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, 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 February 10, 2000.
Form 10-QSB
2nd Qtr.
FY 2000
INDEX
PART I FINANCIAL INFORMATION
PAGE NO.
ITEM 1 FINANCIAL STATEMENTS
Balance Sheets
December 31, 1999 and
June 30, 1999 (unaudited)............... 1
Statements of Operations and
Accumulated Deficit for the Three and Six
Months Ended December 31, 1999
and 1998 (unaudited).................... 2
Statements of Cash Flows:
For the Three and Six Months Ended December 31,
1999 and 1998 (unaudited)............... 4
Notes to Financial Statements (unaudited)....... 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
The terms "Amber", "Company", "we", "our", and "us" refer to
Amber Resources Company unless the context suggests otherwise.
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
BALANCE SHEETS
(Unaudited)
December 31, June 30,
1999 1999
ASSETS
Current assets:
Cash $ 2,861 961
Accounts receivable 3,000 2,000
Total current assets 5,861 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 (150,578) (144,943)
Net oil and gas properties 5,051,229 5,056,864
$5,057,090 5,059,825
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,893 19,697
Royalties payable 79,530 114,323
Total current liabilities 97,423 134,020
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 (521,458) (487,442)
Advances to parent (565,744) (633,622)
Total stockholders' equity 4,959,667 4,925,805
$5,057,090 5,059,825
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
Three Months Ended
December 31, December 31,
1999 1998
Revenue:
Oil and gas sales $ 10,851 4,226
Gain on sale of oil and gas properties - 731,752
Other income 17,401 41,862
Total revenue 28,252 777,840
Expenses:
Lease operating expenses 6,051 5,123
Depletion 4,978 2,417
Exploration expenses - 532
General and administrative,
including $25,000 in 1999
and in 1998 to parent 26,716 29,843
Total expenses 37,745 37,915
Net earnings (loss) (9,493) 739,925
Accumulated deficit at beginning
of the period (511,965) (1,189,417)
Accumulated deficit at end
of the period $ (521,458) (449,492)
Basic earnings (loss) per share * 0.16
Weighted average number of common
shares outstanding 4,666,185 4,666,185
* less than $.01 per share
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
Six Months Ended
December 31, December 31,
1999 1998
Revenue:
Oil and gas sales $ 16,643 128,140
Gain on sale of oil and gas
properties - 731,752
Other income 34,801 83,733
Total revenue 51,444 943,625
Expenses:
Lease operating expenses 9,492 40,648
Depletion 5,635 22,585
Exploration expenses 2,869 532
General and administrative,
including $50,000 in 1999
and $156,745 in 1998 to parent 67,464 182,761
Total expenses 85,460 246,526
Net earnings (loss) (34,016) 697,099
Accumulated deficit at
beginning of the period (487,442) (1,146,591)
Accumulated deficit at end of the period $ (521,458) (449,492)
Basic earnings (loss) per share $ (0.01) 0.15
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)
Six Months Ended
December 31, December 31,
1999 1998
Net cash used in operating activities $ (65,978) (24,445)
Cash flows from investing activities-
Additions to oil and gas properties - (9,105)
Proceeds from the sale of oil and
gas properties - 1,074,617
Net cash propvided by investing activities - 1,065,512
Cash flows from financing activities-
Changes in acccounts receivable from and
accounts payable to parent 67,878 (1,049,617)
Net increase (decrease) in cash 1,900 (8,550)
Cash at beginning of the period 961 14,661
Cash at end of the period $ 2,861 6,111
See accompanying notes to financial statements.
AMBER RESOURCES COMPANY
(A Subsidiary of Delta Petroleum Corporation)
Notes to Financial Statements
Three and Six Months Ended December 31, 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.
Liquidity
The Company has incurred losses from operations over the
past several years coupled with significant deficiencies in cash
flow from operations for the same period. As of December 31,
1999, the Company had a working capital deficit of $91,562.
These factors among others may indicate that without increased
cash flow from operations, sale of oil and gas properties or
additional financing the Company may not be able to meet its
obligation in a timely manner.
The Company is taking steps to reduce losses and generate
cash flow from operations which management believes will generate
sufficient cash flow to meet its obligations in a timely manner.
Should the Company be unable to achieve its projected cash flow
from operations additional financing or sale of oil and gas
properties could be necessary. The Company believes that it
could sell oil and gas properties or obtain additional financing,
however, there can be no assurance that such financing would be
available on a timely basis or acceptable terms.
ITEM 2. MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Forward Looking Statements
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 December 31, 1999, we had a working capital deficit of
$91,562 compared to a working capital deficit of $131,059 at June
30, 1999. Our current liabilities include royalties payable of
$79,530 at December 31, 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, debt securities
and sale of non-strategic properties or advances from
shareholders. 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 considerations 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
Earnings (loss). We reported a loss of $9,493 and
$34,016 for the three and six months ended December 31, 1999
compared to net earnings of $739,925 and $697,099 for the same
period in 1998.
Revenue. Total revenues for the three and six months
ended December 31, 1999 were $28,252 and $51,444 compared to
$777,840 and $943,625 for the same period in 1998. Oil and gas
sales for the three and six months ended December 31, 1999 were
$10,851 and $16,643 compared to $4,226 and $128,140 for the same
period in 1998. Our total revenues were impacted by the sale of
most of our producing properties in November, 1998 resulting in a
gain on sale of oil and gas properties of $731,752 for the six
months ended December 31, 1998.
Production volumes and average prices received for the
three and six months ended December 31, 1999 and 1998 are as
follows:
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
Production:
Oil (Bbls) 128 127 220 342
Gas (Mcfs) 3,393 1,370 5,070 65,720
Average Price:
Oil (per Bbls) $20.38 12.77 $18.73 11.49
Gas (per Mcf) $2.43 1.90 $2.47 1.88
Lease Operating Expenses. Lease operating expenses were
$6,051 and $9,492 for the three and six months ended December 31,
1999 compared to $5,123 and $40,648 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 and
six months ended December 31, 1999 were $4,978 and $5,635
compared to $2,417 and $22,585 for the same period in 1998.
General and Administrative Expenses. General and
administrative expenses for the three and six months ended
December 31, 1999 were $26,716 and $67,464 compared to $29,843
and $182,761 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 represent
interests ranging from .87% to 6.97% in three federal units
located offshore California near Santa Barbara.
The ownership group's development plan for the offshore
properties 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. On November 12, 1999, the MMS directed a Suspension
of Production and required each of the operators to carryout an
agreed upon Schedule of Events with respect to each of their
respective leases and units.
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 based on our
ownership interest over the life of the properties is currently
estimated to be approximately $30 million.
To the extent that we do not have sufficient cash
available to pay our share of expenses if and 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 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
from their current levels, 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.
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 December 31, 1999.
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)
S/Aleron H. Larson, Jr.
Date: February 10, 2000 Aleron H. Larson, Jr.
Chairman\CEO
s/Kevin K. Nanke
Kevin K. Nanke, Chief Financial
Officer 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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