U.S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended August 31, 1997
[ ] 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.
------------------------------------
(Name of small business issuer in its charter)
Wyoming 83-0214692
- ---------------------------------------- -------------------------
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
777 Overland Trail (P.O. Box 766) Casper, Wyoming 82602
- ------------------------------------------------- --------------------
(Address of principal executive offices)
(Zip Code)
Issuer'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
----- -----
Securities registered pursuant to Section 12(g) of the Act:
$.10 Par Value Common Stock
--------------------------
(Title of Class)
Check whether the issuer (1) 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
-
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B 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-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for the fiscal year ended August 31, 1997 were $893,185
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, 1997, was $7,195,189.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of each of the issuer's classes of common
equity as of November 20, 1997 is as follows:
$.10 Par Value Common Stock 3,880,651
<PAGE>
PART I
ITEMS 1 and 2. DESCRIPTION OF BUSINESS AND PROPERTIES
Overview
Double Eagle Petroleum and Mining Co. ( the "Company" or "Double Eagle"),
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 believes 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 199 producing
wells, with oil constituting approximately 30 percent and natural gas
constituting approximately 70 percent of its current production (assuming six
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".
In December 1996, the Company completed a public offering of Units, each
consisting of one share of Common Stock and one Common Stock Purchase Warrant,
for $1.50 per Unit. Each Warrant allows its holder to purchase one share of
Common Stock for $3.00 until December 17, 2001. The Company received net
proceeds of approximately $1,524,571 from this offering.
Forward-Looking Statements
This Form 10-KSB 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-KSB, 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 3 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-KSB
including without limitation in conjunction with the forward-looking statements
included in this Form 10-KSB.
The Company's intentions and expectations described in this Form 10-KSB
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.
2
<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 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.
During fiscal 1998, the Company intends to develop its prospects utilizing its
cash balances together with cash flow from operations and sales of a portion of
the Company's interests to industry partners. 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
that 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 were not required to sell additional interests.
Principal Areas Of Oil And Gas Activity
JAMES CREEK is a producing gas field in south central Wyoming approximately 30
- ------------
miles south of Rock Springs in Sweetwater County. Double Eagle, Credo Petroleum
Corporation, Farleigh Oil Properties and R. K. O'Connell each owns a 25 percent
working interest in one producing gas well, a gathering pipeline, a compressor,
over 20,000 acres of leases and a recently completed well, the Federal 1-6, that
appears to be a commercially productive gas well.
The Federal 1-6 was drilled in the Northeast quarter of Section 6, Township
14 North, Range 103 West in September 1997. The well is a 160 acre offset to
the producing gas well, the Britz Federal 1-31. The Federal 1-6 discovered
three channel sandstones in the Dakota and Lakota Formations that appear capable
of commercial quantities of natural gas. Production casing was run and the
deepest zone, at 5,438' to 5,446', was perforated and tested at a sustained rate
of 1.6 million cubic feet of gas per day with 1550 psi flowing tubing pressure.
The test data indicates this zone has a capable open flow rate of 5 million
cubic feet of gas per day. The well will begin selling gas by December 1, 1997.
All the test data is very positive, but we will have to see what kind of
sustained production the well will do. Tentatively, we are planning several
development wells to be drilled in the spring of 1998. The net cost to the
Company for the Federal 1-6 well was approximately $130,000.
WALTMAN FIELD is a producing gas field in central Wyoming, approximately 45
- -------------
miles west of Casper in Natrona County. Double Eagle owns a 40 percent working
interest in 1,120 gross acres, a 20 percent
3
<PAGE>
working interest in one producing well, the Waltman 21-19, and a 40 percent
working interest in the Horstman 14-24 which will be drilled in January, 1998.
The Waltman 21-19 was drilled and completed in January, 1997. Initial
production was 1.5 million cubic feet of gas per day. Double Eagle acquired an
additional interest in the well and acreage in May, 1997. In August, 1997 the
well was still producing at a rate of 1.4 million cubic feet of gas per day. In
January, 1998 Double Eagle will begin drilling the Horstman 14-24 well to a
depth of 4,500 feet. The net cost to the Company for this well is estimated to
be $160,000.
JEPSON HOLLER DRAW UNIT is a producing oilfield approximately sixty miles north
- -----------------------
of Casper, Wyoming. Double Eagle owns a .058 percent working interest in the
Jepson Holler Draw Waterflood Unit and a 100% working interest in 800 acres
adjacent to the Unit. Ensign Oil & Gas Company, as operator of the Waterflood
Unit, is injecting water into the Cretaceous Shannon Sandstone to enhance the
recovery of oil from this formation. Water injection to pressure up the field
will continue for at least another year before the field goes back into a
producing stage. Double Eagle owns acreage updip from the production and plans
to drill a well in the spring of 1998 to establish outside production.
Currently, Double Eagle owns a 100% working interest in the lease, but has
promoted a partner to take 50% of the deal. Net costs to Double Eagle on this
well are estimated to be $200,000.
COOPER RESERVOIR is a producing gas field two miles south of the Waltman Field
- ----------------
in Natrona County, Wyoming. Double Eagle owns a 20 percent working interest in
840 acres surrounding the field. Intoil, Inc., the operator of the producing
wells in Cooper Reservoir, completed a well adjacent to our acreage in the
summer of 1997. Double Eagle has staked an offset well and is awaiting
information on the Intoil well and the completion of an Environmental Assessment
of the area. If our location appears productive, Double Eagle will begin
drilling in the spring of 1998. The net cost to the Company for this well is
estimated to be $80,000.
MARIANNE FIELD is a producing gas field in south central Wyoming, fifteen miles
- --------------
east of Rock Springs. Double Eagle owns 2.9 percent to 15.8 percent in five
producing wells and the associated acreage. In June, 1997 Double Eagle
participated in the installation of a compressor that has increased our net
production from this field 150 percent. In 1998 we will be evaluating the
drilling of additional wells in this field.
GRAHAM UNIT NO. 2 WELL is currently a shut-in gas well ninety miles west of
- ----------------------
Casper, Wyoming. Double Eagle purchased an additional interest in this well and
now owns a 100% working interest in the well and the associated 363 acres. The
Company is in the process of re-completing the well. The old perforations have
been cemented off and three new zones have been perforated and fracture
stimulated. Tests indicate the well is capable of 200,000 cubic feet of natural
gas per day. Additional work is currently being done to get this well back on
production as soon as possible.
