U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly period ended Commission File
May 31, 1997 Number 0-6529
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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DOUBLE EAGLE PETROLEUM AND MINING CO.
(Exact name of small business issuer as specified
in its charter)
WYOMING 83-0214692
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Overland Trail, P.O. Box 766
Casper, Wyoming 82602
(Address of principal executive offices)
307-237-9330
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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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Common stock, 3,880,621 shares having a par value of $.10 per share were
outstanding as of July 1, 1997.
Transitional Small Business Disclosure format (check one);
Yes No X
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DOUBLE EAGLE PETROLEUM AND MINING COMPANY
INDEX
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PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Balance Sheets May 31, 1997 (Unaudited)
and August 31, 1996 I.
Statements of Operations for the three and nine months
ended May 31, 1997 and 1996 (Unaudited) II.
Condensed Statements of Cash Flows for the nine months
ended May 31, 1997 and 1996 (Unaudited) III.
Notes to Condensed Financial Statements (Unaudited) IV.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations V. - VI.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K VII.
Signatures VIII.
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PART I
FINANCIAL INFORMATION
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I.
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DOUBLE EAGLE PETROLEUM AND MINING COMPANY
CONDENSED BALANCE SHEETS
MAY 31, 1997 AND AUGUST 31, 1996
<CAPTION>
May 31, August
31,
1997 1996
(Unaudite (See Note
d) Below)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 171,848 $ 41,232
U.S. Treasury Bills 691,686 -
Accounts receivable 148,945 119,465
Prepaid expense - 41,731
Total 1,012,479 202,428
OTHER ASSETS
Accounts receivable 82,277 82,277
Investment, at cost 125 8,541
Other 11,500 11,500
Total 93,902 102,318
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation and depletion and impairment allowance
(Successful efforts method used for oil and gas properties) 2,460,494 2,236,172
Total $3,566,875 $2,540,918
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 63,434 $ 185,474
Accrued production taxes 39,600 30,633
Note payable - 250,000
Total 103,034 466,107
DEFERRED TAX LIABILITY, net 158,566 152,799
Total 261,600 618,906
STOCKHOLDERS' EQUITY
Common stock, $.10 par value; authorized - 10,000,000 shares,
issued and outstanding - 3,880,621 and 2,712,371 shares in
1997 and 1996, respectively 388,062 271,237
Capital in excess of par value 2,122,449 886,254
Retained earnings 794,764 764,521
Total 3,305,275 1,922,012
Total $3,566,875 $2,540,918
<FN>
Note: The balance sheet at August 31, 1996 has been taken from the audited
financial statements at that date and condensed.
See accompanying notes to condensed financial statements.
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II.
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DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the Three Months For the Nine Months Ended
Ended
May 31, May 31, May 31, May 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES
Sales of oil and gas $ 131,684 $ 128,607 $ 493,844 $ 270,332
Sales of nonproducing leases 7,800 - 7,800 130,000
Other - primarily zeolites 91 13,957 15,448 28,957
Total 139,575 142,564 517,092 429,289
COSTS AND EXPENSES
Production 29,169 17,659 63,361 52,040
Production taxes 10,763 6,238 47,259 23,981
Cost of nonproducing leases sold 5,111 - 5,111 14,439
Exploration 33,183 25,032 65,439 51,664
Write offs and abandonments 4,899 17,115 6,649 41,463
General and administrative 60,567 58,887 199,740 191,248
Depreciation and depletion 33,999 18,222 100,620 74,513
Interest - 1,397 10,502 6,864
Total 177,691 144,550 498,681 456,212
INCOME (LOSS) FROM OPERATIONS (38,116) (1,986) 18,411 (26,923)
OTHER INCOME (LOSS)
Loss on partnership interest - - (2,983) -
Interest income 11,345 350 20,582 3,976
11,345 350 17,599 3,976
INCOME (LOSS) BEFORE INCOME TAXES (26,771) (1,636) 36,010 (22,947)
INCOME TAX EXPENSE (BENEFIT)
Current - - - -
Deferred (3,812) (238) 5,767 (3,434)
Total (3,812) (238) 5,767 (3,434)
NET INCOME (LOSS) $ (22,959) $ (1,398) $ 30,243 $ (19,513)
INCOME (LOSS) PER COMMON STOCK AND
COMMON STOCK EQUIVALENT SHARE $ (.01) $ (.00) $ .01 $ (.01)
COMMON STOCK AND COMMON STOCK
EQUIVALENT SHARES OUTSTANDING 3,880,621 2,712,371 3,371,126 2,712,371
DIVIDENDS PER SHARE OF COMMON STOCK $ .00 $ .00 $ .00 $ .00
<FN>
See accompanying notes to condensed financial statements.
