UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the Fiscal year ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File Number 0-8835
TAURUS PETROLEUM, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0736215
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10100 Reunion Place, Suite 630, San Antonio, Texas 78216
(Address of Principal Executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 525-1599
Securities registered pursuant to Section 12(b) of the Act: Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
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
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 aggregate market value as of December 15, 1995, of voting stock held by
non_affiliates of the registrant (based upon the average bid and asked price)
was $105,166.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [X] No [ ]
As of December 15, 1995, 59,954,042 shares of the registrant's Common Stock
were outstanding.
<PAGE>
PART I.
ITEM L. BUSINESS
GENERAL DEVELOPMENT OF THE COMPANY
Taurus Petroleum, Inc. ("TPI" or the "Company") is an independent oil
and gas exploration, development and production company with headquarters in
San Antonio, Texas. In April, 1977 Taurus Oil Corporation was organized in
Colorado. In November, 1984 Taurus Oil Corporation and The Methane Gas
Company were merged into TPI under Chapter 11 of the Bankruptcy Reform Act of
1978, as amended. In January, 1987 TPI acquired Ridgeway Exco, Inc. as a
wholly owned subsidiary. TPI owns interest in 67 productive oil and gas wells
located in Texas, Louisiana, Wyoming, Oklahoma, and Montana, and operates 39
of the wells.
TPI sold 1 well during fiscal 1995.
Financial Information about Industry Segments
The Company is engaged solely in the oil and gas exploration and
production business in the continental United States. The Company has no
other industry segments.
Narrative Description of Business
The Company was formed to engage in oil and gas exploration and
production. TPI occasionally buys and sells, or otherwise acquires, oil and
gas leases and participates with others in drilling oil and gas wells. The
Company also occasionally buys, sells, or otherwise acquires existing oil and
gas production. When crude oil and natural gas are discovered and produced by
TPI or its partners, the resulting products are sold at the well head to crude
oil purchasers and pipeline companies in the immediate area where production
originates.
Markets and Customers
The principal markets for oil are refineries and crude oil transmission
companies which have facilities near TPI's producing properties. The
principal markets for gas are companies which have pipelines located near gas
producing properties. TPI has purchasers for its present production and does
not anticipate difficulty in finding purchasers for any new production;
however, the availability of markets for oil and gas and the prices obtained
for production depends upon a number of factors beyond TPI's control. Such
factors include but are not limited to the availability of pipelines and other
means of transportation, Federal and State regulations on the production,
transport and sale of oil and gas, weather conditions and gas proration.
Information relating to major purchasers of the Company's products is
included in Note 5 to the Notes to Consolidated Financial Statements included
in Item 8.
There presently exists a steady market for any oil that may be produced
by the Company; therefore, the loss of any major oil purchaser would not be
detrimental to the Company. The market for oil continues to be volatile,
posted prices during the past calendar year have ranged from $ 15.48 to $
18.18 per barrel for West Texas Intermediate, a benchmark price. The posted
price for West Texas Intermediate on December 1, 1995 was $16.75 per barrel.
During fiscal 1995 the average oil price received by the Company was $ 16.67
per barrel as compared to $14.31 in fiscal 1994 and $14.81 per barrel in
fiscal 1993.
<PAGE>
Average gas prices received by the Company decreased to $ 1.35 for fiscal
1995 as compared to $1.76 per MCF for fiscal 1994. The Company had realized a
$ 1.81 per MCF average in fiscal 1993. Gas prices stabilized during fiscal
1994 and 1993 as compared to the extremely volatile market in the preceding
fiscal year of 1992. On December 1, 1995 January natural gas settled at $ 1.97
per MMBtu. In fiscal 1994 the same contract settled at $1.65 per MMBtu.
Seasonal Nature of Business
The Company's business may be deemed seasonal to the extent that natural
gas demand normally increases during winter months. Also, any operational
repairs or enhancements may be curtailed during winter months.
Working Capital
The Company's working capital are generated primarily from the sale of
its oil and gas production and overhead reimbursement. The amount of oil and
gas sold is dependent on market conditions, production capacity, weather
conditions, and other factors related to extraction of minerals. As of
September 30, 1995 the Company had a negative working capital of $ 155,938.
The Company's increase in negative working capital is primarily due to the
increase in accounts payable to Validus Operating, Inc. for management fees.
Backlog Orders
The Company does not have any backlog orders.
Government Contracts
The Company's business is not subject to renegotiation or termination of
contracts or subcontracts at the election of the Government.
Competition
Oil and gas exploration and the acquisition of producing and undeveloped
properties is a highly competitive and speculative business. TPI does not
hold a significant competitive position in the oil and gas industry. In
seeking suitable opportunities TPI competes with a number of other companies,
including large oil and gas companies with greater financial resources and
technical capabilities. These companies may have a competitive advantage in
acquiring suitable properties for exploration, contracting for drilling
equipment and hiring qualified personnel.
TPI's success in increasing its reserves depends on its ability to
select, acquire and market suitable drilling prospects or conclude favorable
mergers or acquisitions of producing properties.
Governmental Regulation
The oil and gas industry is subject to extensive Federal and State
regulation governing both the conduct of operations and the marketing of
hydrocarbons once production is established. Matters which are subject to
Federal or State control include permits to drill, the location of wells and
limitations on production for conservation. The economics of oil and gas
exploration and development are particularly sensitive to changes in tax laws
and administrative regulations relating to the petroleum industry, and it is
not possible to predict future changes in the laws and their effects on TPI.
Environmental Law Compliance
The Federal Government and various State governments have laws and
regulations regarding the control of contamination of the environment which
may require the acquisition of a permit before drilling commences, prohibit
drilling activities on certain lands lying within wilderness areas where
pollution may arise, and impose substantial penalties for pollution resulting
from drilling operations. Violation of environmental laws and regulations may
result in the imposition of fines and, in certain circumstances, the entry of
an order for the abatement of the conditions or suspension of the activities
giving rise to the violation. Although TPI is subject to these regulations,
TPI does not believe its business operations presently impair environmental
quality. Compliance with environmental laws could have an adverse effect upon
the capital expenditures, earnings and competitive position of TPI. Since
<PAGE>
inception TPI has not made any material capital expenditures for environmental
control facilities and has no plans to do so.
Persons Employed by Registrant
As of December 15, 1995, the Company had no full-time employees.
Item 2. Properties
Reserves
The following table sets forth the estimated quantities of proved
reserves for TPI as of September 30, 1995, 1994, and 1993, and the present
value of estimated future net revenues from these reserves on a non_escalated
basis, discounted by ten percent per year. The estimate of proved reserves
and related valuations were determined by an independent petroleum engineering
firm.
<TABLE>
<CAPTION>
Proven Reserves
September 30,
1995 1994 1993
<S> <C> <C> <C>
____________________________________________________________________
Proved oil reserves (Bbls) 6,203 32,434 24,190
Proved gas reserves (MCF) 1,029,354 1,039,861 980,009
Present value of estimated
Future net revenues $368,936 $673,720 $706,580
____________________________________________________________________
</TABLE>
For additional information pertaining to the Company's reserves, see
Note 7 to the Notes to Consolidated Financial Statements included in Item 8.