MADDEN ANTICLINE encompasses two producing oil and gas fields, Madden and Long
- ----------------
Butte Fields, 100 miles west of Casper in Central Wyoming. Double Eagle owns a
net 448 acres in 2,329 gross acres of leases within the fields and .1 to 7
percent in 17 gas wells that produce from zones at depths from 16,000 to 18,000
feet. As of August 31, 1997, the Company's aggregate daily production from
these wells was 300,000 cubic feet of gas. In general, the Madden Anticline
produces over 100 million cubic feet of gas per day from seven different
formations at depths of 3,000 to 25,000 feet. In 1997, Louisiana Land and
Exploration Company ("LL&E") completed the Big Horn 4-36 well with a capable
open flow of over 200
4
<PAGE>
million cubic feet of gas per day from the Madison Formation at a depth of over
24,000 feet. As a result, LL&E has increased its estimate of gross proved and
probable, recoverable natural gas reserves in the Madison reservoir to in excess
of one trillion cubic feet. Double Eagle has negotiated a deal involving Prima
Oil & Gas Company and John Lockridge to drill a 15,000 foot Lance test on our
acreage in 1998. Double Eagle et al drilled an unsuccessful 2,000' test in 1997
for a net cost of $25,573 to the Company.
MOXA ARCH is in southwestern Wyoming. Double Eagle owns a .3 percent to 3.5
- ----------
percent working interest in 105 gas wells on the Moxa Arch. The Company
anticipates participating in 3 development wells in 1998. The average net cost
to the Company per well is estimated to be $7,500.
EXPLORATION
BUFFALO ROBE PROSPECT is located in central Wyoming, two miles southwest of the
- ---------------------
Bison Basin Oil Field. Double Eagle participated with 23.44% working interest
in the drilling of an 3,051 foot exploratory well with Texaco Exploration &
Production Company as the operator. The well was unsuccessful in finding
commercial hydrocarbons at a net cost to Double Eagle of approximately $38,000.
SEISMOSAUR PROSPECT is a huge seismic anomaly believed to be a reef complex in
- -------------------
Grand County, Utah. Double Eagle purchased .1 percent overriding royalty in
approximately 47,000 acres on this prospect. Gulf Canada Resources drilled an
16,000 foot initial test during 1997 and encountered shows of oil and gas, but
was unable to adequately test the zones of interest. Hopefully, another test
well will be drilled on this prospect in 1998.
CHRISTMAS MEADOWS PROSPECT is on the north slope of the Uinta Mountains in
- ---------------------------
northeastern Utah, 30 miles south of Evanston, Wyoming. While shooting a
regional seismic grid in the 1970's, Gulf noted a large dome on one of the
seismic lines. Subsequent seismic by Gulf, American Quasar, Amoco, Chevron and
others has defined the dome. Amoco staked a well location to test the structure
in 1982, but finally in 1986 they gave up trying to get a drilling permit in
this part of the National Forest. Chevron then staked a well and fought to get
the necessary permits in this popular recreation area until 1994 when Chevron
gave up and turned the project over to Amerac who designated Double Eagle as
their agent. We received a drilling permit in the summer of 1995 and began
building the road to the location with help from Prima Oil & Gas and John
Lockridge. Amerac, Chevron and Judy Yates farmed out their interests to Double
Eagle, Prima and Lockridge. One key to getting the well drilled was to have one
more lease made available to fill in the block surrounding the well. This lease
consists of 400 acres in Section 21 to the south that are considered critical.
These lands were to be available several years ago. We have applied for a
suspension on the time running off our leases while we wait for these lands. We
still have not received approval for that suspension and are patiently waiting
for the Section 21 lands to be made available for lease. The Forest Service is
finishing the necessary Environmental Impact Statement and the lands should be
available "soon". Double Eagle has a 3.82 percent working interest as well as a
25% interest in the farmouts from Chevron, Amerac and Yates on the lands in this
20,880 acres of the Table Top Unit.
RED CREEK is a prospect in south central Wyoming near Baggs. Double Eagle owns
- ---------
a 5% overriding royalty interest in most of the 10,650 acre Red Creek Unit. No
additional drilling was done in the unit in 1997. We hope to see a well drilled
in 1998.
5
<PAGE>
ROCK ISLAND UNIT is located thirty miles east of Rock Springs in south central
- ----------------
Wyoming. Double Eagle owns a 5% overriding royalty interest under 688 acres in
this unit. No drilling on our lands occurred in 1997. Yates Petroleum has a
wellsite staked, but has not commenced drilling.
SOUTH SAND DRAW is a prospect and producing oil field located in central
- ----------------
Wyoming, 120 miles west of Casper. Double Eagle is currently negotiating for
the purchase of the oil field before drilling in the area. The Company has a
100 percent working interest in 735 acres in the South Sand Draw Area.
ZEOLITE MINING CLAIMS The Company has owned since 1972 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 been 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. 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, agricultural deodorant and pesticide carriers.
For accounting purposes, these prospects are carried at a total of $385 on the
Company's financial statements.
In September 1996, the Company entered into a mining lease pursuant to
which Mr. Hayden Rader leased the Company's zeolite placer mining claims. In
September 1997, Mr Rader relinquished his lease and the Company once again owns
100% of these mining claims.
Production
The table below sets forth oil and gas production from the Company's net
interests in producing properties for each of its last three fiscal years.
<TABLE>
<CAPTION>
Oil and Gas Production
Year ended, August 31,
1995 1996 1997
<S> <C> <C> <C>
Quantities
Oil (Bbls) 9,528 17,352 17,331
Gas (Mcf) 68,862 140,179 222,628
Average Sales Price
Oil ($/Bbl) $16.52 $21.42 $21.23
Gas ($/Mcf) $1.40 $1.16 $1.19
Average Production Cost ($/BOE) $2.74 $2.98 $2.47
</TABLE>
6
<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, 1997, 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 the Company owned an interest as of August 31, 1997.
<TABLE>
<CAPTION>
PRODUCTIVE WELLS
OIL GAS
PRODUCTIVE WELLS
OIL GAS
Gross Net Gross Net
<S> <C> <C> <C> <C>
COLORADO ----- ----- 2 .059
MISSISSIPPI 2 .0009 ----- -----
MONTANA 2 .096 ----- -----
NORTH DAKOTA 12 .554 ----- -----
OKLAHOMA ----- ----- 1
UTAH ----- ----- 1 .02
WYOMING 34 1.03 145 3.05
TOTAL 50 1.68 149 3.13
</TABLE>
Drilling, Acquisitions And Reserve Replacement Costs
During the three years ended August 31, 1997, the Company added proved
reserves from acquisitions, extensions, discoveries and reserve revisions of
approximately 158,815 BOE. Capital expenditures during this period were
approximately $696,486, resulting in an average annual reserve replacement cost
of approximately $4.39 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.
