SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
DECEMBER 31, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 OR THE TRANSITION PERIOD FROM
__________ TO __________
Commission file number 0-8874
Amber Resources Company
(Exact name of registrant as specified in its charter)
Delaware 84-0750506
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
555 17th Street, Suite 3310
Denver, Colorado 80202
(Address of principal (Zip Code)
executive offices)
(303) 293-9133
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) 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 No X
4,666,185 shares of common stock $.0625 par value were
outstanding as of February 6, 1996.
Form 10-QSB
2nd Qtr.
FY 1996
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
December 31, 1995 and
June 30, 1995...................... 1
Statements of Operations and
Accumulated Deficit for the
Three and Six Months Ended
December 31, 1995 and 1994.......... 2
Statements of Cash Flows:
For the Six Months
Ended December 31, 1995 and 1994.... 4
Notes to Financial Statements......... 5
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS...................... 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings...................... 11
Item 2. Changes in Securities.................. 11
Item 3. Defaults upon Senior Securities........ 11
Item 4. Submission of Matters to a Vote of
Security Holders....................... 11
Item 5. Other Information...................... 11
Item 6. Exhibits and Reports on Form 8-K....... 11
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
BALANCE SHEETS (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
December 31, June 30,
1995 1995
Assets
Current assets:
Cash $5,589 3,751
Accounts receiveable 104,030 104,047
Other current assets 2,000 -
Total current assets 111,619 107,798
Oil and gas properties, successful efforts
method of accounting (Notes 2 and 3):
Undeveloped offshore California properties 5,006,276 5,006,276
Developed onshore domestic properties 1,430,583 1,385,673
6,436,859 6,391,949
Accumulated depletion (664,582) (608,817)
Net oil and gas properties 5,772,277 5,783,132
5,883,896 5,890,930
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable:
Trade 47,057 78,487
Affiliate 662,950 256,371
Royalties payable held in suspense 199,223 188,847
Recoupment gas royalties payable 669,841 669,841
Total current liabilities 1,579,071 1,193,546
Stockholders' equity
Preferred stock, $1.00 par value;
authorized 5,000,000
shares of Class A
convertible preferred stock,
none issued - -
Common stock, $.0625 par value;
authorized 25,000,000 shares,
4,666,185 shares issued and
outstanding 291,637 291,637
Additional paid-in capital 5,755,232 5,755,232
Accumulated deficit (1,742,044) (1,349,485)
Total stockholders' equity 4,304,825 4,697,384
5,883,896 5,890,930
Statements of Operations and Accumulated Deficit
(Unaudited)
Three Months Ended
December 31,
1995 1994
Revenue:
Oil and gas sales, including recoupment
gas $0 in 1995 and $80,904 in 1994 $131,757 215,349
Gain on sale of oil and gas properties - 57,667
Interest income 47 47
Total revenue 131,804 273,063
Expenses:
Lease operating expenses 46,829 76,861
Depletion 23,867 85,130
Exploration expenses 4,880 -
General and administrative 289,222 152,809
Interest on recoupment gas obligation - 54,025
Total expenses 364,798 368,825
Loss before extraordinary item (232,994) (95,762)
Extraordinary gain on settlement of
recoupment gas obligation - 493,850
Net income (loss) (232,994) 398,088
Accumulated deficit at beginning of period (1,509,050) (1,318,956)
Accumulated deficit at end of period ($1,742,044) (920,868)
Income (loss) per common share:
Loss before extraordinary item ($0.05) (0.02)
Extraordinary gain on settlement of
recoupment gas obligation 0.00 0.11
Net income (loss) ($0.05) 0.09
Weighted average number of common
shares outstanding 4,666,185 4,666,185
Six Months Ended
December 31,
1995 1994
Revenue:
Oil and gas sales, including recoupment
gas $0 in 1995 and $167,009 in 1994 $229,562 451,624
Gain on sale of oil and gas properties - 57,667
Interest income 102 88
Total revenue 229,664 509,379
Expenses:
Lease operating expenses 93,456 125,007
Depletion 55,766 149,233
Exploration expenses 4,880 -
General and administrative 468,121 305,921
Interest on recoupment gas obligation - 113,285
Total expenses 622,223 693,446
Loss before extraordinary item (392,559) (184,067)
Extraordinary gain on settlement of
recoupment gas obligation - 493,850
Net income (loss) (392,559) 309,783
Accumulated deficit at beginning of period (1,349,485) (1,230,651)
Accumulated deficit at end of period ($1,742,044) (920,868)
Income (loss) per common share:
Loss before extraordinary item ($0.08) (0.04)
Extraordinary gain on settlement of
recoupment gas obligation - 0.11
Net income (loss) ($0.08) 0.07
Weighted average number of common
shares outstanding 4,666,185 4,666,185
Statements of Cashflows
(Unaudited)
Six Months Ended
December 31,
1995 1994
Net cash used in operating activities ($359,831) (62,821)
Cash flows from investing activities:
Additions to oil and gas properties (44,910) (36,196)
Proceeds from sale of oil and gas properties - 78,160
Net cash (used in) provided by
investing activities (44,910) 41,964
Cash flows from financing activities:
Increase in accounts payable -
affiliate 406,579 22,694
Net cash provided by financing
activities 406,579 22,694
Net increase in cash 1,838 1,837
Cash at beginning of the period 3,751 4,064
Cash at end of the period $5,589 5,901
See accompanying notes to unaudited financial statements.
