SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(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, 1998 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 10, 1998.
Form 10-QSB
1st Qt.
FY 1999
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
September 30, 1998 and
June 30, 1998 (unaudited)........... 1
Statements of Operations and
Accumulated Deficit for
the Three Months Ended
September 30, 1998 and
1997 (unaudited)..................... 2
Statements of Cash Flows
for the Three Months Ended
September 30, 1998 and 1997
(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......................... 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,
1998 1998
ASSETS
Current assets:
Cash $10,009 14,661
Accounts receivable 64,936 71,178
Total current assets 74,945 85,839
Oil and gas properties, successful efforts
method of accounting):
Undeveloped offshore California properties 5,006,276 5,006,276
Developed onshore domestic properties 1,273,239 1,264,134
6,279,515 6,270,410
Accumulated depletion (868,272) (848,104)
Net oil and gas properties 5,411,243 5,422,306
$5,486,188 5,508,145
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade $ 75,741 41,059
Parent 362,021 333,976
Royalties payable 190,974 232,832
Total current liabilities 628,736 607,867
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 (1,189,417) (1,146,591)
Total stockholders' equity 4,857,452 4,900,278
$5,486,188 5,508,145
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,
1998 1997
Revenue:
Oil and gas sales $123,914 183,977
Gain on sale of oil and gas properties - 87,225
Other income 41,871 51,663
Total revenue 165,785 322,865
Expenses:
Lease operating expenses 35,525 53,043
Depletion 20,168 29,993
General and administrative, including $131,745
and $132,997 to parent 152,918 149,251
Total expenses 208,611 232,287
Net income (loss) (42,826) 90,578
Accumulated deficit at beginning of period (1,146,591) (1,434,763)
Accumulated deficit at end of period ($1,189,417) (1,344,185)
Net income (loss) per common share ($0.01) 0.02
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)
Three Months Ended
September 30,
1998 1997
Net cash used in operating activities ($23,592) (104,257)
Cash flows from investing activities:
Additions to oil and gas properties (9,105) -
Proceeds from the sale of oil and
gas properties - 116,939
Net cash provided by (used in)
investing activities (9,105) 116,939
Cash flows from financing activities-
Increase (decrease) in accounts
payable to parent 28,045 (10,903)
Net (decrease) increase in cash (4,652) 1,779
Cash at beginning of the period 14,661 6,440
Cash at end of the period $10,009 8,219
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, 1998 and 1997
(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. For a more complete understanding of
the Company's operations and financial position, reference is
made to the consolidated financial statements of the Company, and
related notes thereto, filed with the Company's annual report on
Form 10-KSB for the year ended June 30, 1998, previously filed
with the Securities and Exchange Commission.
(2) Subsequent Event
On November 3, 1998, the Company entered into a letter
agreement with an unrelated entity to sell its right, title and
interest in 17 oil and gas wells located in Oklahoma
for approximately $1,075,000 at closing and an additional
payment of approximately $85,000 on March 15, 1999.
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 September 30, 1998, the Company had a working capital
deficit of $553,791 compared to a working capital deficit of
$522,028 at June 30, 1998. The Company's current liabilities
include royalties payable of $232,832 at September 30, 1998 which
represent 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. The Company has been
informed by its legal counsel that the applicable statute of
limitations period for actions on written contracts arising in
the state of Oklahoma is five years. The statute of limitation
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 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.
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 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.
On November 3, 1998, the Company entered into a letter
agreement with an unrelated entity to sell its right, title and
interest in 17 oil and gas wells located in Oklahoma
for approximately $1,075,000 at closing and an additional
payment of approximately $85,000 on March 15, 1999.
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, 1998 was $42,826 compared to net
income of $90,578 for the three months ended September 30, 1997.
Revenue. Total revenue for the three months ended
September 30, 1998 was $165,785 compared to $322,865 for the
three months ended September 30, 1997. Revenue for the
three months ended September 30, 1997 included a gain on sale of
oil and gas properties of $87,225. Oil and gas sales for the
three months ended September 30, 1998 were $123,914 compared to
$183,977 for the three months ended September 30, 1997. The
Company's oil and gas sales were impacted by the decrease in both oil
and gas production and prices.