7
<PAGE>
<TABLE>
<CAPTION>
WELLS DRILLED
Year Ended August 31,
1997 1996 1995
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 3 .4725 1 .125 3 .3
Subtotal 3 .4725 1 .125 3 .3
Development
Oil 8 .005 0 0 0 0
Gas 4 .21 7 .029 12 .3
Dry Holes 0 0 0 0 2 .2
Subtotal 12 .215 7 .029 14 .5
TOTALS 15 .6875 8 .154 17 .8
</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,
1995, 1996, and 1997 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.
8
<PAGE>
<TABLE>
<CAPTION>
Estimated Proved Reserves
(1)(2)
At August 31,
1995 1996 1997
<S> <C> <C> <C>
Proved Developed Reserves (Bbls) 95,383 188,580 180,526
Proved Undeveloped Oil Reserves (Bbls) --------- --------- ---------
Total Proved Oil Reserves (Bbls) 95,383 188,580 180,526
Proved Developed Gas Reserves (Mcf) 1,935,164 2,082,591 2,757,188
Proved Undeveloped Gas Reserves (Mcf) --------- --------- ---------
Total Proved Gas Reserves (Mcf) 1,935,164 2,082,591 2,757,188
Total Proved Crude Oil Equivalents (BOE) (3) 417,910 535,679 640,057
Present Value Of Estimated Future Net Revenues
before income taxes (in thousands), discounted at 10% $863,312$2,449,299 $2,695,755
<FN>
(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.
(3) Gas is converted to barrel of oil equivalent at 6,000 cubic feet equals one
barrel.
</TABLE>
Reference should be made to the supplemental oil and gas information
included in this form 10KSB 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, 1997. The category of "Undeveloped Acreage"
in the tables includes leasehold interests that already may have been classified
as containing proved undeveloped reserves.
9
<PAGE>
<TABLE>
<CAPTION>
WORKING INTERESTS
Developed Undeveloped
Acreage (1) Acreage (2) Total
STATE GROSS NET GROSS NET GROSS NET
<S> <C> <C> <C> <C> <C> <C>
MONTANA 29 1 54,600 31,534 54,629 31,535
NORTH DAKOTA 40 16 40 16
UTAH 637 16 50,459 2,067 51,096 2,083
WYOMING 48,222 2,259 69,112 42,523 117,334 44,782
TOTAL 48,888 2,276 174,211 76,140 223,099 78,416
</TABLE>
<TABLE>
<CAPTION>
ROYALTY INTERESTS
Developed Undeveloped
Acreage (1) Acreage (2) Total
STATE GROSS NET GROSS NET GROSS NET
<S> <C> <C> <C> <C> <C> <C>
COLORADO 155 5 6,448 177 6,603 182
MISSISSIPPI 2 0 2 0
MONTANA 291 15 291 15
NORTH DAKOTA 1,380 67 0 0 1,380 67
OKLAHOMA 0 11 0
UTAH 0 0 2,240 90 2,240 90
WYOMING 13,733 308 25,540 979 39,273 1,287
TOTAL 15,572 395 34,228 1,246 49,800 1,641
<FN>
(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.
</TABLE>
10
<PAGE>
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:
<TABLE>
<CAPTION>
Acres Expiring
Gross Net
<S> <C> <C>
Twelve Months Ending:
December 31, 1997 978 498
December 31, 1998 4,115 2,207
December 31, 1999 21,662 10,813
December 31, 2000 and later 146,083 61,579
</TABLE>
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
Not applicable.
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 the Nasdaq SmallCap Stock Market under the symbol
"DBLE". The Company's Units, each consisting of one share of Common Stock and
one Warrant, traded from December 1996 until October 1997, when the Units were
separated and the Warrant commenced trading. The range of high and low bid
prices for each quarterly period during the two most recent fiscal years ended
August 31, 1996 and 1997, as reported by Nasdaq is as follows:
11
<PAGE>
<TABLE>
<CAPTION>
Units ("DBLEU") Common Stock ("DBLE")
High Low High Low
<S> <C> <C> <C> <C>
Fiscal 1996
First Quarter --- --- 1.62 .87
Second Quarter --- --- 1.50 .87
Third Quarter --- --- 1.75 1.00
Fourth Quarter --- --- 1.62 1.12
Fiscal 1997
First Quarter --- --- 1.50 1.00
Second Quarter 1.62 1.31 1.87 1.25
Third Quarter 1.56 1.00 1.50 .87
Fourth Quarter 1.50 1.00 1.37 1.00
</TABLE>
The quotations set forth above reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not reflect actual transactions. On
November 20, 1997 the closing high bid price for the Common Stock as reported by
NASDAQ was $2.3125 per share and the closing low asked price was $2.50.
Holders On November 18, 1997, the number of shareholders of record was
2001.
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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. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Introduction
This discussion summarizes the significant factors affecting the operating
results, financial condition, and cash flows of Double Eagle Petroleum and
Mining Company, for the three-year period ended August 31, 1997. This
discussion should be read in conjunction with the Letter to Stockholders,
Financial Statements and Notes to the Financial Statements included in this
annual report. All references to a specific year refer to the fiscal year ended
during that calendar year.
Overview
Fiscal 1997 was a very successful year for Double Eagle, with oil and gas
sales up significantly, contributing to strong growth in total revenues, and a
significant advancement in net earnings.
The Company is well on its way towards its growth strategy, to consistently
grow reserves, production and revenues with low risk developmental drilling,
workovers, and acquisitions. As we implement these growth strategies, we will
continue to look carefully for ways to improve efficiencies and reduce costs.
We intend to aggressively pursue these growth strategies, while maintaining
the Company's strong financial health. We can continue to evaluate
opportunities to make prudent use of the Company's financial resources.
12
<PAGE>
Operating Results
In 1997, total revenues increased 38% from the prior year to $893,185, and
in 1996 total revenues decreased 30% from the prior year to $645,177. Oil and
gas sales showed improvement in both periods, while sales of nonproducing
leases increased in 1997 from 1996 and decreased in 1996 from 1995.
Oil and gas sales increased 52% in 1997 to $633,797, and 69% in 1996 to
$417,114. The improvement in oil and gas sales in 1997 was primarily the result
of increased production volume as well as higher crude oil and natural gas
pricing. Contributing to the growth in production was the successful drilling
of the Waltman 21-19 well, putting a compressor on at the Marianne Field, and
the acquisition of an additional interest in the Long Butte Field. Increased
production volume was the primary contributor to the increase in oil and gas
sales in 1996. The increase in volume in 1996 was due primarily to the workover
of the Rabourn 11-5 well. Also, acquisitions of producing properties and the
recompletion of the Britz Federal 1-31 well contributed to the improvement in
production volume for 1996.
