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, 1994 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 November 15, 1995.
Form 10-QSB
2nd Qtr.
FY 1995
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
December 31, 1994 and
June 30, 1994...................... 1
Statements of Operations and
Accumulated Deficit for the
Three and Six Months Ended
December 31, 1994 and 1993.......... 2
Statements of Cash Flows:
For the Six Months
Ended December 31, 1994 and 1993.... 4
Notes to Financial Statements......... 5
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS...................... 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings...................... 12
Item 2. Changes in Securities.................. 12
Item 3. Defaults upon Senior Securities........ 12
Item 4. Submission of Matters to a Vote of
Security Holders....................... 12
Item 5. Other Information...................... 12
Item 6. Exhibits and Reports on Form 8-K....... 12
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
BALANCE SHEETS (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
December 31, June 30,
1994 1994
Assets
Current assets:
Cash $5,901 $4,064
Accounts receiveable 110,493 59,494
Other current assets - 2,500
Total current assets 116,394 66,058
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 1,956,287 2,722,260
6,962,563 7,728,536
Accumulated depletion (917,709) (1,083,517)
Net oil and gas properties 6,044,854 6,645,019
$6,161,248 6,711,077
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable:
Trade $103,847 45,912
Affiliate 74,766 52,072
Royalties payable held in suspense 186,793 185,123
Recoupment gas royalties payable 669,841 643,841
Total current liabilities 1,035,247 926,948
Recoupment gas obligation - 967,911
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 (920,868) (1,230,651)
Total stockholders' equity 5,126,001 4,816,218
$6,161,248 6,711,077
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Statements of Operations and Accumulated Deficit
(Unaudited)
Three Months Ended
December 31,
1994 1993
Revenue:
Oil and gas sales, including recoupment
gas $80,904 in 1994 and $84,497 in 1993 $215,349 319,218
Gain on sale of oil and gas properties 57,667 -
Interest income 47 539
Total revenue 273,063 319,757
Expenses:
Lease operating expenses 76,861 93,874
Depletion 85,130 107,845
General and administrative 152,809 144,445
Interest on recoupment gas obligation 54,025 62,108
Total expenses 368,825 408,272
Loss before extraordinary item (95,762) (88,515)
Extraordinary gain on settlement of
recoumpment gas obligation 493,850 -
Net income (loss) 398,088 (88,515)
Accumulated deficit at beginning of period (1,318,956) (892,953)
Accumulated deficit at end of period ($920,868) (981,468)
Income (loss) per common share:
Loss before extraordinary item ($0.02) (0.02)
Extraordinary gain on settlement of
recoumpment gas obligation 0.11 -
Net income (loss) $0.09 (0.02)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
Statements of Operations and Accumulated Deficit
(Unaudited)
Six Months Ended
December 31,
1994 1993
Revenue:
Oil and gas sales, including recoupment
gas $167,009 in 1994 and $233,884 in 1993 $451,624 576,725
Gain on sale of oil and gas properties 57,667 -
Interest income 88 539
Total revenue 509,379 577,264
Expenses:
Lease operating expenses 125,007 166,848
Depletion 149,233 204,877
General and administrative 305,921 188,481
Interest on recoupment gas obligation 113,285 164,144
Total expenses 693,446 724,350
Loss before extraordinary item (184,067) (147,086)
Extraordinary gain on settlement of
recoumpment gas obligation 493,850 -
Net income (loss) 309,783 (147,086)
Accumulated deficit at beginning of period (1,230,651) (834,382)
Accumulated deficit at end of period ($920,868) (981,468)
Income (loss) per common share:
Loss before extraordinary item ($0.04) (0.03)
Extraordinary gain on settlement of
recoumpment gas obligation 0.11 -
Net income (loss) $0.07 (0.03)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
Statement of Cash Flows
(Unaudited)
Six Months Ended
December 31,
1994 1993
Net cash used in operating activities ($62,821) (8,758)
Cash flows from investing activities:
Additions to oil and gas properties (36,196) -
Proceeds from sale of oil and gas properties 78,160 -
Net cash used in investing activities 41,964 -
Cash flows from financing activities:
Decrease in advances to UFG - (8,045)
Increase (decrease) in accounts payable -
affiliate 22,694 (54,035)
Net cash provided by (used in)
financing activities 22,694 (62,080)
Net increase (decrease) in cash 1,837 (70,838)
Cash at beginning of the period 4,064 75,455
Cash at end of the period $5,901 4,617
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, 1994 and 1993
(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) Restatements
The Company changed its method of accounting for oil and gas
properties to the successful efforts method from the full cost
method. In the opinion of management, the successful efforts
method of accounting is preferable in the Company's circumstance,
as it is more generally accepted as industry practice, it more
accurately reflects the current activities of the Company, which
include only limited exploration activities, and it results in a
better matching of revenue and expenses. The financial statements
have been restated to apply the new method of accounting
retroactivity.
