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 MARCH 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 November 15, 1995.
Form 10-QSB
3rd Qtr.
FY 1995
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
March 31, 1995 and
June 30, 1994 . . . . . . . . . . . . . . . . .1
Statements of Operations and
Accumulated Deficit for the
Three and Nine Months Ended
March 31, 1995 and 1994 . . . . . . . . . . . .2
Statements of Cash Flows:
For the Nine Months
Ended March 31, 1995 and 1994 . . . . . . . . .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. . . . . . . . . . . . . . . . . 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
March 31, June 30,
1995 1994
Assets
Current assets:
Cash $5,730 $4,064
Accounts receiveable 83,218 59,494
Other current assets - 2,500
Total current assets 88,948 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 1,964,448 2,722,260
6,970,724 7,728,536
Accumulated depletion (910,194) (1,083,517)
Net oil and gas properties 6,060,530 6,645,019
$6,149,478 6,711,077
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable:
Trade $71,947 45,912
Affiliate 163,092 52,072
Royalties payable held in suspense 192,701 185,123
Recoupment gas royalties payable 669,841 643,841
Total current liabilities 1,097,581 926,948
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 (994,972) (1,230,651)
Total stockholders' equity 5,051,897 4,816,218
$6,149,478 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
March 31,
1995 1994
Revenue:
Oil and gas sales, including recoupment
gas $0 in 1994 and $113,453 in 1993 $147,073 247,818
Gain on sale of oil and gas properties - -
Interest income - 18
Total revenue 147,073 247,836
Expenses:
Lease operating expenses 34,936 95,181
Depletion 35,855 119,956
General and administrative 150,386 131,161
Interest on recoupment gas obligation - 49,801
Total expenses 221,177 396,099
Net loss (74,104) (148,263)
Accumulated deficit at beginning of period (920,868) (981,468)
Accumulated deficit at end of period ($994,972) (1,129,731)
Loss per common share ($0.02) (0.03)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Statements of Operations and Accumulated Deficit
(Unaudited)
Nine Months Ended
March 31,
1995 1994
Revenue:
Oil and gas sales, including recoupment
gas $167,009 in 1994 and $347,337 in 1993 $598,697 824,843
Gain on sale of oil and gas properties 57,667 -
Interest income 88 557
Total revenue 656,452 825,400
Expenses:
Lease operating expenses 159,943 262,029
Depletion 141,718 324,833
General and administrative 499,677 319,642
Interest on recoupment gas obligation 113,285 213,945
Total expenses 914,623 1,120,449
Loss before extraordinary item (258,171) (295,049)
Extraordinary gain on settlement of
recoumpment gas obligation 493,850 -
Net income (loss) 235,679 (295,049)
Accumulated deficit at beginning of period (1,230,651) (834,382)
Accumulated deficit at end of period ($994,972) (1,129,431)
Income (loss) per common share:
Loss before extraordinary item ($0.06) (0.06)
Extraordinary gain on settlement of
recoumpment gas obligation 0.11 -
Net income (loss) $0.05 (0.06)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Statements of Cash Flows
(Unaudited)
Nine Months Ended
March 31,
1995 1994
Net cash used in operating activities ($189,455) (9,781)
Cash flows from investing activities:
Additions to property and equipment (44,357) -
Proceeds from sale of Oil and Gas Properties 124,458 -
Net cash used in investing activities 80,101 -
Cash flows from financing activities:
Decrease in advances to UFG - (8,045)
Increase (decrease) in accounts payable -
affiliate 111,020 (54,035)
Net cash provided by (used in)
financing activities 111,020 (62,080)
Net decrease in cash 1,666 (71,861)
Cash at beginning of the period 4,064 75,455
Cash at end of the period $5,730 3,594
See accompanying notes to unaudited financial statements.
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Notes to Financial Statements
Nine Months Ended March 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) 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 March
31, 1994 as previously reported and as restated follows:
As Previously
Reported Adjustments As Restated
Revenue $134,383 113,453 247,836
Expenses (127,226) (268,873) (396,099)
Net Income (loss) $ 7,157 (155,420) (148,263)
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 March 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 March 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 $2,119,421, 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 March 31, 1995, the Company had a working capital
deficit of $1,008,633 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 held in suspense and
recoupment gas royalties payable. The Company's royalties
payable in suspense at March 31, 1995 is $192,701 which represent
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 March 31, 1995. 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 a net loss
of $74,104 and a net income of $235,679 for the three and nine
months ended March 31, 1995 compared to a net loss of $148,263
and $295,349 for the same periods in 1994. Net income for the
three and nine months ended March 31, 1995 included an
extraordinary gain on the settlement of a recoupment gas
obligation.
Revenue. Total revenues for the three and nine months
ended March 31, 1995 were $147,073 and $656,452 compared to
$247,836 and $825,400 for the same periods in 1994. Oil and gas
sales for the three and nine months ended March 31, 1995 were
$147,073 and $598,697 compared to $247,818 and $824,543 for the
same periods in 1994. 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 $0 and $167,009 for the
three and nine months ended March 31, 1995 compared to $113,453
and $347,337 for the same periods in 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 nine months ended March 31, 1995 and 1994 are as
follows:
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
Production:
Oil (barrels) 40 384 713 1,160
Gas (Mcfs) 51,217 53,560 190,517 220,389
Recoupment
gas (Mcfs) 46,391 78,105 162,369 238,050
Average Price:
Oil (per barrel) $16.20 $15.60 $16.50 $15.25
Gas (per Mcf) $ 1.50 $1.80 $1.65 $1.76
Lease Operating Expenses. Lease operating expenses
were $34,936 and $159,943 for the three and nine months ended
March 31, 1995 compared to $95,181 and $262,029 for the same
periods in 1994. On a MCF equivalent basis, production expenses
and taxes were $.36 and $.45, respectively, per Mcf equivalent
during the three and nine month periods ended March 31, 1995
compared to $.71 and $.56, respectively, per Mcf equivalent for
the same periods in 1994.
Depreciation and Depletion Expense. Depreciation and
depletion expense for the three months ended March 31, 1995 were
$35,855 and $141,718 compared to $119,956 and $324,833 for the
same periods in 1994. On a MCF equivalent basis, depreciation
and depletion expense were $.37 and $.40, respectively, per Mcf
equivalent during the three and nine month periods ended March
31, 1995 compared to $.90 and $.70, respectively, per Mcf
equivalent for the same periods in 1994.
General and Administrative Expenses. General and
administrative expenses for the three and nine months ended March
31, 1995 were $150,386 and $499,677 compared to $131,161 and
$319,642 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 and
$113,285 for the three and nine months ended March 31, 1995
compared to $49,801 and $213,945 for the same periods in 1995.
This expense fluctuates with the change in gas prices. Effective
December 1, 1994 the Company was not 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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<PERIOD-END> MAR-31-1995
<CASH> 5,730
<SECURITIES> 0
<RECEIVABLES> 83,218
<ALLOWANCES> 0
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<COMMON> 291,637
<OTHER-SE> 4,760,260
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