U.S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
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Commission File No. 0-6529
DOUBLE EAGLE PETROLEUM AND MINING CO.
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(Exact name of registrant as specified in its charter)
Wyoming 83-0214692
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Overland Trail (P.O. Box 766) Casper, Wyoming 82602
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (307) 237-9330
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
$.10 Par Value Common Stock
--------------------------
(Title of Class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
computed based on the average of the closing bid and asked prices of such stock
as of November 20, 1996, was $2,454,389.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of each of the issuer's classes of common
equity as of November 20, 1996 is as follows:
$.10 Par Value Common Stock 2,712,371
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<PAGE>
PART I
ITEMS 1 and 2. DESCRIPTION OF BUSINESS AND PROPERTIES
Overview
The Company, which was formed on January 13, 1972, explores for, develops,
produces and sells crude oil and natural gas. The Company concentrates its
activities in areas in which it has accumulated detailed geologic knowledge and
developed significant management experience. Current areas of exploration and
development focus for the Company include the Moxa Arch in southwestern Wyoming,
the Powder River Basin in northeastern Wyoming, the Washakie Basin in south
central Wyoming, the Wind River Basin in central Wyoming, and the Christmas
Meadows area in northeastern Utah. The Company owns interests in a total of 184
producing wells, with oil constituting approximately 55 percent and natural gas
constituting approximately 45 percent of its current production (assuming 10 Mcf
of gas production equals one barrel of oil production).
The Company also has undeveloped acreage in other basins and is evaluating
the possibility of additional activity in other areas. See "--Principal Areas Of
Oil And Gas Activity".
Forward-Looking Statements
This Form 10-K includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act Of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act Of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical fact
included in this Form 10-K, including without limitation the statements under
"ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS--Financial Condition, Liquidity And Capital Resources", "ITEMS 1
AND 2. DESCRIPTION OF BUSINESS AND PROPERTIES--Business Strategy", "--Principal
Areas Of Oil And Gas Activity", "--Zeolite Mining Activities", and "--Reserves",
and Note 14 to the Financial Statements located elsewhere herein regarding the
Company's financial position and liquidity, the amount of and its ability to
make debt service payments, its strategies, financial instruments, and other
matters, are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed in this Form 10-K including without
limitation in conjunction with the forward-looking statements included in this
Form 10-K.
The Company's intentions and expectations described in this Form 10-K with
respect to possible exploration and other testing activities concerning
properties in which it holds interests may be deemed to be forward-looking
statements. These statements are made based on management's current assessment
of the exploratory merits of the particular property in light of the geological
information available at the time and based on the Company's relative interest
in the property and its estimate of its share of the exploration cost.
Subsequently obtained information concerning the merits of any property as well
as changes in estimated exploration costs and ownership interest may result in
revisions to management's expectations and intentions and thus the Company may
delete one or more of these intended exploration activities. Further,
circumstances beyond the Company's control may cause such prospects to be
eliminated from further consideration as exploration prospects.
<PAGE>
Business Strategy
The Company's strategy is to increase its cash flow and oil and gas
reserves by developing and marketing oil and gas prospects. Upon marketing a
prospect to another entity, the Company will attempt to receive a promoted or
carried interest in the initial well for the prospect. The Company will then
participate proportionately in the drilling of any development wells on the
prospect. In prior years, the Company has undertaken to assemble a large acreage
position and sell it to others while retaining a royalty position. By attempting
to direct its focus to generation of geologic prospects with a promoted interest
at the exploratory phase and a participating interest at the development stage,
the Company will be utilizing more resources for drilling rather than for lease
acquisition. In this manner, the Company believes that in a shorter time period
it will be exposed to a greater number of opportunities to increase reserves and
cash flow.
The Company intends to develop several prospects each year with a view to
taking advantage of advances in seismic and drilling technologies. Of these
prospects, between five and ten each year will be intended as unusually high
potential, higher risk prospects. As indicated above, the Company intends to
market its prospects on a basis that will allow the Company to receive a
promoted or carried interest and thereby control its risk on the initial well on
each of these prospects.
The Company owns varying interests in its oil and gas prospects. These
interests and prospects are described below under "--Principal Areas Of Oil And
Gas Activity". These interests are owned directly by the Company and the
remaining interests in these prospects are owned by various industry partners.
The Company intends to develop its prospects utilizing the proceeds of this
Offering as well as cash flow from operations and sales of a portion of the
Company's interests to industry partners. The estimated amounts to be expended
by the Company for its interests to bring prospect properties into revenue
producing operation are set forth below. If the Offering is not completed or if
the Company's available cash from operations or from sales of interests to
industry partners are lower than anticipated, the Company's activities will
decrease. The Company anticipates the decreased activities will include
expending smaller amounts in the Company's principal areas of activity and
attempting to sell a larger portion of the Company's interests in its prospects
and retaining a royalty interest or a smaller working interest in those
prospects than the Company believes it would be able to retain if the Company
had more funds for developing these prospects and was not required to sell
additional interests.
Principal Areas Of Oil And Gas Activity
Moxa Arch
During the past two years, the Company has participated in the drilling and
completion of 53 successful natural gas wells on the Moxa Arch in the Whiskey
Buttes and South Swan Fields of the Green River Basin in southwestern Wyoming.
The Company's working interests in these wells and other developed acreage on
the Moxa Arch range from 0.3 percent to 3.5 percent and cover approximately
15,500 gross acres. Amoco Production Company, Marathon Oil Co., and Coastal Oil
& Gas Corp. each owns working interests in excess of 10 percent in this acreage.
The Company has a 100 percent working interest in an additional approximately
8,800 undeveloped acres on which there currently is no planned activity. Hollis
Oil & Gas Co. owns a 3.5 percent working interest in 640 of the gross developed
acres in which the Company has a 3.5 percent working interest. Stephen H.
Hollis, the President and a Director of the Company, is a Vice President,
Director and stockholder of Hollis Oil & Gas Co. and William N. Heiss, a
Director of the Company, is the President, a Director and stockholder of Hollis
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<PAGE>
Oil & Gas Co. See "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS". In
addition to the 53 wells drilled during the past two years, the Company has
working interests in 47 producing gas wells and a three percent overriding
royalty interest in another producing well on approximately 4,000 gross acres,
all of which are located on the Moxa Arch. Through August 31, 1996, the Company
had expended approximately $372,000 on its Moxa Arch prospects, including
approximately $330,000 for leasehold acquisition, rental payments and drilling
costs on the 15,500 gross developed acres, and $42,050 for leasehold acquisition
and rental payments on the 8,800 undeveloped acres. The Company intends to
participate in the drilling of five to ten additional development wells in 1997
at an estimated average cost to the Company of approximately $7,500 per well.
Production from the Company's wells on the Moxa Arch is from the Frontier at a
depth of approximately 10,000 feet.
Powder River Basin
Rabourn Well. The Rabourn Well, in which the Company has a 100 percent
working interest, is located on a 400-acre lease in the Powder River Basin in
Campbell County, Wyoming. The Company drilled this well in 1981 and it had been
producing at a steady rate of 15 barrels of oil per day for a number of years
prior to April 1996, when the Company fracture stimulated the well. This
resulted in increased production which as of August 31, 1996 had sustained a
rate of approximately 55 barrels of oil per day. The Rabourn well produces from
the Muddy Sandstone formation at a depth of approximately 6,600 feet. The
Company has expended more than $452,000 to acquire and develop this prospect,
including approximately $46,000 for lease acquisition and rental payments and
$406,000 for drilling, completion, and recompletion costs, plus additional
amounts for two unsuccessful wells that were attempted prior to 1985.
Jepson Holler Draw Unit. Double Eagle owns a 0.058 percent working interest
in the Jepson Holler Draw Unit, Johnson County, Wyoming. Ensign Oil & Gas
Company is starting to waterflood the unit to improve oil recovery. In addition
to Ensign, Basin Exploration, Inc. and EOS, Inc. each owns working interests in
excess of 10 percent in this unit. Currently, there are 18 producing wells, 34
water injector wells and two water supply wells. Ensign plans to drill 26
additional development wells and seven water injector wells during 1997. The
Company estimates its cost to participate in this project at approximately
$7,700. The field produces oil from the Cretaceous Shannon Sandstone. Through
August 31, 1996, the Company had expended approximately $5,500 to acquire and
develop its interests in this prospect.
Washakie Basin
James Creek Area. Each of the Company, Credo Petroleum Corp., Farleigh Oil
Properties and R.K. O'Connell owns a 25 percent working interest in 10,383 gross
acres in the James Creek area approximately 30 miles South of Rock Springs,
Wyoming. In August 1995, the Company participated in a successful recompletion
that resulted in a well producing 300 Mcf of gas per day from the Frontier
formation at approximately 4,405 feet. An offset location targeting the Frontier
formation at approximately 4,500 feet has been identified, and the Company and
its partners intend to drill this well during the fall of 1997 at an estimated
net cost to the Company of $83,000 to drill and complete. Through August 31,
1996, the Company had spent approximately $115,000 to acquire and develop its
interests in this prospect.
Red Creek. In November 1994, the Company sold a 100 percent working
interest in approximately 10,650 acres in Sweetwater and Carbon Counties,
Wyoming to Conoco, with the Company retaining a five percent overriding royalty
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<PAGE>
interest. In 1995, Conoco drilled an 11,244 foot Mesaverde test, which initially
flowed commercial quantities of natural gas. Conoco then fractured the well, and
this resulted in decreasing the production significantly and adding water
production in quantities substantial enough to render the well uneconomic.
Conoco has announced its intention to undertake additional drilling of wells on
this acreage during the remainder of 1996 and during 1997. The Company received
an amount in excess of the Company's accumulated costs for the Red Creek
property when the Company sold its working interest to Conoco. Because the
Company holds an overriding royalty interest, the Company is not required to
make any additional expenditures with respect to this prospect.
Rock Island Unit. In February 1996, the Company sold a 100 percent working
interest in a 688-acre lease in the Rock Island Unit located in the Washakie
Basin to Yates Petroleum, with the Company retaining a five percent overriding
royalty covering the interests sold to Yates. An exploratory unit has been
formed among Yates, the Company and owners of other adjacent acreage. Yates has
announced its intention to drill a 16,000 foot Frontier test on this acreage in
late 1996. The Company received an amount in excess of the Company's accumulated
costs for the Rock Island property when the Company sold its working interest to
Yates. Because the Company holds an overriding royalty interest, the Company is
not required to make any additional expenditures with respect to this prospect.
Marianne Field. The Company purchased additional working interests in the
five wells in which the Company previously had interests in the Marianne Field,
Sweetwater County, Wyoming in August 1996. Current net production from the five
wells is net 50 Mcf per day to the Company. A compressor unit will be added in
the fall of 1996 to attempt to increase production. The Company's working
interest varies from 2.9 percent to 15.8 percent in the five wells in which
Credo Petroleum Corporation, Farleigh Oil Properties, and R.K. O'Connell have
significant interests. The Company has spent approximately $21,250 to acquire
and develop its interests in this prospect.
State 1-36 Well. The Company owns a 75 percent working interest, and Hollis
Oil & Gas a 25 percent, working interest in the State 1-36 Well located on a
640-acre lease in Sweetwater County, Wyoming. The Company has spent
approximately $276,000 to acquire and develop its interest in this well.
Wind River Basin
Madden Anticline. The Company owns interests in approximately 2,329 gross
and 448 net acres on the Madden Anticline, Fremont County, Wyoming. These
interests consist of working interests in 17 producing wells varying from .1 to
seven percent, at depths ranging from approximately 16,000 feet to 18,000 feet.