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III.
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DOUBLE EAGLE PETROLEUM AND MINING COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 30,243 $ (19,513)
Charges to income not requiring cash:
Depreciation and depletion 100,620 74,513
Abandoned properties 5,730 37,720
Gain on sale of assets (2,688) (115,561)
Deferred tax allowance 5,767 (3,434)
Loss on partnership interests 2,983 -
Decrease (increase) in operating assets:
Accounts receivable (29,481) (84,791)
Prepaid expenses - (25,000)
Other - (100)
Increase (decrease) in operating liabilities:
Accounts payable (33,909) (36,897)
Accrued production taxes 8,967 (10,600)
Net cash provided by (used in) operating activities 88,232 (183,663)
INVESTING ACTIVITIES:
Acquisitions of property and equipment (384,372) (365,115)
Purchase U.S. Treasury bills (691,686) -
Addition to partnership interests (34,110) -
Proceeds from sale of property and equipment 7,800 130,000
Net cash (used in) investing activities (1,102,368) (235,115)
FINANCING ACTIVITIES:
Proceeds from borrowings 98,981 297,500
Repayment of debt (348,981) (142,500)
Issuance of common stock, net 1,524,571 -
Stock offering costs paid (116,320) -
Purchase stock options (13,499) -
Net cash provided by financing activities 1,144,752 155,000
INCREASE (DECREASE) IN CASH 130,616 (263,778)
CASH AND CASH EQUIVALENTS
Beginning of period 41,232 268,385
End of period $ 171,848 $ 4,607
<FN>
See accompanying notes to condensed financial statements.
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IV.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Summary of Significant Accounting Policies
Refer to the Company's annual financial statements for the year ended August
31, 1996, for a description of the accounting policies which have been
continued without change. Also, refer to the footnotes with those annual
statements for additional details of the Company's financial condition,
results of operations, and cash flows. The details in those notes have not
changed except as a result of normal transactions in the interim.
2. Management Representation
In management's opinion, all adjustments necessary for a fair presentation
are reflected in the interim financial statements. Such adjustments are of a
normal recurring nature.
3. Interim Results of Operations
The results of operations for the period ended May 31, 1997, are not
necessarily indicative of the operating results for the full year.
4. Statement of Cash Flows Supplemental Information
Interest and income taxes paid:
During the nine months ended May 31, 1997 and 1996, the Company paid $10,502
and $6,864, respectfully, in interest expense and no income taxes.
Noncash investing activities:
During the nine months ended May 31, 1997, a partnership in which the Company
acquired a significant interest was liquidated. The Company received $39,543
in Partnership assets in exchange for the Partnership interest.
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V.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the nine months ended May 31, 1997, the Company's working capital
increased by $1,173,124. As discussed in the previous quarter, the increase was
due primarily to the completion of the public offering of units. After all costs
of the stock offering were paid, the Company had net proceeds of $1,409,000.
The company then paid off all notes payable in the amount of $348,900 and has
also paid $384,000 in capital expenditures for leases, equipment and intangible
drilling costs.
Management believes that the Company's liquidity is sufficient to meet future
cash needs for operations. Management does not anticipate any future material
sales of oil and gas properties solely to raise working capital, but rather will
expend resources on existing oil and gas properties to increase production.
RESULTS OF OPERATIONS
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Current Year-To-Date Compared to Corresponding Year-To-Date
- -----------------------------------------------------------
Revenues from oil and gas sales increased from $270,332 to $493,844, an increase
of 83% when compared to the same period one year ago. This increase was due to
the increase in the sale of gas from the acquisition of producing properties;
the successful workover of the Company's Rabourn well and the successful
drilling of several development wells. The increase can also be attributed to
higher prices for oil and gas.