No estimates of proved oil or gas reserves were filed with or included
in reports to any other Federal authority or agency since the beginning of the
last fiscal year. The Company's future oil reserves dropped due to the sale
of one oil property. The drop in future revenue is due largely to longer life
expectancy of current gas wells resulting in more expenses and a very low
future gas price estimated at $ 1.23. The January price is currently $ 1.97.
Production
The table below sets forth information with respect to TPI's producing
oil and gas properties for the fiscal years ended September 30, 1995, 1994,
and 1993.
<TABLE>
<CAPTION>
Year Ended September 1995 1994 1993
______________________________________________________________
<S> <C> <C> <C>
Production
Oil and condensate (Bbls.) 3,380 5,696 6,285
Gas (MCF) 61,227 88,893 90,945
Average sales prices
Oil and condensate ($/Bbls.) $16.67 $14.31 $14.81
Gas ($/MCF) 1.35 1.76 1.81
Average production cost
($/per equivalent Bbls.) 8.56 5.51 7.37
______________________________________________________________
</TABLE>
<PAGE>
Productive wells, developed acreage and undeveloped acreage in which TPI
owns interests are located in the United States and consisted of the following
as of September 30, 1995:
<TABLE>
<CAPTION>
GROSS NET
__________________________________________________
<S> <C> <C>
Oil wells 37 19.6
Gas wells 30 17.2
Developed acreage 12,843 4,992
Undeveloped acreage 250 27.6
___________________________________________________
</TABLE>
Drilling Activity
The company participated in the development of a waterflood in Wyoming
and rework of outside operated properties.
Delivery Commitments
The Company is not obligated to provide a fixed or determinable quantity
of oil or gas in the future under any contract or agreement.
Item 3. Legal Proceedings
No legal proceedings currently exist.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted during the fourth quarter of fiscal 1995
to a vote of security holders, through the solicitation of proxies or
otherwise.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Holders
As of December 15, 1995, there were approximately 5,000 stockholders of
record and 59,954,042 shares of TPI's Common Stock, $.001 par value,
outstanding.
Dividends
The Company has never paid dividends on its Common Stock.
<PAGE>
Market Information
The Company's Common Stock is traded on the over-the-counter market and
the quotes are carried in the "pink sheets". There are very few trades in the
Company's common stock. The following sets forth the range of high and low
closing bid prices of the Common Stock from October l, 1993, through November
30, 1995. These prices are believed to be representative inter-dealer
quotations, without retail markup, markdown or commissions, and may not
represent actual transactions.
<TABLE>
<CAPTION>
High Low
Bid Ask Bid Ask
___________________________________________________________________________
<S> <C> <C> <C> <C>
October 1 through November 30, 1995 .001 .02 .001 .02
Quarter ended September 30, 1995 .001 .02 .001 .02
Quarter ended June 30, 1995 .001 .02 .001 .02
Quarter ended March 31, 1995 .001 .02 .001 .02
Quarter ended December 31, 1994 .001 .02 .001 .02
Quarter ended September 30, 1994 .001 .02 .001 .02
Quarter ended June 30, 1994 .001 .02 .001 .02
Quarter ended March 31, 1994 .001 .02 .001 .02
Quarter ended December 31, 1993 .001 .02 .001 .02
_________________________________________________________________________
</TABLE>
<PAGE>
Item 6. Selected Financial Data
The following table includes certain selected financial data of TPI for
the fiscal years indicated:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
___________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Operating
revenue $151,073 $249,183 $271,441 $315,564 $383,539
Net loss (137,056) ( 83,119) (111,250) (139,333) (223,386)
Net loss per
common share (.00) (.00) (.00) (.00) (.01)
Cash dividends
per common - - - - -
share
Total assets 360,880 449,027 478,847 537,174 607,748
Long_term debt,
net of current
portion 92,358 112,623 127,515 - -
______________________________________________________________________________
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Consolidated net losses were $137,056, $ 83,119 and $111,250 for fiscal
1995, 1994 and 1993, respectively. Operating revenue decreased $ 98,110
during fiscal 1995, and decreased $ 22,258 during fiscal 1994 as compared to
fiscal 1993. The decrease in operating revenue in fiscal 1995 was due to the
decrease in the price the Company received for its gas along with a reduction
in the quantities of oil and gas production due primarily to the natural
production decline in the Company's properties and the disposal of one
producing property.
<PAGE>
The Company produced 3,380 barrels of oil during fiscal 1995 as compared
to 5,696 barrels in fiscal 1994 and 6,285 in fiscal 1993. Gas production in
fiscal 1995 was 61,227 MCF as compared to 88,893 MCF in fiscal 1994 and
90,945 MCF in fiscal 1993. The decrease in oil production is due to the aging
of the Company's oil properties combined with the continued disposition of
wells. The reduction in gas production is attributed to the natural aging of
the gas properties. The average price received during fiscal 1995 was $16.67
per barrel, up from the average price per barrel of $14.31 for the prior year.
The average price received per MCF of gas in fiscal 1995 was $1.35, a
decrease of $0.41 as compared to fiscal 1994. The fiscal 1994 price decreased
$0.05 to $1.76 from $1.81 received in fiscal 1993.
Administrative overhead revenue in fiscal 1995 decreased $1,544 compared
to fiscal 1994. This decrease is the result of the loss of administrative
overhead from properties that have been sold or plugged.
Lease operating expenses for the Company were $121,043, $117,700 and
$163,829 for fiscal 1995, 1994 and 1992, respectively. The increase in 1995
as compared to fiscal 1994 is primarily due to lease operating increases on a
waterflood project in Wyoming and a large expenditure for pollution abatement
on outside operated properties in Texas.
The Company's depreciation and depletion ("D&D") expense decreased by
$ 7,155 in fiscal 1995 as compared to 1994. The decrease in fiscal 1994 and
fiscal 1995 was the result of production volumes being a smaller percentage of
reserves .
The Company's general and administrative expenses decreased by $ 4,319
in fiscal 1995. This decrease is associated with managements continued
efforts to reduce expenses.
Interest expense increased to $10,468 in fiscal 1995 as compared to $
7,656 and $ 4,369 in fiscal 1994 and 1993, respectively. This is the result of
the Company converting a portion of its management fee payable to long-term
debt in December of 1992.
For the fiscal year 1995, the Company sold one property. The Company
sold no producing properties in fiscal 1994 and one in fiscal 1993.
Liquidity and Capital Resources
The Company's current liabilities exceed current assets by $155,938 at
September 30, 1995 as compared to a negative working capital of $52,607 at
September 30, 1994.
The Company had a negative cash flow of $103,819 (Net income plus
depreciation and depletion) during fiscal 1995 as compared to the negative
cash flows of $ 42,727 for fiscal 1994 and $ 51,593 for fiscal 1993. The
negative cash flows in fiscal 1995, 1994 and 1993 were funded by loans from
its controlling shareholders, existing cash, issuance of Common Stock and sale
of one property.