Other significant interest owners include W.A. Moncrief, Jr., BHP Petroleum,
Inc. and Texaco, Inc. As of August 31, 1996, the Company's aggregate daily
production from these wells was 300 Mcf. In general, the Madden Anticline
produces over 100 million cubic feet of gas per day from seven formations in two
fields, Long Butte Field and Madden Field, at depths which vary from 3,000 feet
to 25,000 feet.
In October 1996, the Company drilled a test on an undeveloped 480-acre
lease on the Madden Anticline at an estimated net cost to the Company of
$15,000. The Company's after payout interest in this acreage is 32.5 percent
unless a third party fails to drill a deep test well on this lease by November
1998, in which case the Company's after payout working interest will be 50
percent. The Company initially planned to plug this well because it did not
appear to be capable of commercial production.
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<PAGE>
However, the Company is reevaluating its plans as a result of a build up of gas
pressure during the commencement of plugging and because there are existing gas
wells producing on both sides of this lease. Hollis Oil & Gas Co. owns a 15
percent, Prima Oil & Gas Co. owns a 35 percent, and Lockridge Operating Co. owns
(subject to its obligation to drill a deep test well by November 1998) a 17.5
percent working interest in this lease. In addition, Hollis Oil & Gas Co. owns a
25 percent working interest in 402.9 gross acres in the Long Butte Field in
which the Company holds a 50 percent working interest.
There currently is significant drilling activity on Madden Anticline and
the Company plans to be involved in up to two development wells in this area
through fiscal 1997 at a cost to the Company of approximately $79,600 per well.
The Company has expended approximately $271,000 to date to acquire and
develop its interests in the Madden Anticline area.
South Sand Draw. The Company has a 100 percent working interest in 735
acres in the South Sand Draw area of Fremont County, Wyoming. The Company
believes that because of the stratigraphically and structurally complex nature
of this prospect, 3-D seismic should be undertaken prior to designating drilling
locations and target zones. In July 1996, the Company spent $110 an acre to
acquire leases covering approximately 69 net acres based on its preliminary
analysis of this prospect, resulting in aggregate expenditures of $15,000 on
this prospect. Adjacent acreage owned by other entities includes existing oil
production from the Phosphoria and Tensleep formations and existing gas
production from the Frontier formation. The Company is seeking partners for the
3-D seismic work, exploration and development of its South Sand Draw acreage in
an attempt to commence its initial test well during 1997. The Company intends to
attempt to retain a carried interest, for which no expenditures would be
required, in this acreage.
Graham No. 2 Well. The Company owns a 75 percent working interest in the
Graham No. 2 Well, which is located on a 363-acre lease in Natrona County,
Wyoming. The remaining 25 percent working interest is owned by J.N.
Incorporated. The Company originally drilled this well in 1981. The initial
zones were depleted and the well was shut-in in 1992 after paying out in excess
of its costs of approximately $441,000. The Company has identified seven
prospective zones, and if it is able to obtain an additional partner, will
attempt to recomplete this well to a new zone in the same formation. By
obtaining an additional partner, the Company believes that it can undertake the
recompletion without additional out-of-pocket cost to the Company, although the
Company's interest in the well would be reduced.
Cooper Reservoir. The Company owns a 20 percent working interest in 840
gross acres in Cooper Reservoir Field in Natrona County, Wyoming. Hollis Oil &
Gas Co. owns a five percent working interest in this acreage. See "ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS". The remaining 75 percent of
working interests are owned by Prima Oil & Gas Co., Lockridge Operating Co., and
Alpha Development. Intoil, Inc. has staked a location to drill a well offsetting
the Company's acreage; however there is no assurance that the well will be
drilled. To date, the Company has expended approximately $2,600 on this
prospect, primarily for lease acquisition and rental payment costs. The Company
is marketing this prospect to prospective partners and, based on discussions
with the owners of the remaining interests, anticipates that its initial test
well will be drilled during the summer of 1997 to the Fort Union formation at
approximately 4,500 feet. The net cost to the Company for this well is estimated
to be approximately $80,000.
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<PAGE>
Waltman Field. The Company owns a 20 percent working interest, and Hollis
Oil & Gas a five percent working interest, in 1,120 gross acres in the Waltman
Field immediately north of the Cooper Reservoir Field. A well drilled on this
acreage in 1995 was a dry hole. Through August 31, 1996, the Company had
expended approximately $59,000 for its interest in this acreage and the well.
Utah
Christmas Meadows. The Company owns a 100 percent working interest in 800
acres that are included in a pool of approximately 20,840 acres in the Table Top
Unit, Summit County, Utah. The Company's working interest in the pooled acreage
is approximately 3.8 percent. Through various farm out arrangements with the
holders of other pooled acreage, the Company has the right to earn an additional
24.1 percent working interest before payment (18.075 percent after payout) in
all the pooled acreage by drilling a test well on the pooled acreage. Holders of
10 percent or greater working interests in the pooled acreage consist of Prime
Oil & Gas Co. and Lockridge Operating Co. Seismic work has been undertaken and
drilling permits received for an initial test well. However, approximately 400
acres that are adjacent to the drillsite for the initial test well have not been
made available for leasing by the federal government. The Company and its
industry partners believe that it would be imprudent to drill the test well
until the adjacent lands are leased. Because the adjacent federal lands have not
been made available for leasing, the Company and its industry partners requested
that the lease period on their current federal leases be suspended so that they
would not expire prior to the federal government's making the adjacent unleased
lands available for leasing. This request was denied by the Bureau Of Land
Management, and the Company and its industry partners currently are in the
process of appealing this decision. The Company's partners have been informed by
the U.S. Department Of Interior, Office Of Hearings And Appeals, that this
appeal process will prevent the unit leases from expiring until the appeal
decision is made. Because of these complications, drilling of the test well has
been delayed until at least the summer of 1997. In the event that the Company
and its industry partners are not successful in their appeal of the suspension
of the leases, the leases will expire according to their terms. The leases
directly controlled by the Company within the Table Top Unit will expire in
approximately four years, while the leases held by certain of the Company's
industry partners will expire prior to the summer of 1997. As a result of the
unsettled nature of these issues, there can be no assurance that the Company
will be able to market and drill this prospect in the near future. The Company
estimates that its net cost to participate in the test well will be
approximately $325,000, although the Company is attempting to bring in an
additional partner to reduce the Company's working interest and share of costs.
Through August 31, 1996, the Company had expended approximately $323,000 with
respect to its Christmas Meadows interests, including costs for lease
acquisitions, rental payments, and road construction, and has received
approximately $236,000 from sales of interests in this prospect.
Zeolite Mining Activities
The Company has owned since 1972 placer mining claims covering 320 acres of
land in Lander County, Nevada and 640 acres of land in Owyhee County, Idaho,
which, because of natural outcrops and because of other sampling and analysis,
are believed to overlie significant deposits of clinoptilolite, which is one of
34 naturally occurring zeolites. Although the existence of these deposits has
been indicated for some time, no commercially significant mining operations have
been conducted on the Company's property because significant markets for
zeolites have not yet developed. Zeolites currently are utilized commercially
for small consumption items such as cat litter, deodorant and aquarium filler
material, but the amount of consumption from these markets has not justified
large scale production to date.
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Continuing efforts are being made by other entities to develop more extensive
markets for the use of zeolites, particularly with respect to agricultural uses,
such as feed supplement, soil amendment, agriculture deodorant and pesticide
carriers. For accounting purposes, these properties are carried at a total of
$385 on the Company's financial statements.
In September 1996, the Company entered into a mining lease pursuant to
which Mr. Hayden Rader leased the Company's zeolite placer mining claims. This
mining lease and a previous agreement with the lessee provide for the lessee to
pay a production royalty of $8 per ton for each ton of minerals mined and
removed from the properties subject to the lease. (The Company will receive $7
of this $8 per ton royalty, and a third party will receive $1 of this amount.)
The lease may be terminated by the lessee with respect to all or a portion of
the properties at any time without any further obligation. During the term of
the lease, the lessee will undertake any assessment work and pay any maintenance
fees necessary to maintain the claims in good standing. The lessee paid to the
Company $10,000 as an option fee and an additional $15,000 as the option
exercise price upon entering into the mining lease. To the extent that the lease
is still in effect, the lessee shall be required to pay a lease bonus of $50,000
in September 1997 and annual advance royalties of $100,000 beginning in
September 1998. These advance royalties will be credited against the amount of
the royalty otherwise payable in the case of any production.
The lessee currently is attempting to develop markets for sale of zeolite
from these properties. There is no assurance that any such markets can be
developed or that any such sales will occur.
Production
The table below sets forth oil and gas production from the Company's net
interests in producing properties for each of its last three fiscal years.
<TABLE>
<CAPTION>
Oil And Gas Production
-------------------------------------------
Year Ended
August 31,
-------------------------------------------
1994 1995 1996
---------- ---------- -----------
<S> <C> <C> <C>
Quantities
Oil (Bbls)............................ 11,107 9,528 17,352
Gas (Mcf)............................. 53,287 68,862 140,179
Average Sales Price
Oil ($/Bbls).......................... $16.37 $16.52 $21.42
Gas ($/Mcf)........................... $1.32 $1.40 $1.16
Average Production Cost
($/BOE)................................ $3.14 $2.74 $2.98
</TABLE>
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<PAGE>
The Company's oil and gas production is sold on the spot market and the
Company does not have any production that is subject to firm commitment
contracts. During the year ended August 31, 1996, purchases by each of two
customers, Texaco Trading & Transportation, Inc. and Amoco Production Company,
represented more than 10 percent of total Company revenues. Neither of these two
customers, or any other customers of the Company, has a firm sales agreement
with the Company. The Company believes that it would be able to locate alternate
customers in the event of the loss of one or both of these customers.
Productive Wells
The following table categorizes certain information concerning the
productive wells in which the Company owned an interest as of August 31, 1996.
<TABLE>
<CAPTION>
Productive Wells
--------------------------------------------------
Oil Gas
------------------- -------------------
Gross Net Gross Net
----- --- ----- ---
<S> <C> <C> <C> <C>
Wyoming
Moxa Arch ............................ -- -- 102.00 0.45
Powder River Basin ............... 26.00 1.03 -- --
Washakie Basin ................... -- -- 24.00 1.36
Wind River Basin ................. -- -- 15.00 1.03
Other Productive Wells ............. 17.00 0.73 -- --
Total ..................... 43.00 1.76 141.00 2.84
</TABLE>
Drilling, Acquisitions And Reserve Replacement Costs
During the three years ended August 31, 1996, the Company added proved
reserves from acquisitions, extensions, discoveries and reserve revisions of
approximately 197,358 BOE. Capital expenditures during this period were
approximately $994,945, resulting in an average annual reserve replacement cost
of approximately $5.04 per BOE over that three year period.
The Company drilled or participated in the drilling of wells as set forth
in the following table for the periods indicated. In certain of the wells in
which the Company participates, the Company has an overriding royalty interest
and no working interest.
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<TABLE>
<CAPTION>
Wells Drilled
-----------------------------------------------------------------------
Year Ended August 31,
-----------------------------------------------------------------------
1994 1995 1996
----------------- ------------------ -------------------
Gross Net Gross Net Gross Net
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Exploratory
Oil................ 0 0 0 0 0 0
Gas................ 0 0 0 0 0 0
Dry Holes.......... 0 0 3 .3 1 .125
- - - -- - ----
Subtotal....... 0 0 3 .3 1 .125
- - - -- - ----
Development
Oil................ 0 0 0 0 0 0
Gas................ 28 .5 12 .3 7 .029
Dry Holes.......... 0 0 2 .2 0 0
- - - -- - -
Subtotal... 28 .5 14 .5 7 .029
-- -- -- -- - ----
Totals: 28 .5 17 .8 8 .154
== == == == = ====
</TABLE>
All the Company's drilling activities are conducted on a contract basis
with independent drilling contractors.
