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, 1997 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 May 10, 1997.
Form 10-QSB
3rd Qtr.
FY 1997
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
March 31, 1997 and
June 30, 1996...................... 1
Statements of Operations and
Accumulated Deficit for the
Three and Nine Months Ended
March 31, 1997 and 1996.......... 2
Statements of Cash Flows:
For the Nine Months
Ended March 31, 1997 and 1996.... 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...................... 10
Item 2. Changes in Securities.................. 10
Item 3. Defaults upon Senior Securities........ 10
Item 4. Submission of Matters to a Vote of
Security Holders....................... 10
Item 5. Other Information...................... 10
Item 6. Exhibits and Reports on Form 8-K....... 10
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
BALANCE SHEETS (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
March 31, June 30,
1997 1996
Assets
Current assets:
Cash $5,021 36,137
Accounts receiveable 129,515 114,560
Other current assets - 2,000
Total current assets 134,536 152,697
Oil and gas properties, successful efforts
method of accounting (Note 2):
Undeveloped offshore California properties 5,006,276 5,006,276
Developed onshore domestic properties 1,447,628 1,429,967
6,453,904 6,436,243
Accumulated depletion (833,953) (726,684)
Net oil and gas properties 5,619,951 5,709,559
5,754,487 5,862,256
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable:
Trade 26,065 8,225
Affiliate 648,596 710,229
Royalties payable 471,438 595,956
Total current liabilities 1,146,099 1,314,410
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 (1,438,481) (1,499,023)
Total stockholders' equity 4,608,388 4,547,846
$5,754,487 5,862,256
Statements of Operations and Accumulated Deficit
(Unaudited)
Three Months Ended
March 31,
1997 1996
Revenue:
Oil and gas sales $294,750 163,653
Other income 51,648 15
Total revenue 346,398 163,668
Expenses:
Lease operating expenses 65,696 62,206
Depletion 24,277 35,151
Exploration expenses 577 1,470
General and administrative 148,014 97,124
Total expenses 238,564 195,951
Net income (loss), net of taxes 107,834 (32,283)
Accumulated deficit at beginning of period (1,546,315) (1,742,045)
Accumulated deficit at end of period ($1,438,481) (1,774,328)
Net income (loss) per common share $0.02 (0.01)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
Statements of Operations and Accumulated Deficit
(Unaudited)
Nine Months Ended
March 31,
1997 1996
Revenue:
Oil and gas sales $698,503 393,215
Other income 124,626 117
Total revenue 823,129 393,332
Expenses:
Lease operating expenses 152,354 155,663
Depletion 107,269 90,917
Exploration expenses 4,879 6,350
General and administrative 498,085 565,245
Total expenses 762,587 818,175
Net income (loss) 60,542 (424,843)
Accumulated deficit at beginning of period (1,499,023) (1,349,485)
Accumulated deficit at end of period ($1,438,481) (1,774,328)
Net income (loss) per common share $0.01 (0.09)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
Statements of Cashflows
(Unaudited)
Nine Months Ended
March 31,
1997 1996
Net cash provided by (used in)
operating activities $48,178 (400,512)
Cash flows from investing activities:
Additions to oil and gas properties (17,661) (44,277)
Net cash used in
investing activities (17,661) (44,277)
Cash flows from financing activities:
(Decrease) increase in accounts
payable affiliate (61,633) 477,306
Net cash provided by financing
activities (61,633) 477,306
Net (decrease)increase in cash (31,116) 32,517
Cash at beginning of the period 36,137 3,751
Cash at end of the period $5,021 36,268
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, 1997 and 1996
(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 March 31, 1997.
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, 1997, 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 $2,091,761 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, 1997, the Company had a working
capital deficit of $1,011,563 compared to a working capital
deficit of$1,161,713 at June 30, 1996. The Company's current
liabilities include royalties payable of $471,438 at March 31,
1997 which 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 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 has
been informed by its legal counsel that the applicable Statue of
Limitations period for actions on written contracts arising in
the state of Oklahoma is five years. The Statue of Limitations
has expired for royalty owners to make a claim for a portion of
the estimated royalties that had previously been accrued.
Accordingly, these amounts have been written off and recorded as
other income.
The Company believes that it is unlikely that all
claims that might be made for payment of 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.
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
income of $107,834 and $60,542 for the three and nine months
ended March 31, 1997 compared to a net loss of $32,283 and
$424,843 for the same periods in 1996.
Revenue. Total revenues for the three and nine
months ended March 31, 1997 were $346,398 and $823,129 compared
to $163,668 and $393,332 for the same periods in 1996. Oil and
gas sales for the three and nine months ended March 31, 1997 were
$294,750 and $698,503 compared to $163,653 and $393,215 for the
same periods in 1996. The Company's oil and gas sales were
impacted by the increase in oil and gas prices. Included in
total revenue, are estimated royalty amounts written off as the
Statue of Limitations has expired of $51,630 and $124,518 for the
three and nine months ended March 31, 1997, respectively.
Production volumes and average prices received for
the three and nine months ended March 31, 1997 and 1996 are as
follows:
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
Production:
Oil (Bbls) 259 526 700 873
Gas (Mcfs) 96,745 81,499 270,447 223,328
Average Price:
Oil (per Bbls) $23.01 $17.31 $21.74 $17.05
Gas (per Mcf) $2.89 $1.89 $2.49 $1.69
Lease Operating Expenses. Lease operating
expenses were $65,696 and $152,354 for the three and nine months
ended March 31, 1997 compared to $62,206 and $155,663 for the
same periods in 1996. On a MCF equivalent basis, lease operating
expenses were $.67 and $.55, respectively, per Mcf equivalent
during the three and nine months ended March 31, 1997 compared to
$.73 and $.68, respectively, per Mcf equivalent for the same
periods in 1996.
Depletion Expense. Depletion expense for the
three and nine months ended March 31, 1997 were $24,277 and
$107,269 compared to $35,151 and $90,917 for the same periods in
1996. On a MCF equivalent basis, depletion expense were $.25 and
$.39, respectively, per Mcf equivalent during the three and nine
months ended March 31, 1997 compared to $.42 and $.40,
respectively, per Mcf equivalent for the same periods in 1996.
General and Administrative Expenses. General and
administrative expenses for the three and nine months ended March
31, 1997 were $148,014 and $498,085 compared to $97,124 and
$565,245 for the same periods as in 1996.
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.
a. Exhibits.
Exhibit 27. Financial Data Schedule.
b. 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: May 13, 1997 /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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