On December 7, 1992 the Company issued 20,000,000 shares of TPI Common
Stock to Validus Operating, Inc. ("Validus") at $.005 per share as
consideration for $100,000 of the management fees payable to Validus. In
addition, TPI converted a portion of the management fee payable of $99,000 to
a long-term note. Also, on September 30, 1993 TPI converted $50,000 of the
management fee payable to Validus to long-term note. Validus has represented
that it will require payment of future management fees and the notes payable
only to the extent of available cash flow of TPI.
In addition, on December 7, 1992, the Company issued 2,000,000 shares
of newly issued TPI Common Stock to Brian Cornish at $.005 per share as
consideration for the $10,000 owed to Mr. Cornish.
The Company's primary source of cash, other than normal operations, has
been through the issuance of Common Stock, and if needed, cash from the sale
of property and equipment will be used to provide cash flow.
<PAGE>
Management is aware that positive steps are needed to increase the
Company's size. Management is pursuing various options to attract capital.
The options being considered include, further infusions of cash and producing
oil and gas properties by the controlling shareholders, bank debt secured by
the Company's producing oil and gas properties, and acquisitions and mergers
with other oil and gas producing companies. The Company has also implemented
a program managing outside properties for a management fee.
Item 8. Financial Statements and Supplementary Data
The information required by this item starts on the next page.
<PAGE>
TAURUS PETROLEUM, INC.
AND SUBSIDIARIES
Financial Statements
Submitted in Response to Item 8
for the Year Ended September 30, 1995
<PAGE>
Report of Ernst & Young LLP Independent Auditors
Board of Directors and Stockholders
Taurus Petroleum, Inc.
We have audited the consolidated financial statements of Taurus Petroleum,
Inc. and subsidiaries listed in the accompanying index to consolidated
financial statements (Item 14(a)). Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the management of Taurus
Petroleum, Inc. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements listed in the
accompanying index to financial statements (Item 14(a)) present fairly, in all
material respects, the consolidated financial position of Taurus Petroleum,
Inc. and subsidiaries at September 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended September 30, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
The accompanying financial statements have been prepared assuming that Taurus
Petroleum, Inc. will continue as a going concern. As more fully described in
Note 1, the Company has incurred recurring operating losses and has a working
capital deficiency. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.
ERNST & YOUNG LLP
San Antonio, Texas
January 4, 1996
<PAGE>
<TABLE>
TAURUS PETROLEUM, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 1995 and 1994
<CAPTION>
Assets 1995 1994
Current assets: ____________ ___________
<S> <C> <C>
Cash and cash equivalents $ 2,174 $ 900
Accounts receivable:
Joint interest owners, net of allowance
for doubtful accounts of $17,009 in
1995 and $13,792 in 1994 5,650 5,887
Oil and gas sales 24,809 52,274
__________ __________
Total accounts receivable 30,459 58,161
Other current assets 17,163 24,892
__________ __________
Total current assets 49,796 83,953
Property and equipment, at cost:
Oil and gas properties, successful
efforts method (Notes 1 and 7)
Unproved oil and gas properties 17,285 17,285
Proved oil and gas properties 2,145,930 2,210,173
Other 36,110 36,110
__________ ___________
2,199,325 2,263,568
Less accumulated depreciation
and depletion 1,888,241 1,898,494
__________ ___________
Net property and equipment 311,084 365,074
__________ ___________
Total Assets $ 360,880 $ 449,027
___________ ____________
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable-trade $ 61,000 $ 23,090
Accounts payable-related parties (Note 6) 107,396 69,600
Current portion of notes payable-related
parties (Notes 2 and 6) 21,922 14,892
Undistributed oil and gas sales 13,451 28,291
Other current liabilities 1,965 687
__________ ___________
Total current liabilities 205,734 136,560
Notes payable-related parties, net of current
portion (Notes 2 and 6) 92,358 112,623
Stockholders' equity (Note 4):
Common Stock, par value $.001; authorized
200,000,000 shares; issued 60,307,749 shares 60,307 60,307
in 1995 and in 1994
Additional paid-in capital 3,082,328 3,082,328
Accumulated deficit (since date of
reorganization in November 1984) (2,997,274) (2,860,218)
____________ ___________
145,361 282,417
Less treasury stock, 353,707 shares at cost (82,573) (82,573)
__________ ___________
Total stockholders' equity 62,788 199,844
___________ __________
Total liabilities and stockholders' equity $ 360,880 $ 449,027
_____________ ______________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
TAURUS PETROLEUM, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended September 30, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
______ ______ ______
<S> <C> <C> <C>
Operating revenue:
Oil and gas sales (Note 1) $ 141,545 $ 238,111 $ 257,671
Administrative overhead 9,528 11,072 13,770
__________ _________ _________
151,073 249,183 271,441
Costs and operating expenses:
Lease operating, including taxes 121,043 117,700 163,829
Depreciation and depletion 33,237 40,392 59,657
General and administrative 33,558 37,877 47,830
Management agreement (Note 6) 120,000 120,000 120,000
Bad debt provision 8,811 8,681 -
__________ __________ __________
316,649 324,650 391,316
__________ __________ __________
Loss from operations (165,576) (75,467) (119,875)
Other income (expense):
Interest expense (10,468) (7,656) (4,369)
Gain on sale of property
and equipment 37,723 - 6,750
Other 1,265 4 6,244
__________ __________ __________
28,520 (7,652) 8,625
Net loss $ (137,056) $ (83,119) $(111,250)
___________ ___________ ___________
Net loss per common share $ (.00) $ (.00) $ (.00)
Weighted average number of ___________ ___________ ___________
common shares outstanding 59,954,042 59,954,042 55,915,685
___________ ___________ ___________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
TAURUS PETROLEUM, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years Ended September 30, 1995, 1994 and 1993
<CAPTION>
Addi- Total
tional Less stock_
Common Stock paid-in Accumulated treasury holders'
Shares Amount capital deficit stock equity
<S> <C> <C> <C> <C> <C> <C>
Balances, Sep-
tember 30, 1992 38,307,749 $ 38,307 $ 2,994,328 ($2,665,849) ($ 82,573) $ 284,213
Common Stock
issued for reduction
of Accounts Payable 22,000,000 22,000 88,000 - - 110,000
__________ __________ ____________ ____________ ___________ ___________
Net Loss - - - ( 111,250) - (111,250)
Balances, Septem-
ber 30, 1993 60,307,749 $ 60,307 $ 3,082,328 $(2,777,099) $ (82,573) $ 282,963
Net loss - - - (83,119) - (83,119)
___________ __________ ___________ _____________ ___________ ____________
Balances Septem-
ber 30, 1994 60,307,749 $ 60,307 $ 3,082,328 $(2,860,218) $ (82,573) $ 199,844
Net Loss - - - (137,056) - (137,056)
___________ ___________ __________ ____________ ___________ ____________
Balance, Septem-
ber 30, 1995 60,307,749 $ 60,307 $ 3,082,328 $(2,997,274) $ (82,573) $ 62,788
___________ ___________ __________ ____________ ___________ ____________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
TAURUS PETROLEUM, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended September 30, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
_____ _____ _____
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(137,056) $ (83,119) $(111,250)
Adjustments to reconcile net loss
to net cash used in operations:
Depreciation and depletion 33,237 40,392 59,657
Gain from sale of property
and equipment (37,723) - (6,750)
Bad debt provision 3,217 8,681 -
Other changes in current assets and
liabilities relating to operations 94,358 52,660 56,577
_________ _________ _________
Net cash provided by (used in)
operating activities (43,967) 18,614 (1,766)