Reserves
The following reserve related information for the years ended August 31,
1994, 1995, and 1996 is based on estimates prepared by the Company. The
Company's reserve estimates are developed using geological and engineering data
and interests and burdens information developed by the Company. Reserve
estimates are inherently imprecise and are continually subject to revisions
based on production history, results of additional exploration and development,
prices of oil and gas, and other factors. The notes following the table should
be read in connection with the reserve estimates.
<TABLE>
<CAPTION>
Estimated Proved Reserves (1)(2)
-----------------------------------------------
At August 31,
-----------------------------------------------
1994 1995 1996
----------- ------------ -----------
<S> <C> <C> <C>
Proved Developed Oil Reserves (Bbls).................... 104,612 95,383 188,580
Proved Undeveloped Oil Reserves (Bbls).................. --- --- ---
Total Proved Oil Reserves (Bbls)................... 104,612 95,383 188,580
Proved Developed Gas Reserves (Mcf)..................... 1,844,343 1,935,164 2,082,591
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Proved Undeveloped Gas Reserves (Mcf)...................... --- --- ---
Total Proved Gas Reserves (Mcf)....................... 1,844,343 1,935,164 2,082,591
Total Proved Crude Oil Equivalents (BOE)................... 289,046 288,899 396,839
Present Value Of Estimated Future Net Revenues before
income taxes (in thousands), discounted
at 10%.................................................... $1,243,115 $863,312 $2,449,299
</TABLE>
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(1) The Company's annual reserve reports are prepared as of August 31, which is
the last day of the Company's fiscal year.
(2) The present value of estimated future net revenues as of each date shown
was calculated using oil and gas prices as of that date.
Reference should be made to Note 11, Oil And Gas Producing Activities, to
the Financial Statements included in this Form 10-K for additional information
pertaining to the Company's proved oil and gas reserves as of the end of each of
the last three fiscal years.
Acreage
The following tables set forth the gross and net acres of developed and
undeveloped oil and gas leases in which the Company had working interests and
royalty interests as of August 31, 1996. The category of "Undeveloped Acreage"
in the tables includes leasehold interests that already may have been classified
as containing proved undeveloped reserves.
<TABLE>
<CAPTION>
WORKING INTERESTS
Developed Undeveloped
Acreage (1) Acreage (2) Total
----------------------- ----------------------- ----------------------
State Of Location (Area) Gross Net Gross Net Gross Net
---------- --------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Wyoming:
Moxa Arch........................... 15,520 63 8,807 8,807 24,327 8,870
Powder River Basin.................. 15,020 408 6,524 2,796 21,544 3,204
Washakie Basin...................... 2,400 617 47,168 28,772 49,568 29,389
Wind River Basin.................... 14,499 525 6,676 5,956 21,175 6,481
Utah:
Christmas Meadows................... 0 0 21,403 1,363 21,403 1,363
Other................................. 666 17 13,951 12,337 14,617 12,354
Total............................. 48,105 1,630 104,529 60,031 152,634 61,661
</TABLE>
- -----------------------
-10-
<PAGE>
<TABLE>
<CAPTION>
ROYALTY INTERESTS
Developed Undeveloped
Acreage (1) Acreage (2) Total
------------------------ ------------------------ ---------------------
State Of Location (Area) Gross Net Gross Net Gross Net
----------- ---------- ----------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Wyoming:
Moxa Arch.............................. 1,320 20 2,830 103 4,150 123
Powder River Basin..................... 1,480 3 2,360 102 3,840 105
Washakie Basin......................... 1,973 5 13,903 562 15,876 567
Wind River Basin....................... 8,960 280 0 0 8,960 280
Other.................................... 1,826 86 5,880 272 7,706 358
Total............................... 15,559 394 24,973 1,039 40,532 1,433
</TABLE>
(1) Developed acreage is acreage assigned to producing wells for the spacing
unit of the producing formation. Developed acreage in certain of the
Company's properties that include multiple formations with different well
spacing requirements may be considered undeveloped for certain formations,
but have only been included as developed acreage in the presentation above.
(2) Undeveloped acreage is lease acreage on which wells have not been drilled
or completed to a point that would permit the production of commercial
quantities of oil and gas regardless of whether such acreage contains
proved reserves.
Substantially all of the leases summarized in the preceding table will
expire at the end of their respective primary terms unless the existing leases
are renewed or production has been obtained from the acreage subject to the
lease prior to that date, in which event the lease will remain in effect until
the cessation of production. The following table sets forth the gross and net
acres subject to leases summarized in the preceding table that will expire
during the periods indicated:
Acres Expiring
-----------------------
Gross Net
------- ------
Twelve Months Ending:
December 31, 1996....................... 1,933 1,683
December 31, 1997....................... 4,061 2,465
December 31, 1998....................... 2,875 1,915
December 31, 1999 and later............. 60,406 44,416
-11-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding (nor is the
Company's property subject of a pending legal proceeding) that the Company
believes would have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 20, 1996, a special meeting of the shareholders of the Company was
held. At that meeting, the following matters were approved by the shareholders
by the votes indicated below.
(1) A proposal to increase the number of authorized shares of
Common Stock to 10,000,000 received 2,314,881 shares voting in
favor of the proposal, 28,360 shares voting against the
proposal, and 4,020 abstaining.
(2) A proposal to adopt the 1996 Stock Option Plan received
2,257,425 shares voting in favor of the proposal, 86,546
shares voting against the proposal, and 3,290 shares
abstaining.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information. The Company's Common Stock is traded in the
over-the-counter market and listed on NASDAQ under the symbol "DBLE". The range
of high and low bid prices for each quarterly period during the two most recent
fiscal years ended August 31, 1995 and 1996, as reported by NASDAQ is as
follows:
High Low
--------- ---------
Fiscal 1995
First Quarter $.62 $.50
Second Quarter .75 .62
Third Quarter .75 .50
Fourth Quarter 1.37 .50
Fiscal 1996
First Quarter 1.62 .87
Second Quarter 1.50 .87
Third Quarter 1.75 1.00
Fourth Quarter 1.62 1.12
The quotations set forth above reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not reflect actual transactions. On
December 10, 1996 the closing high bid price for the Common Stock as reported by
NASDAQ was $1.25 per share and the closing low asked price was $1.4375.
-12-
<PAGE>
Holders. On December 10, 1996, the number of shareholders of record was
approximately 2,045.
Dividends. The Company has not paid any cash dividends since its inception.
The Company anticipates that all earnings will be retained for the development
of its business and that no cash dividends on its Common Stock will be paid in
the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 6. SELECTED FINANCIAL DATA
1996 1995 1994 1993 1992
------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 649,651 $ 933,486 $ 499,357 $ 655,977 $ 709,596
Income (Loss) before cumulative
effect of accounting change (21,143 ) 15,291 (173,028 ) (76,421 ) 36,752
Income (Loss) before cumulative
effect of accounting change per
share (.01 ) .01 (.08 ) (.04 ) .02
Cash dividends per common
shares - - - - -
At Year End:
Total assets 2,540,918 2,235,220 2,030,406 2,004,968 2,265,005
Long-term obligations - - - - -
Working capital (263,679 ) 173,390 60,494 144,999 72,334
Stockholders' equity 1,922,012 1,943,155 1,796,613 1,928,229 1,970,680
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity And Capital Resources
- -------------------------------
During the year ended August 31, 1996, the Company's operations resulted in
negative working capital of ($264,000) compared with positive working capital of
$173,000 at August 31, 1995. The $437,000 decrease was due to the Company's
incurring a significant expense to fracture stimulate and recomplete three of
its producing wells, and costs to acquire additional interests in certain
prospects. One of the three recompletions, that of the Rabourn Well, resulted in
substantially increased production from that well. These transactions were
initially paid for with borrowed funds, and a majority of the debt was repaid in
the two quarters ended May 31, 1996 and February 28, 1996, respectively. The
funds were borrowed from a commercial bank pursuant to a demand loan that
accrued interest at a rate per annum equal to one percentage point above the
bank's prime rate.
Management believes that the Company's liquidity is sufficient to meet
future cash needs for operations; however, without obtaining additional capital
from a proposed public offering of the Company's securities or from other
sources (which other sources are currently unknown), the Company will not be
able to pursue the same number of oil and gas projects on the same basis as it
would like. The Company has budgeted approximately $1,270,000 to pursue oil and
gas projects during fiscal 1997 assuming the availability of additional funds
and approximately $310,000 if additional funding is not available. See "ITEMS 1
and 2. DESCRIPTION OF BUSINESS AND PROPERTIES--Principal Areas Of Oil And Gas
Activity". It is not anticipated that the Company will undertake future material
sales of oil and gas properties for the primary purpose of raising working
capital. Based on the factors described above, the Company's current and
anticipated sources of cash funds, together with revenues from operations, are
expected to provide sufficient liquidity to fund the Company's anticipated
operations through fiscal 1997.
Revenues from the sale of oil and gas increased significantly in fiscal
1996, and certain of these funds were reinvested in capitalized development
activities. Although this reinvestment resulted in a short-term decrease in
working capital, it is anticipated to result in increased future cash flows as
shown in Note 11 to the financial statements. The Company is not the operator on
the wells in which it holds interests; therefore, no inventories of oil and gas
are reflected on its financial statements. Accounts receivable at year end were
more than double the prior year, primarily due to increased production from
-13-
<PAGE>
the Rabourn Well. In addition, accounts receivable and accounts payable were
both significant at year end due to the work being performed on the Graham Unit
to which the Company bills joint interest parties for 25%.
As discussed below under "--Results Of Operations", the Company has
experienced an increase in production and in production expenses. The Company
anticipates that the Company's increased production, primarily from the
Company's Rabourn well, together with the increased sales prices for oil and gas
currently being received by the Company, will lead to increased revenues and
cash flows from operations and improved liquidity for the Company. The Company
believes this will be the case even though the Company's production costs will
increase as production increases because the marginal costs of producing
additional oil and gas from existing wells is small compared with the additional
production revenue being generated by those additional production costs. To the
extent the Company's exploration costs increase, this will reduce the Company's
liquidity; however, as discussed above, the Company believes that it has
sufficient liquidity to meet future cash needs for operations.
The Company's liquidity has been reduced recently due to decreases in
interest income as a result of smaller cash balances earning interest and
interest expense resulting from the use of borrowed funds to finance a portion
of recently increased oil and gas activities. Both of these factors are caused
primarily by the Company's recent increases in oil and gas activities. Because
of the relatively small amount the Company has received from interest income in
past periods ($4,474 in fiscal 1996, $18,122 in fiscal 1995, and $6,621 in
fiscal 1994) and the relatively small amount of interest expense incurred by the
Company ($10,594 in fiscal 1996 and none in fiscal 1995 and 1994), the Company
does not believe that the decrease in interest income and the increase in income
expense will have a material adverse effect on the Company's liquidity. For
additional information concerning these matters, see below, "--Results Of
Operations".
During the year ended August 31, 1996, gas balancing arrangements had no
material effect on operations or liquidity and capital resources. Because there
has been no significant fluctuation in the units of gas and the price used to
value the receivable, no adjustment has been made to the asset. In the near
future, the Company intends to contact the operator and initiate a settlement
for the imbalance.
