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, 1999 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 November 5, 1999.
Form 10-QSB
1st Qtr.
FY 2000
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
September 30, 1999 and
June 30, 1999 (unaudited)............... 1
Statements of Operations and
Accumulated Deficit for the Three Months Ended
September 30, 1999 and 1998 (unaudited)... 2
Statements of Cash Flows:
For the Three Months Ended September 30, 1999
and 1998 (unaudited)..................... 3
Notes to Financial Statements (unaudited)....... 4
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS............................ 5
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
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
BALANCE SHEETS
(Unaudited)
September 30, June 30,
1999 1999
ASSETS
Current assets:
Cash $ 1,755 961
Accounts receivable 3,000 2,000
Total current assets 4,755 2,961
Oil and gas properties, successful efforts
method of accounting:
Undeveloped offshore California properties 5,006,276 5,006,276
Developed onshore domestic properties 195,531 195,531
5,201,807 5,201,807
Accumulated depletion (145,600) (144,943)
Net oil and gas properties 5,056,207 5,056,864
$5,060,962 $5,059,825
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,376 19,697
Royalties payable 96,926 114,323
Total current liabilities 129,302 134,020
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 (511,965) (487,442)
Advances to parent (603,244) (633,622)
Total stockholders' equity 4,931,660 4,925,805
$5,060,962 5,059,825
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
Three Months Ended
September 30, September 30,
1999 1998
Revenue:
Oil and gas sales $ 5,792 123,914
Other income 17,400 41,871
Total revenue 23,192 165,785
Expenses:
Lease operating expenses 3,441 35,525
Depletion 657 20,168
Exploration expenses 2,869 -
General and administrative,
including $25,000 in 1999
and $131,745 in 1998 to parent 40,748 152,918
Total expenses 47,715 208,611
Loss (24,523) (42,826)
Accumulated deficit at beginning of the period (487,442) 1,146,591
Accumulated deficit at end of the period (511,965) (1,189,417)
Basic loss per share $ (0.01) (0.01)
Weighted average number of common
shares outstanding 4,666,185 4,666,185
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Statement of Cash Flows
(Unaudited)
Three Months Ended
September 30, September 30,
1999 1998
Net cash used in operating activities $(29,584) (23,592)
Cash flows from investing activities-
Additions to oil and gas properties - (9,105)
Cash flows from financing activities-
Changes in acccounts receivable from and
accounts payable to parent 30,378 28,045
Net increase (decrease) in cash 794 (4,652)
Cash at beginning of the period 961 14,661
Cash at end of the period $ 1,755 10,009
See accompanying notes to financial statements.
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Notes to Financial Statements
Three Months Ended September 30, 1999 and 1998
(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.
ITEM 2. MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Forward Looking Statement
The statements contained in this report which are not
historical fact are "forward looking statements" that involve
various important risks, uncertainties and other factors which
could cause the Company's actual results to differ materially
from those expressed in such forward looking statements. These
factors include, without limitation, the risks and factors set
forth below as well as other risks previously disclosed in the
Company's annual report on Form 10-KSB.
Background
Amber Resources Company ("Amber", "the Company") was
incorporated in January, 1978, and is principally engaged in
acquiring, exploring, developing, and producing oil and gas
properties. We own interests in undeveloped oil and gas
properties offshore California, near Santa Barbara and developed
oil and gas properties in Western Oklahoma.
Liquidity and Capital Resources.
At September 30, 1999, we had a working capital deficit of
$124,547 compared to a working capital deficit of $131,060 at
June 30, 1999. Our current liabilities include royalties payable
of $96,926 at September 30, 1999 which represents our estimate of
royalties payable on production attributable to certain wells in
Oklahoma. We believe that the operators of the affected wells
have paid some of the royalties on our behalf and have withheld
such amounts from revenues attributable to our interest in the
wells. We have been in contact with the operators of the wells
in an attempt to determine what amounts the operators have paid
on our behalf over the past five years, which amounts would
reduce the amounts we owe. To date, we have not received
information sufficient to allow us to determine the amounts paid
by the operators. We have been informed by our 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.
We believe that it is unlikely that all claims that might
be made for payment of royalties payable would be made at one
time. We believe, although there can be no assurance, that we
may ultimately be able to settle with potential claimants for
less than the amounts recorded for royalties payable.
We do not currently have a credit facility with any bank
and we have not determined the amount, if any, that we could
borrow against our existing properties. We will continue to
explore additional sources of both short-term and long-term
liquidity to fund our working capital deficit and our capital
requirements for development of our 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 our future operating performance and liquidity are
beyond our control, including oil and natural gas prices and the
availability of financing.