Sales of nonproducing leases, undertaken in the normal course of business
increased 71% in 1997 to $242,744, and declined 79% from $634,979 in 1995 to
$130,000 in 1996. The Company anticipates it will continue with sales of
selected nonproducing leases, retaining a royalty interest or a smaller working
interest where feasible. This will allow the Company to further reduce its
lease inventory, with the intention of increasing the return on those assets, in
order to focus attention and resources on those prospects management considers
to be the most promising.
Costs and expenses increased 8% in 1997 to $717,410, and decreased 28% in
1996 to $663,134. If costs of properties sold were excluded, expenses increased
6% in 1997 to $685,468, and decreased 5% in 1996 to $648,695.
Costs and expenses increased in 1997 primarily as a result of increased
exploration and production activity offset by lower write offs and abandonments.
A significant drop in write offs and abandonments, more than offset increased
exploration and production costs in 1996. General and administrative expenses
continued to decline as a percentage of oil and gas sales. Those expenses were
42% in 1997, 58% in 1996, and 92% in 1995.
Other income and expenses showed improvement in 1997 to net income of
$15,207, and declined in 1996 to net expense of $6,120. The improvement in 1997
can be attributed to increased interest income on higher average balances of
cash and cash equivalents. This was affected by the cash proceeds received from
the Company's issuance of common stock and warrants in December 1996. The
decline in 1996 was the result of lower average cash balances earning interest
and increased interest expense on short-term borrowings.
Pretax earnings increased in 1997 to $190,982, and declined in 1996 to a
loss of $24,077. Net income increased in 1997 to $162,827, and declined in 1996
to a loss of $21,143. The Company was able to utilize a portion of its net
operating loss carryforwards to offset the 1997 tax liability.
Financial Condition and Liquidity
Double Eagle's financial position improved in 1997, with current assets
totaling $1,045,744 at August 31, 1997, from $202,428 at August 31, 1996. The
improvement was primarily the result of cash proceeds from the issuance of
common stock, in addition to the cash provided from operating activities.
Double Eagle's earnings are generated principally from its capital investment,
which consists of working capital (current assets less current liabilities) plus
all noncurrent assets. Capital investment is currently financed with
stockholders' equity and current liabilities. The Company has no long-term
debt, which is anticipated to provide the Company with a great deal of financial
flexibility in the future.
13
<PAGE>
Operating activities generated $37,404 in cash in 1997, compared with
generating cash of $38,286 in 1996, and consuming cash of $143,344 in 1995.
Receivables continued to grow, due to the increase in oil and gas sales.
Accounts receivable as a percentage of oil and gas sales remained consistent at
28% in 1997, and 29% in 1996.
Double Eagle invested $563,709 in oil and gas properties in 1997, compared
with $603,708 in 1996, and $322,710 in 1995. The increases in capital
expenditures were primarily in support of the Company's goal to grow reserves,
production and revenues, through low risk developmental drilling, workovers, and
acquisitions.
The Company repaid $250,000 in financing under its line of credit
arrangement in 1997, compared with borrowing $250,000 in 1996 to provide funds
for recompletions, principally the Rabourn Well. The Company has not paid any
cash dividends on its common stock since inception. The Company anticipates it
will continue to retain earnings for the development of its business for the
foreseeable future.
Management believes that the Company's liquidity is sufficient to meet
projected cash needs for operations, ordinary capital expenditures, and other
business purposes. Double Eagle's primary financing objective is to maintain a
conservative balance sheet, defined as using appropriate levels of equity and
long-term debt to finance noncurrent assets and permanent working capital needs.
14
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 7. FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
Index
Page
Numbers
--------
(1) Report of Independent Certified Public Accountants F-1
Financial Statements:
Balance Sheets as of August 31, 1997 and 1996 F-2
Statements of Income for the years ended
August 31, 1997, 1996, and 1995 F-3
Statements of Stockholders' Equity for the years
ended August 31, 1997, 1996, and 1995 F-4
Statements of Cash Flows for the years ended
August 31, 1997, 1996, and 1995 F-5
Notes to Financial Statements F-6 - F-10
(2) Supplemental Oil and Gas Information (Unaudited) F-11 - F-13
F-1(a)
<PAGE>
-----------------------------------
HOCKER, LOVELETT, HARGENS & SKOGEN, 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, 1997 and 1996, and the related statements of income, changes in
stockholders' equity, and cash flows for the years ended August 31, 1997, 1996
and 1995. 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, 1997 and 1996, and the results of its operations
and its cash flows for the years ended August 31, 1997, 1996 and 1995, in
conformity with generally accepted accounting principles.
/S/ Hocker, Lovelett, Hargens & Skogen, P.C.
Casper, Wyoming
October 29, 1997
F-1
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
BALANCE SHEETS
August 31, 1997 and 1996 1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 868,313 $ 41,232
Accounts receivable 177,431 119,465
Prepaid expenses - 41,731
Total Current Assets 1,045,744 202,428
PROPERTIES AND EQUIPMENT
Undeveloped properties 528,481 423,482
Developed properties 3,528,257 3,134,757
Corporate and other 239,387 183,899
4,296,125 3,742,138
Less accumulated depreciation, depletion and amortization 1,640,260 1,505,966
Net Properties and Equipment 2,655,865 2,236,172
INVESTMENTS AND OTHER ASSETS
Gas balancing arrangement 82,277 82,277
Investments 125 8,541
Other 11,500 11,500
Total Other Assets 93,902 102,318
TOTAL ASSETS $ 3,795,511 $ 2,540,918
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 147,396 $ 185,474
Accrued production taxes 29,301 30,633
Line of credit arrangement - 250,000
Total Current Liabilities 176,697 466,107
DEFERRED INCOME TAXES 45,294 17,139
Total Liabilities 221,991 483,246
STOCKHOLDERS' EQUITY
Common stock, $.10 par value; 10,000,000 shares authorized; issued
and outstanding 3,880,651 shares in 1997 and 2,712,371 in 1996 388,062 271,237
Capital in excess of par value 2,122,450 886,254
Retained earnings 1,063,008 900,181
Total Stockholders' Equity 3,573,520 2,057,672
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,795,511 $ 2,540,918
<FN>
See accompanying notes to financial statements.
