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, 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 X No
4,666,185 shares of common stock $.0625 par value were
outstanding as of February 10, 1998.
Form 10-QSB
2nd Qtr.
FY 1998
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
December 31, 1997 and
June 30, 1997 (unaudited)........... 1
Statements of Operations and
Accumulated Deficit for the
Three and Six Months Ended
December 31, 1997 and 1996
(unaudited)......................... 2
Statements of Cash Flows:
For the Six Months
Ended December 31, 1997 and 1996
(unaudited)......................... 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
i
PART I - FINANCIAL INFORMATION
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
BALANCE SHEETS (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
December 31, June 30,
1997 1997
Assets
Current assets:
Cash $29,948 6,440
Accounts receivable 77,386 111,728
Total current assets 107,334 118,168
Oil and gas properties, successful efforts
method of accounting:
Undeveloped offshore California properties 5,006,276 5,006,276
Developed onshore domestic properties 1,263,073 1,405,645
6,269,349 6,411,921
Accumulated depletion (808,068) (846,755)
Net oil and gas properties 5,461,281 5,565,166
5,568,615 5,683,334
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable:
Trade 3,337 16,281
Affiliate 239,976 635,139
Royalties payable 318,687 419,808
Total current liabilities 562,000 1,071,228
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 (1,040,254) (1,434,763)
Total stockholders' equity 5,006,615 4,612,106
5,568,615 5,683,334
Statements of Operations and Accumulated Deficit
(Unaudited)
Three Months Ended
December 31,
1997 1996
Revenue:
Oil and gas sales $250,594 229,328
Gain on sale of oil and gas properties 196,768 -
Other income 51,697 36,466
Total revenue 499,059 265,794
Expenses:
Lease operating expenses 38,330 44,491
Depletion 20,079 41,196
Exploration expenses - 1,078
General and administrative 136,719 111,073
Total expenses 195,128 197,838
Net income 303,931 67,956
Accumulated deficit at beginning of period (1,344,185) (1,614,271)
Accumulated deficit at end of period ($1,040,254) (1,546,315)
Basic earnings per share $0.07 0.01
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,
1997 1996
Revenue:
Oil and gas sales $434,571 403,753
Gain on sale of oil and gas properties 283,993 -
Other income 103,360 72,978
Total revenue 821,924 476,731
Expenses:
Lease operating expenses 91,373 86,658
Depletion 50,072 82,992
Exploration expenses - 4,302
General and administrative 285,970 350,071
Total expenses 427,415 524,023
Net income (loss) 394,509 (47,292)
Accumulated deficit at beginning of period (1,434,763) (1,499,023)
Accumulated deficit at end of period ($1,040,254) (1,546,315)
Basic earnings per share $0.08 (0.01)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
Statements of Cashflows
(Unaudited)
Six Months Ended
December 31,
1997 1996
Net cash provided by (used) in operating activities $80,865 (82,049)
Cash flows from investing activities:
Additions to oil and gas properties (257) (16,982)
Proceeds from the sale of oil and gas properties 338,063 -
Net cash provided by (used in)
investing activities 337,806 (16,982)
Cash flows from financing activities:
(Decrease) increase in accounts
payable to affiliate (395,163) 72,612
Net cash (used in) provided by financing
activities (395,163) 72,612
Net decrease in cash 23,508 (26,419)
Cash at beginning of the period 6,440 36,137
Cash at end of the period $29,948 9,718
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, 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 for the year ended June 30,1997, previously filed with
the Securities and Exchange Commission. 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.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
Earnings per Share (Statement No. 128) effective for periods ending
after December 15, 1997. Statement No. 128 changes the
computation, presentation and disclosure requirements for earnings
per share for entities with publicly held common stock or potential
common stock. Under such requirements the Company is required to
present both basic earnings per share and diluted earnings per
share. Basic earnings per share is computed by dividing income
available to common stockholders by the weighted-average number of
common shares outstanding during the period. Diluted earnings per
share is computed by dividing income available to common
stockholders by all dilative potential common shares outstanding
during the period. The Company adopted the provisions of Statement
No. 128 as of December 31, 1997. The application of Statement
No. 128 did not have an effect on the presentation of basic earnings per
common share for any prior periods.
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.
Liquidity and Capital Resources.
The financial statements have been prepared on a
going concern basis which contemplates the realization of assets
and the satisfaction of liabilities and commitments in the normal
course of business. Certain factors, described below, raise
substantial doubt about the ability of the Company to continue as
a going concern.
At December 31, 1997, the Company had a working
capital deficit of $454,666 compared to a working capital deficit
of $953,060 at June 30, 1997. The Company's current liabilities
included royalties payable of $318,687 at December 31, 1997 which
represents the Company's estimate of royalties payable on
production attributable to its interest in certain wells in
Oklahoma. 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. 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.
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 $303,931 and $394,509 for the three and six months ended
December 31, 1997 compared to net income of $67,956 and a net loss
of $47,292 for the same periods in 1996.
Revenue. Total revenues for the three and six
months ended December 31, 1997 were $499,059 and $821,924 compared
to $265,794 and $476,731 for the same periods in 1996. Oil and gas
sales for the three and six months ended December 31, 1997 were
$250,594 and $434,571 compared to $229,328 and $403,753 for the
same periods in 1996. The Company's oil and gas sales were
impacted by the increase in oil and gas prices and the sale of
certain oil and gas properties.
Production volumes and average prices received for
the three and six months ended December 31, 1997 and 1996 are as
follows:
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
Production:
Oil (Bbls) 263 222 309 441
Gas (Mcfs) 81,215 89,970 171,185 173,702
Average Price:
Oil (per Bbls) $19.11 $20.98 $19.18 $21.00
Gas (per Mcf) $ 3.02 $2.50 $2.50 $2.27
Lease Operating Expenses. Lease operating expenses were
$38,330 and $91,373 for the three and six months ended December 31,
1997 compared to $44,829 and $86,658 for the same periods in 1996.
On a MCF equivalent basis, lease operating expenses were $.46 and
$.53 respectively, per Mcf equivalent during the three and six
month periods ended December 31, 1997 compared to $.49 and $.49,
respectively, per Mcf equivalent for the same periods in 1996.
Depreciation and Depletion Expense. Depletion expense
for the three and six months ended December 31, 1997 were $20,079
and $50,072 compared to $41,196 and $82,992 for the same periods in
1996. On a MCF equivalent basis, depletion expense was $.24 and
$.29, respectively, per Mcf equivalent during the three and six
month periods ended December 31, 1997 compared to $.49 and $.47,
respectively, per Mcf equivalent for the same periods in 1996.
General and Administrative Expenses. General and
administrative expenses for the three and six months ended December
31, 1997 were $136,719 and $285,970 compared to $111,073 and
$350,071 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.
Exhibits:
Exhibit 27. Financial Data Schedule.
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: February 12, 1998 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. Filed herewith electronically.
(99) Additional Exhibits.
Not applicable.
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