The Company's revenues and profitability are substantially dependent on the
prevailing prices for oil and natural gas. The volatility of oil and gas prices,
particularly in the western United States where the Company's properties are
located, could have a material adverse effect on the Company's liquidity and
operations.
Results Of Operations
---------------------
Year Ended August 31, 1996 Compared To Year Ended August 31, 1995
- -----------------------------------------------------------------
The Company experienced a net loss for the year ended August 31, 1996 of
$(21,143) compared to net income for the prior year of $15,291. The change is
due mainly to the sale of several of the Company's nonproducing properties in
the first quarter of fiscal 1995, yielding a profit of $363,600, compared to the
sale of nonproducing properties in fiscal 1996 yielding a profit of $115,600.
Without considering proceeds from sales of properties, the Company had a net
loss from operations of $(139,638) for the year ended August 31, 1996 compared
to a net loss of $(387,583) for the year ended August 31, 1995, primarily as a
result of increased production and lower write-offs and abandonments. During
fiscal 1996, the Company incurred write-off and abandonment expenses of $92,793,
consisting of approximately $64,400 for leases that were abandoned or allowed
-14-
<PAGE>
to expire and an additional approximately $28,400 in costs related to drilling
unsuccessful wells, or dry holes. This compares to write-off and abandonment
expenses of $213,090 in fiscal 1995, consisting of approximately $158,100 for
abandoned and expired leases and an additional approximately $55,000 for dry
hole costs.
Revenue from oil and gas sales increased by approximately $169,600 in the
year ended August 31, 1996 compared to the year ended August 31, 1995. This
increase primarily can be attributed to a workover performed on the Company's
Rabourn Well, which accounted for $118,000 of the increase, added production
from the purchase of producing gas properties in the first quarter of the
current year, which accounted for $43,000 of the increase, the recompletion of
the Britz Federal Well in a different zone, which accounted for $18,000 of the
increase, and increases in average oil prices from $16.25 per barrel in 1995
compared to $21.42 per barrel in 1996. Because there was no gas balancing
agreement adjustment in 1996, revenues were not increased as they were by
$19,000 in 1995.
Production costs and taxes increased by approximately $46,600 due to the
increase in oil and gas production and sales revenue.
Exploration costs decreased by $7,000 during the year ended August 31, 1996
when compared to the year ended August 31, 1995. The decrease primarily is
attributable to lower geological expenses.
Overall costs and expenses decreased by approximately $241,300 during the
year ended August 31, 1996 when compared to the prior year, due primarily to a
decrease in the cost of properties sold and a decrease in write-offs and
abandonments of $120,000, a decrease in dry hole costs of $28,000, and a
decrease in exploration costs of $7,000 due to lower geological expenses.
Interest income decreased by approximately $13,000 from 1995 to 1996 due to
a decrease in funds being available for investments as they were used for
property workovers as described above. The Company also incurred interest
expense of $10,000 in 1996 in connection with its bank line of credit.
Depreciation and depletion expense increased by approximately $28,000
during the year ended August 31, 1996 compared to the previous year. This
increase can be attributed to increased production from properties acquired in
1995 and increased production and costs from recompletions and development
activities in 1996 described above.
Other income increased $65,000 in 1996 compared to 1995 primarily due to
charging a management fee of $37,000 to joint interest parties for the Company's
operations on development of a major prospect. The Company also recognized
$32,000 in revenue in 1996 as a result of the determination that no post-closing
reductions in the purchase price were required with respect to the Buck Creek
Field property sold by the Company in 1994.
General and administrative expenses were up slightly during fiscal 1996 as
a result of additional travel costs by Company personnel for purposes associated
with raising additional capital and monitoring workover and recompletion well
projects and showing a developmental prospect to interested individuals.
Year Ended August 31, 1995 Compared To August 31, 1994.
-------------------------------------------------------
The Company experienced net income for the year ended August 31, 1995 of
approximately $15,291 compared to a net loss of approximately $(341,616) for the
year ended August 31, 1994. The change is due primarily to sales of nonproducing
-15-
<PAGE>
properties in 1995 that were substantially greater than sales in 1994. Without
considering proceeds from sales of properties and producing wells, the Company
had a net loss from operations of $(387,583) in the year ended August 31, 1995
compared to a net loss from operations of $(337,502) in 1994 primarily as a
result of higher production, and correspondingly higher sales from production,
and higher interest income and an increase in write-offs and abandonments in
1995. During fiscal 1995, the Company incurred write-off and abandonment
expenses of $213,090, consisting of approximately $158,100 for abandoned and
expired leases and $55,000 for dry hole expenses, compared to write-off and
abandonment expenses of $195,457 in fiscal 1994, consisting of approximately
$137,000 for abandoned and expired leases and $58,500 for dry hole costs.
Revenues from sales of oil and gas were up slightly during the year ended
August 31, 1995 as compared with the year ended August 31, 1994. The decrease in
price per Mcf of gas was partly offset by an increase in the production of gas.
Production of gas increased by 10,000 Mcf of gas and $16,000 as a result of the
Company's acquisition of an additional working interest in producing properties
in the Whiskey Butte Field during the year ended August 31, 1995 and by 7,650
Mcf of gas and $14,000 as a result of the acquisition of an overriding royalty
interest in the Farson Road Unit near the end of the year ended August 31, 1994.
Revenue from the sales of oil and gas decreased by $7,000 from the Graham Unit's
having been shut in and $32,000 from the sale of the Buck Creek Field in 1994.
The revenue from the Rabourn Well was stable as the $2.50 decrease in per barrel
price was equally offset by an 825 barrel increase in production. Lastly,
production from the Long Butte property decreased by 40% and the lower price
from the 1-36 State Well resulted in $10,000 less revenue. Sales and production
of oil decreased as a result of the Company selling its older producing
properties in the Buck Creek Field in fiscal 1994.
During the year ended August 31, 1995, the Company recognized $19,500 in
oil and gas sales as a result of the gas balancing agreement on the Whiskey
Butte Field.
Sales and gains on sales of non-producing properties increased
significantly when compared with the previous year. Gains on sales of
nonproducing properties totaled $406,000 for fiscal 1995 compared to $67,700 for
the previous year. The Company sold a block of Wyoming leases during the first
quarter at a substantial gain.
There were no sales of producing properties during the year ended August
31, 1995.
Interest income increased approximately $11,500 in fiscal 1995 compared to
fiscal 1994, due to increased interest rates and the Company's improved cash
position as a result of the aforementioned nonproducing properties transaction.
Total production costs decreased slightly during the year ended August 31,
1995 as a result of the sale of the properties in the Buck Creek Field in fiscal
1994. Production taxes increased by $11,000 as a result of the increased oil and
gas revenue and additional taxes attributable to working interests during the
current year.
Exploration expenses increased by $22,000 in the year ended August 31,
1995. This is primarily attributable to the expiration of $129,000 of
nonproducing leases in North Dakota. Dry hole costs of $55,000 incurred during
fiscal 1995 were comparable to the $58,000 abandonment of a property in the
prior year. Lease rental costs during the year ended August 31, 1995 increased
by $13,000 as a result of higher rental requirements for some of the Company's
newer properties. Also, geological expenses increased by $9,000 as the Company
was aggressively evaluating the production capabilities of its properties.
-16-
<PAGE>
General and administrative expenses remained relatively stable during the
two years.
Depreciation and depletion increased by $6,500 during the year ended August
31, 1995 compared with the prior fiscal year, during the year ended August 31,
1994. This increase is a result of increased production and the acquisition of
the additional working interest in the Whiskey Butte Field discussed earlier.
The deferred income tax benefit of $30,000 of the previous year was
replaced with a deferred tax expense of $3,000 during 1995 as a result of the
adoption of SFAS No. 109 in the previous year.
The above-mentioned events and factors led to the Company's net income of
$15,000 during the year ended August 31, 1995 compared to a net loss of $340,000
in the prior year.
-17-
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index
Page Numbers
(1) Report of Independent Certified Public Accountants F-1
Financial Statements:
Balance Sheets as of August 31, 1996 and 1995 F-2
Statements of Operations for the years ended
August 31, 1996, 1995, and 1994 F-3
Statement of Stockholders' Equity for the years
ended August 31, 1996, 1995, and 1994 F-4
Statements of Cash Flow for the years ended
August 31, 1996, 1995, and 1994 F-5
Notes to Financial Statements F-6 - F-14
(2) Additional financial information required to be
furnished pursuant to the requirements on Form 10-K
Report of Independent Certified Public Accountants
on Schedules F-15
Schedules:
V Property and Equipment F-16
VI Accumulated Depreciation and Depletion of
Property and Equipment F-17
All other schedules are omitted because they are inapplicable, not required, or
the information is included in the financial statements or notes thereto.
-18-
<PAGE>
HOCKER, LOVELETT, HARGENS & YENNIE, P.C.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Stockholders and Board of Directors
Double Eagle Petroleum and Mining Company
We have audited the balance sheets of Double Eagle Petroleum and Mining Company
as of August 31, 1996 and 1995, and the related statements of operations,
stockholders' equity, and cash flows for the years ended August 31, 1996, 1995
and 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amount and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Double Eagle Petroleum and
Mining Company as of August 31, 1996 and 1995, and the results of its operations
and its cash flows for the years ended August 31, 1996, 1995 and 1994, in
conformity with generally accepted accounting principles.
/S/ Hocker, Lovelett, Hargens & Yennie, P.C.
