U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarterly Period Ended June 30, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-8898
Midcoast Energy Resources, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 76-0378638
(State or Other Jurisdiction of (I.R.S.Employer
Incorporation or Organization) Identification No.)
1100 Louisiana, Suite 2950
Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 650-8900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the 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
On June 30, 1996, there were outstanding 1,496,147 shares of the Company's
common stock, par value $.01 per share after consideration of the stock split
discussed in Note 3 of the Notes to the Consolidated Financial Statements.
Transitional Small Business Disclosure Format. Yes No X
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
Quarterly Report on Form 10-QSB for the
Quarter Ended June 30, 1996
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995. . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the six months
ended June 30, 1996 and June 30, 1995. . . . . . 4
Consolidated Statement of Shareholders' Equity for
the six months ended June 30, 1996 . . . . . . . 5
Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and June 30, 1995. . . . . . 6
Notes to Consolidated Financial Statements. . . . . 7
Item 2. Management's Discussion and Analysis of
Results of Operations . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . 12
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<TABLE>
<CAPTION>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS June 30, December 31,
1996 1995
<S> --------------- ---------------
CURRENT ASSETS: <C> <C>
Cash and cash equivalents $ 723,910 $ 106,152
Accounts receivable, no allowance for doubtful accounts 2,197,854 2,319,667
Asset held for resale 210,447 210,447
--------------- ---------------
Total current assets 3,132,211 2,636,266
--------------- ---------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Natural gas transmission facilities 7,943,479 7,365,421
Investment in transmission facilities 1,284,609 1,284,609
Oil and gas properties, using the full cost method of accounting 309,556 302,293
Other property and equipment 148,969 85,819
--------------- ---------------
9,686,613 9,038,142
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION (1,078,432) (831,981)
--------------- ---------------
8,608,181 8,206,161
DEFERRED CONTRACT COSTS AND OTHER ASSETS, net of amortization 632,154 246,081
--------------- ---------------
Total assets $ 12,372,546 $ 11,088,508
--------------- ---------------
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 2,988,730 $ 2,086,138
Current portion of deferred income 83,000 83,000
Short-term borrowing from bank - 25,000
Current portion of long-term debt payable to:
Banks 1,015,520 540,998
Shareholders and affiliates 20,000 -
--------------- ---------------
Total current liabilities 4,107,250 2,735,136
--------------- ---------------
LONG-TERM DEBT PAYABLE TO:
Bank 3,031,278 2,926,947
Shareholders and affiliates 448,822 1,033,822
--------------- ---------------
Total long-term debt 3,480,100 3,960,769
--------------- ---------------
DEFERRED INCOME 193,667 235,167
SHAREHOLDERS' EQUITY:
5% cumulative preferred stock, $1 par value, 1 million
shares authorized, 200,000 shares issued and outstanding
with a liquidation preference of $1,183,665 (Note 3) - 200,000
Common stock, $.01 par value, 10 million shares authorized,
1,496,147 and 1,465,680 shares issued and outstanding at
June 30, 1996 and December 31, 1995, respectively (Note 3) 14,961 14,657
Paid-in capital 18,946,997 18,824,681
Accumulated deficit (14,271,129) (14,775,102)
Unearned compensation (99,300) (106,800)
--------------- ---------------
Total shareholders' equity 4,591,529 4,157,436
--------------- ---------------
Total liabilities and shareholders' equity $ 12,372,546 $ 11,088,508
--------------- ---------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Six Months Ended
----------------------------------
June 30, June 30,
1996 1995
--------------- ---------------
<S> <C> <C>
OPERATING REVENUES:
Sale of natural gas and transportation fees $ 10,108,722 $ 5,518,061
Sale of pipeline 22,500 -
Oil and gas revenue 99,790 7,597
--------------- ---------------
Total operating revenues 10,231,012 5,525,658