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF INCOME
For the years ended August 31, 1997, 1996 1997 1996 1995
and 1995
<S> <C> <C> <C>
Revenues
Oil and gas sales $ 633,797 $ 417,114 $ 247,461
Sales of nonproducing leases 242,744 130,000 634,979
Other income 16,644 98,063 32,924
Total Revenues 893,185 645,177 915,364
Costs and Expenses
Production costs 76,875 79,532 45,009
Production taxes 57,634 41,750 29,679
Exploration expenses 115,128 84,685 91,705
Write offs and abandonments 35,283 92,793 213,090
General and administrative 265,006 243,035 228,021
Depreciation and depletion 135,542 106,900 78,586
Cost of nonproducing leases sold 31,942 14,439 228,992
Total Costs and Expenses 717,410 663,134 915,082
Income (Loss) from Operations 175,775 (17,957) 282
Other Income (Expenses)
Interest income 29,765 4,474 18,122
Interest expense (11,575) (10,594) -
Other expense (2,983) - -
15,207 (6,120) 18,122
Income (Loss) before Income Taxes 190,982 (24,077) 18,404
Income Tax Expense (Credit) 28,155 (2,934) 3,113
Net Income (Loss) $ 162,827 $ (21,143) $ 15,291
Earnings (Loss) per Common Share $ .05 $ (.01) $ .01
Weighted Average Number
of Shares Outstanding 3,527,546 2,712,371 2,450,590
<FN>
See accompanying notes to financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended August 31, 1997, 1996, and 1995
Additional Total
Outstandin Common Paid In Retained Stockholder
g Stock Capital Earnings s'
Shares Equity
<S> <C> <C> <C> <C> <C>
Balance at,
August 31, 1994
as previously reported 2,362,371 $ 236,237 $ 790,003 $ 770,373 $ 1,796,613
Correction of an Error-
restatement of deferred
tax liability - - - 135,660 135,660
Balance at,
August 31, 1994,
as restated 2,362,371 $ 236,237 $ 790,003 $ 906,033 $ 1,932,273
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 $ 921,324 $ 2,078,815
Net Loss - - - (21,143) (21,143)
Balance,
August 31, 1996 2,712,371 $ 271,237 $ 886,254 $ 900,181 $ 2,057,672
Net Income - - - 162,827 162,827
Common Stock Issued 1,168,250 116,825 1,236,196 - 1,353,021
Balance at
August 31, 1997 3,880,621 $ 388,062 $ 2,122,450 $ 1,063,008 $ 3,573,520
<FN>
See accompanying notes to financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF CASH FLOWS
For the Years ended August 31, 1997, 1996 and 1995 1997 1996 1995
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ 162,827 $ (21,143) $ 15,291
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and depletion 135,542 106,900 78,586
Abandonments and loss on investments 19,058 69,377 160,574
Gain on sale of nonproducing leases (210,802) (115,561) (405,987)
Deferred taxes 28,155 (2,934) 3,113
Changes in operating assets and liabilities:
Accounts receivable (57,966) (78,128) (50,080)
Accounts payable (39,078) 75,042 57,959
Accrued production taxes (1,332) 4,733 (2,800)
Net cash provided by (used in) operating activities 37,404 38,286 (143,344)
Cash Flows from Investing Activities
Proceeds from sales of properties 242,744 130,000 634,979
Purchase of investments (34,110) - (9,000)
Purchase of properties (563,709) (603,708) (322,710)
Net cash provided by (used in) investing activities (355,075) (473,708) 303,269
Cash Flows from Financing Activities
Issuance of common stock 1,524,571 - -
Stock offering costs paid (116,320) (41,731) -
Purchase of employee stock options (13,499) - -
Net borrowings (repayments) under line of
credit arrangement (250,000) 250,000 -
Net cash provided by (used in) financing activities 1,144,752 208,269 -
Increase (Decrease) in Cash and Cash Equivalents 827,081 (227,153) 159,925
Cash and cash equivalents at beginning of year 41,232 268,385 108,460
Cash and cash equivalents at end of year $ 868,313 $ 41,232 $ 268,385
Supplemental Disclosures of Cash and Non-Cash
Transactions
Cash paid during the year for Interest $ 11,575 $ 10,594 $ -
<FN>
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.
</TABLE>
F-5
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
1.Summary of Significant Accounting Policies
Nature of Business
Double Eagle was incorporated under Wyoming law in 1972 for the purpose of
exploration, development, and production of 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.
Accounting for Oil and Gas Activities
Double Eagle uses the successful efforts method of accounting for oil and gas
producing activities. Under this method, acquisition costs for proved and
unproved properties are capitalized when incurred. Exploration costs,
including geological and geophysical costs, the costs of carrying and
retaining unproved properties and exploratory dry hole drilling costs, are
expensed. Development costs, including the costs to drill and equip
development wells, and successful exploratory drilling costs that locate
proved reserves, are capitalized. In addition, the Company limits the total
amount of unamortized capitalized costs to the value of future net revenues,
based on current prices and costs.
Depreciation, depletion and amortization
Depreciation and depletion 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 in the property. Unproved oil and gas
interests are carried at original acquisition costs including filing and
title fees.
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 the 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 to 7 years for office equipment.
Maintenance, repairs and renewals which neither materially add to the value
of the property nor appreciably prolong its life are charged to expense as
incurred.
Cash and Cash Equivalents
For purposes of preparing the statement of cash flows, currency on hand,
demand deposits, money market accounts, treasury bills and certificates of
deposits with short-term maturities are considered to be cash and cash
equivalents.
F-6
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
NOTES TO FINANCIAL STATEMENTS (continued)
1.Summary of Significant Accounting Policies (continued)
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of 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.
Income taxes
Income taxes are determined under an asset and liability approach. The
income statement effect is derived from changes in deferred income taxes on
the balance sheet. This approach gives consideration to the future tax
consequences associated with differences between financial accounting and tax
bases of assets and liabilities. These differences relate to items such as
depreciable and depletable properties, exploratory and intangible drilling
costs, and non-producing leases.
Gas Balancing Arrangement
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.
Earnings per Share
Earnings (loss) per common share is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding during the
respective periods. The dilutive effect of stock options on earnings per
common share is insignificant for all periods and is not included in the
computation of earnings per common share.
Stock-Based Compensation
In fiscal year 1997, the Company adopted the disclosure provisions of
Statement of Financial Accounting Standards No. 123 "Accounting for Stock-
Based Compensation." As permitted under SFAS No. 123, the Company continues
to account for employee stock option plans using the intrinsic value method
of accounting.
Reclassifications
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation in the
current year financial statements. These reclassifications have no effect on
net income or stockholders' equity.
F-7
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
NOTES TO FINANCIAL STATEMENTS (continued)
2.Gas Balancing Arrangement
The Company has a .1% to 3.5% ownership in various producing gas wells which
are 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 is estimated to be approximately 70,000
mcfs. The imbalance is being carried on the balance sheet of the Company at
the lower of the value at the date of the imbalance or current market prices.
The Company is actively pursuing payment or settlement for its share of the
imbalance.
3.Short-Term Debt
The company maintains a $350,000 unsecured short-term line of credit with a
bank which the Company utilizes as part of its cash management program. The
interest rate on the line of credit is at 1/2% over New York Prime Rate. At
August 31, 1997 and 1996, the amounts outstanding under this line of credit
were $ -0- and $250,000, respectively.