Production volumes and average prices received for the
three months ended September 30, 1998 and 1997 are as follows:
Three Months Ended
September 30,
1998 1997
Production:
Oil (barrels) 215 46
Gas (Mcf) 64,350 89,038
Average Price:
Oil (per barrel) $12.34 $19.63
Gas (per Mcf) $1.88 $2.06
Lease Operating Expenses. Lease operating expenses for
the three month period ended September 30, 1998 were $35,525
compared to $53,043 for the three months ended September 30,
1997. On an Mcf equivalent basis, production expenses and taxes
were $.54 per Mcf equivalent during the three month period ended
September 30, 1998 compared to $.59 per Mcf equivalent for the
same period in 1997.
Depletion Expense. Depletion expense for the three
months ended September 30, 1998 was $20,168 compared to $29,993
for the three months ended September 30, 1997. On an Mcf
equivalent basis, depletion expense was $.31 per Mcf equivalent
during the three month period ended September 30, 1998 compared
to $.34 per Mcf equivalent for the same period in 1997.
General and Administrative Expenses. General and
administrative expense for the three months ended September 30,
1998 was $152,918 compared to $149,251 for the three months ended
September 30, 1997.
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 substantial. The estimated cost, which will be
incurred over the life of the properties (assumed to be 38
years), for the complete development of all of the properties in
which Amber owns an interest, including delineation wells,
environmental mitigation, development wells, fixed platforms,
fixed platform facilities, pipelines and power cables, onshore
facilities and platform removal is currently estimated to be
slightly in excess of approximately $3 billion. The Company's
share of such costs is estimated to be approximately $26,938,000.
Operating expenses for the same properties over the same period
of time, including platform operating costs, well maintenance and
repair costs, oil, gas and water treating costs, lifting costs
and pipeline transportation costs are expected to be
approximately $2,286,486,000 with the Company's share estimated
to be $36,354,000.
Each working interest owner will be required to pay its
proportionate share of these costs based upon the amount of the
interest that it owns. The size of Amber's working interest
varies from .87% to 6.97%. The Company may be required to farm
out all or a portion of its interests in these properties to a
third party 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. Net
revenues over the same time period, to be shared by all of the
working interest owners in proportion to the size of their
respective working interests, are estimated to be approximately
$2,216,067,000 after the payment of all of the above expenses and
amounts due to owners of royalty interests with Amber's share
estimated to be approximately $35,833,000 before taxes.
These units have been formally approved and are
regulated by the MMS. 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. 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 these
factors relating to timing of the development of the reserves in
the preparation of the reserve information relating to these
properties. It is anticipated that, based upon discussion with
appropriate governmental agencies, development of the subject
leases will require from three to five years for permitting.
Because of the substantial reserves contained in the
projects, it is generally accepted that they will be developed;
however, the time required to complete development may be from
five to ten years. As additional information becomes available
in the future, the Company's estimates of the proved undeveloped
reserves attributable to these properties could materially
change.
The MMS initiated the California Offshore Oil and Gas
Energy Resources (COOGER) study at the request of the local
regulatory agencies of the three counties (Ventura, Santa Barbara
and San Luis Obispo) affected by offshore oil and gas
development. A private consulting firm is currently conducting
the study under a contract with the MMS. The COOGER study seeks
to present a long-term regional perspective of potential onshore
constraints that should be considered when developing existing
undeveloped offshore leases. COOGER will project the
economically recoverable oil and gas production from offshore
leases which have not yet been developed. These projections will
be utilized to assist in identifying a potential range of
scenarios for developing these leases. These scenarios will then
be compared to the projected infrastructural, environmental and
socioeconomic baselines between 1995 and 2015.