--------------- ---------------
OPERATING EXPENSES:
Cost of natural gas and transportation charges 8,654,277 4,773,541
Cost of pipeline sold 2,153 -
Production of oil and gas 39,856 1,066
Depreciation, depletion, and amortization 277,353 174,483
General and administrative 493,049 376,284
--------------- ---------------
Total operating expenses 9,466,688 5,325,374
--------------- ---------------
Operating income 764,324 200,284
NON-OPERATING ITEMS:
Interest expense (210,131) (133,234)
Other income(expense), net (27,357) (11,189)
--------------- ---------------
INCOME BEFORE INCOME TAXES 526,836 55,861
PROVISION FOR INCOME TAXES - -
--------------- ---------------
Net income 526,836 55,861
5% CUMULATIVE PREFERRED STOCK DIVIDENDS (22,863) (29,348)
--------------- ---------------
NET INCOME APPLICABLE TO
COMMON SHAREHOLDERS $ 503,973 $ 26,513
--------------- ---------------
NET INCOME PER COMMON SHARE $ 0.34 $ 0.02
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,479,411 1,421,276
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30,1996
(UNAUDITED)
5% Cumulative Total
Preferred Common Paid-in Accumulated Unearned Shareholders'
Stock Stock Capital Deficit Compensation Equity
------------- ------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 $ 200,000 $ 14,657 $ 18,824,681 $(14,775,102) $ (106,800) $ 4,157,436
Issuance of 4,460 shares in connection
with a financing agreement with an
affiliate (Note 7) - 44 5,956 - - 6,000
Vesting of 14,498 shares in connection
with an employment contract entered
into in April 1995 - - - - 19,500 19,500
Issuance of 8,921 shares which are
subject to a three year vesting
schedule in connection with an
employment agreement (Note 6) - 89 11,911 - (12,000) -
Issuance of 17,086 shares in connection
with employee stock bonuses (Note 6) - 171 22,815 - - 22,986
Redemption of 200,000 shares of 5%
cumulative preferred stock (Note 3) (200,000) - 81,634 - - (118,366)
Net income - - - 526,836 - 526,836
5% cumulative preferred stock dividends - - - (22,863) - (22,863)
------------- ------------- ------------- ------------- ------------ -------------
BALANCE, June 30, 1996 $ - $ 14,961 $ 18,946,997 $(14,271,129) $ (99,300) $ 4,591,529
------------- ------------- ------------- ------------- ------------ -------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Six Months Ended
----------------------------------
June 30, June 30,
1996 1995
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income applicable to common shareholders $ 503,973 $ 26,513
Adjustments to arrive at net cash provided (used) in
operating activities-
Depreciation, depletion and amortization 277,353 174,483
Gain on sale of operating pipeline (20,347) -
Recognition of deferred income (41,500) (41,500)
Income on partnership investments (79,183) -
Issuance of common stock to employees 38,886 2,075
Changes in working capital accounts-
Decrease in accounts receivable 121,813 680,908
Increase (decrease) in accounts payable and
accrued liabilities 771,243 (377,728)
--------------- ---------------
Net cash provided by operating activities 1,572,238 464,751
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (620,515) (553,106)
Investments in partnerships and other (322,818) (1,972)
--------------- ---------------
Net cash used in investing activities (943,333) (555,078)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank debt borrowings 3,033,000 2,820,000
Bank debt repayments (2,484,147) (2,928,040)
Proceeds from notes payable to
shareholders & affiliates (Note 7) 100,000 173,822
Repayments on notes payable to
shareholders & affiliates (660,000) -
--------------- ---------------
Net cash provided (used) in financing activities (11,147) 65,782
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 617,758 (24,545)
--------------- ---------------
CASH AND CASH EQUIVALENTS, beginning of period 106,152 65,921
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 723,910 $ 41,376
--------------- ---------------
CASH PAID FOR INTEREST $ 230,796 $ 142,304
--------------- ---------------
CASH PAID FOR INCOME TAXES $ - $ -
--------------- ---------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial information has been
prepared by Midcoast Energy Resources, Inc. ("Midcoast" or "the
Company") in accordance with the instructions to Form 10-QSB.
