Prepaid expenses and other 179,736 178,175
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Total current assets 3,578,215 3,891,954
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Oil and gas properties, at cost using the successful efforts method of
accounting, net of accumulated depletion and depreciation of
$4,908,202 on February 29, 2000 and $4,989,730 on May 31, 2000 1,526,338 1,489,804
Coal and gravel properties, net of accumulated depletion and depreciation
of $8,402,067 on February 29, 2000 and $8,192,358 on May 31, 2000 336,861 334,131
Real estate held for development 2,761,119 2,764,715
Other property and equipment, net of accumulated depreciation
of $321,775 on February 29, 2000 and $329,629 on May 31, 2000 150,955 143,102
Other assets 1,010,875 1,025,875
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$ 9,364,363 $ 9,649,581
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 91,155 $ 188,587
Accrued expenses 75,750 61,707
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Total current liabilities 166,905 250,294
Reserve for reclamation costs 413,000 413,000
Deferred Federal income taxes 122,392 200,871
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Total liabilities 702,297 864,165
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Stockholders' equity:
Common stock, $.04 par value, 20,000,000
shares authorized, 10,157,803 shares issued 406,312 406,312
Additional paid-in capital 805,092 805,092
Retained earnings 17,050,509 17,210,781
Unrealized loss on investment securities
available for sale, net of income taxes (131,372) (90,725)
Less treasury stock, at cost, 5,645,130 shares on February 29, 2000
and 5,674,230 on May 31, 2000 (9,468,475) (9,546,044)
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Total stockholders' equity 8,662,066 8,785,416
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$ 9,364,363 $ 9,649,581
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The accompanying notes are an integral part of these financial statements.
1
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OAKRIDGE ENERGY, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
3 Months Ended 3 Months Ended
May 31, 1999 May 31, 2000
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<S> <C> <C>
Revenues:
Oil and gas $ 319,941 $ 455,851
Gravel 16,768 15,593
Other 9,750 9,750
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Total revenues 346,459 481,194
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Operating expenses:
Oil and gas 366,273 248,647
Coal and gravel 17,068 19,174
Real estate development 8,912 10,386
General and administrative 125,715 145,876
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Total operating expenses 517,968 424,083
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Income (loss) from operations (171,509) 57,111
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Other income:
Interest and dividend income 42,088 46,961
Gain on sale of oil and gas properties 7,978 11,906
Other, net 5,680 128,045
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Total other income 55,746 186,912
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Income (loss) before income taxes (115,763) 244,023
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Income taxes (39,301) 83,751
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Net income (loss) $ (76,462) $ 160,272
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Income (loss) per common share (0.02) 0.04
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Weighted average shares outstanding 4,617,202 4,493,555
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The accompanying notes are an integral part of these financial statements.
2
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OAKRIDGE ENERGY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
3 Months Ended 3 Months Ended
May 31, 1999 May 31, 2000
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Cash flows from operating activities:
Net income (loss) $ (76,462) $ 160,272
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depletion and depreciation 141,951 95,995
Accretion on investment securities, net 14 0
Gain on sale of oil and gas properties (7,978) (11,906)
Gain on sale of other property and equipment (5,500) (128,045)
Deferred federal income taxes 0 78,479
Net changes in assets and liabilities:
Trade accounts receivable (11,290) (12,544)
Prepaid expenses and other current assets 1,675 (9,353)
Accounts payable 78,461 97,432
Federal income tax payable (132,360) 0
Accrued expenses (17,296) (14,043)
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Net cash provided by (used in) operating activities (28,785) 256,287
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Cash flows from investing activities:
Additions to oil and gas properties (323) (44,993)
Additions to real estate held for development (32,794) (8,503)
Investments in partnership 0 (15,000)
Proceeds from sale of oil and gas properties 12,478 11,906
Proceeds from sale of other property and equipment 5,500 129,066
Maturities of investments available for sale 100,000 0
Principal payments received on notes receivable 1,354 10,914
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Net cash provided by investing activities 86,215 83,390
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Cash flows from financing activities:
Purchases of treasury stock (1,125) (77,569)
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Net cash used in financing activities (1,125) (77,569)
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Net increase in cash and cash equivalents 56,305 262,108
Cash and cash equivalents at beginning of period 2,614,499 2,672,543
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Cash and cash equivalents at end of period $ 2,670,804 $ 2,934,651
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Supplemental disclosures of cash flow information:
Income taxes paid $ 120,437 $ 23,732
</TABLE>
Recognition in Stockholders' Equity of the net unrealized holding loss on
available for sale securities of $77,031, net of tax effect of $39,683
during the quarter ended may 31, 1999 and $40,647, net of tax effect of
$23,842 during the quarter ended may 31, 2000.