Production costs increased by 22%, also as a result of increased production
activities. Production taxes have increased by approximately 100% to coincide
with the increase in oil and gas revenue. Depreciation and depletion expense
increased by approximately $26,100, or 35%, also as a result of increased
production. Depreciation and depletion expenses did not increase at the same
rate as production due to a revision in the reserve estimates by the Company at
fiscal year end.
During the prior year, the Company had sales of nonproducing leases of $130,000
compared to $7,800 during the current year.
Exploration costs during the current year-to-date have increased $13,700 (27%)
primarily due to increased geological activity. Also, write-offs and
abandonments were approximately $34,800 lower as fewer nonproducing leases were
expiring and the Company did not incur any significant dry hole expenses.
General and administrative expenses increased by $8,500 as the Company has added
additional employees as a result of the increased activities to be done
subsequent to the successful public stock offering. Interest expense was higher
during the period as the Company incurred debt to cover the required prepaid
offering costs incurred prior to receipt of the offering proceeds.
Interest income increased during the current year as a result of the investment
of a portion of the offering proceeds in U.S. Treasury Bills.
<PAGE>
VI.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Current Quarter Compared to Previous Quarter
- --------------------------------------------
Revenues from oil and gas sales decreased by approximately $63,000 or 32%
compared to the previous quarter. In addition to a lower price being received
for much of the Company's gas production, the decrease can also be attributed to
lower production on a couple significant wells. The Company received increased
production from the Waltman development well drilled in the previous quarter.
Production costs increased by $10,000 during the current quarter as the Company
continues to work on increasing production and has increased the number of
producing properties. Production taxes decreased by $13,600 to coincide with
the decrease in oil and gas revenue. Depreciation and depletion increased by
$7,900 during the current quarter due to the depletion expense resulting from
the increased production on the Waltman well, noted in the previous paragraph,
exceeding the depletion savings resulting from the lower production of other
properties.
Exploration costs during the current quarter again increased by $11,900 as the
Company continues to increase efforts in the areas of geological expense while
they investigate ways to increase production.
General and administrative expenses decreased by 5% as operations have settled
down after the public stock offering.
Interest income increased by $2,500 as the Company continues to invest a
significant portion of the proceeds from the stock offering in U.S. Treasury
bills.
Current Quarter Compared to Corresponding Quarter of Prior Year
- ---------------------------------------------------------------
Oil and gas revenues increased from $128,607 to $131,684 when compared to the
same quarter in 1996. The increase in production from the acquisition of
additional producing properties; successful workovers of existing properties and
drilling of development wells was offset by a significant decline in production
during the current quarter on the Rabourn and Whiskey Butte wells.
Production costs increased by $11,500 due to increased activity on more
properties and production taxes increased by $4,500 due to higher rates on
certain working interest properties. Depreciation and depletion expense
increased by 87% as a result of production on new wells with higher depletion
factors.
Exploration costs decreased by $4,000 when compared to the same period one year
ago. The 1997 increase in exploration and geological activity was offset by a
decline in the expense incurred from expiring and surrendered nonproducing
leases.
General and administrative expenses were up slightly as a result of the increase
in the number of employees as the Company increases its current exploration
activities. Lastly, interest income increased by $11,000 due to the investment
of the stock offering proceeds discussed earlier.
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VII.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
No Forms 8-K were filed during the period covered by this report.
<PAGE>
VIII.
SIGNATURES
Pursuant to the requirements 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 COMPANY
(Registrant)
/s/ Richard B. Laudon
---------------------
Richard B. Laudon
Treasurer and Principal Financial Officer
Date: July 14, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> MAY-31-1997
<CASH> 171,848
<SECURITIES> 691,686
<RECEIVABLES> 148,945
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,012,479
<PP&E> 3,953,972
<DEPRECIATION> 1,493,478
<TOTAL-ASSETS> 3,566,875
<CURRENT-LIABILITIES> 103,034
<BONDS> 0
0
0
<COMMON> 388,062
<OTHER-SE> 2,917,213
<TOTAL-LIABILITY-AND-EQUITY> 3,566,875
<SALES> 517,092
<TOTAL-REVENUES> 537,674
<CGS> 0
<TOTAL-COSTS> 488,179
<OTHER-EXPENSES> 2,983
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,502
<INCOME-PRETAX> 36,010
<INCOME-TAX> 36,010
<INCOME-CONTINUING> 30,243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,243
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