Casper, Wyoming
October 18, 1996
F-1
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
BALANCE SHEETS
AUGUST 31, 1996 AND 1995
1996 1995
-------------- --------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents - Note 2 $ 41,232 $ 268,385
Accounts receivable - Note 8 119,465 41,337
Prepaid expense 41,731 -
-------------- --------------
Total 202,428 309,722
OTHER ASSETS
Accounts receivable - Note 3 82,277 82,277
Investment, at cost 8,541 9,000
Other 11,500 11,500
-------------- --------------
Total 102,318 102,777
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation and depletion and impairment allowance
- Notes 4 and 8 (Successful efforts method used
for oil and gas properties) 2,236,172 1,822,721
-------------- --------------
Total $ 2,540,918 $ 2,235,220
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 185,474 $ 110,432
Accrued production taxes 30,633 25,900
Note payable - Note 14 250,000 -
-------------- --------------
Total 466,107 136,332
DEFERRED TAX LIABILITY, net - Note 5 152,799 155,733
-------------- --------------
Total 618,906 292,065
STOCKHOLDERS' EQUITY - Notes 6 and 8 Common stock,
$.10 par value; authorized - 10,000,000 shares;
issued and outstanding - 2,712,371 shares 271,237 271,237
Capital in excess of par value 886,254 886,254
Retained earnings 764,521 785,664
-------------- --------------
Total 1,922,012 1,943,155
-------------- --------------
Total $ 2,540,918 $ 2,235,220
============== ==============
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED AUGUST 31, 1996, 1995, AND 1994
1996 1995 1994
-------------- -------------- ---------------
<S> <C>
REVENUES - Note 7
Sales of oil and gas $ 417,114 $ 247,461 $ 235,411
Sales of nonproducing properties 130,000 634,979 78,244
Sale of wells - - 136,495
Interest 4,474 18,122 6,621
Other, primarily zeolite royalties in 1995 and 1994 98,063 32,924 30,000
Gain on sale of investments - - 12,586
-------------- -------------- ---------------
Total 649,651 933,486 499,357
COSTS AND EXPENSES
Production 79,532 45,009 51,600
Production taxes 41,750 29,679 18,667
Cost of nonproducing properties sold 14,439 228,992 10,540
Cost of wells sold - - 69,736
Exploration 84,685 91,705 69,341
Write offs and abandonments 92,793 213,090 195,457
Interest 10,594 - -
General and administrative 243,035 228,021 214,947
Depreciation and depletion 106,900 78,586 72,108
-------------- -------------- ---------------
Total 673,728 915,082 702,396
-------------- -------------- ---------------
INCOME (LOSS) BEFORE INCOME TAXES (24,077 ) 18,404 (203,039 )
INCOME TAX EXPENSE (CREDIT) - Note 5
Current - - -
Deferred (2,934 ) 3,113 (30,011 )
-------------- -------------- ---------------
Total (2,934 ) 3,113 (30,011 )
-------------- -------------- ---------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE (21,143 ) 15,291 (173,028 )
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
- Note 5 - - (168,588 )
-------------- -------------- ---------------
NET INCOME (LOSS) $ (21,143 ) $ 15,291 $ (341,616 )
============== ============== ===============
INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE
Before cumulative effect of accounting
change $ (.01 ) $ .01 $ (.08 )
Cumulative effect of accounting change .00 .00 (.07 )
-------------- -------------- ---------------
After cumulative effect of accounting
change $ (.01 ) $ .01 $ (.15 )
============== ============== ===============
COMMON STOCK AND COMMON STOCK
EQUIVALENT SHARES OUTSTANDING 2,712,371 2,450,590 2,317,166
============== ============== ===============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED AUGUST 31, 1996, 1995, AND 1994
Capital Total
Shares in Excess Stock-
Out- Common of Par Retained holders'
standing Stock Value Earnings Equity
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance,
August 31, 1993 2,062,371 $ 206,237 $ 610,003 $ 1,111,989 $ 1,928,229
Net Loss - - - (341,616 ) (341,616 )
Common Stock
Issued 300,000 30,000 180,000 - 210,000
-------------- -------------- -------------- -------------- --------------
Balance,
August 31, 1994 2,362,371 236,237 790,003 770,373 1,796,613
Net Income - - - 15,291 15,291
Common Stock
Issued 350,000 35,000 96,251 - 131,251
-------------- -------------- -------------- -------------- --------------
Balance,
August 31, 1995 2,712,371 271,237 886,254 785,664 1,943,155
Net Loss - - - (21,143 ) (21,143 )
-------------- -------------- -------------- -------------- --------------
Balance,
August 31, 1996 2,712,371 $ 271,237 $ 886,254 $ 764,521 $ 1,922,012
============== ============== ============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31, 1996, 1995, AND 1994
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash from oil and gas sales $ 437,508 $ 232,803 $ 295,394
Cash paid for production, exploration
and general and administrative (434,833 ) (394,269 ) (333,124 )
Interest received 4,474 18,122 6,621
Interest paid (10,594 ) - -
-------------- -------------- ---------------
Net Cash Used in Operating
Activities (3,445 ) (143,344 ) (31,109 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of properties 130,000 634,979 214,739
Proceeds from sale of investments - - 14,810
Purchases of properties (603,708 ) (322,710 ) (411,660 )
Purchase of investment - (9,000 ) -
-------------- -------------- ---------------
Net Cash Provided by (Used in)
Investing Activities (473,708 ) 303,269 (182,111 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - - 210,000
Proceeds from bank loan 392,500 - -
Repayment of bank loan (142,500 ) - -
-------------- -------------- ---------------
Net Cash Provided by Financing Activities 250,000 -
-------------- -------------- ---------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (227,153 ) 159,925 (3,220 )
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 268,385 108,460 111,680
-------------- -------------- ---------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 41,232 $ 268,385 $ 108,460
============== ============== ===============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the year ended August 31, 1995, the Company issued 350,000 shares of
common stock with a market value of $131,250 as partial payment on the purchase
of oil and gas producing properties.
See accompanying notes to financial statements.
F-5
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
The Company was incorporated under Wyoming law in 1972 for the purpose of
exploring, developing and producing oil, gas and other minerals in the Rocky
Mountain region of the United States. Its oil and gas production is sold to
major companies of the petroleum industry under terms requiring payment within
sixty days. The prices received for its oil and gas are very volatile due to
economic conditions within the industry. Income from mineral production is
nominal and received in the form of minimum annual royalties.
1. Significant Accounting Policies
This summary of significant accounting policies is presented to assist in
understanding the Company's financial statements:
a. Cash and Cash Equivalents - For purposes of the Statement of Cash
Flows, the Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
b. Property and Equipment - The Company uses the "successful efforts"
method for capitalizing the costs of completed oil and gas wells
whereby only the costs attributable to successful exploratory wells
and the costs of development wells within a producing field are
reflected in property and equipment. Producing and nonproducing
properties are evaluated periodically, and if conditions warrant, an
impairment allowance is provided. The costs of exploratory wells are
charged to expense in the period in which the wells are determined
to be unsuccessful. Depletion and depreciation of the capitalized
costs for producing oil and gas properties are provided by the
unit-of-production method based on proved oil and gas reserves.
Uncompleted wells and equipment are reflected at the Company's
incurred cost and represent costs of drilling and equipping oil and
gas wells that are not completed as of the balance sheet date.
The costs of unproved leases which become productive are
reclassified to proved properties when proved reserves are
discovered on the property.
Unproved oil and gas interests are carried at original acquisition
costs including filing and title fees. Annual rentals and geological
and geophysical expenditures are charged to expense when incurred.
Zeolite properties include the original costs to acquire and stake
the claims and the preliminary evaluation and development costs
which are necessary prior to commencement of mining operations.
Subsequent to the time that zeolite mines reach operational status,
all operational expenditures are charged to expense in the period
incurred.
Office facilities and equipment are recorded at cost. Depreciation
of office facilities and equipment is recorded using straight-line
and accelerated methods over the estimated useful lives of 7 to 40
years for office facilities and 5 years for office equipment.
Maintenance and repairs are charged to expense as incurred.
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. Significant Accounting Policies (Continued)
c. Bad Debts - The direct write off method of accounting for
uncollectible accounts receivable is utilized whereby an account is
written off only when determined to be uncollectible. The results of
this method do not vary materially from the preferred method.
d. Investment - The accompanying financial statements include the
investment in an unconsolidated partnership, in which the Company
owns a 30% interest. The investment is carried at cost under the
equity method. The earnings (loss) from the investment is reflected
as other income in the Statement of Operations due to immateriality
to the financial statements.
e. Income Taxes - Effective September 1, 1993, the Company adopted SFAS
Statement No. 109, "Accounting for Income Taxes." Under SFAS No.
109, deferred income taxes are provided for the tax effect of timing
differences arising from certain costs and expenses which are
recognized in different periods for income tax and financial
reporting purposes.
f. Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
g. Income (Loss) Per Share - Earnings per share is based on the
weighted-average number of shares of common stock outstanding in
each year. There would have been no material dilutive effect on net
income per share for 1995 if outstanding stock options had been
exercised.
h. Revenue Recognition - Revenue includes sales to unaffiliated
organizations in connection with net working interests and royalty
interests. Excluded from gross revenue are royalty payments to
owners and net profit disbursements to partners. Production and
severance taxes are included as part of production costs and are not
deducted in determining gross revenue.
In accordance with EITF 90-22, the gas-balancing arrangement is
accounted for by the entitlements method. The Company has reflected
sales revenue and a corresponding receivable for its proportionate
share of the gas sold by Amoco. The receivable is valued at the
lower of the price in effect at the time of production or the
current market value.
2. Off Balance Sheet Risk of Financial Instruments
Interest bearing time deposits are held by the Company in a commercial
bank which at times may be in excess of the Federal Deposit Insurance
Corporation's maximum limits. The following is a summary of the insured
and uninsured bank balances at August 31:
<TABLE>
<CAPTION>
1996 1995
------------------------------- ------------------------------
Carrying Bank Carrying Bank
Amount Balance Amount Balance
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Insured $ 41,232 $ 82,627 $ 100,962 $ 100,962
Uninsured - - 167,423 185,750
</TABLE>
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. Gas Balancing Arrangement
The Company has a 100% ownership in a producing gas well which is located
in a unitized field operated by a major oil company. At the end of fiscal
year 1992-93, there was an imbalance, caused by the gas purchasing company
recognizing purchase contracts with certain, but not all, interest owners
in the field while it continued to take all gas produced. The Company's
portion of the underbalance at August 31, 1994 was estimated to be 40,000
mcf's and at August 31, 1995 and 1996, 80,000 mcf's as a result of the
Company purchasing additional ownership in the well. An estimated payout
for the underbalance of $1 per mcf is used to value the receivable. The
Company has not received payment or settlement for its share of the
imbalance to date.
4. Property and Equipment
A summary of property and equipment is as follows:
<TABLE>
<CAPTION>
1996 1995
----------------------------------- ----------------------------------
Accumulated Accumulated
Depreciation Depreciation
Cost & Depletion Cost & Depletion
---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Zeolite mining properties $ 385 $ - $ 385 $ -
Unproved oil and gas interests 423,482 - 488,278 -
Proved oil interests 653,267 200,857 516,055 161,407
Completed wells and related
equipment 2,356,059 1,204,456 1,977,564 1,146,453
Wells in process 125,431 - 71,570 -
Condominium office facility 130,049 65,067 130,049 62,447
Office equipment 53,465 35,586 37,886 28,759
---------------- ---------------- --------------- ----------------
Total $ 3,742,138 $ 1,505,966 $ 3,221,787 $ 1,399,066
================ ================ =============== ================
</TABLE>
5. Income Taxes
Effective September 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which applies
an asset and liability approach requiring the recognition of deferred tax
assets and liabilities with respect to the expected future tax
consequences of events that have been recognized in the financial
statements and tax returns. All of the Company's earnings are located in
the United States.
<TABLE>
<CAPTION>
1996 1995 1994
---------------- ---------------- ----------------
<S> <C> <C> <C>
Income Tax Expense (Credit)
Current $ - $ - $ -
Deferred (2,934 ) 3,113 (30,011 )
</TABLE>
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. Income Taxes (Continued)
Deferred tax liabilities (assets) are comprised of the following at August
31:
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
Tax effects of temporary differences
------------------------------------------------
<S> <C> <C>
1st year federal lease rentals $ 2,821 $ 3,850
Intangible drilling costs 381,698 332,826
Percentage depletion 133,083 133,083
Depreciation 2,193 2,193
Tax basis surrendered property 113 113
Production taxes 2,844 2,844
---------------- ----------------
Total Long Term Deferred Tax Liabilities 522,752 474,909
Depletion of intangible drilling costs (240,283 ) (233,279 )
Net operating loss carryforwards (128,703 ) (84,941 )
Other (967 ) (956 )
---------------- ----------------
Total Long Term Deferred Tax Assets (369,953 ) (319,176 )
---------------- ----------------
Net Long Term Deferred Tax Liabilities $ 152,799 $ 155,733
================ ================
At August 31, 1996, the Company has unused deductions and credits which
may be applied against future taxable income and which expire as follows:
Percent Depletion
In Excess of Net Operating
Year Ending Cost Depletion Loss Investment
August 31, Carryforward Tax Credits
------------------ ------------------ ----------------- ------------------
<S> <C> <C> <C>
1997 $ - $ - $ 11,643
1998 - - 19,397
1999 - - 9,630
2000 - - 4,306
2001 - - 580
2003 - 191,551 -
2004 - 49,017 -
2007 - 78,344 -
2008 - 28,442 -
2009 - 143,210 -
2010 - 73,765 -
2011 - 293,691 -
Indefinite 1,467,244 - -
--------------- -------------- ---------------
Total $ 1,467,244 $ 858,020 $ 45,556
=============== ============== ===============
</TABLE>
Investment tax credits for financial purposes are the same as those shown
for tax reporting purposes.