The accompanying notes are an integral part of these financial statements.
3
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OAKRIDGE ENERGY, INC.
Notes to Condensed Financial Statements
---------------------------------------
(Unaudited)
(1) The accompanying unaudited financial statements for three month periods
ended May 31, 1999 and 2000 reflect, in the opinion of management, all
adjustments, which are of a normal and recurring nature, necessary for a
fair presentation of the results for such periods.
(2) The foregoing financial statements should be read in conjunction with the
annual financial statements and accompanying notes for the fiscal year
ended February 29, 2000.
(3) The Company's operating segments are set forth in the annual financial
statements and accompanying notes for the fiscal year ended February 29,
2000.
Information regarding operations and assets by segment is as follows:
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For the three For the three
months ended months ended
May 31, 1999 May 31, 2000
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Business segment revenue:
Oil and gas $ 329,691 $ 465,601
Gravel 16,768 15,593
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$ 346,459 $ 481,194
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Business segment profit (loss):
Oil and gas $ (36,582) $ 216,954
Coal and gravel (300) (3,581)
Real estate development (8,912) (10,386)
General corporate (125,715) (145,876)
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Income (loss) from operations (171,509) 57,111
Interest income and other, net 47,768 175,006
Gain on sales of oil and gas properties 7,978 11,906
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Income (loss) before income taxes $(115,763) $ 244,023
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<CAPTION>
As of As of
February 29, 2000 May 31, 2000
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Total assets:
Oil and gas $5,119,166 $5,412,932
Coal and gravel 336,861 334,131
Real estate development 2,761,119 2,764,715
General corporate 1,147,217 1,137,803
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$9,364,363 $9,649,581
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with
Items 6 and 7 of the Company's Annual Report on Form 10-KSB for the fiscal year
ended February 29, 2000 and the Notes to Condensed Financial Statements
contained in this report.
RESULTS OF OPERATIONS
The Company had net income of $160,272 ($.04 per share) in the
three months ended May 31, 2000 compared to a net loss of $76,462 ($.02 per
share) during the three months ended May 31, 1999. Substantially improved oil
and gas revenues, reduced oil and gas operating expenses and income from the
sale of miscellaneous assets were responsible for the improved performance.
Oil and gas revenues increased approximately $135,900 (42.5%) in
the three months ended May 31, 2000 due to significant increases in the average
oil and gas prices received by the Company. Reflecting continued strong
worldwide oil prices, the Company's average oil price received increased $12.69
per barrel (approximately 83.8%) during the 2000 period to $27.83 per barrel.
The Company's average price received in the 1999 period was $15.14 per barrel.
The Company's average gas price received also rose from $1.93 per MCF in the
1999 period to $2.88 per MCF in the 2000 period, an increase of approximately
49.6%. The increase in oil and gas revenues was achieved despite declines in
barrels of oil and MCFs of gas sold during the 2000 period of approximately
21.3% and 13.8%, respectively. Revenues from the Company's principal property in
Madison County, Texas tracked overall results, increasing approximately $82,400
(31.9%) on higher average oil and gas prices received and lower production sales
volumes.
Revenues from the Company's gravel operations decreased
approximately $1,200 (7.0%) in the three months ended May 31, 2000 due to the
lower level of gravel sales made by Four Corners Materials, Inc. (formerly
called Durango Construction, Inc.) from the Company's Colorado gravel property
during the 2000 period. Rentals received by the Company from its surface lease
to such corporation were the same in both periods. The Company had no coal
revenues in either the 1999 or 2000 period.
5
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The expenses of the Company's oil and gas operations decreased
approximately $117,600 (32.1%) in the 2000 period due to the absence of any dry
hole costs and lower depletion and depreciation expense. The Company incurred
approximately $89,700 of dry hole costs in the 1999 period but did not
participate in the drilling of any wells in the 2000 period. Depletion and
depreciation expense declined approximately $43,400 (34.7%) primarily as a
result of the production decline from the Madison County, Texas property. The
Company's overall per equivalent barrel amortization rate also declined between
periods due to the Company's higher level of estimated proven oil and gas
reserves at February 29, 2000 as compared to the prior year. Marginally
offsetting the declines were higher lease operating expense, principally from
the Madison County, Texas property and the North Texas area leases, and higher
production taxes resulting from the increased oil and gas revenues.