4.Income Taxes
The income tax expense (credit) amounts reported on the income statement are
composed entirely of deferred income taxes.
The tax effects of temporary differences that gave rise to significant
portions of the deferred tax liabilities and deferred tax assets as of August
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax liabilities:
Intangible drilling costs $ 136,461 $ 143,032
1st year federal lease rentals 1,762 2,810
138,223 145,842
Deferred tax assets:
Net operating loss carryforwards 88,138 128,703
Lease bonuses 4,791 -
92,929 128,703
Net deferred tax liabilities $ 45,294 $ 17,139
</TABLE>
At August 31, 1997, the Company has a net operating loss carryforward for
regular income tax reporting purposes of $587,585 which will begin expiring
in 2007. In addition, the Company has investment tax credits of $33,913
which expire beginning in 1998.
F-8
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
NOTES TO FINANCIAL STATEMENTS (continued)
5.Common Stock and Stock Options
In December, 1996, the Company issued 1,118,250 "Units" of Company
securities. Each "unit" consists of one share of the Company's $.10 par
value common stock and one warrant to purchase one share of common stock at a
price of $3.00 per share. The common stock portion of the units are included
in the weighted average number of shares outstanding used in computing
earnings per share. Subsequent to year end, the Company separated the common
stock and warrants that compose the Company's units. An additional 100,000
warrants to purchase common stock of the Company at a price of $3.00 per
share were issued to a securities dealer in connection with the initial
offering of the units.
Stock option plans approved by the stockholders provide for granting of
options to employees for purchase of common stock generally at prices between
the "bid" and "ask" prices at the time of grant. Generally, options granted
expire three years after the date of grant. The changes in the outstanding
stock options during the three years ended August 31, 1997, 1996, and 1995
are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
Wt. Avg. Wt. Avg. Wt. Avg.
Shares Ex. Pr. Shares Ex. Pr. Shares Ex. Pr.
<S> <C> <C> <C> <C> <C> <C>
Beginning of year 200,000 $ .917 200,000 $ .919 120,000 $ 1.031
Granted 90,000 1.375 60,000 1.180 80,000 .750
Exercised (50,000) .875 - - - -
Purchased (30,000) .935 - - - -
Expired - - (60,000) 1.188 - -
End of year 210,000 $ 1.120 200,000 $ .917 200,000 $ .919
</TABLE>
During January, 1997 the Company issued options for the purchase of 75,000
shares of the Company's common stock to an unaffiliated company in connection
with services to be provided on the Company's behalf. The options, with
exercise prices of $1.25 to $5.00, expire in January and July of 1998.
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation". As permitted by FAS 123, the Company continues to apply the
recognition and measurement provisions of Accounting Principals Board Opinion
No. 25, "Accounting for Stock Issued to Employees". Had compensation and
corporate relations expense been determined for stock options granted in 1997
and 1996, based on the fair values at grant dates consistent with SFAS No.
123, the Company's pro forma 1997 net income and earnings per share would
have been $68,871 and $.02, respectively, and 1996 net loss and loss per
share would have been $(88,321) and $(.03), respectively.
The pro forma amounts were estimated using the Black-Scholes option pricing
model with the following assumptions for 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Weighted average expected life (years) 1.9 3.0
Expected volatility 80% 142%
Risk free interest rate 5.55% 5.50%
Weighted average fair value of options granted $ .48 $ 1.12
</TABLE>
F-9
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
NOTES TO FINANCIAL STATEMENTS (continued)
6.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.
7.Commitments and Contingencies
Concentration of Credit Risk and Major Customers
The Company invests its cash primarily in deposits with major banks. Certain
deposits may, at times, be in excess of federally insured limits ($447,383
and $ -0- at August 31, 1997 and 1996, respectively). The Company has not
incurred losses related to such cash balances.
Sales to major unaffiliated customers (customers accounting for 10 percent of
more of gross revenue), all representing purchasers of oil and gas, for each
of the years ended August 31, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Company A $ 227,299 $ 205,313 $ 74,429
Company B 84,419 58,131 52,522
Company C - - 27,761
</TABLE>
Contingencies
The Company is subject to extensive federal, state, and local environmental
laws and regulations. These requirements, which change frequently, regulate
the discharge of materials into the environment. The Company believes it is
in compliance with existing laws and regulations.
8.Financial Instruments
The following disclosures on the estimated fair value of financial
instruments are presented in accordance with SFAS 107 "Disclosures about
Fair Value of Financial Instruments". Fair value, as defined in SFAS 107, is
the amount at which the instrument could be exchanged currently between
willing parties. The Company invests its surplus cash in Treasury Bills with
maturities from thirteen to twenty six weeks. The Bills are expected to be
held to maturity and are stated at amortized cost. Because of the short term
of the investments, estimated fair values approximate amortized costs. 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, 1997 and 1996 were immaterial..
9.Restatement of Retained Earnings
When the Company adopted SFAS 109 "Accounting for Income Taxes", it made an
error in determining the net deferred tax liability of the Company. The
error resulted in an over-statement of the deferred tax liability of
$135,660. Retained earnings of the Company have been increased effective
August 31, 1994 by this amount to correct the error. The error had no effect
on net income for each of the years presented.
F-10
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
Oil and Gas Reserves
The information presented below regarding the Company's oil and gas reserves was
prepared by the Company's geologist. All reserves are located within the
continental United States.