6. Common Stock
Under an employee's incentive stock option plan approved by the
stockholders in January, 1993, 200,000 shares of common stock have been
authorized and reserved for issuance to employees. Options granted under
this plan cannot exceed ten years from the date of grant. The option price
is equal to the market value of the common stock on date of grant. At
August 31, 1996, there were six options outstanding for two hundred
thousand shares to current employees of the Company. The term in which to
exercise is three years from the date of each grant. As of May 1996, the
Board approved the Company's 1996 Stock Option Plan covering options to
acquire an aggregate of 200,000 shares of common stock. No options have
been granted under the 1996 Stock Option Plan, which was approved by the
Company's stockholders in June 1996.
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. Common Stock (Continued)
Changes in the exercisable status of options outstanding under the 1993
plan at August 31, are as follows:
<TABLE>
<CAPTION>
Shares
----------------------------------------------------------
1996 1995 1994
---------------- ---------------- ----------------
<S> <C> <C> <C>
Beginning of year 200,000 120,000 60,000
Granted 60,000 80,000 60,000
Expired/Exercised (60,000 ) - -
---------------- ---------------- ----------------
End of year 200,000 200,000 120,000
Option price $.75, $.875 $.75, $.875 $.875 and $1.1875
and $1.18 and $1.1875
</TABLE>
Subsequent to August 31, 1996, the Company purchased the stock options for
30,000 shares from one employee.
The Board of Directors has authorized the purchase and retirement of a
maximum of 200,000 shares of the Company's outstanding common stock. As of
August 31, 1996, 27,960 shares have been purchased to date and retired at
a per share cost of $1.50 to $10.00. Subsequent to August 31, 1996, the
Board of Directors terminated authorization of this stock repurchase
program.
7. Major Customers
Certain customers who accounted for more than 10% individually of the
Company's oil and gas sales are as follows:
<TABLE>
<CAPTION>
Year Ended August 31,
----------------------------------------------------------
1996 1995 1994
---------------- ---------------- ----------------
<S> <C> <C> <C>
Company A $ - $ - $ 21,308
Company B 256,114 91,120 89,668
Company C - 27,761 27,946
Company D 58,131 52,522 66,057
</TABLE>
8. Related Party Transactions
During the year ended August 31, 1995, the Company acquired certain proved
oil and gas leases and overriding royalties from a related party. In
addition to $71,300 cash, the Company issued 350,000 shares of restricted
common stock with a market value of $131,250 for a total purchase price of
$202,550.
The Company and certain directors, stockholders and investees are joint
holders in proved and unproved oil and gas properties. During the normal
course of business, the Company pays or receives monies and in turn bills
or pays the interest holders for their respective shares. These
transactions are immaterial in amount when compared to the Company's total
receipts and expenditures. They are accounted for as part of the normal
joint interest billing function.
During the year ended August 31, 1994, the Company conducted a private
placement offering of 300,000 shares of its previously unissued common
stock at $.70/share. The stock was offered in 10,000 share blocks to
holders-of-record owning 10,000 shares or more. Of the 300,000 shares
sold, 255,715 shares were purchased by the Chairman of the Board of
Directors which provided $179,000 of working capital for the Company.
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. Segment Information
The Company's dominant segment is oil and gas exploration and
development. Revenues and assets of the Company's zeolite mining
segment account for less than 10% of total revenues and total assets.
10. Statements of Cash Flows
Reconciliation of Net Income (Loss) to Net Cash Used By Operating
Activities at August 31,:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Net Income (Loss) $ (21,143 ) $ 15,291 $ (341,616 )
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and depletion 106,900 78,586 72,108
Sales of properties (130,000 ) (634,979 ) (214,739 )
Sale of investments - - (14,810 )
Costs of properties disposed 83,357 387,068 278,687
Cost of investments sold - - 2,224
Deferred taxes - net (2,934 ) 3,113 138,577
(Increase) Decrease In:
Accounts receivable (78,128 ) (50,080 ) 22,481
Prepaid expense (41,731 ) - -
Other 459 2,498 7,502
(Decrease) Increase In:
Accounts payable 75,042 57,959 32,677
Accrued production taxes 4,733 (2,800 ) (14,200 )
--------------- ---------------- ---------------
Total Adjustments 17,698 (158,635 ) 310,507
--------------- ---------------- ---------------
Net Cash Used In Operating Activities $ (3,445 ) $ (143,344 ) $ (31,109 )
=============== ================ ===============
</TABLE>
Costs of properties disposed is further scheduled as follows for the
years ended August 31,:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Cost of wells sold $ - $ - $ 69,736
Cost of leases sold 14,439 228,992 10,540
Surrendered and expired leases 64,420 157,821 136,982
Write off of prior year capitalized dry hole
costs or abandonments 4,498 255 61,429
--------------- ---------------- ---------------
Cash flow adjustment $ 83,357 $ 387,068 $ 278,687
=============== ================ ===============
</TABLE>
11. Oil and Gas Producing Activities
Capitalized costs relating to oil and gas activities at August 31:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Proved properties $ 3,009,326 $ 2,493,619 $ 2,221,394
Unproved properties 548,913 559,848 779,649
--------------- ---------------- ---------------
3,558,239 3,053,467 3,001,043
Accumulated depreciation and depletion 1,405,313 1,307,860 1,240,855
--------------- ---------------- ---------------
Net $ 2,152,926 $ 1,745,607 $ 1,760,188
=============== ================ ===============
</TABLE>
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. Oil and Gas Producing Activities (Continued)
Costs incurred in oil and gas property acquisition, exploration, and
development activities for the years ended August 31,:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Property acquisition:
Proved $ 123,440 $ 207,346 $ 13,433
Unproved 27,834 95,442 343,795
Exploration 177,478 304,795 264,798
Development 436,855 143,649 24,960
--------------- ---------------- ---------------
Total $ 765,607 $ 751,232 $ 646,986
=============== ================ ===============
</TABLE>
Results of operations for oil and gas producing activities, excluding
corporate overhead and interest costs, for the years ended August 31,:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Revenues $ 417,114 $ 247,461 $ 235,411
Production costs (121,282 ) (74,688 ) (70,267 )
Exploration expenses (177,478 ) (304,795 ) (264,798 )
Depreciation and depletion (97,453 ) (73,949 ) (67,607 )
Income tax (expense) credit 2,934 (3,113 ) 30,011
--------------- ---------------- ---------------
Results of operations from producing activities $ 23,835 $ (209,084 ) $ (137,250 )
=============== ================ ===============
Reserve quantity information (unaudited) for the years ended August 31,
(all located in the United States):
1996
----------------------------------------
Proved developed reserves: Oil (bbl's) Gas (mcf's)
----------------- ------------------
Beginning of year 95,383 1,935,164
Revisions of previous estimates 110,049 22,940
Discoveries 500 50,500
Purchased - 214,166
Production (17,352 ) (140,179 )
----------------- ------------------
End of year 188,580 2,082,591
================= ==================
1995
----------------------------------------
Proved developed reserves: Oil (bbl's) Gas (mcf's)
----------------- ------------------
Beginning of year 104,612 1,844,343
Revisions of previous estimates 299 (3,329 )
Discoveries - 90,000
Purchased - 73,012
Production (9,528 ) (68,862 )
----------------- ------------------
End of year 95,383 1,935,164
================= ==================
</TABLE>
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. Oil and Gas Producing Activities (Continued)
<TABLE>
<CAPTION>
1994
----------------------------------------
Proved developed reserves: Oil (bbl's) Gas (mcf's)
----------------- ------------------
<S> <C> <C>
Beginning of year 118,715 1,703,588
Revisions of previous estimates 2,507 2,041
Discoveries 12,314 256,000
Purchased 5 11,506
Producing Properties Sold (17,822 ) (75,505 )
Production (11,107 ) (53,287 )
----------------- ------------------
End of year 104,612 1,844,343
================= ==================
</TABLE>
The above reserve information is based on estimates prepared by the
Company. Proved developed oil and gas reserves are those which can be
expected to be recovered through existing wells with existing equipment
and operating methods. Proved undeveloped oil and gas reserves are
those which are expected to be recovered from new wells on undrilled,
proved acreage, or from existing wells where a relatively major
expenditure is required for completion. Management does not feel that
the Company has any proved, undeveloped reserves. All information
presented pertains to proved, developed reserves.
Standardized measure of discounted future net cash flows and changes
therein relating to proved oil and gas reserves at August 31,
(unaudited):
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Future cash flows $ 6,455,189 $ 3,349,951 $ 4,147,146
Future production costs (1,595,675 ) (1,481,310 ) (1,456,421 )
Future income taxes (1) (1,360,515 ) (635,338 ) (914,847 )
--------------- ---------------- ---------------
Future net cash flows 3,498,999 1,233,303 1,775,878
10% annual discount (1,049,700 ) (369,991 ) (532,763 )
--------------- ---------------- ---------------
Discounted future net cash flows $ 2,449,299 $ 863,312 $ 1,243,115
=============== ================ ===============
</TABLE>
(1) The income tax is 34% of the future cash flows less the future
production costs adjusted for net operating loss carryforwards.
The following are the principal sources of changes in the standardized
measure of discounted future net cash flows for the years ended August
31, (unaudited):
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ---------------
<S> <C> <C> <C>
Sales, net of production costs $ (295,832 ) $ (142,966 ) $ (268,931 )
Net changes in prices and production costs 304,917 (344,196 ) 379,995
Discoveries and purchases 183,900 57,054 37,296
Development costs (737,773 ) (76,577 ) (59,481 )
Revisions of previous quantity estimates 2,044,444 2,570 55,675
Accretion of discount 86,331 124,312 125,265
--------------- ---------------- ---------------
Net changes $ 1,585,987 $ (379,803 ) $ 269,819
=============== ================ ===============
</TABLE>
The preceding is a standardized measure of the discounted future net
cash flows and changes applicable to proved oil and gas reserves
required by SFAS 69 of the FASB. The future cash flows are based on
estimated oil and gas reserves utilizing prices and costs in effect as
of year end discounted at 10% per year and assuming continuation of
existing economic conditions.
F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. Oil and Gas Producing Activities (Continued)
The standardized measure of discounted future net cash flows, in
management's opinion, should be examined with caution. The basis for
this table is management's reserve study which contains imprecise
estimates of quantities and rates of production of reserves. Revisions
of previous estimates can have a significant impact on these results.
Also, exploration costs in one year may lead to significant
discoveries in later years and may significantly change previous
estimates of proved reserves and their valuation.
Therefore, the standardized measure of discounted future net cash
flows is not necessarily a "best estimate" of the fair value of the
Company's proved oil and gas properties.
12. Subsequent Event
On October 11, 1996 the Company filed a Registration Statement on Form
SB-2 with the Securities and Exchange Commission with respect to the
sale of additional shares of stock.
13. Fair Values of Financial Instruments
Statement of Financial Accounting Standards No.107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure of fair
value information for certain financial instruments. The carrying
amounts for trade receivables and payables are considered to be their
fair values. The difference between the carrying amounts and the
estimated fair values of the Company's other financial instruments at
August 31, 1996 and 1995 were immaterial.
14. Note Payable
The Company owes $250,000 on a bank line of credit which is due
December 1, 1996 at an initial variable interest rate of 8.75%.
Subsequent to year end, the line-of-credit was increased to $350,000.