The information furnished reflects all adjustments, all of which
were of a normal recurring nature, which are, in the opinion of
the Company, necessary for a fair presentation of the results for
the interim periods presented. Although the Company believes
that the disclosures are adequate to make the information
presented not misleading, certain information and footnote
disclosures, including significant accounting policies, normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. It is suggested
that the financial information be read in conjunction with the
financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995.
2. BACKGROUND
Midcoast was formed on May 11, 1992, as a Nevada corporation and,
in September 1992, became the successor to Nugget Oil Corporation
("Nugget") through a merger pursuant to the Nugget Plan of
Reorganization. The merger was accounted for as a pooling of interests.
3. CAPITAL STOCK
In July 1996, the Company's articles of incorporation were amended to increase
the number of authorized common shares from 6,000,000 shares to 10,000,000
shares. In addition, the Board of Directors ("Board") authorized an
approximate 4.46 for 1 stock split in connection with the Company's
registering with the U.S. Securities and Exchange Commission ("SEC")
1,150,000 shares (after consideration of the stock split) of its common stock
(see Note 8), including the Company's grant of an option to the
underwriters to purchase up to 150,000 shares to satisfy over-allotments in
the sale of the Company's common stock. Under the terms of the underwriting
agreement, the underwriters will also receive warrants to acquire 100,000
shares at 142% of the initial offering price per share. The securities
underlying these warrants are subject to piggyback registration rights.
In May 1996, the Board approved the redemption of the 5% cumulative preferred
stock ("5% Preferred") for $118,367 held by a director and officer and two
former directors and officers of the Company. The shares were redeemed for
ten percent (10%) of the stated liquidation value ($1,183,665). Subsequently,
no shares of the Company's preferred stock remain outstanding. Following
redemption of the Company's 5% Preferred, the Company's articles of
incorporation were amended to reflect only one class of outstanding
securities, the Company's common stock.
4. ACQUISITION
In May 1996, Magnolia Pipeline Corporation ("Magnolia"), a wholly-owned
subsidiary, acquired nine gathering pipeline systems and one transmission
pipeline system from Texas Southeastern Gas Gathering Company ("TSGGC)". The
TSGGC systems were acquired pursuant to a purchase and sale agreement dated
March 12, 1996 for a total purchase price of $390,000 less purchase price
adjustments giving effect to operating income since the effective date of
January 1, 1996. These systems total approximately 113 miles of 2 inch to 10
inch diameter pipeline with associated equipment. Five systems are located
in Alabama, and five systems are located in Mississippi. The bulk of the
systems are located within 100 miles of Magnolia's existing system and it
is the Company's intention to integrate the operation of these systems with
Magnolias' systems. TSGGC had acquired these systems in 1994 as part of a
larger acquisition package. The acquisition was financed by amending an
existing credit facility with a bank as discussed in Note 5.
5. BANK DEBT
In May 1996, the Company's $1,500,000 revolving line of credit with a bank was
amended to increase the available credit by $350,000 and adjust the monthly
reduction of availability from $17,860 to $23,000. This amendment was made to
finance the TSGGC acquisition discussed in Note 4.
6. EMPLOYEE BENEFITS
The Company issued a total of 26,007 shares of the Company's common
stock to certain key employees in the quarter ended June 30,
1996. Of the shares issued in this period, 8,921 shares were issued in
connection with an employment agreement with an employee.
The shares are valued at the estimated fair market value on the date of
issuance. Compensation expense is being recognized ratably over
the vesting period.
7. RELATED PARTY TRANSACTION
In March 1996, the Company borrowed $100,000 from an affiliate owned by a
former officer and director of the Company for its equity contribution in Pan
Grande Pipeline L.L.C. ("Pan Grande") (in which the Company ownes a 50%
interest) pursuant to a promissory note. The note, as amended, bears interest
at the prime rate plus 2.5% and is payable in 59 monthly installments of
$1,667 pus accrued interest and a final installment at March 15, 2001 in
the amount of the remaining principal and accrued interest them outstanding
and unpaid. The note is secured by the Company's interest in Pan Grande.