Cash flows from investing activities:
Proceeds from sale of property
and equipment 70,000 - 6,750
Capital expenditures (11,524) (3,470 ) -
__________ _________ _________
Net cash provided by (used in)
investing activities 58,476 (3,470) 6,750
Cash flows from financing activities:
Note payments (13,235) (21,485) -
___________ __________ ________
Net cash (used in)
financing activities (13,235) (21,485) -
___________ __________ ________
Net increase (decrease) in cash 1,274 (6,341) 4,984
Cash and cash equivalents:
Beginning of year 900 7,241 2,257
_________ _________ _________
End of year $ 2,174 $ 900 $ 7,241
____________ __________ ___________
Supplemental disclosure of cash
flow information-
Cash paid during the
year for interest $ 9,190 $ 11,963 $ 63
Supplemental schedule of noncash
investing and financing activities:
Conversion of accounts payable
to common stock $ - $ - $ 110,000
Conversion of accounts payable
to note payable $ - $ - $ 149,000
Purchase of oil and gas properties
for reduction in accounts receivable $ - $ 11,490 $ -
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
TAURUS PETROLEUM, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1995, 1994 and 1993
(1)Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Taurus Petroleum, Inc. ("TPI" or the "Company") and its wholly owned
subsidiaries. The Company's only significant subsidiary is Ridgeway
Exco, Inc. ("Ridgeway"). All intercompany balances and transactions have
been eliminated in consolidation.
These financial statements have been prepared on the "going concern"
basis, which presumes that the (Company) will be able to realize its
assets and discharge its liabilities in the normal course of business for
the foreseeable future.
The Company's continuation as a "going concern" is dependent on the
establishment of profitable operations, and upon either the continued
financial support of the principal shareholder or upon the ability of the
Company to raise additional capital. Management is pursuing various options to
attrect capital, including infusions of cash and producing oil and gas
properties and mergers. The outcome of these matters cannot be predicted at
this time. These financial statements do not include any adjustments to the
amounts and classification of assets and liabilities that might be necessary
should the Company be unable to continue in business.
Property and Equipment
The Company follows the successful efforts method of accounting for its
oil and gas producing activities. Under this method of accounting, all
property acquisition costs and well costs of exploratory and development
wells are capitalized when incurred, pending determination of whether the
well will be productive. If any exploratory well is nonproductive, the
capitalized costs of drilling the well, net of any salvage value, are
charged to expense. The cost of development wells are capitalized,
whether the well is productive or nonproductive. Unproved properties are
assessed periodically to determine whether there has been a decline in
value, and if such decline is indicated, a loss is recognized.
Geological and geophysical costs and the costs of carrying and retaining
undeveloped properties, including delay rentals, are expensed as
incurred.
Depreciation and depletion are computed separately on each individual
prospect. Proved property leasehold and mineral rights are depleted on
the unit-of-production method over the estimated total proved reserves of
the individual prospects. Completed well costs are depreciated on the
unit-of-production method over the estimated proved developed reserves of
each well.
The Company uses the present value of net revenue from proved oil and gas
reserves, based on constant prices in assessing the recorded net investment
in proved oil and gas properties.
Depreciation of other property and equipment is computed on the straight line
method over estimated useful lives ranging from 5 to 10 years.
Federal Income Taxes
The Company records income taxes under Financial Accounting Standards
Board Statement No. 109 using the liability method (See Note 3). Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse. Prior to
the adoption of Statement No. 109, income tax expense was determined
using the deferred method. Deferred tax expense was based on items of
income and expense that were reported in different years in the financial
statements and tax returns and were measured at the tax rate in effect in
the year the differences originated.
<PAGE>
Loss Per Common Share
Loss per common share was computed by dividing the net loss by the weighted
average number of common shares outstanding during the respective periods.
Cash Equivalents
For purposes of the statement of cash flows, all highly liquid investments
with original maturities of three months or less are considered to be cash
equivalents.
Oil and Gas Sales
The Company recognizes revenue for its oil and gas sales when produced and
delivered to the purchaser.
Sale or Disposition of Oil and Gas Properties
Gain or loss at time of the disposition is determined on an individual
property basis.
Gas Balancing
The Company recognizes the sale of gas when the gas is produced and delivered
to the purchaser. At this time the Company's exposure with respect to gas
imbalances is minimal. The Company has no gas imbalance situations involving
its operated properties. Outside operated properties may have gas imbalance
situations. However, if present, the effect to the Company would be minimal,
due to the Company's small ownership in outside operated properties.
(2)Notes Payable
Notes payable consist of unsecured notes in the original amounts of $99,000
and $50,000 due in monthly installments through 2002 and 2004 respectively.
The notes are payable to Validus Operating, Inc. and bear interest at the
prime rate, six and one half percent at September 30, 1995. See note 6 for
additional information regarding payment terms.
At September 30, 1995, maturities of the notes during each of the next four
years amount to approximately $14,900.
(3)Income Taxes
Effective October l, 1992, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
FASB Statement No. 109, "Accounting for Income Taxes". As permitted under the
new rules, prior years' financial statements have not been restated. There
was no cumulative effect of adopting Statement No. 109 as of October 1, 1992.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. There are no significant
temporary differences.
Deferred tax assets consist of the Company's net operating losses. Due to
past operating losses and the probable limitations on the future use of the
operating loss carryforwards as discussed below, a valuation allowance to
offset the deferred tax assets has been established at September 30, 1995.
The Company has combined net operating loss (NOL) carryforwards to fiscal
year ending September 30, 1996, for Federal income tax purposes of approximately
$6,625,000. Approximately $2,710,000 of TPI's NOL carryforwards and $14,000
of unused investment tax credits relate to the period prior to November 19,
1984, the date of reorganization. In the year these benefits are utilized,
the benefit will be accounted for as a credit to stockholders' equity. NOLs
existing at July 15, 1987, approximately $5,325,000, including approximately
$2,000,000 relating to Ridgeway prior to its acquisition by TPI are limited
due to Section 382 of the Internal Revenue Code (the Code) as revised by the
Tax Reform Act of 1986. Section 382 limits the amount of combined carryforwards
<PAGE>
which can be utilized to approximately $100,000 per year. Although additional
common stock has been issued, management believes that the NOLs arising after
July 15, 1987, of approximately $1,300,000 are currently not subject to the
Section 382 limitation. Should it be determined that an ownership change has
occurred, a further limitation on the utilization of the Company's NOL will
occur. The Ridgeway NOL's are also subject to the separate return limitation
years rule. The remainder of the NOL carryforwards not utilized to offset
future taxable income will expire at various dates through 2008.