Proved oil and gas reserves are the estimated quantities of crude oil, natural
gas, and natural gas liquids which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Proved developed
oil and gas reserves are those expected to be recovered through existing wells
with existing equipment and operating methods. The determination of oil and gas
reserves is highly complex and interpretive. The estimates are subject to
continuing changes as additional information becomes available
Estimated net quantities of proved developed reserves of oil and gas for the
years ended August 31, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Natural Gas (Thousands of cubic feet) 1997 1996 1995
<S> <C> <C> <C>
Beginning of year 2,082,591 1,935,164 1,844,343
Revisions of prior estimates (45,610) 22,940 (3,329)
Discoveries 507,710 50,500 90,000
Purchases of reserves in place 435,125 214,166 73,012
Production (222,628) (140,179) (68,862)
End of year 2,757,188 2,082,591 1,935,164
</TABLE>
<TABLE>
<CAPTION>
Oil (Barrels) 1997 1996 1995
<S> <C> <C> <C>
Beginning of year 188,580 95,383 104,612
Revisions of prior estimates 3,000 110,049 299
Discoveries 20 500 -
Purchases of reserves in place 6,257 - -
Production (17,331) (17,352) (9,528)
End of year 180,526 188,580 95,383
</TABLE>
Capitalized Costs Relating to Oil and Gas Producing Activities
The aggregate amount of capitalized costs relating to crude oil and natural gas
producing activities and the aggregate amount of related accumulated
depreciation. depletion and amortization at August 31, 1997, 1996 and 1995 are
as follows:
<TABLE>
<CAPTION>
Natural Gas (Thousands of cubic feet) 1997 1996 1995
<S> <C> <C> <C>
Proved properties $ 3,528,257 $ 3,009,326 $ 2,493,619
Unproved properties 528,481 548,913 559,848
4,056,738 3,558,239 3,053,467
Accumulated depreciation and depletion 1,521,590 1,405,313 1,307,860
Net capitalized costs $ 2,535,148 $ 2,152,926 $ 1,745,607
</TABLE>
F-11
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
Costs incurred in Oil and Gas Property Acquisitions, Exploration and Development
Activities
Costs incurred in property acquisitions, exploration, and development activities
for the years ended August 31, 1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Property acquisitions - proved $ 132,703 $ 123,440 $ 207,346
Property acquisitions - unproved 147,576 27,834 95,442
Exploration 150,411 177,478 304,795
Development 265,796 436,855 143,649
Total $ 696,486 $ 765,607 $ 751,232
</TABLE>
Results of Operations from Oil and Gas Producing Activities
The results of operations for the Company's oil and gas producing activities for
the years ended August 3, 1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Operating revenues $ 633,797 $ 417,114 $ 247,461
Costs and expenses
Production 134,509 121,282 74,688
Exploration 150,411 177,478 304,795
Depreciation and depletion 119,846 97,453 73,949
404,766 396,213 453,432
Income (loss) before Income Taxes 229,031 20,901 (205,971)
Income Tax Expense (Benefit) 28,155 (2,934) 3,113
Results of operations $ 200,876 $ 23,835 $ (209,084)
</TABLE>
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves
The following information has been developed utilizing procedures prescribed by
SFAS 69 "Disclosures About Oil and Gas Producing Activities" and based on
natural gas and crude oil reserves and production volumes estimated by the
Company. It may be useful for certain comparison purposes, but should not be
solely relied upon in evaluating the Company or its performance. Further,
information contained in the following table should not be considered as
representative or realistic assessments of future cash flows, nor should the
Standardized Measure of Discounted Future Net Cash Flows be viewed as
representative of the current value of the Company.
The Company believes that the following factors should be taken into account in
reviewing the following information: (1) future costs and selling prices will
probably differ from those required to be used in these calculations; (2) due to
future market conditions and governmental regulations, actual rates of
production achieved in future years may vary significantly from the rate of
production assumed in these calculations; (3) selection of a 10% discount rate
is arbitrary and may not be reasonable as a measure of
F-12
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves (continued)
the relative risk inherent in realizing future net oil and gas revenues; and (4)
future net revenues may be subject to different rates of income taxation.
Under the Standardized Measure, future cash inflows were estimated by applying
year-end oil and gas prices to the estimated future production of year-end
proved reserves. Futures cash inflows were reduced by estimated future
development and production costs based upon year-end costs in order to arrive at
net cash flow before tax. Future income tax expense has been computed by
applying year-end statutory rates to future pretax net cash flows and the
utilization of net operating loss carryforwards. Use of a 10% discount rate is
required by SFAS 69.
Management does not rely solely upon the following information in making
investment and operating decisions. Such decisions are based upon a wide range
of factors, including estimates of probable as well as proved reserves, and
varying price and cost assumptions considered more representative of a range of
possible economic conditions that may be anticipated.
Standardized Measure is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Future cash inflows $ 7,113,621 $ 6,455,189 $ 3,349,951
Futures production and development costs (1,581,564) (1,595,675) (1,481,310)
Future income taxes (1,680,979) (1,360,515) (635,338)
Future net cash flows 3,851,078 3,498,999 1,233,303
10% annual discount rate (1,155,323) (1,049,700) (369,991)
Discounted future net cash flows $ 2,695,755 $ 2,449,299 $ 863,312
</TABLE>
The following is an analysis of the changes in the Standardized Measure:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Balance, beginning of the year $ 2,449,299 $ 863,312 $ 1,243,115
Sales, net of production costs (499,288) (295,832) (142,966)
Net changes in prices and production costs 177,501 304,917 (344,196)
Discoveries and purchase of reserves in place 851,438 183,900 57,054
Development costs incurred (548,910) (737,773) (76,577)
Revisions of previous quantity estimates 20,785 2,044,444 2,570
Accretion of discount 244,930 86,331 124,312
Balance, end of the year $ 2,695,755 $ 2,449,299 $ 863,312
</TABLE>
F-13
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Directors And Executive Officers
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Positions
<S> <C> <C>
Richard B. Laudon 63 Chairman Of The Board; and Director
Stephen H. Hollis 47 Chief Executive Officer; President;
Treasurer; and Director
Carol A. Osborne 45 Secretary
Tom R. Creager 38 Director
William N. Heiss 45 Director
Ken M. Daraie 39 Director
</TABLE>
Dr. Richard B. Laudon has served as the Chairman Of The Board of the Company
since January 1972. From January 1972 until September 1997, Dr. Laudon served
as Treasurer of the Company and, from January 1996 until September 1997, Dr.
Laudon served as Vice President of the Company. In addition, 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 and Chief Executive Officer 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
15
<PAGE>
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.
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.
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.
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.
Ken M. Daraie has served as a Director of the Company since February 1997.
Mr. Daraie began his career with Sun Exploration and Production Co. as a
Petroleum Engineer from 1982 to 1990. In 1990, he joined Conoco, Inc., in
Casper, where he held Engineering positions until 1994. From 1994 to 1995, Mr.
Daraie worked for the Fluor Daniel Corporation and Barlow & Haun, Inc. as
Project Manager and General Manager, respectively. In 1995, Mr. Daraie founded
Continental Industries, LC, an independent oil and gas production/service
company, where he currently serves as President. Mr. Daraie is a past Chairman
of the Board of Energy West Federal Credit Union and currently serves on the
Casper Planning and Zoning Commission. Mr. Daraie received a Bachelor's Degree
in Physics from Baylor University in 1979 and a Bachelor of Science Degree in
Petroleum Engineering from the University of Texas in 1982.
Section 16(a) Beneficial Ownership Reporting Compliance
One exempt transaction in February 1997, required to be reported by Mr. Hollis
on an Annual Statement Of Changes In Beneficial Ownership Of Securities on Form
5, was reported late with the Securities And Exchange Commission ("SEC") on a
Form 5. One exempt transaction in February 1997 required to be reported by Ms.