The affiliate has committed to lend up to an additional $75,000 in the event
an additional system is purchased by Pan Grande. In consideration for the
financing of the equity contribution and the commitment for additional
financing, the Company issued the affiliate 4,460 shares of the Company's
common stock.
8. SUBSEQUENT EVENTS
On August 9, 1996, the Company's Registration Statement on
Form SB-2 was declared effective by the SEC. On August 14, 1996, the
Company sold 1,000,000 shares of its common stock at an offering price of
$10.00 per share. The Company's stock is listed on the American Stock
Exchange under the symbol "MRS". After deducting underwriting commissions
and other expenses of the offering, proceeds of approximately $8,841,000
were received by the Company from the underwriter. The proceeds will be used to
repay certain indebtedness with the remainder to be applied to working capital
needs including any future construction or acquisitions of pipelines and
related assets.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS
Results of Operations
Operating Revenues:
Operating revenues generated during the six months ended June 30, 1996 totaled
approximately $10.2 million as compared to $5.5 million in 1995 which
represents an 85% increase in 1996. The increase is primarily attributable to
increased gas marketing opportunities where the Company has a fixed asset
investment. Sales of this type increased from $3.7 million to $7.5 million
during the six months ended June 30, 1995, and 1996, respectively. In addition,
Magnolia, which was acquired in August 1995 and includes the pipelines
acquired from TSGGC in May 1996, contributed $592,185 in transportation revenue
for the six months ended June 30, 1996. Magnolia's impact, however, is more
evident with respect to earnings as discussed in the "Earnings" section below.
Operating Expenses:
Operating expenses for the six months ended June 30, 1996 totaled approximately
$9.5 million, or 78% higher than the comparable 1995 period. As explained in
the preceding section, the primary explanation for the increase can be
attributed to increased gas marketing transactions where the Company has a
fixed asset investment.
Depreciation, depletion, and amortization expense was approximately $277,000 in
1996, as compared to approximately $174,000 in 1995. The increase in 1996 can
be attributed to the acquisition of Magnolia on August 1, 1995.
General and administrative expenses incurred for the six months ended June 30,
1996 were approximately $493,000 or $117,000 (31%) higher than for the same
period in 1995. Of the total $117,000 increase in 1996, approximately $114,000
is related to higher personnel costs. In April 1996, the Company hired an
employee with extensive business development experience in the energy industry
in order to further develop the Company's current and future pipeline systems.
Furthermore, three additional field operations personnel were hired in May
1996 to ensure the proper maintenance of the numerous pipelines purchased in
the TSGGC acquisition discussed in Note 4. Also, approximately $39,000 in stock
compensation was granted to employees in April 1996. All other general and
administrative expenses in 1996 have not been affected by the Company's
significant growth due to the Company's ongoing effort to control expenses and
effectively assimilate new business using existing resources.
Interest expense for the first half of 1996 and 1995, was approximately
$210,000 and $133,000, respectively. The Company was servicing an average
of approximately $4.4 million in debt during the first half of 1996 as
compared to an average of $2.8 million in debt during the first half of 1995.
The increased debt service in 1996 is attributable to the acquisition of
Magnolia in August 1995 and the TSGGC pipelines in May 1996.
Earnings:
The Company recognized operating income and net income of $764,324 and $503,973
respectively, for the six months ended June 30, 1996 as compared to operating
income and net income of $200,284 and $26,513 for the six months ended June 30,
1995. Despite a 59% increase in depreciation, depletion and amortization
expense in 1996, operating income increased by $564,040 over 1995. The primary
factor which contributed to the increase in operating earnings in 1996 was the
transportation revenue generated by Magnolia. During the six months ended June
30, 1996, Magnolia generated income (before depreciation, general and
administrative expenses, and interest) of approximately $436,000. The Company
anticipates Magnolia's income levels to be seasonal in nature with the greatest
income to be generated during the winter months.
Another factor which contributed to higher earnings in 1996 versus 1995 was
the increased gas sales to customers where the Company has a fixed asset
investment. The colder than expected winter temperatures forced gas prices
and demand higher. As a result, the Company was able to sell gas at slightly
higher margins than is typical of gas marketing transactions.