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Notes to Financial Statements
Six Months Ended December 31, 1995 and 1994
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and, in
accordance with those rules, do not include all the information and
notes required by generally accepted accounting principles for
complete financial statements. As a result, these unaudited
financial statements should be read in conjunction with Amber
Resources Company's (the Company) audited financial statements and
notes thereto filed with the Company's most recent annual report on
Form 10-KSB. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, considered necessary
for a fair presentation of the financial position of the Company
and the results of its operations have been included. Operating
results for interim periods are not necessarily indicative of the
results that may be expected for the complete fiscal year.
(2) Contingencies
The Company has an investment in certain undeveloped offshore
California properties of $5,006,276 at December 31, 1995. The
Company's ability to ultimately develop the properties is subject
to a number of uncertainties, including the operator's ability to
obtain the necessary permits and authorizations relating to the
development activities. The Company's ability to realize its
investment in the offshore California properties is dependent on
its ability to develop the properties or to sell some or all of its
interests in the properties. Accordingly, the financial statements
do not include any adjustments that would result if the Company
could not realize its investment.
ITEM 2. MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Background
Amber Resources Company ("the Company") was incorporated
in January, 1978, and is principally engaged in acquiring,
exploring, developing, and producing oil and gas properties. The
Company owns interest in undeveloped oil and gas properties
offshore California, near Santa Barbara and developed oil and gas
properties in Western Oklahoma.
From August 20, 1991 through December 31, 1991,
Underwriters Financial Group, Inc. ("UFG") acquired 80.08% of the
outstanding common stock of the Company (3,736,775 shares). The
shares of the Company were acquired in exchange for shares of
common stock of UFG, shares of convertible preferred stock of UFG,
and a note payable secured by a portion of the shares acquired. On
April 30, 1992, UFG acquired an additional 373,885 shares of the
Company's common stock in exchange for shares of its common stock,
thereby increasing its ownership of the Company to 88.09%. In
October 1992, UFG concluded a series of agreements with Delta
Petroleum Corporation ("Delta"), then a subsidiary of UFG, to
participate in a plan to reorganize and recapitalize Delta (the
"Plan of Reorganization"). Under the terms of the Plan of
Reorganization, UFG transferred the 4,110,660 shares of the Company
it owned to Delta. Also in connection with the Plan of
Reorganization, Delta issued 1,030,000 shares of its common stock
to Messrs. Burdette A. Ogle and Ronald Heck (collectively "Ogle"),
shareholders of Delta, in exchange for their working interests in
two federal offshore California oil and gas units and 167,317
shares of common stock of the Company. As a result of these
transactions, at December 31, 1995, Delta owns 4,227,377 shares, or
91.68% of the outstanding common stock of the Company. As of that
date, 3,357,003 shares of common stock of the Company owned by
Delta are pledged to secure a note payable by UFG to Snyder Oil
Corporation in the amount of $2,441,500 including accrued interest.
The note is currently in default.
On December 11, 1995, UFG filed for Chapter 11 bankruptcy
protection with the United States Bankruptcy Court for the Southern
District of New York. Delta's position and alternative courses of
action are being reviewed by its management and legal counsel.
The Company adjusted the basis of its assets and
liabilities in 1991 to reflect the new basis of accounting
resulting from the acquisition for more than 80% of its common
shares by UFG. The Company's net assets were adjusted to reflect
UFG's acquisition costs of the shares of $5,406,408. The minority
shareholders' interest in the Company was not reflected in this
adjustment as accumulated losses had exceeded their original
investment at that date. The subsequent acquisition of additional
shares of the Company by UFG in 1992 was accounted for as an
increase in oil and gas properties and an increase in additional
paid-in capital of $595,461, representing the estimated fair value
of the UFG shares issued in exchange for the additional shares.
The acquisition by Delta of additional shares from Ogle was also
accounted for in 1992 as an increase in oil and gas properties and
an increase in additional paid-in capital of $45,000, representing
Ogle's predecessor cost of the shares of the Company. The
additional shares acquired from Ogle by Delta were accounted for at
predecessor cost due to the related party nature of the
transaction.
Liquidity and Capital Resources.