F-14
<PAGE>
HOCKER, LOVELETT, HARGENS & YENNIE, P.C.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SCHEDULES
To the Stockholders and Board of Directors
Double Eagle Petroleum and Mining Company
In connection with our audit of the financial statements of Double Eagle
Petroleum and Mining Company as of August 31, 1996 and 1995, and for each of the
three years ended August 31, 1996, 1995 and 1994, which report is incorporated
by reference, we also audited supporting schedules V and VI. In our opinion,
these schedules present fairly, when read in conjunction with the related
financial statements, the financial data required to be set forth therein.
/S/ Hocker, Lovelett, Hargens & Yennie, P.C.
Casper, Wyoming
October 18, 1996
F-15
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
SCHEDULE V - PROPERTY AND EQUIPMENT
Column A Column B Column C Column D Column E
- --------------------------------------------- --------------- ---------------- ---------------- ----------------
Balance At Balance At
Beginning Additions End Of
Classification Of Period At Cost Retirements Period
- --------------------------------------------- --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Year ended August 31, 1994
Zeolite mining properties $ 385 $ - $ - $ 385
Unproved oil and gas interest 585,915 343,795 150,062 (A) 779,648
Proved oil interests 323,515 20,525 28,131 315,909
Completed wells and equipment 2,955,392 49,359 1,099,266 (B) 1,905,485
Wells in process - - - -
Office equipment 28,140 2,222 - 30,362
Condominium office facility 127,299 2,750 - 130,049
--------------- ---------------- ---------------- ----------------
Total $ 4,020,646 $ 418,651 1,277,459 3,161,838
=============== ================ ================ ================
Year ended August 31, 1995
Zeolite mining properties $ 385 $ - $ - $ 385
Unproved oil and gas interest 779,648 95,443 386,813 (A) 488,278
Proved oil interests 315,909 207,346 7,200 516,055
Completed wells and equipment 1,905,485 72,079 - 1,977,564
Wells in process - 71,570 - 71,570
Office equipment 30,362 7,524 - 37,886
Condominium office facility 130,049 - - 130,049
--------------- ---------------- ---------------- ----------------
Total $ 3,161,838 $ 453,962 $ 394,013 $ 3,221,787
=============== ================ ================ ================
Year ended August 31, 1996
Zeolite mining properties $ 385 $ - $ - $ 385
Unproved oil and gas interest 488,278 27,834 92,630 (A) 423,482
Proved oil interests 516,055 137,212 - 653,267
Completed wells and equipment 1,977,564 378,495 - 2,356,059
Wells in process 71,570 58,359 4,498 125,431
Office equipment 37,886 15,579 - 53,465
Condominium office facility 130,049 - - 130,049
--------------- ---------------- ---------------- ----------------
Total $ 3,221,787 $ 617,479 $ 97,128 $ 3,742,138
=============== ================ ================ ================
</TABLE>
(A) Includes property abandonments of $136,982, $157,821 and $64,420 for
the years ended August 31, 1994, 1995 and respectively.
(B) Includes impairment allowance of $54,567.
F-16
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND DEPLETION
OF PROPERTY AND EQUIPMENT
Column A Column B Column C Column D Column E
- --------------------------------------------- ---------------- --------------- ---------------- ---------------
Additions
Balance At Charged To Balance At
Beginning Costs And End Of
Classification Of Period Expenses Retirements Period
- --------------------------------------------- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Year ended August 31, 1994
Proved oil interests (A) $ 153,987 $ 14,190 $ 20,267 $ 147,910
Completed wells and equipment (A) 2,011,042 53,417 971,514 1,092,945
Office equipment (B) 25,328 1,642 - 26,970
Condominium office facility (C) 56,740 2,859 - 59,599
---------------- --------------- ---------------- ---------------
Total $ 2,247,097 $ 72,108 $ 991,781 $ 1,327,424
================ =============== ================ ===============
Year ended August 31, 1995
Proved oil interests (A) $ 147,910 $ 20,441 $ 6,944 $ 161,407
Completed wells and equipment (A) 1,092,945 53,508 - 1,146,453
Office equipment (B) 26,970 1,789 - 28,759
Condominium office facility (C) 59,599 2,848 - 62,447
---------------- --------------- ---------------- ---------------
Total $ 1,327,424 $ 78,586 $ 6,944 $ 1,399,066
================ =============== ================ ===============
Year ended August 31, 1996
Proved oil interests (A) $ 161,407 $ 39,450 $ - $ 200,857
Completed wells and equipment (A) 1,146,453 58,003 - 1,204,456
Office equipment (B) 28,759 6,827 - 35,586
Condominium office facility (C) 62,447 2,620 - 65,067
---------------- --------------- ---------------- ---------------
Total $ 1,399,066 $ 106,900 $ - $ 1,505,966
================ =============== ================ ===============
</TABLE>
(A) Depreciated by units of production method.
(B) Five year lives, depreciated by an accelerated method.
(C) Seven to forty year lives, depreciated by declining balance method.
F-17
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
-19-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Directors And Executive Officers
The directors and executive officers of the Company are as follows:
Name Age Positions
- ---- --- ---------
Richard B. Laudon 62 Chairman Of The Board; Treasurer;
and Director
Stephen H. Hollis 46 President; and Director
Carol A. Osborne 44 Secretary
Tom R. Creager 37 Director
John R. Kerns 65 Director
William N. Heiss 44 Director
Dr. Richard B. Laudon has served as the Chairman Of The Board and Treasurer
of the Company since January 1972. In addition Dr. Laudon has served as a
Vice-President of the Company since January 1996. From 1972 until January 1994,
Dr. Laudon served as the President of the Company. Dr. Laudon held various
geological positions with Esso Corporation from 1959 to 1969. He was employed as
a senior geologist for an affiliate of United Nuclear Corporation from 1969 to
1970, and was an independent consulting geologist until 1972. Dr. Laudon was the
President of the Rocky Mountain Section of American Association of Petroleum
Geologists in 1986. Dr. Laudon received a Bachelor of Science Degree in Geology
from the University of Tulsa in 1956, a Master of Science Degree in Geology from
the University of Wisconsin in 1957, and a Doctorate of Philosophy in Geology
from the University of Wisconsin in 1959.
Stephen H. Hollis has served as the President of the Company since January
1994 and previously served as a Vice-President of the Company from December 1989
through January 1994. Mr. Hollis has served as a Director of the Company since
December 1989. Mr. Hollis has served as the Vice-President of Hollis Oil & Gas
Co., a small oil and gas company, since January 1994 and served as the President
of Hollis Oil & Gas Co. from June 1986 through January 1994. Mr. Hollis was a
geologist for an affiliate of United Nuclear Corporation from 1974 to 1977 and a
consulting geologist from 1977 to 1979. In 1979, Mr. Hollis joined Marathon Oil
Company and held various positions until 1986, when he founded Hollis Oil & Gas
Co. Mr. Hollis is a past President of the Wyoming Geological Association. Mr.
Hollis received a B.A. Degree in Geology from the University of Pennsylvania in
1972 and a Masters Degree in Geology from Bryn Mawr College in 1974. One
transaction in January 1996, required to be reported by Mr. Hollis on a
Statement Of Change In Beneficial Ownership Of Securities on Form 4, was
reported late with the Securities And Exchange Commission ("SEC") on a Form 5,
Annual Statement Of Changes In Beneficial Ownership.
John R. Kerns has served as a Director of the Company since January 1972.
From January 1972 until January 1980, Mr. Kerns served as Secretary of the
Company. Mr. Kerns was a geologist for Tenneco Oil Company from 1960 to 1968 and
-20-
<PAGE>
and has been an independent consulting geologist since that time. He is a past
President of the Wyoming Geological Association and a past President of the
Rocky Mountain Section of the American Association of Petroleum Geologists. Mr.
Kerns received a B.A. Degree in Geology from Oregon University in 1952 and a
Masters Degree in Geology from the University of Arizona in 1958.
William N. Heiss has served as a Director of the Company since January
1996. Mr. Heiss owned a mineral brokerage business until 1981, when he went into
private law practice, emphasizing mineral and real property law. Mr. Heiss has
served as a Director and the Secretary of Hollis Oil & Gas Co. since 1987 and as
President since January 1994. He is a member of the Rocky Mountain Mineral Law
Foundation, and the Natrona County and Wyoming Bar Associations. Mr. Heiss
received a B.A. Degree in mathematics from Indiana University in 1970 and a J.D.
degree from the University of Wyoming in 1978. An Initial Statement Of
Beneficial Ownership on Form 3 required to be filed by Mr. Heiss in January 1996
was reported late with the SEC on a Form 5, Annual Statement Of Changes In
Beneficial Ownership.
Tom R. Creager has served as a Director of the Company since January 1996.
Since October 1991, Mr. Creager has been President and Senior Portfolio Manager
with Pinnacle West Asset Management, Inc., a firm engaged in investment
management and research and as a consultant to CPA Consulting Group, P.C.
working in the areas of taxation, business and financial consulting. From 1985
to 1991, he worked in public accounting primarily in income tax areas. Mr.
Creager has served as a Director of Hollis Oil & Gas Co. since July 1989. From
1983 until 1985, Mr. Creager was employed by an oil and gas contractor and
supply company as corporate controller. Mr. Creager received a B.A. Degree in
Accounting from the University of Wyoming in 1983. An Initial Statement Of
Beneficial Ownership on Form 3 required to be filed by Mr. Creager in January
1996 was reported late with the SEC on a Form 5, Annual Statement Of Changes In
Beneficial Ownership.
Carol A. Osborne has served as the Secretary of the Company since January
1996 and previously served as the Assistant Secretary of the Company from
December 1989 until January 1996. In addition, Ms. Osborne has served as the
Company's Office Manager since 1981. An Initial Statement Of Beneficial
Ownership on Form 3 required to be filed by Ms. Osborne in January 1996 was
reported late with the SEC on a Form 5, Annual Statement Of Changes In
Beneficial Ownership.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth in summary form the compensation received
during each of the Company's last three completed fiscal years by each of the
Company's President and Chairman Of The Board. No employee of the Company
received total salary and bonus exceeding $100,000 during any of the last three
fiscal years.
-21-
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation
Long-Term Other Annual
Name and Fiscal Year Salary Bonus Compensation-- Compen-
Principal Position Ended ($)(1) ($) Options (#) sation ($)
- ----------------------- --------------- -------------- ----------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Stephen H. Hollis, 1996 $53,700 -0- 50,000 -0-
President
1995 $53,700 -0- 70,000 -0-
1994 $53,700 -0- 50,000 -0-
Richard B. Laudon, 1996 $53,700 -0- -0- -0-
Chairman Of The
Board 1995 $53,700 -0- -0- -0-
1994 $53,700 -0- -0- -0-
</TABLE>
- ------------------
(1) The dollar value of base salary (cash and non-cash) received.
Option Grants Table
The following table sets forth information concerning individual grants of
stock options made during the fiscal year ended August 31, 1996 to the Company's
President and Chairman Of The Board. See "--Stock Option Plans".
<TABLE>
<CAPTION>
Option Grants For Fiscal Year Ended August 31, 1996
% of Total
Options Granted
Options to Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ---------------------------- ----------- ----------------- ------------------ ----------
<S> <C> <C> <C> <C>
Stephen H. Hollis, 50,000 100 1.18 1/22/99
President
Richard B. Laudon, -0- -0- N/A N/A
Chairman Of The Board
</TABLE>
Aggregated Option Exercises And Fiscal Year-End Option Value Table.