Capital Resources and Liquidity
As a result of the equity offering discussed in Note 8, the Company has
approximately $5,000,000 of additional working capital to fund the construction
and/or acquisition of new pipeline systems. In addition, historically, the
Company has funded its capital requirements through cash flow from operations
and borrowings from affiliates and commercial lenders. For the year ended
December 31, 1995, the Company generated cash flow from operations of
approximately $2,361,000. For the six months ended June 30, 1996, the Company
generated cash flow from operations of approximately $1,572,238 and had
$750,000 available to the Company through one of its credit facilities on
June 30, 1996.
In December 1992, the Company entered into a financing agreement which included
a $400,000 line of credit. In September 1994, the line of credit was renewed
and the available line raised to $750,000. The line of credit expires on
September 1, 1996, however, the Company expects that a new facility will be
in place prior to that date, as discussed below. Borrowings under this credit
facility are collateralized by the Company's non-transportation based
accounts receivable and the entire facility has been personally guaranteed
by three significant shareholders of the Company, one of which is also an
officer and director of the Company. At June 30, 1996, the Company had
$750,000 of available funds under this credit facility.
In October 1995, the Company entered into a new financing agreement with an
existing bank lender. The new agreement provides for an initial $1,250,000
revolving line of credit with the amount of available credit being reduced by
$20,833 per month beginning December 1, 1995. Upon maturity at November 1,
1998, the balance of principal plus accrued interest then remaining outstanding
and unpaid is payable in full. The note is secured by transportation revenues
from eight (8) of the Company's pipeline systems which are also subject to a
negative pledge to keep the pipelines free and clear of all liens and
encumbrances. The facility has been personally guaranteed by three
significant shareholders of the Company, one of which is also an officer and
director of the Company. At June 30, 1996, the Company had no available funds
under this credit facility.
In December 1995, the Company entered into a new financing agreement with a
bank. The agreement provided for an initial $1,500,000 revolving line of credit
with the amount of available credit being reduced by $17,860 per month
beginning February 1, 1996. In May 1996, the agreement was amended to
increase the available credit by $350,000 and adjust the monthly reduction
of availability from $17,860 to $23,000. The $350,000 was drawn to fund
the acquisition of ten gas gathering pipelines from TSGGC in May 1996.
(see Note 4). Upon maturity at January 15, 1999, the balance of principal
plus accrued interest then remaining outstanding and unpaid is payable in full.
In connection with this financing agreement, a $50,000 certificate of deposit
and 100% of Magnolia's stock has been pledged as collateral and has been
personally guaranteed by three significant shareholders of the Company, one of
which is also an officer and director of the Company. At June 30, 1996, the
Company had no funds available under this credit facility.
The Company believes that with the proceeds from the equity offering, its
existing credit facilities, and funds provided by operations, the Company will
be able to meet its operating cash needs for the foreseeable future. In
addition, the Company is currently negotiating with a commercial bank to obtain
a comprehensive credit facility which will facilitate financing on future
construction projects or acquisitions. Such facility will likely include a
working capital line of credit and a revolving facility to finance future
acquisition or construction projects. There can, however, be no assurance that
the Company will be able to obtain such financing.<PAGE>
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities
Magnolia Pipeline Corporation ("Magnolia"), a wholly-owned subsidiary, has a
revolving credit facility with a bank which prohibits the payment of dividends
to Magnolia stockholders. As such, Magnolia's cash balance of $161,356 at June
30, 1996 is restricted from the payment of dividends. In addition, the Company
has pledged a $50,000 certificate of deposit as collateral on the Magnolia
revolving credit facility mentioned above.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits:
3.1 Articles of Incorporation of Midcoast Energy Resources, Inc.
(Incorporated by reference from Midcoast Form 10-KSB for the fiscal
year ended December 31, 1992.)
3.2 Certificate of Amendment of Articles of Incorporation of Midcoast
Energy Resources, Inc. (Incorporated by reference from Midcoast
Registration Statement on Form SB-2 (No. 333-4643)).