The expenses of the Company's coal and gravel operations rose
approximately $2,100 (12.3%) due to severance benefits paid to a former employee
and testing and permitting fees associated with the reclamation work at the
Carbon Junction coal mine as most other categories of expense declined. Real
estate development expenses increased approximately $1,500 (16.5%) due to
current and back ad valorem taxes paid on the approximate 10-acre river tract
purchased by the Company adjacent to its other Colorado land in 1998. Virtually
all other categories of expense decreased due to the Company's restriction of
further activities until decisions are made by the City of Durango with respect
to possible acquisitions of the Company's land for construction of a water
reservoir and a collector or arterial road.
General and administrative expense increased approximately
$20,200 (16.0%) due to higher auditing expense resulting from the change in
independent public accountants made by the Company between the 1999 and 2000
periods and greater tax accounting charges.
Other income increased approximately $131,200 (over 235%) in the
three months ended May 31, 2000 as compared to the 1999 period. Gains on the
sale of surplus coal equipment (bulldozers) and the sale of a right of way from
a portion of the Company's Colorado land were the principal reasons for the
increase in the 2000 period as interest and dividend income and gain on the sale
of oil and gas properties were only marginally higher than in the 1999 period.
6
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The Company's weighted average shares outstanding decreased
approximately 2.7% in the 2000 period due to purchases of the Company's common
stock made by the Company since the end of the 1999 period. The Company
purchased a total of 29,100 shares of its common stock in the three months ended
May 31, 2000, including 25,000 shares purchased from Noel Pautsky's widow.
FINANCIAL CONDITION AND LIQUIDITY
During the first quarter of fiscal 2001, the Company's operating
and investing activities carried the Company's financing activities, resulting
in an approximate $262,100 increase in cash and cash equivalents at May 31,
2000. Higher average oil and gas prices received enabled the Company's operating
activities to provide approximately $256,300 in funds during the period. Gains
from the sale of surplus coal equipment and a land right of way, which more than
offset additions to oil and gas properties and real estate held for development
and an additional investment in a partnership which markets the gas from the
Madison County, Texas property, allowed the Company's investing activities to
add $83,400 in funds. The Company's financing activities (entirely purchases of
the Company's common stock) used approximately $77,600 in funds. At May 31,
2000, the Company had no indebtedness and cash, cash equivalents and investment
securities available for sale totaling approximately $3,244,300.
The Company expects to fund its contemplated operations
(including an approximate $435,500 commitment with respect to its interest in a
new prospect in Smith County, Texas involving the purchase of one existing
producing well and the drilling of two additional wells) and any stock purchases
it makes during the second quarter and the remainder of fiscal 2001 from its
cash and cash equivalents, sales or maturities of all or a portion of its
investment securities available for sale and the cash flow from its oil and gas
properties. Any significant decline in oil and gas prices from current levels
might cause the Company to restrict its activity levels from those presently
contemplated by management for the remainder of the fiscal year
7
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - Financial Data Schedule for the three months ended May 31,
2000 filed as Exhibit 27.
(b) Reports on Form 8-K - No reports on Form 8-K were filed by the Company
during the three months ended May 31, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
OAKRIDGE ENERGY, INC.
(Registrant)
DATE: July 17, 2000 By /s/ Sandra Pautsky
-----------------------------------------
Sandra Pautsky, President
By /s/ Carol J. Cooper
---------------------------------------
Carol J. Cooper, Chief Accounting Officer
8
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INDEX TO EXHIBITS
The exhibits filed herewith are filed in accordance with the requirements
of Item 601 to Regulation S-B for filings on Form 10-QSB. For convenient
reference, each exhibit is listed according to the number assigned to it in the
Exhibit Table of such Item 601.
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EXHIBIT
NUMBER DESCRIPTION
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(2) - Plan of acquisition, reorganization, arrangement, liquidation or
succession - not applicable.
(3) - (i) Articles of Incorporation - not applicable.
(ii) Bylaws - not applicable.
(4) - Instruments defining the rights of security holders, including
indentures - not applicable.
(10) - Material contracts - not applicable.
(11) - Statement re computation of per share earnings - not applicable.
(15) - Letter on unaudited interim financial information - not applicable.
(18) - Letter on change in accounting principles - not applicable.
(19) - Reports furnished to security holders - not applicable.
(22) - Published report regarding matters submitted to vote - not
applicable.
(23) - Consents of experts and counsel - not applicable.
(24) - Power of Attorney - not applicable.
(27) - Financial Data Schedule - filed herewith.
(99) - Additional exhibits - not applicable.
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