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended August 31, 1996 by the Company's
President and Chairman Of The Board, and the fiscal year-end value of
unexercised options held by the President and Chairman Of The Board.
-22-
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises
For Fiscal Year Ended August 31, 1996
And Year-End Option Values
Value of
Unexercised
Number of In-The-Money
Unexercised Options at
Options at Fiscal Fiscal Year-End
Year-End (#)(3) ($)(4)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) (1) Realized ($)(2) Unexercisable Unexercisable
- ------------------------------- -------------------- --------------------- ---------------------- -------------
<S> <C> <C> <C> <C>
Stephen H. Hollis, 0 0 170,000/0 $38,750/$0
President
Richard B. Laudon, 0 0 0/0 $0/$0
Chairman Of The Board
</TABLE>
- --------------------
(1) The number of shares received upon exercise of options during the fiscal
year ended August 31, 1996.
(2) With respect to options exercised during the Company's fiscal year ended
August 31, 1996, the dollar value of the difference between the option
exercise price and the market value of the option shares purchased on the
date of the exercise of the options.
(3) The total number of unexercised options held as of August 31, 1996
separated between those options that were exercisable and those options
that were not exercisable.
(4) For all unexercised options held as of August 31, 1996, the aggregate
dollar value of the excess of the market value of the stock underlying
those options over the exercise price of those exercised options, based on
the bid price of the Company's Common Stock on August 31, 1996. The closing
bid price for the Company's Common Stock on August 31, 1996 was $1.125 per
share.
Stock Option Plans
The 1993 Stock Option Plan. In November 1992, the Board Of Directors of the
Company approved the Company's Stock Option Plan (1993) (the "1993 Plan"), which
subsequently was approved by the Company's stockholders. Pursuant to the 1993
Plan, the Company may grant options to purchase an aggregate of 200,000 shares
of the Company's common stock to key employees of the Company, including
officers and directors who are salaried employees who have contributed in the
past or who may be expected to contribute materially in the future to the
successful performance of the Company. The options granted pursuant to the 1993
Plan are intended to be incentive options qualifying for beneficial tax
treatment for the recipient. The 1993 Plan is administered by an option
committee that determines the terms of the options subject to the requirements
of the 1993 Plan. At August 31, 1996, options to purchase 200,000 shares were
outstanding under the 1993 Plan. In September 1996, options to purchase 30,000
shares held by Carol A. Osborne were repurchased by the Company for an aggregate
of $13,200. As a result, options to purchase an additional 30,000 shares could
be granted under the 1993 Plan.
-23-
<PAGE>
The 1996 Stock Option Plan. In May 1996, the Board of Directors of the
Company approved the Company's 1996 Stock Option Plan (the "1996 Plan"), which
subsequently was approved by the Company's stockholders. Pursuant to the 1996
Plan, the Company may grant options to purchase an aggregate of 200,000 shares
of the Company's common stock to key employees, directors, and other persons who
have or are contributing to the success of the Company. The options granted
pursuant to the 1996 Plan may be either incentive options qualifying for
beneficial tax treatment for the recipient or non-qualified options. The 1996
Plan is administered by an option committee that determines the terms of the
options subject to the requirements of the 1996 Plan. At August 31, 1996, no
options were outstanding under the 1996 Plan and options to purchase 200,000
could be granted under the 1993 Plan.
Compensation Of Outside Directors
Directors of the Company who are not also employees of the Company
("Outside Directors") are paid $400 for each meeting of the Board Of Directors
that they attend. Directors also are reimbursed for expenses incurred in
attending meetings and for other expenses incurred on behalf of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table summarizes certain information as of August 31, 1996
with respect to the beneficial ownership of the Company's common stock (i) by
the Company's directors, (ii) by stockholders known by the Company to own 5% or
more of the Company's common stock, and (iii) by all officers and directors as a
group.
As Of August 31, 1996
--------------------------------
Percentage Of
Class
Name And Address Of Number Of Beneficially
Beneficial Owner Shares Owned
- ---------------- ---------- -------------
Dr. Richard B. Laudon 569,147 21.0%
3737 West 46th
Casper, Wyoming 82604
Carol A. Osborne 200 --*
John R. Kerns 77,203 2.8%
Stephen H. Hollis (4) 544,900(1) 20.1%
2037 S. Poplar
Casper, Wyoming 82601
William N. Heiss (4) 350,000(2) 12.9%
Tom R. Creager(4) 351,500(3) 13.0%
Directors and Officers as a group 1,192,950(1)(4) 41.4%
(Six Persons)
Hollis Oil & Gas Co. (4) 350,000 12.9%
- ---------------
* Less than one percent.
(1) Includes options held by Mr. Hollis to purchase 50,000 shares of Common
Stock that expire January 19, 1997, options to purchase 70,000 shares that
expire January 19, 1998, and options to purchase 50,000 shares that expire
January 22, 1999. In addition to 24,900 shares owned directly by Mr.
Hollis, the table above includes 350,000 shares of the Company's Common
Stock owned by Hollis Oil & Gas Co. Mr. Hollis is an officer, director and
51 percent owner of Hollis Oil & Gas Co.
-24-
<PAGE>
(2) These shares are owned by Hollis Oil & Gas Co. Mr. Heiss is an officer,
director and 30% beneficial owner of Hollis Oil & Gas Co.
(3) Includes 350,000 shares of Common Stock of the Company held by Hollis Oil &
Gas Co. Mr. Creager is a director of Hollis Oil & Gas Co.
(4) The shares owned by Hollis Oil & Gas Company are shown or included as
beneficially owned five times in the table: once as beneficially owned by
Hollis Oil & Gas Company, again under the beneficial ownership of each of
Mr. Hollis, Mr. Heiss, and Mr. Creager, and also as part of the shares
beneficially owned by Directors and Officers as a group.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended August 31, 1995, the Company acquired certain proved
oil and gas leases and overriding royalties from Hollis Oil & Gas Co. In
addition to $71,300 cash, the Company issued 350,000 shares of restricted Common
Stock with a market value of $131,250, for a total purchase price of $202,550.
Mr. Stephen H. Hollis, the President and a Director of the Company, is a
Vice-President, Director and a stockholder of Hollis Oil & Gas Co. Mr. William
N. Heiss, currently a Director of the Company, is the President, a Director, and
a stockholder of Hollis Oil & Gas Co. Mr. Heiss was not a Director of the
Company at the time of this transaction. The purchase price was determined by
negotiations between the Company and Hollis Oil & Gas Co. and approved by the
Company's Board Of Directors with Mr. Hollis abstaining. The Company did not
obtain an independent appraisal of the interest purchased from Hollis Oil & Gas
Co., however, it is the Company's position that this transaction was on as
favorable terms as would have been obtained from an independent third party.
The Company and certain directors, officers and stockholders of the Company
are joint holders in proved and unproved oil and gas properties. During the
normal course of business, the Company pays or receives monies and in turn bills
or pays the interest holders for their respective shares. These transactions are
immaterial in amount when compared to the Company's total receipts and
expenditures. They are accounted for as part of the normal joint interest
billing function. See also, "ITEMS 1. and 2. DESCRIPTION OF BUSINESS AND
PROPERTIES--Principal Areas Of Oil And Gas Activity-- Moxa Arch", "--Washakie
Basin--State 1-36 Well", "--Wind River Basin--Madden Anticline", and "--Wind
River Basin--Waltman Field".
During the year ended August 31, 1994, the Company completed a private
placement offering of 300,000 shares of its previously unissued common stock at
$.70 per share to provide funding for the Company. The stock was offered in
10,000 share blocks to holders-of-record owning 10,000 shares or more. Of the
300,000 shares sold, 255,715 shares were purchased by Dr. Richard Laudon, the
Chairman Of The Board Of Directors of the Company.
-25-
<PAGE>
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1) and (a)(2) Financial Statements And Financial Statement Schedules
See "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- Index" on
page 18.
(a)(3) Exhibits.
Exhibit Index
Exhibit No. Description
- ----------- -----------
3.1(a) Articles Of Incorporation filed with the Wyoming Secretary Of State on
January 13, 1972 (incorporated by reference from Exhibit 3.1(a) of the
Registrant's Registration Statement on Form SB-2 filed on October 11,
1996, SEC Registration No. 333-14011).
3.1(b) Articles of Amendment of Registrant filed with the Wyoming Secretary
Of State on February 27, 1984 (incorporated by reference from Exhibit
3.1(b) of the Registrant's Registration Statement on Form SB-2 filed
on October 11, 1996, SEC Registration No. 333-14011).
3.1(c) Articles Of Amendment of Registrant filed with the Wyoming Secretary
Of State on July 9, 1996 (incorporated by reference from Exhibit
3.1(c) of the Registrant's Registration Statement on Form SB-2 filed
on October 11, 1996, SEC Registration No. 333-14011).
3.2 Bylaws (incorporated by reference from Exhibit 3.2 of the Registrant's
Registration Statement on Form SB-2 filed on October 11, 1996, SEC
Registration No. 333-14011).
4.1 Form of Warrant Agreement concerning Common Stock Purchase Warrants
(incorporated by reference from Exhibit 4.3 of the Amendment No. 1 to
the Registrant's Registration Statement on Form SB-2 filed on November
27, 1996, SEC Registration No. 333-14011).
10.1 Agreement dated May 26, 1995 between the Registrant and Hollis Oil &
Gas Co. (incorporated by reference from Exhibit 10.1 of the
Registrant's Registration Statement on Form SB-2 filed on October 11,
1996, SEC Registration No. 333-14011).
23.1 Consent of Hocker, Lovelett, Hargens & Yennie, P.C.
27 Financial Data Schedule
(b) Reports On Form 8-K. During the last quarter of the fiscal year ended
August 31, 1996, the Company filed no reports on Form 8-K.
-26-
<PAGE>
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.
DOUBLE EAGLE PETROLEUM AND MINING CO.
Date: December 12, 1996 /s/ Richard B. Laudon
----------------------
Richard B. Laudon, Chief Executive,
Operational, and Financial Officer
Pursuant to the requirements of the Securities Exchange Act Of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: December 12, 1996 /s/ Stephen H. Hollis
-----------------------
Stephen H. Hollis, Director
Date: December 12, 1996 /s/ Richard B. Laudon
-----------------------
Richard B. Laudon, Director
Date: December 12, 1996 /s/ Tom R. Creager
--------------------
Tom R. Creager, Director
Date: December 12, 1996 /s/ John R. Kerns
-------------------
John R. Kerns, Director
Date: December 12, 1996 /s/ William N. Heiss
----------------------
William N. Heiss, Director
-27-
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Annual Report on Form 10-K of Double Eagle
Petroleum And Mining Co. of our report dated October 18, 1996 relating to the
financial statements of Double Eagle Petroleum And Mining Co. appearing in the
Annual Report on Form 10-K.
/s/ Hocker, Lovelett, Hargens & Yennie, P.C.
Casper, Wyoming
December 16, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 41,232
<SECURITIES> 0
<RECEIVABLES> 119,465
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202,428
<PP&E> 3,742,138
<DEPRECIATION> 1,505,966
<TOTAL-ASSETS> 2,540,918
<CURRENT-LIABILITIES> 466,107
<BONDS> 0
0
0
<COMMON> 271,237
<OTHER-SE> 1,650,775
<TOTAL-LIABILITY-AND-EQUITY> 2,540,918
<SALES> 645,177
<TOTAL-REVENUES> 649,651
<CGS> 0
<TOTAL-COSTS> 663,134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,594
<INCOME-PRETAX> (24,077)
<INCOME-TAX> (2,934)
<INCOME-CONTINUING> (21,143)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,143)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