Osborne on an Annual Statement Of Changes In Beneficial Ownership Of Securities
on Form 5 was reported late with the SEC. An Initial Statement Of Beneficial
Ownership Of Securities on Form 3 required to be filed by Mr. Daraie following
his election as a director in February 1997 was filed late. Mr. Daraie did not
beneficially own any securities of the Company required to be included on the
Form 3.
16
<PAGE>
ITEM 10. 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 Chief Executive Officer and President. No employee of the Company
received total salary and bonus exceeding $100,000 during any of the last three
fiscal years.
<TABLE>
<CAPTION>
Annual Compensation
Fiscal Long-Term Other Annual
Name and Year Salary Bonus Compensation--Compen-
Principal Position Ended ($)(1) ($) Options (#) sation ($)
<S> <C> <C> <C> <C> <C>
Stephen H. Hollis, 1997 $72,000 -0- 50,000 -0-
Chief Executive Officer
and President 1996 $53,700 -0- 50,000 -0-
1995 $53,700 -0- 70,000 -0-
<FN>
(1) The dollar value of base salary (cash and non-cash) received.
</TABLE>
Option Grants Table
The following table sets forth information concerning individual grants of
stock options made during the fiscal year ended August 31, 1997 to the Company's
Chief Executive Officer and President. See "---tock Option Plans".
<TABLE>
<CAPTION>
Option Grants For Fiscal Year Ended August 31, 1997
% of Total
Options GrantedExercise or
Options to Employees inBase Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
<S> <C> <C> <C> <C>
Stephen H. Hollis, 50,000 55.6% $1.375 2/24/2000
Chief Executive
Officer and
President
</TABLE>
17
<PAGE>
Aggregated Option Exercises And Fiscal Year-End Option Value Table.
The following table sets forth information concerning each exercise of stock
options during the fiscal year ended August 31, 1997 by the Company's Chief
Executive Officer and President, and the fiscal year-end value of unexercised
options held by the Chief Executive Officer and President.
<TABLE>
<CAPTION>
Aggregated Option Exercises
For Fiscal Year Ended August 31, 1997
And Year-End Option Values
Value of
Unexercised
Number of In-The-Money
Unexercised Options at
Options at Fiscal Year-End
Fiscal ($)(4)
Shares Year-End (#)(3)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) (1) Realized ($)(2)Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Stephen H. Hollis, 50,000 31,250 170,000/0 $17,500/$0 (5)
Chief Executive
Officer and
President
<FN>
(1) The number of shares received upon exercise of options during the fiscal
year ended August 31, 1997.
(2) With respect to options exercised during the Company's fiscal year ended
August 31, 1997, 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, 1997
separated between those options that were exercisable and those options
that were not exercisable.
(4) For all unexercised options held as of August 31, 1997, the aggregate
dollar value of the excess of the market value of the stock underlying
those options over the exercise price of those unexercised options, based
on the bid price of the Company's Common Stock on August 31, 1997. The
closing bid price for the Company's Common Stock on August 31, 1997 was
$1.00 per share.
(5) On November 18, 1997, the closing bid price of the Company's Common Stock
was $2.3125 per share, which would result in a value of unexercised in-the-
money options held by Mr. Hollis of $212,875.
</TABLE>
18
<PAGE>
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.
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, 1997,
options to purchase 90,000 shares of Common Stock were outstanding under the
1996 Plan and options to purchase 110,000 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.
19
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table summarizes certain information as of August 31, 1997 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.
<TABLE>
<CAPTION>
As Of August 31, 1997
Percentage Of
Class
Name And Address Of Number Of Beneficially
Beneficial Owner Shares Owned
<S> <C> <C>
Dr. Richard B. Laudon 499,147 12.9%
3737 West 46th
Casper, Wyoming 82604
Carol A. Osborne 20,200(1) *
Stephen H. Hollis (5) 636,900(2) 15.6%
2037 S. Poplar
Casper, Wyoming 82601
William N. Heiss (5) 374,000(3) 9.6%
Tom R. Creager(5) 351,500(4) 9.1%
Ken M. Daraie 0 0
Directors and Officers as a group 1,181,747(1)(2) 23.3%
(Six Persons) (3)(5)
Hollis Oil & Gas Co. (5) 350,000 9.0%
<FN>
* Less than one percent.
</TABLE>
(1) Includes options held by Ms. Osborne to purchase 20,000 shares that
expire February 24, 2000.
(2) Includes options held by Mr. Hollis to purchase 70,000 shares that
expire January 19, 1998, options to purchase 50,000 shares that expire
January 22, 1999, options to purchase 50,000 shares that expire
February 24, 2000, and Warrants to purchase 21,000 shares that expire
on December 17, 2001. In addition to 95,900 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.
20
<PAGE>
(3) Includes 12,000 shares and Warrants to purchase 12,000 shares that
expire on December 17, 2001 that are held by a trust for which Mr.
Heiss serves as trustee and of which Mr. Heiss is a beneficiary. Also
includes 350,000 shares owned by Hollis Oil & Gas Co. Mr. Heiss is an
officer, director and 30% beneficial owner of Hollis Oil & Gas Co.
(4) 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.
(5) 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 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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".
21
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1) and (a)(2) Financial Statements And Financial Statement Schedules
See "ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ---Index" on
page F-1(a)
(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).
(b) Reports On Form 8-K. During the last quarter of the fiscal year ended
--------------------
August 31, 1997, the Company filed no reports on Form 8-K.
22
<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: November 28, 1997 /s/ Stephen H. Hollis
-----------------------
Stephen H. Hollis
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: November 28, 1997 /s/ Stephen H. Hollis
-----------------------
Stephen H. Hollis, Director
Date: November 28, 1997 /s/ Richard B. Laudon
----------------------
Richard B. Laudon, Director
Date: November 28, 1997 /s/ Tom R. Creager
-------------------
Tom R. Creager, Director
Date: November 28, 1997 /s/ William N. Heiss
-------------------
William N. Heiss, Director
Date: November 28, 1997 /s/ Ken M. Daraie
-----------------
Ken M. Daraie
23
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<CASH> 868,313
<SECURITIES> 0
<RECEIVABLES> 177,341
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,045,744
<PP&E> 4,296,125
<DEPRECIATION> 1,640,260
<TOTAL-ASSETS> 3,795,511
<CURRENT-LIABILITIES> 176,697
<BONDS> 0
0
0
<COMMON> 388,062
<OTHER-SE> 3,185,458
<TOTAL-LIABILITY-AND-EQUITY> 3,795,511
<SALES> 893,185
<TOTAL-REVENUES> 922,950
<CGS> 0
<TOTAL-COSTS> 717,410
<OTHER-EXPENSES> 2,983
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,575
<INCOME-PRETAX> 190,982
<INCOME-TAX> 28,155
<INCOME-CONTINUING> 162,827
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162,827
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