The financial statements were also restated (i) to record as
a liability the Company's obligation under the recoupment agreement
with a gas purchaser; (ii) to adjust the amount previously recorded
for recoupment gas royalties; and (iii) to record other
adjustments.
It is not practicable to determine the effect of each
adjustment recorded to restate the financial statements.
Summarized financial information for the six months ended December
31, 1993 as previously reported and as restated follows:
As Previously As
Reported Adjustments Restated
Revenue $351,775 225,489 577,264
Expenses (313,032) (411,318) (724,350)
Net Income (loss) $ 38,743 (185,829) (147,086)
Net Income (loss)
per share $ .01 (.03)
(3) Contingencies
The Company has an investment in certain undeveloped offshore
California properties of $5,006,276 at December 31, 1994. 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, 1994, 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 $2,221,689, including accrued
interest. The note is currently in default.
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, 1994, the Company had a working
capital deficit of $918,854 compared to a working capital deficit
of $860,890 at June 30, 1994. 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 $186,793 in suspense at December 31, 1994 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, 1994.
The Company is awaiting the outcome of litigation in various courts
which may impact the method of calculating the Company's obligation
for royalties payable on recoupment gas. 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 will lose 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.
After evaluation of the considerations described
above the Company believes that its cash flow from its existing
producing properties, proceeds from the sale of producing
properties, and other sources of funds will be adequate to fund its
operating expenses and satisfy its other current liabilities over
the next year or longer.
Results of Operations
Net Earnings (Loss). The Company reported net
income of $398,088 and $309,783 for the three and six months ended
December 31, 1994 compared to a net loss of $88,515 and $147,086
for the same periods in 1993. Net income for the three and six
months ended December 31, 1994 included an extraordinary gain on
the settlement of a recoupment gas obligation.
Revenue. Total revenues for the three and six
months ended December 31, 1994 were $273,063 and $509,379 compared
to $319,757 and $577,264 for the same periods in 1993. Oil and gas
sales for the three and six months ended December 31, 1994 were
$215,349 and $451,624 compared to $319,218 and $576,725 for the
same periods in 1993. The Company's oil and gas sales were
impacted by 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 compared to $88,497
and $233,884 for the same periods in 1993. 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:
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
Production:
Oil (Bbls) 195 310 673 776
Gas (Mcfs) 99,025 108,565 172,075 167,129
Recoupment
gas (Mcfs) 46,391 79,947 115,978 159,945
Average Price:
Oil (per Bbls) $15.60 $14.20 $16.20 $14.03
Gas (per Mcf) $ 1.46 $1.67 $1.53 $1.73
Lease Operating Expenses. Lease operating expenses
were $76,861 and $125,007 for the three and six months ended
December 31, 1994 compared to $93,874 and $166,848 for the same
periods in 1993. On a MCF equivalent basis, production expenses
and taxes were $.52 and $.43, respectively, per Mcf equivalent
during the three and six month periods ended December 31, 1994
compared to $.49 and $.50, respectively, per Mcf equivalent for the
same periods in 1993.
Depreciation and Depletion Expense. Depreciation
and depletion expense for the three months ended December 31, 1994
were $85,130 and $149,233 compared to $107,845 and $204,877 for the
same periods in 1993. On a MCF equivalent basis, depreciation and
depletion expense were $.58 and $.51, respectively, per Mcf
equivalent during the three and six month periods ended December
31, 1994 compared to $.56 and $.61, respectively, per Mcf
equivalent for the same periods in 1993.
General and Administrative Expenses. General and
administrative expenses for the three and six months ended December
31, 1994 were $152,809 and $305,921 compared to $144,445 and
$188,481 for the same periods as in 1993. 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
$54,025 and $113,285 for the three and six months ended December
31, 1994 compared to $62,108 and $164,144 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)
Date: June 12, 1996 s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman\CEO
s/Kevin K. Nanke
Kevin K. Nanke, Controller and
Principal Accounting Officer
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.
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