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 SEPTEMBER 30, 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
1st Qtr.
FY 1995
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
September 30, 1994 and
June 30, 1994....................... 1
Statements of Operations and
Accumulated Deficit for
the Three Months Ended
September 30, 1994 and 1993......... 2
Statements of Cash Flows:
For the Three Months Ended
September 30, 1994 and 1993......... 3
Notes to Financial Statements........... 4
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
September 30, June 30,
1994 1994
Assets
Current assets:
Cash $3,702 4,064
Accounts receiveable 87,832 59,494
Other current assets - 2,500
Total current assets 91,534 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 2,755,864 2,722,260
7,762,140 7,728,536
Accumulated depletion (1,147,620) (1,083,517)
Net oil and gas properties 6,614,520 6,645,019
$6,706,054 6,711,077
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable:
Trade $96,793 45,912
Affiliate 109,648 52,072
Royalties payable held in suspense 186,793 185,123
Recoupment gas royalties payable 643,841 643,841
Total current liabilities 1,037,075 926,948
Recoupment gas obligation 941,066 967,911
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 (1,318,956) (1,230,651)
Total stockholders' equity 4,727,913 4,816,218
$6,706,054 6,711,077
See accompanying notes to unaudited financial statements.
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Statements of Operations and Accumulated Deficit
(Unaudited)
Three Months Ended
September 30,
1994 1993
Revenue:
Oil and gas sales, including recoupment
gas $86,105 in 1994 and $145,387 in 1993 $236,275 257,507
Interest income 41 -
Total revenue 236,316 257,507
Expenses:
Lease operating expenses 48,146 72,974
Depletion 64,103 97,032
General and administrative 153,112 44,036
Interest on recoupment gas obligation 59,260 102,036
Total expenses 324,621 316,078
Net loss (88,305) (58,571)
Accumulated deficit at beginning of period (1,230,651) (834,382)
Accumulated deficit at end of period ($1,318,956) (892,953)
Net loss per common share ($0.02) (0.01)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
See accompanying notes to unaudited financial statements.
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Statements of Cash Flows (Unaudited)
Three Months Ended
September 30,
1994 1993
Net cash used in operating activities ($24,334) (10,413)
Cash flows from investing activities:
Additions to oil and gas properties (33,604) -
Net cash used in investing activities (33,604) -
Cash flows from financing activities:
Decrease in advances to UFG - (8,045)
Increase (decrease) in accounts payable -
affiliate 57,576 (53,508)
Net cash provided by (used in)
financing activities 57,576 (61,553)
Net decrease in cash (362) (71,966)
Cash at beginning of the period 4,064 75,455
Cash at end of the period $3,702 3,489
See accompanying notes to unaudited financial statements.
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Notes to Financial Statements
Three Months Ended September 30, 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 three months ended
September 30, 1993 as previously reported and as restated
follows:
As Previously As
Reported Adjustments Restated
Revenue $116,318 141,189 $ 257,507
Expenses (90,455) (225,623) ( 316,078)
Net Income
(loss) $ 25,863 ( 84,434) $( 58,571)
Net Income
(loss) per share $.01 $(.01)
(3) Contingencies
The Company has an investment in certain undeveloped offshore
California properties of $5,006,276 at September 30, 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.
(4) Subsequent Events
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 it's interest in four wells
and the associated acreage in complete satisfaction of it's
recoupment gas obligation which amounted to $941,066 at September
30, 1994. As a result of this agreement, the Company will no
longer be obligated to El Paso for recoupment gas from the
remaining wells subject to the recoupment agreement. As a result
of this transaction, the Company recorded an extraordinary gain
of $493,850 for the quarter ended December 31, 1994.
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 September 30, 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
$2,185,891, 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 September 30, 1994, the Company had a working capital
deficit of $945,541 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 in suspense of $186,793 at September 30, 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
$643,841 at September 30, 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
the recoupment gas obligation. As a result of this agreement,
the Company will no longer be 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 of $493,850 for the
quarter ended December 31, 1995.
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's net loss for the three
months ended September 30, 1994 was $88,305 compared to a net
loss of $58,571 for the three months ended September 30, 1993.
Revenue. Oil and gas sales for the three months ended
September 30, 1994 were $236,275 compared to $257,507 for the
three months ended September 30, 1993. Revenue from oil and gas
sales includes amortization of the Company's recoupment gas
obligation of $86,105 for the three months ended September 30,
1994 and $145,387 for the three months ended September 30, 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.
Production volumes and average prices received for the three
months ended September 30, 1994 and 1993 are as follows:
Three Months Ended
September 30,
1994 1993
Production:
Oil (barrels) 478 466
Gas (Mcf) 74,871 59,489
Recoupment Gas (Mcf) 69,587 79,998
Average Price:
Oil (per barrel) $16.80 $13.80
Gas (per Mcf) $ 1.58 $1.80
Lease Operating Expenses. Lease operating expenses for
the three month period ended September 30, 1994 was $48,146
compared to $72,974 for the three months ended September 30,
1993. On a MCF equivalent basis, production expenses and taxes
were $.33 per Mcf equivalent during the three month period ended
September 30, 1994 compared to $.51 per Mcf equivalent for the
same period in 1993.
Depletion Expense. Depletion expense for the three months
ended September 30, 1994 was $64,103 compared to $97,032 for the
three months ended September 30, 1993. On a MCF equivalent
basis, depreciation and depletion expense were $.44 per Mcf
equivalent during the three month period ended September 30, 1994
compared to $.68 per Mcf equivalent for the same period in 1993,
reflecting a decrease in production taxes resulting from lower
prices.
General and Administrative Expenses. General and
administrative expense for the three months ended September 30,
1994 was $153,112 compared to $44,036 for the three months ended
September 30, 1993. General and administrative expenses
increased from 1993 to 1994 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 $59,260 for
the three months ended September 30, 1994 and $102,036 for the
three months ended September 30, 1993. This expense fluctuates
with the change in gas prices. Effective December 1, 1994 the
Company will no longer be 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\C.E.O.
s/Kevin K. Nanke
Kevin K. Nanke
Controller and Principal Accounting
Officer
Date: June 12, 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.
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