No specific decisions regarding levels of offshore oil
and gas development or individual projects will occur in
connection with the COOGER study. Information presented in the
study is intended to be utilized as a reference document to
provide the public, decision makers and industry with a broad
overview of cumulative industry activities and key issues
associated with a range of development scenarios. The exact
effects of each of the scenarios are not yet capable of analysis
because the study has not yet been completed. However, the
Company has evaluated its position with regard to the scenarios
currently being studied with respect to properties and the results
of such evaluation are set forth in the Company's Form 10-KSB for
the year ended June 30, 1998.
Current Status. On November 5, 1996, the MMS issued a
Directed Suspension of Operations for the POCS Non-Producing
Leases and Units, pursuant to CFR 250.10(b)(4), extending the
existing Suspension of Operations ("SOO") from January 1, 1997
until December 31, 1998. This action permitted unit owners to
cease paying lease payments to the Federal government and
suspended the requirements relating to development of the leases
during this period. The Directive cited the fact that the MMS
had requested in 1992 that the lease owners participate in what
became known as the COOGER (California Offshore Oil and Gas
Energy Resources) Study and during the term of the Study that the
leases would be held under a SOO.
The MMS issued a second letter on December 24, 1996
with the intent to notify all lease owners of the course of
action to be followed by the lease and unit operators prior to
the expiration of the SOO. In another letter, on September 17,
1998, the MMS informed all owners and operators that due to
delays in the COOGER Study the SOO's on all the units would be
extended through the first quarter of 1999 and revised the dates
for actions required by the previous letters. During 1998 each
operator is to meet with the MMS to discuss conceptual plans that
will lead to eventual development. By January 15, 1999, each
operator 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 Suspension of Production time period to execute the
Schedule of Events. The lease and unit Schedule of Events, when
approved by the MMS, will go into effect on April 1, 1999.
In order to carry out the requirements of the December
24, 1996 and September 17, 1998 MMS letters, all operators of the
units in which the Company owns 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. The Company is
participating with the operators in meeting the MMS schedules
through meetings, and consultations and is sharing in the costs
as invoiced by the operators.
Based on prices of $9.11 per Bbl and $1.41 per Mcf and
applicable regulatory parameters, the Company's aggregate working
interests in these properties had a pre-tax present value
(discounted at 10%) of approximately $1,601,000 as of July 1,
1998 according to a reserve report issued by Forrest A. Garb &
Associates ("Garb"), an independent petroleum engineering firm of
Dallas, Texas. According to Garb's report, Amber's Offshore
California reserves from these units totalled approximately 9.68
million Bbls of oil and 12.86 Bcf of gas for an aggregate
equivalent of 11.82 million BOE.
Year 2000
The Company has completed a review of its 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 the Company's 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 its review, the Company currently believes
that the Year 2000 issue will not pose material operational
problems for the Company and that it is adequately prepared for
the Year 2000. To the Company's knowledge after investigation,
no "embedded technology" (such as microchips in an electronic
control system) of the Company poses a material Year 2000
concern.
Because the Company believes that it has no material
internal Year 2000 problems, the Company has not and does not
expect to expend a significant amount of funds to address Year
2000 issues. It is Company policy to continue to review its
suppliers' Year 2000 compliance and require assurance of Year
2000 compliance from new suppliers; however, such monitoring does
not involve a significant cost to the Company.
In addition to the foregoing, the Company has contacted its
major vendors and has received either oral or written asurances
from its major vendors or has reviewed assurances contained on
vendors' web sites that they have no material Year 2000 problems.
The Company believes that its vendors are largely fungible;
therefore, in the event a vendor's representations regarding its
Year 2000 compliance were untrue for any reason, the Company
believes that it could find adequate Year 2000-compliant vendors
as substitutes.
The Company has also received either oral or written
assurances from its customers or has reviewed assurances
contained on its 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 Amber's expected
Year 2000 compliance and the estimated cost thereof include
internal computer hardware or software problems which have not as
yet been identified by Amber, 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. 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.
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)
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: January 5, 1999
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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