The Company also has combined unused investment tax credits of approximately
$14,327. These credits are subject to certain limitations as set forth in
Section 382 of the Code. If the investment tax credit carryforwards are not
utilized, they will expire at various dates between 1995 and 2000.
(4)Stock Options and Compensation
On April 24, 1986, the Board of Directors of TPI adopted the 1986 Incentive
Stock Option Plan (the "Option Plan"), reserving 500,000 shares for issuance
under the Option Plan. Under the Option Plan, the Board of Directors may
grant options to the officers and key employees of TPI and its subsidiaries.
As of September 30, 1991 all options granted under this plan have expired.
At September 30, 1995, options to purchase 500,000 shares remain available
for grant under the Plan.
(5)Major Customers
Sales to individual customers which as a percentage of total revenue exceeded
10% were as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
Customer 1995 1994 1993
________ __________________________
<S> <C> <C> <C>
Detroit of Texas (Gulf Coast Pipeline) 44% 55% 40%
Enron Oil Trading & Transportation(EOTT) 17% 24% 20%
Longhorn Production 10% 11% 6%
Citizen National Gas Company 5% 7% 12%
</TABLE>
(6)Related Party Transactions
Brian E. Cornish and Associates ("BECA"), an investment company controlled by
Brian E. Cornish, advanced $10,000 to TPI in April, 1990. On December 7, 1992
the Company issued 2,000,000 shares of Common Stock at $.005 to Brian E. Cornish
in consideration for the amount owed.
TPI is operated by Validus Operating, Inc. (Validus) under a Management
Agreement, which was originally effective April 1, 1990, and has been extended
through January 31, 1996. Under the terms of this agreement, Validus is
entitled $10,000 per month for its services. Validus is an oil and gas
operating company controlled by Thomas P. McDonnell ("McDonnell").
Mr. McDonnell a principal shareholder of TPI, currently serves as a member of
the Board of Directors and is Chief Operating Officer, President, and Treasurer
of TPI. On December 7, 1992, the Company issued 20,000,000 shares of TPI
Common Stock to Validus at $.005 per share as consideration for $100,000 of
the management fees payable to Validus. In addition, TPI converted the remaining
management fee payable at September 30, 1992 of $99,000 to a long_term note
payable. Also on September 30, 1993 TPI converted an additional $50,000 of
management fee payable to a long_term note payable. Validus has represented
that it will require payment of future management fees, notes payable and
accounts payable to related parties only to the extent of available cash flow.
<PAGE>
(7)Disclosures About Oil and Gas Producing Activities
At September 30, 1995 and 1994, capitalized costs and the accumulated
depreciation and depletion relating to the Company's oil and gas producing
activities, all of which are in the United States, were as follows:
<TABLE>
<CAPTION>
1995 1994
________ _________
<S> <C> <C>
Unproved oil and gas properties $ 17,285 $ 17,285
Proved oil and gas properties 2,145,930 2,210,173
Accumulated depreciation
and depletion (1,852,579 ) (1,862,961)
_____________ ____________
Net capitalized costs $ 310,636 $ 364,497
_____________ ____________
</TABLE>
Costs incurred, capitalized and expensed in connection with oil and gas
producing activities for the years ended September 30, 1995, 1994, and
1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
_____ _____ _____
<S> <C> <C> <C>
Property acquisition costs:
Proved $ 11,524 $ 14,960 -
Unproved - - -
Exploration costs - - -
Depreciation and depletion $33,107 $ 40,148 $ 58,796
</TABLE>
Results of operations from oil and gas producing activities for the years
ended September 30, 1995, 1994, and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
_____ _____ _____
<S> <C> <C> <C>
Oil and gas sales $ 141,545 $ 238,111 $ 257,671
Lease operating costs (121,043) (117,700) (163,829)
Depreciation and depletion ( 33,107) (40,148) (58,769)
General and administrative (16,779) (18,930) (23,915)
Results of operations for producing
activities, excluding corporate
___________ __________ __________
overhead and interest expense $ (28,384) $ 61,333 $ 11,158
_____________ ___________ ____________
</TABLE>
No income taxes are reflected in the above table due to the effect of tax
credits and loss carryforwards related to oil and gas producing activities.
A summary of changes in quantities of proved oil and gas reserves for the years
ended September 30, 1995, 1994, and 1993 is as follows (all reserves are
proved developed) (unaudited):
<PAGE>
<TABLE>
<CAPTION>
Gas Oil
(MCF) (Bbls.)
________ _______
<S> <C> <C>
Balances, September 30, 1992 971,815 35,002
Revisions to previous estimates 99,139 (4,527)
Production (90,945) (6,285)
__________ __________
Balances, September 30, 1993 980,009 24,190
Revisions to previous estimates 147,745 13,940
Production (88,893) (5,696)
__________ _________
Balances, September 30, 1994 1,038,861 32,434
Revisions to previous estimates 51,720 (9,276)
Sales of Reserves in Place - (13,575)
Production (61,227) (3,380)
___________ _________
Balances, September 30, 1995 1,029,354 6,203
______________ _____________
</TABLE>
The standardized measure of discounted future net cash flows relating to
proved oil and gas reserves at September 30, 1995, 1994, and 1993 are as
follows (unaudited):
<TABLE>
<CAPTION>
1995 1994 1993
_____ _____ _____
<S> <C> <C> <C>
Future cash inflows $ 1,355,556 $2,083,032 $2,092,353
Future production and
development costs ( 648,945) ( 885,995) ( 875,035)
____________ ____________ ____________
Future net cash flows 706,611 1,197,037 1,217,318
10% annual discount for
estimated timing of
cash flows 337,675 523,317 510,738
____________ ____________ ____________
Standardized measure of
discounted future
net cash flows $ 368,936 $ 673,720 $ 706,580
_____________ ______________ _____________
</TABLE>
The changes in the standardized measure of discounted future net cash flows
relating to proved oil and gas reserves for the years ended September 30, 1995,
1994, and 1993 are as follows (unaudited):
<TABLE>
<CAPTION>
1995 1994 1993
______ ______ ______
<S> <C> <C> <C>
Sales of oil and gas produced,
net of production costs $ (20,502) $ (120,411) $ (93,842)
Net change in prices and
production costs (222,080) (64,8440) (32,664)
Revisions of previous quantity estimates ( 1,400) 116,911 67,005
Sales of reserves in place 84,000 - -
Net change in discount 185,642 (12,579) 2,439
Other (162,444) 48,063 -
__________ __________ _________
Net increase (decrease) (304,784) (32,860) (57,062)
Beginning of period 673,720 706,580 763,642
__________ ___________ _________
End of period $ 368,936 $ 673,720 $ 706,580
____________ ___________ ___________
</TABLE>
<PAGE>
The estimate of proved reserves and related valuations for 1995, 1994 and 1993
were determined by an independent petroleum engineering firm. The standardized
measure of discounted future net cash flows relating to proved oil and gas
reserves and the changes in standardized measure of discounted future net cash
flows relating to proved oil and gas reserves were presented in accordance with
the provisions of Statement of Financial Accounting Standard No. 69. The
standardized measure does not purport to represent the fair market value of the
Company's proved oil and gas reserves. An estimate of fair market value would
also take into account, among other factors, anticipated future changes in
prices and costs and a discount factor more representative of the time value of
money and the risks inherent in reserve estimates. Under the standardized
measure future cash inflows were computed by applying year-end prices to
estimated future production of year_end reserves. Future production and
development costs are computed by estimating the expenditures to be incurred
in developing and producing the proved oil and gas reserves at year_end, based
on year_end costs and assuming continuation of existing economic conditions.