After evaluation of the consideration described above, we
believe that our cash flow from our existing producing
properties, proceeds from the sale of producing properties, the
repayment of advances from parent, and other sources of funds
will be adequate to fund our operating expenses and satisfy our
other current liabilities over the next year or longer.
Results of Operations
Loss. We reported a loss of $24,523 for the three
months ended September 30, 1999 compared to a net loss of $42,826
for the same period in 1998.
Revenue. Total revenues for the three months ended
September 30, 1999 were $23,192 compared to $165,785 for the same
period in 1998. Oil and gas sales for the three months ended
September 30, 1999 were $5,792 compared to $123,914 for the same
period in 1998. Our oil and gas sales were impacted by the sale
of most of our producing properties in November, 1998.
Production volumes and average prices received for the
three months ended September 30, 1999 and 1998 are as follows:
Three Months Ended
September 30,
1999 1998
Production:
Oil (Bbls) 92 215
Gas (Mcfs) 1,677 64,350
Average Price:
Oil (per Bbls) $16.43 $12.34
Gas (per Mcf) $2.55 $1.88
Lease Operating Expenses. Lease operating expenses were
$3,441 for the three months ended September 30, 1999 compared to
$15,525 for the same period in 1998. The decrease in lease
operating expense can be attributed to the sale of most of our
producing properties in November, 1998.
Depletion Expense. Depletion expense for the three
months ended September 30, 1999 were $657 compared to $29,993 for
the same period in 1998.
General and Administrative Expenses. General and
administrative expenses for the three months ended September 30,
1999 were $40,748 compared to $152,918 for the same period as in
1998. Effective October 1, 1998, we entered into an agreement
with our parent, whereby we paid our parent an administration fee
of $25,000 per quarter.
Future Operations
Our offshore California undeveloped properties are
attributable to our interests in three federal units located
offshore California near Santa Barbara.
Our development plan currently provides for 22 wells from
one platform set in a water depth of approximately 328 feet for
the Gato Canyon Unit; 63 wells from one platform set in a water
depth of approximately 1,300 feet for the Sword Unit; and 183
wells from two platforms for the Lion Rock Unit. On the Lion
Rock Unit, platform A would be set in a water depth of
approximately 507 feet, and Platform B would be set in a water
depth of approximately 484 feet. The reach of the deviated wells
from each platform required to drain each unit falls within the
reach limits now considered to be "state-of-the-art."
Current Status.
On October 15, 1992 the MMS directed a Suspension of
Operations ("SOO") effective January 1, 1993, for the POCS non-
producing leases and units, pursuant to CFR 250.10, to enable the
lease owners to participate in what became known as the COOGER
Study. This allowed the leases to be held under an SOO during
the term of the study thereby permitting the owners to cease
paying lease payments to the Federal government and suspending
the requirements relating to development of these leases during
this period.
The MMS has extended the SOO from time to time to allow
completion of the COOGER Study. Most recently the MMS directed
an additional SOO through November 15, 1999 when unit operators
are required to have submitted descriptions of their exploration
plans for the leases to support their requests for Suspension of
Production ("SOP") status for the leases. Each operator has or
will submit what the MMS has termed a Schedule of Events for a
specific lease or unit that it operates and also a request for a
SOP time period to execute the Schedule of Events.
In order to carry out the requirements of the MMS, all
operators of the units in which we own non-operating interests
(described below) are currently engaged in studies to develop a
conceptual framework and general timetable for continued
delineation and development of the leases. For delineation, the
operators will outline the mobile drilling unit well activities,
including number and location. For development, the operators'
reports will cover the total number of facilities involved,
including platforms, pipelines, onshore processing facilities,
transportation systems and marketing plans. We are participating
with the operators in meeting the MMS schedules through meetings,
and consultations and in sharing in the costs as invoiced by the
operators.
Cost to Develop Offshore California Properties.
The cost to develop all of the offshore California
properties in which we own an interest, including delineation
wells, environmental mitigation, development wells, fixed
platforms, fixed platform facilities, pipelines and power cables,
onshore facilities and platform removal over the life of the
properties (assumed to be 38 years), is estimated to be slightly
in excess of $3 billion. Our share of such costs over the life
of the properties is estimated to be $26,938,000.
To the extent that we do not have sufficient cash
available to pay its share of expenses when they become payable
under the respective operating agreements, it will be necessary
for us to seek funding from outside sources. Likely potential
sources for such funding are currently anticipated to include (a)
public and private sales of our Common Stock (which may result in
substantial ownership dilution to existing shareholders), (b)
bank debt from one or more commercial oil and gas lenders, (c)
the sale of debt instruments to investors, (d) entering into farm-
out arrangements with respect to one or more of our interests in
the properties whereby the recipient of the farm-out would pay
the full amount of our share of expenses and we would retain a
carried ownership interest (which would result in a substantial
diminution of our ownership interest in the farmed-out
properties), (e) entering into one or more joint venture
relationships with industry partners, (f) entering into financing
relationships with one or more industry partners, and (g) the
sale of some or all of our interests in the properties.