At December 31, 1995, the Company had a working capital
deficit of $1,467,452 compared to a working capital deficit of
$1,085,748 at June 30, 1995. The Company's working capital deficit
is in part a result of the royalties payable and recoupment gas
royalties payable held in suspense. The Company's royalties
payable of $199,223 in suspense at December 31, 1995 represents the
Company's estimate of royalties payable on production attributable
to its interest in certain wells in Oklahoma. The Company is
attempting to identify the royalty owners and calculate the amounts
owed to each owner, which it expects will require some time. To
date, no significant claims have been asserted against the Company
by royalty owners for amounts due for prior production. The
Company has estimated that royalties are payable on recoupment gas
produced on certain of its wells of $669,841 at December 31, 1995.
To date no claims have been asserted against the Company by royalty
owners for royalties due on recoupment gas produced. The Company
believes that the operators of the affected wells have paid some of
the royalties on behalf of the Company and have withheld such
amounts from revenues attributable to the Company's interest in the
wells. The Company has contacted the operators of the wells in an
attempt to determine what amounts the operators have paid on behalf
of the Company over the past five years, which amounts would reduce
the amounts owed by the Company. To date the Company has not
received information sufficient to allow it to determine the
amounts paid by the operators.
The Company believes that it is unlikely that all claims
that might be made for payment of royalties payable in suspense or
for recoupment royalties payable would be made at one time. The
Company believes, although there can be no assurance, that it may
ultimately be able to settle with potential claimants for less than
the amounts recorded for royalties payable held in suspense and
recoupment gas royalties payable.
On November 18, 1994, the Company entered into an
agreement with El Paso Natural Gas Company ("El Paso") under which
the Company agreed to transfer to El Paso the Company's interest in
four wells and the associated acreage in complete satisfaction of
Company's recoupment gas obligation. As a result of this
agreement, the Company is no longer obligated to El Paso for
recoupment gas from the remaining wells subject to the recoupment
agreement. Consequently, the Company has lost the revenues from
the wells transferred to El Paso and gain the revenues from the
remaining wells attributable to production amounts freed from the
recoupment requirements. As a result of this transaction, the
Company recorded an extraordinary gain on settlement of the
recoupment gas obligation of $493,850.
The Company does not currently have a credit facility
with any bank and it has not determined the amount, if any, that it
could borrow against its existing properties. The Company will
continue to explore additional sources of both short-term and long-
term liquidity to fund its working capital deficit and its capital
requirements for development of its properties including
establishing a credit facility, sale of equity or debt securities
and sale of non-strategic properties. Many of the factors which
may affect the Company's future operating performance and liquidity
are beyond the Company's control, including oil and natural gas
prices and the availability of financing.
Results of Operations
Net Earnings (Loss). The Company reported net loss of
$314,265 and $473,830 for the three and six months ended December
31, 1995 compared to net income of $398,088 and $309,783 for the
same periods in 1994. Net income for the three and six months
ended December 31, 1994 included an extraordinary gain on the
settlement of a recoupment gas obligation of $493,850.
Revenue. Total revenues for the three and six months
ended December 31, 1995 were $131,804 and $229,664 compared to
$273,063 and $509,379 for the same periods in 1994. Oil and gas
sales for the three and six months ended December 31, 1995 were
$131,757 and $229,562 compared to $215,349 and $451,624 for the
same periods in 1994. The Company's oil and gas sales were
impacted by the settlement of the recoupment gas obligation and the
over production of gas by other working interest owners in certain
gas wells in Oklahoma. The Company expects to recover the
production attributable to its underbalanced position in future
periods, as the wells are brought back into balance. Revenue from
oil and gas sales includes amortization of the Company's recoupment
gas obligation of $80,904 and $167,009 for the three and six months
ended December 31, 1994. Revenue is recorded as the recoupment gas
is produced and delivered to the gas purchaser.
The amount of revenue recorded varies with the amount of gas
recouped by the purchaser and the current price of gas. Effective
December 1, 1994, the Company's wells were no longer subject to a
recoupment agreement, due to a settlement with El Paso. As a
result of the settlement, the Company recorded an extraordinary
gain on settlement of the recoupment gas obligation of $493,850.
Production volumes and average prices received for the
three and six months ended December 31, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Production:
Oil (Bbls) 277 195 347 673
Gas (Mcfs) 72,403 99,025 141,829 172,075
Recoupment
gas (Mcfs) - 46,391 - 115,978
Average Price:
Oil (per Bbls) $16.95 $15.60 $16.65 $16.20
Gas (per Mcf) $ 1.75 $1.46 $1.58 $1.53
</TABLE>
Lease Operating Expenses. Lease operating expenses
were $46,829 and $93,456 for the three and six months ended
December 31, 1995 compared to $76,861 and $125,007 for the same
periods in 1994. On a MCF equivalent basis, production expenses
and taxes were $.63 and $.65, respectively, per Mcf equivalent
during the three and six month periods ended December 31, 1995
compared to $.52 and $.43, respectively, per Mcf equivalent for the
same periods in 1994.