No future income taxes are reflected due to the effect of tax credits and loss
carryforwards related to oil and gas producing activities. Future net cash
flows are discounted at a rate of 10% annually to derive the standardized
measure of discounted future net cash flows.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
<PAGE>
PART III.
Item 10. Directors and Executive Officers of the Registrant
Each director elected at the 1995 annual meeting will hold office until
the next annual meeting and until a successor is elected and qualified.
The following table provides information with respect to all directors
of the Company and all persons nominated to become directors:
Nominee, Positions with TPI
Principal Occupation Age Term as Director
_______________________________ ____ _________________________
BRIAN E. CORNISH - Chairman and Chief 56 August 13, 1987 - present (1)
Executive Officer of TPI; Geologist
and Managing Director of B.E. Cornish
& Associates Pty. Ltd., Chairman and
Managing Director of Cornwall Resource
Corporation N.L.
DAVID S. CROCKETT,JR., - Director, 51 July 12, 1988 - present (2)
Secretary of TPI; President of David S.
Crockett & Co., Certified Public
Accountants
CHRISTOPHER N. CURNOW - Director 50 November 19, 1987 - present (3)
and Vice President, Exploration of
TPI; Director-Operations of Cornwall
Resource Corporation N.L. and Chief
Executive Officer of Centaur Petroleum
Pty. Ltd.
THOMAS P. MCDONNELL, - Director, Chief 43 July 11, 1990 - present (4)
Operating Officer, President and Treasurer
of TPI; President of Validus Operating,
Inc.; Chairman of Epoch Resources, Inc.
FOOTNOTES to Item 10:
(1) Mr. Cornish was elected to the Board of Directors on August 13, 1987,
pursuant to Stock Purchase Agreements executed by the Company and the Cornwall
Group.
(2) Mr. Crockett was elected to the Board of Directors on July 12, 1988,
pursuant to Stock Purchase Agreements executed by the Company and the Cornwall
Group. Elected by the Board of Directors as Secretary effective September 30,
1992.
(3) Mr. Curnow was elected to the Board of Directors on November 19, 1987,
pursuant to Stock Purchase Agreements executed by the Company and the Cornwall
Group.
(4) Mr. McDonnell was elected to the Board of Directors on July 11, 1990
pursuant to Stock Purchase Agreements executed by the Company and Mr.
McDonnell.
<PAGE>
Identification of Executive Officers
Each executive officer elected at the 1995 annual meeting of directors
will hold office until the next annual meeting of directors and until a
successor is elected and qualified.
The following table provides information with respect to all executive
officers of the Company and all persons chosen to become executive officers:
Name Age
______________ _____
Brian E. Cornish 56 Chairman of the Board and Chief Executive Officer
Thomas P. McDonnell 43 Chief Operating Officer, President, and Treasurer
Christopher N. Curnow 50 Director and Vice President, Exploration
David S. Crockett 51 Secretary
Business Experience
Brian E. Cornish was elected to the Board of Directors on August 13,
1987, and became Chairman of the Board on July 12, 1988. Effective January l,
1989, Mr. Cornish became Chairman of the Board and Chief Executive Officer of
the Company. Mr. Cornish is a practicing petroleum geologist who graduated
from the University of Adelaide in Economic Geology in 1960. He subsequently
has gained wide experience in resource exploration both in the Australian and
international oil exploration industry which included a number of years with
The Superior Oil Co. Group. He has been a consulting geologist to a number of
resource oriented corporations. Mr. Cornish is an active member of a number
of professional petroleum and mineral organizations both in Australia and the
United States. Since 1967 he has been the Geologist and Managing Director of
B.E. Cornish & Associates Pty. Ltd., geological and technical consultants, of
Sydney, Australia. Mr. Cornish is Chairman and Managing Director of both
Cornwall Resource Corporation N.L. and its wholly owned subsidiary CPC
Petroleum Corporation N.L. of Sydney.
Thomas P. McDonnell was elected to the Board of Directors July 11, 1990.
Effective July 11, 1990, Mr. McDonnell was appointed Chief Operating Officer,
President and Treasurer of the Company. Mr. McDonnell is a graduate of the
University of Florida, where he received his BS degree in Electrical
Engineering in 1975. Mr. McDonnell received an MBA from Corpus Christi State
University in 1978. Mr. McDonnell was employed by Schlumberger Offshore
Services as a Openhole Logging Engineer from 1975 to 1978. Mr. McDonnell was
a District Manager of an Openhole logging District for Birdwell Division of
SSC from 1978 to 1980. In 1980 Mr. McDonnell was employed by WENCO
Engineering as a Petroleum Engineer. WENCO is an engineering firm
specializing in production exploration and reservoir engineering. Mr.
McDonnell was involved in reservoir engineering for private companies; however
his main position involved supervising exploration and development. From 1981
to 1987 Mr. McDonnell was employed as President of McDonnell Oil and Gas
Consultants, Inc. In this position Mr. McDonnell consulted in the drilling
and completion of numerous wells in Oklahoma, Texas and Tennessee. He also
operated over 50 wells in the Midcontinent Region. In 1984 Mr. McDonnell
formed Validus Operating, Inc. He is the President and Chairman of the Board.
Validus Operating, Inc. is an oil and gas production company with production
in Texas, Oklahoma and New Mexico. Along with operating its own properties,
Validus Operating, Inc. operates properties as a third party. Mr. McDonnell
is also Chairman of the Board of Epoch Resources, Inc. an oil and gas
production company with operations in Texas and Oklahoma.