3.3 Bylaws of Midcoast Energy Resources, Inc. (Incorporated by reference
from Midcoast Form 10-KSB for the fiscal year ended December 31,
1992.)
4.1 Shareholder Agreement by and between Midcoast Energy Resources, Inc.
and Bill G. Bray dated April 30, 1994 (Incorporated from Midcoast
Form 10-KSB for the fiscal year ended December 31, 1994).
4.2 Shareholder Agreement by and between Midcoast Energy Resources, Inc.
and Duane S. Herbst dated April 30, 1994 (Incorporated from Midcoast
Form 10-KSB for the fiscal year ended December 31, 1994).
4.3 Shareholder Agreement by and between Midcoast Energy Resources, Inc.
and Richard A. Robert dated April 30, 1994 (Incorporated from
Midcoast Form 10-KSB for the fiscal year ended December 31, 1994).
4.4 Shareholder Agreement by and between Midcoast Energy Resources, Inc.
Iris J. Berthelot, II dated April 30, 1994 (Incorporated from
Midcoast Form 10-KSB for the fiscal year ended December 31, 1994).
4.5 Specimen Certificate for Share of Common Stock, par value $.01 per
share (Incorporated by reference from Midcoast Registration Statement
on Form SB-2 (No. 333-4643)).
4.6 Representative's Warrents (Incorporated by reference from Midcoast
Registration Statement on Form SB-2 (No. 333-4643)).
4.7 Termination Agreement dated May 13, 1996 to terminate the Shareholders
Agreement by and between Magic Gas Corp. (f/k/a Midcoast Natural Gas,
Inc.), Stevens G. Herbst and Kenneth B. Holmes, Jr. dated
November 16, 1992. (Incorporated by reference from Midcoast
Registration Statement on Form SB-2 (No. 333-4643)).
4.8 Voting Proxy Agreement by and between Midcoast Energy Resources, Inc.
Stevens G, Herbst, Kenneth B. Holmes, Jr., Rainbow Investments Company
and Texas Commerce Bank National Association. (Incorporated by
reference from Midcoast Registration Statement on Form SB-2
(No. 333-4643)).
4.9 Registration Rights Agreement by and between Midcoast Energy
Resources, Inc.and Stevens G. Herbst. (Incorporated by reference from
Midcoast Registration Statement on Form SB-2 (No. 333-4643)).
4.10 Registration Rights Agreement by and between Midcoast Energy
Resources, Inc. and Kenneth B. Holmes, Jr. (Incorporated by reference
from Midcoast Registration Statement on Form SB-2 (No. 333-4643)).
4.11 Registration Rights Agreement by and between Midcoast Energy
Resources, Inc. and Rainbow Investments Company. (Incorporated
by reference from Midcoast Registration Statement on Form SB-2
(No. 333-4643)).
27.1 Financial Data Schedule
b. Reports on Form 8-K:
None
Signature
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.
MIDCOAST ENERGY RESOURCES, INC.
(Registrant)
BY: /s/ Richard A. Robert
Richard A. Robert
Treasurer Principal Financial Officer
Principal Accounting Officer
Date: August 16, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 723,910
<SECURITIES> 0
<RECEIVABLES> 2,197,854
<ALLOWANCES> 0
<INVENTORY> 210,447
<CURRENT-ASSETS> 3,132,211
<PP&E> 9,686,613
<DEPRECIATION> 1,078,432
<TOTAL-ASSETS> 12,372,546
<CURRENT-LIABILITIES> 4,107,250
<BONDS> 0
<COMMON> 14,961
0
0
<OTHER-SE> 4,576,568
<TOTAL-LIABILITY-AND-EQUITY> 12,372,546
<SALES> 10,131,222
<TOTAL-REVENUES> 10,231,012
<CGS> 8,656,430
<TOTAL-COSTS> 9,466,688
<OTHER-EXPENSES> 27,357
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 210,131
<INCOME-PRETAX> 526,836
<INCOME-TAX> 0
<INCOME-CONTINUING> 526,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 503,973
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