It is unlikely that any one potential source of funding
would be utilized exclusively. Rather, it is more likely that we
will pursue a combination of different funding sources when the
need arises. Regardless of the type of financing techniques that
are ultimately utilized, however, it currently appears likely
that because of our small size in relation to the magnitude of
the capital requirements that will be associated with the
development of the subject properties, we will be forced in the
future to issue significant amounts of additional shares, pay
significant amounts of interest on debt that presumably would be
collateralized by all of our assets (including its offshore
California properties), reduce its ownership interest in the
properties through sales of interests in the property or as the
result of farm-outs, industry financing arrangements or other
partnership or joint venture relationships, or to enter into
various transactions which will result in some combination of the
foregoing. In the event that we are not able to pay our share of
expenses as a working interest owner as required by the
respective operating agreements, it is possible that we might
lose some portion of its ownership interest in the properties
under some circumstances, or that we might be subject to
penalties which would result in the forfeiture of substantial
revenues from the properties.
While the cost to develop the offshore California
properties in which we own an interest are anticipated to be
substantial in relation to our small size, management believes
that the opportunities for Amber to increase its asset base and
ultimately improve its cash flow are also substantial in relation
to its size. Although there are several factors to be considered
in connection with Amber 's plans to obtain funding from outside
sources as necessary to pay its proportionate share of the costs
associated with developing its offshore properties (not the least
of which is the possibility that prices for petroleum products
could continue to decline in the future to a point at which
development of the properties is no longer economically
feasible), management believes that the timing and rate of
development in the future will in large part be motivated by the
prices paid for petroleum products.
To the extent that prices for petroleum products decline
further from their current near historic lows, it is likely that
development efforts will proceed at a slower pace to the end that
costs will be incurred over a more extended period of time. In
the event that petroleum prices increase, however, management
believes that development efforts will intensify. Our ability to
successfully negotiate financing to pay its share of development
costs on favorable terms will be inextricably linked to the
prices that are paid for petroleum products during the time
period in which development is actually occurring on each of the
subject properties.
Year 2000
We have completed a review of our computer system and
applications (which began in fiscal 1997) to identify the systems
that could be affected by the "Year 2000" issue. The Year 2000
problem is the result of computer programs being written using
two digits rather than four to define the applicable year. Any
of our programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This
could result in a major system failure or miscalculations.
On the basis of our review, we currently believe that the
Year 2000 issue will not pose material operational problems for
us. To our knowledge, after investigation, no "embedded
technology" (such as microchips in an electronic control system)
of the Company poses a material Year 2000 concern.
Because we believe that we have no material internal Year
2000 problems, we have not and do not expect to expend a
significant amount of funds to address Year 2000 issues. It is
our policy to continue to review our suppliers' Year 2000
compliance and require assurance of Year 2000 compliance from new
suppliers; however, such monitoring does not involve a
significant cost to us.
In addition to the foregoing, we have contacted our major
vendors and have received either oral or written assurances from
our major vendors or has reviewed assurances contained on
vendors' web sites that they have no material Year 2000 problems.
We believe that our vendors are largely fungible; therefore, in
the event a vendor's representations regarding its Year 2000
compliance were untrue for any reason, we believe that we could
find adequate Year 2000-compliant vendors as substitutes.
We have also received either oral or written assurances
from our customers or have reviewed assurances contained on our
customers' web sites that they have no Year 2000 problems which
would materially adversely affect the business or operations of
the Company.
The information contained in this Year 2000 discussion is
forward-looking and involves risks and uncertainties that may
cause actual results to vary materially from those projected.
Some factors that could significantly impact our expected Year
2000 compliance and the estimated cost thereof include internal
computer hardware or software problems which have not as yet been
identified by us, and currently undisclosed and unanticipated
problems which may be encountered by third parties with whom
Amber has business relationships.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There is no litigation pending or threatened by or
against us or any of our properties as of June 30, 1999.
The operators of the offshore Federal units in which we
own interests have each filed Notices of Appeal on behalf of
themselves and the co-owners of the various units, including
Amber, with the United States Department of Interior of a June
25,1999 order issued by the Regional Director, Pacific OCS
Region, terminating existing Suspensions of Production in effect
prior to the present Suspension of Operations. We do not expect
that the outcome of any later appeal that might be filed pursuant
to the Notice of Appeal will have any material affect upon our
property interests because the operators are in the process of
requesting new Suspension of Production status for each of the
units which, if granted, will replace the existing Suspension of
Operations.
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.
Exhibit 27. Financial Data Schedule.
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: November 11, 1999 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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