<PAGE>
Christopher N. Curnow was elected to the Board of Directors on November
19, 1987. On December 15, 1988, Mr. Curnow was elected Vice President,
Exploration of the Company. Mr. Curnow has over 20 years' experience in the
petroleum industry since graduating from the University of Adelaide with a
Bachelor of Science (Honors) degree in 1968. Mr. Curnow spent 13 years with
Exxon Corporation both in Australia and Canada, the USA, and Malaysia. During
these years he gained a wide range of experience in technical, operational and
management aspects of the oil industry. Since 1981 Mr. Curnow has been a
consultant specializing in the management and technical supervision of oil and
gas activities of several Australian companies. Mr. Curnow has been
associated with Cornwall Resource Corporation N.L. since January 1986 and has
been responsible for the management of the petroleum interests of the Cornwall
Group of Companies. Since 1982 Mr. Curnow has been Chief Executive Officer of
Centaur Petroleum Pty. Ltd., a company engaged in oil exploration in
Australia. Mr. Curnow is a Director of Cornwall Resource Corporation N.L. of
Sydney, Australia.
David S. Crockett, Jr. was elected to the Board of Directors on July 12,
1988. On September 30, 1992 Mr. Crockett was elected Secretary of the
Company. Mr. Crockett has been President of David S. Crockett & Co., certified
public accountants, since July 1972. Since April 1983 Mr. Crockett has been
Assistant Treasurer, and since May 1984 Vice President of Stonetex Oil Corp.
Item 11. Executive Compensation
During the last fiscal year no executive officer received any cash
compensation.
During the last fiscal year no options were granted to or exercised by
any executive officers of the Company.
Compensation Pursuant to Plans
1986 Incentive Stock Option Plan
The 1986 Incentive Stock Option Plan initially reserved 500,000 shares
of TPI Common Stock for future issuance to its officers and key employees.
Under the plan, the Board of Directors may grant options to its officers and
key employees of TPI and its subsidiaries. The plan authorizes the granting
of options which are (a) nontransferable; (b) exercisable at prices not less
than the fair market value of the stock at date of grant; provided, however,
that options granted to persons owning more than 10% of the total combined
voting power of TPI may not have exercise prices less than 110% of the fair
market value of the stock on the date of the grant; and (c) exercisable for
periods up to ten years from date of grant. Payment of the exercise price can
be paid with shares of TPI valued at the fair market value of such shares at
the date of exercise. The plan will terminate on April 24, 1996. There is no
minimum holding period before the options can be exercised and the length of
the exercise period is at the discretion of the Board of Directors. Options
granted to date under the plan have expired. Options to purchase 500,000 TPI
shares remain available for grant under the 1986 plan. No options were
granted or accrued pursuant to the plan during the last fiscal year. This
plan was approved by the Company's stockholders on April 6, 1987.
Compensation of Directors
Directors receive reimbursement for travel and out_of_pocket expenses
incurred while on TPI business or while attending meetings of the Board of
Directors. No travel expenses of were incurred by directors during fiscal
year 1994.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table presents information at December 16, 1995, with
respect to any person or group who is known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock.
Amount and
Title Nature of
of Name and Address of Beneficial Percent
Class Beneficial Owner Ownership of Class
_______ _______________________ ____________ ___________
Common Validus Operating, Inc. 20,000,000 33.36%
$.001 10100 Reunion Place Direct
par value Suite 630
San Antonio, Texas 78216
Common Thomas P. McDonnell 8,262,602 13.78%
$.001 10100 Reunion Place Direct
par value Suite 630
San Antonio, Texas 78216
Common Centaur Petroleum Pty. Ltd. 11,174,611 18.64%
$.001 12 Winsham Road Direct
par value Karrinyup, Australia 6018
Common Christopher N. Curnow 4,250,000 7.09%
$.001 12 Winsham Road
par value Karrinyup, Australia 6018
Common Brian E. Cornish 6,250,000 10.42%
$.001 Level 17, 168 Walker Street Direct
par value North Sydney, NSW, Australia 2060
Security Ownership of Management
The following table presents information at December 16, 1995, with
respect to shares of the Company's Common Stock beneficially owned by the
Company's directors and nominees for directors and by all directors and
officers of the Company as a group.
Amount and
Title Nature of
of Name of Beneficial Percent
Class Beneficial Owner Ownership of Class
_________ _____________________ _____________ __________
Common Brian E. Cornish 6,250,000 10.42%
$.001 Direct
par value
Common David S. Crockett, Jr. - -
$.001
par value
<PAGE>
Common Christopher N. Curnow 15,425,611 (1) 25.73%
$.001 Direct &
par value Indirect
Common Thomas P. McDonnell 28,262,602 (2) 47.14%
$.001 Direct &
par value Indirect
Common All Directors and 49,938,213 83.29%
$.001 officers as a group Direct or
par value of four persons Indirect
FOOTNOTES to Item 12:
[FN]
(1) Includes shares of Centaur Petroleum Pty. Ltd. which is controlled by
Christopher N. Curnow.
(2) Includes shares of Validus Operating, Inc. which is wholly_owned by Thomas
P. McDonnell.
Changes in Control
There are no arrangements known to the Company which may at a subsequent
date result in a change in control of the Company.
Item 13. Certain Relationships and Related Transactions
Brian E. Cornish and Associates ("BECA") an investment company controlled
by Brian E. Cornish, advanced $10,000 to TPI in April, 1990. On December 7,
1992 the Company issued 2,000,000 shares of Common Stock to Brian E. Cornish
in consideration for the amount owed.
TPI is operated by Validus Operating, Inc. under a Management Agreement,
which was originally effective April 1, 1990 and has been extended through
January 31, 1996. Under the terms of this agreement, Validus will receive
$10,000 per month for its services. Validus is an oil and gas operating
company controlled by Thomas P. McDonnell. Mr. McDonnell currently serves as
a member of the Board of Directors and is Chief Operating Officer, President,
and Treasurer of TPI. On December 7, 1992 the Company issued 20,000,000
shares of TPI Common Stock to Validus at $.005 per share as consideration for
$100,000 of the management fees payable to Validus. In addition, TPI converted
the remaining management fee payable of $99,000 a to long_term note payable.
Also on September 30, 1993 TPI converted an additional $50,000 of management
fee payable to long_term note payable. The principal of both notes will be
amortized over a 10 year period at the prevailing monthly prime rate of
interest. Currently the prime rate stands at 6.50 %.
David Crockett, Jr. is currently a member of the TPI Board of Directors
and Corporate Secretary. In addition to his duties as a Director, Mr.
Crockett provides consulting services to TPI regarding accounting and
financing matters.
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8_K
(a) Index to financial statements covered by report of independent auditors:
(1) The following financial statements are included in Item 8 in this
report:
i. Report of Independent Auditors
is included on page 11.
ii. Consolidated Balance Sheets as
of September 30, 1995 and 1994 are included on pages 12.
iii. Consolidated Statements of
Operations for the years ended September 30, 1995, 1994 and 1993
are included on page 13.
iv. Consolidated Statements of
Stockholders' Equity for the years ended September 30, 1995, 1994,
and 1993 are included on page 14.
v. Consolidated Statements of
Cash Flows for the years ended September 30, 1995, 1994 and 1993
are included on pages 15.
vi. Notes to Consolidated
Financial Statements are included on pages 16 through 21.