Depreciation and Depletion Expense. Depletion
expense for the three and six months ended December 31, 1995 were
$23,867 and $55,766 compared to $85,130 and $149,233 for the same
periods in 1994. On a MCF equivalent basis, depletion expense were
$.32 and $.39, respectively, per Mcf equivalent during the three
and six month periods ended December 31, 1995 compared to $.58 and
$.51, respectively, per Mcf equivalent for the same periods in
1994.
General and Administrative Expenses. General and
administrative expenses for the three and six months ended December
31, 1995 were $289,222 and $468,121 compared to $152,809 and
$305,921 for the same periods as in 1994. General and
administrative expenses increased as the Company's level of
activity increased following the reorganization of Delta.
Interest on Recoupment Gas Obligation Expense.
Imputed interest expense on the recoupment gas obligation was $0
for the three and six months ended December 31, 1995 compared to
$54,025 and $113,285 for the same periods in 1994. This expense
fluctuates with the change in gas prices. Effective December 1,
1994 the Company was no longer subject to interest on the
recoupment gas obligation due to the settlement with El Paso.
Future Operations
The Company's offshore California proved undeveloped
reserves are attributable to its interests in three federal units
located offshore California near Santa Barbara. While these
interests represent ownership of substantial oil and gas reserves
classified as proved undeveloped, the cost to develop the reserves
will be very substantial. The Company may be required to farm out
all or a portion of its interests in these properties if it cannot
fund its share of the development costs. There can be no assurance
that the Company can farm out its interests on acceptable terms.
If the Company were to farm out its interests in these properties,
its share of the proved reserves attributable to the properties
would be decreased substantially. The Company may also incur
substantial dilution of its interests in the properties if it
elects to use other methods of financing the development costs.
These units have been formally approved and are regulated
by the Minerals Management Service of the Federal Government.
However, due to a history of opposition to offshore drilling and
production in California by some individuals and groups, the
process of obtaining all of the necessary permits and
authorizations to develop the properties will be lengthy and even
after all required approvals are obtained, lawsuits may possibly be
filed to attempt to further delay the development of the
properties. While the Federal Government has recently attempted to
expedite this process, there can be no assurance that it will be
successful in doing so. The Company does not have a controlling
interest in and does not act as the operator of any of the offshore
California properties and consequently will not control the timing
of either the development of the properties or the expenditures for
development. Management and its independent engineering consultant
have considered the effect of these factors relating to timing of
the development of the reserves in the preparation of the reserve
information relating to these properties. As additional
information becomes available in the future, the Company's
estimates of the proved undeveloped reserves attributable to these
properties could change, and such changes could be substantial.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMBER RESOURCES COMPANY
(Registrant)
/s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman\CEO
/s/Kevin K. Nanke
Kevin K. Nanke, Controller and
Principal Accounting Officer
February 9, 1996
INDEX
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession. Not applicable.
(4) Instruments Defining the Rights of Security Holders,
Including Indentures. Not applicable.
(9) Voting Trust Agreement. Not applicable.
(10) Material Contracts. Not applicable.
(11) Statement Regarding Computation of Per Share Earnings.
Not applicable.
(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.
(15) Letter Regarding Unaudited Interim Information.
Not applicable.
(16) Letter re: Change in Certifying Accountants. Not
applicable.
(17) Letter re: Director Resignation. Not applicable.
(18) Letter Regarding Changes in Accounting Principals.
Not applicable.
(19) Previously Unfiled Documents.
Not applicable.
(20) Report Furnished to Security Holders.
Not applicable.
(22) Published Report Regarding Matters Submitted to Vote of
Security Holders. Not applicable.
(23) Consents of Experts and Counsel. Not applicable.
(24) Power of Attorney.
Not applicable.
(27) Financial Data Schedule.
(99) Additional Exhibits.
Not applicable.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000276750
<NAME> AMBER RESOURCES COMPANY
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 5,589
<SECURITIES> 0
<RECEIVABLES> 104,030
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 111,619
<PP&E> 6,436,859
<DEPRECIATION> 664,582
<TOTAL-ASSETS> 5,883,896
<CURRENT-LIABILITIES> 1,579,071
<BONDS> 0
0
0
<COMMON> 291,637
<OTHER-SE> 4,013,188
<TOTAL-LIABILITY-AND-EQUITY> 5,883,896
<SALES> 229,562
<TOTAL-REVENUES> 229,664
<CGS> 0
<TOTAL-COSTS> 622,223
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (392,559)
<INCOME-TAX> 0
<INCOME-CONTINUING> (392,559)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (392,559)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