(2) The following financial statement schedules are filed as a part of
this report:
i. Schedule VIII - Valuation and
Qualifying Accounts for the years ended September 30, 1995, 1994
and 1993 are included on page 31.
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable, and therefore have been omitted.
(b) Reports on Form 8-K filed through December 23, 1995.
None
(c) The exhibits listed in the Index of Exhibits included on page 29 and 30
are filed herewith as a part of this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
TAURUS PETROLEUM, INC.
Date January 9, 1996 By/s/Brian E. Cornish
_____________________
Brian E. Cornish
Chairman of the Board, Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the undersigned on behalf of the registrant
and in the capacity and on the date indicated.
Date January 9, 1996 /s/Thomas P. McDonnell
___________________________________
Thomas P. McDonnell
President, Chief Operating Officer,
and Treasurer
Majority of the Board of Directors
Date January 9, 1996 /s/Brian E. Cornish
___________________________________
Brian E. Cornish, Director
Date January 9, 1996 /s/Christopher N. Curnow
___________________________________
Christopher N. Curnow, Director
Date January 9, 1996 /s/Thomas P. McDonnell
___________________________________
Thomas P. McDonnell, Director
<PAGE>
INDEX TO EXHIBITS
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession.
Stock Purchase Agreement between Taurus Petroleum, Inc. and Cornwall
Petroleum Holdings, Inc. dated July 15, 1987 (Exhibit 2.1 to the Form 8_K
dated July 15, 1987, of Taurus Petroleum, Inc.) is incorporated herein by
reference. Also included as a part of Exhibit 2.1 are the first pages and
signature pages of the Agreements between Taurus Petroleum, Inc. ("TPI") and
B. E. Cornish & Associates, Inc.("Associates") and between TPI and Coolibah
Petroleum, Inc.("Coolibah") and pages 1, 13, 21 and 38 of the Agreement
between TPI and J.D.C. McLean ("McLean"). All other pages of the Agreement
between TPI and Associates, Coolibah and McLean are identical to those of the
agreement between TPI and Cornwall Petroleum Holdings, Inc.
(3) Articles of Incorporation and By-Laws.
Articles of Amendment to the Articles of Incorporation of Taurus
Petroleum, Inc. dated May 26, 1988 (Exhibit 3 to the Form 10-K for the fiscal
year ended September 30, 1988) is incorporated herein by reference.
By-Laws of the Company (Exhibit 3.1 to the Form 10-K for the fiscal
year ended September 30, 1985) is incorporated herein by reference.
Articles of Amendment to the Articles of Incorporation of Taurus
Petroleum, Inc. dated June 12, 1986 (Exhibit 3.1 to the Form 10-K for the
fiscal year ended September 30, 1986) is incorporated herein by reference.
Composite Restated Articles of Incorporation as for June 12, 1986, of
Taurus Petroleum, Inc. (Exhibit 3.2 to the Form 10-K for the fiscal year ended
September 30, 1986) is incorporated herein by reference.
(4) Instruments Defining the Rights of Security Holders.
The form of Common Stock share certificate (Exhibit 4 to September 30,
1984, Annual Report on Form 10-K and Articles V, VI, VII and XIV of the
Amended Articles of the Form 10-K for the fiscal year ended September 30,
1986) is incorporated herein by reference.
(9) Voting Trust Agreement. Not applicable.
(10) Material Contracts.
Stock Purchase agreement between Taurus Petroleum, Inc. and Validus
Operating, Inc. dated December 7, 1992 (Exhibit (1) of Form 8-K dated December
18, 1992) is incorporated herein by reference.
Stock Purchase agreement between Taurus Petroleum, Inc. and Brian E.
Cornish, dated December 7, 1992 (Exhibit (2) of Form 8-K dated December 18,
1992) is incorporated herein by reference.
Loan Agreement between Taurus Petroleum, Inc. and Validus Operating,
Inc. dated December 7, 1992 (Exhibit (3) of Form 8-K dated December 18, 1992)
is incorporated herein by reference.
Management Agreement between Taurus Petroleum, Inc. and Validus
Operating, Inc. dated April 1, 1990 (Exhibit (10) of Form 10-K dated January
4, 1991) is incorporated herein by reference.
Loan Agreement between Taurus Petroleum, Inc. and Validus Operating,
Inc. dated September 30, 1993
(Exhibit (10) of Form 10-K for fiscal year ended September 30, 1993) is
incorporated herein by reference.
(11) Statement Regarding Computation of Per Share Earnings. Not applicable.
<PAGE>
(12) Statement Regarding Computation of Ratios. Not applicable.
(13) Annual Report to Security Holders, Form 10-Q, or Quarterly Report to
Security Holders. Not applicable.
(16) Letter Regarding Change in Certifying Accountant. Not applicable
(18) Letter Regarding Change in Accounting Principles. Not applicable.
(19) Previously Unfiled Documents. Not applicable.
(22) Subsidiaries of the Registrant. The Company has one significant
subsidiary, Ridgeway Exco, Inc., a Colorado corporation.
(23) Published Report Regarding Matters Submitted to Vote of Security
Holders. Not applicable.
(24) Consent of Experts and Counsel. Not applicable.
(25) Power of Attorney. Not applicable.
(28) Additional Exhibits. Not applicable.
(29) Information from Reports Furnished to State Insurance Regulatory
Authorities. Not applicable.
<PAGE>
<TABLE>
TAURUS PETROLEUM, INC.
AND SUBSIDIARIES
Valuation and Qualifying Accounts Schedule VIII
Years Ended September 30, 1995, 1994 and 1993
<CAPTION>
Deductions
Additions accounts
charged receivable Balance
Balance at to costs written at
beginning and off and end of
Description of period expenses recoveries period
__________________________________________________________________
<S> <C> <C> <C> <C>
Year ended September 30, 1995
Allowance for doubtful
accounts receivable $ 13,792 $ 8,811 $ 5,594 $ 17,009
_________ ________ ________ _________
Year ended September 30, 1994
Allowance for doubtful
accounts receivable $ 45,143 $ 8,681 $ 40,032 $ 13,792
Year ended September 30, 1993
Allowance for doubtful
accounts receivable $ 45,143 $ - $ - $ 45,143
_________ _________ __________ _________
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,174
<SECURITIES> 0
<RECEIVABLES> 47,468
<ALLOWANCES> 17,009
<INVENTORY> 0
<CURRENT-ASSETS> 17,163
<PP&E> 2,199,325
<DEPRECIATION> 1,888,241
<TOTAL-ASSETS> 360,880
<CURRENT-LIABILITIES> 205,734
<BONDS> 92,358
0
0
<COMMON> 60,307
<OTHER-SE> 2,481
<TOTAL-LIABILITY-AND-EQUITY> 360,880
<SALES> 141,545
<TOTAL-REVENUES> 151,073
<CGS> 121,043
<TOTAL-COSTS> 154,280
<OTHER-EXPENSES> 162,369
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,468
<INCOME-PRETAX> (137,056)
<INCOME-TAX> 0
<INCOME-CONTINUING> (165,576)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (137,056)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
