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
February 28, 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 April 9, 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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Page
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PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Balance Sheets February 28, 1997 (Unaudited)
and August 31, 1996 I.
Statements of Operations for the three and six months
ended February 28, 1997 and February 29, 1996 (Unaudited) II.
Condensed Statements of Cash Flows for the six months
ended February 28, 1997 and February 29, 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 4. Submission of matters to a vote of security holders VII.
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
FEBRUARY 28, 1997 AND AUGUST 31, 1996
<CAPTION>
February 28, August 31,
1997 1996
(Unaudited) (See Note
Below)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 223,265 $ 41,232
U.S. Treasury Bills 692,321 -
Accounts receivable 152,308 119,465
Prepaid expense - 41,731
Total 1,067,894 202,428
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) 2,411,780 2,236,172
Total $ 3,573,576 $ 2,540,918
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 41,564 $ 185,474
Accrued production taxes 41,100 30,633
Note payable - 250,000
Total 82,664 466,107
DEFERRED TAX LIABILITY, net 162,378 152,799
Total 245,042 618,906
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 2,122,749 886,254
Retained earnings 817,723 764,521
Total 3,328,534 1,922,012
Total $ 3,573,576 $ 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 Six Months
Ended Ended
February February February February
28, 29, 28, 29,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES
Sales of oil and gas $ 194,698 $ 76,373 $ 362,160 $ 141,725
Sales of nonproducing leases - 130,000 - 130,000
Other - primarily zeolites 301 - 15,357 15,000
Total 194,999 206,373 377,517 286,725
COSTS AND EXPENSES
Production 19,185 19,985 34,192 34,381
Production taxes 24,380 16,486 36,496 17,743
Cost of nonproducing leases sold - 14,439 - 14,439
Exploration 21,247 13,595 32,256 26,633
Write offs and abandonments - 2,651 1,750 24,347
General and administrative 63,497 74,614 139,173 132,361
Depreciation and depletion 26,071 29,095 66,621 56,291
Interest 5,382 2,917 10,502 5,467
Total 159,762 173,782 320,990 311,662
INCOME (LOSS) FROM OPERATIONS 35,237 32,591 56,527 (24,937)
OTHER INCOME
Loss on partnership interest (2,983) - (2,983) -
Interest income 8,853 1,715 9,237 3,626
5,870 1,715 6,254 3,626
INCOME (LOSS) BEFORE INCOME TAXES 41,107 34,306 62,781 (21,311)
INCOME TAX EXPENSE (BENEFIT)
Current - - - -
Deferred 9,579 (54) 9,579 (3,196)
Total 9,579 (54) 9,579 (3,196)
NET INCOME (LOSS) $ 31,528 $ 34,360 $ 53,202 $ (18,115)
INCOME (LOSS) PER COMMON STOCK AND
COMMON STOCK EQUIVALENT SHARE $ .01 $ .01 $ .02 $ (.01)
COMMON STOCK AND COMMON STOCK
EQUIVALENT SHARES OUTSTANDING 3,516,382 2,712,371 3,112,156 2,712,371
DIVIDENDS PER SHARE OF COMMON STOCK $ - $ - $ - $ -
<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 SIX MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
(UNAUDITED)
<CAPTION>
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 53,202 $ (18,115)
Charges to income not requiring cash:
Depreciation and depletion 66,621 56,291
Abandoned properties 831 21,474
Gain on sale of assets - (115,561)
Deferred tax allowance 9,579 (3,196)
Loss on partnership interests 2,983 -
Decrease (increase) in operating assets:
Accounts receivable (32,843) (14,044)
Increase (decrease) in operating liabilities:
Accounts payable (55,497) (61,403)
Accrued production taxes 10,467 (7,500)
Net cash provided by (used in) operating
activities 55,343 (142,054)
INVESTING ACTIVITIES:
Acquisitions of property and equipment (291,930) (250,415)
Purchase U.S. Treasury bills (692,321) -
Addition to partnership interests (34,110) -
Proceeds from sale of property and equipment - 130,000
Net cash (used in) investing activities (1,018,361) (120,415)
FINANCING ACTIVITIES:
Proceeds from borrowings 98,981 162,500
Repayment of debt (348,981) (142,500)
Issuance of common stock, net 1,524,571 -
Stock offering costs paid (116,320) -
Purchase stock options (13,200) -
Net cash provided by financing activities 1,145,051 20,000
INCREASE (DECREASE) IN CASH 182,033 (242,469)
CASH AND CASH EQUIVALENTS
Beginning of period 41,232 268,385
End of period $ 223,265 $ 25,916
<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 February 28, 1997, are not
necessarily indicative of the operating results for the full year.
4. Subsequent Event
During the quarter ended February 28, 1997, the Company had a public offering
of units of its common stock and common stock purchase warrants. 1,118,750
units, each consisting of one share of common stock and one warrant, were
sold at $1.50 per share. The Company received $1,322,000 in net proceeds from
the sales after payment of all offering costs.
5. Statement of Cash Flows Supplemental Information
Interest and income taxes paid:
During the six months ended February 28, 1997 and February 29, 1996, the
Company paid $5,120 and $2,550, respectfully, in interest expense and no
income taxes.
Noncash investing activities:
During the six months ended February 28, 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.
<PAGE>
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
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During the six months ended November 30, 1997, the Company's working capital
increased by $1,248,879. 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 also paid $290,000 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 $141,725 to $362,160, an increase
of 156% 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 have remained relatively level during the current year compared
to the corresponding period. Production taxes have increased by more than 100%
to coincide with the increase in oil and gas revenue. Depreciation and
depletion expense increased by approximately $10,300, or 18%, 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.
The Company has not sold any properties during the current year.
Exploration costs during the current year-to-date have increased $5,600 (21%)
primarily due to increased geological activity. Also, write-offs and
abandonments was approximately $22,600 lower as fewer nonproducing leases were
expiring and the Company did not incur any significant dry hole expenses.
General and administrative expenses increased by $6,800 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.
During the current year, the Company's share of a partnership interest also
produced a $3,000 loss.
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VI.
Current Quarter Compared to Previous Quarter
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Revenues from oil and gas sales increased by approximately $27,000 or 16%
compared to the previous quarter. This increase was primarily due to an
increase in the price of gas received on certain significant properties.
Production during the current quarter was slightly lower.
Production costs and taxes increased by approximately $16,400 coinciding with
the increase in oil and gas sales revenue. Depreciation and depletion expense
decreased during the current quarter as compared to the previous quarter due to
the decrease in production on certain properties with higher depletion ratios.
Exploration costs increased by $10,200 again primarily to an increase in
geological expenses as the Company increases its efforts to continually increase
and improve production. The Company had no expiring leases or dry hole costs
compared to $1,700 in the previous quarter.
General and administrative costs decreased by approximately $12,000 when
compared to the previous quarter. During the previous quarter, the Company
incurred additional costs relating to the year end completion, audit and
shareholder relations. The Company also had increased office costs as a result
of the public offering. Specific incremental costs incurred in connection with
the offering were charged against the proceeds, but costs which were not
incremental such as salaries, telephone, etc. are expensed as incurred.
Interest income increased by $9,700 during the current quarter again as a result
of the investment of a 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 $76,373 to $194,698, an increase of 156%
when compared to the same quarter in 1996 due to the acquisition of additional
producing properties; successful workovers of existing properties and drilling
of development wells, mentioned earlier. The Company also received higher prices
during the current quarter from oil and gas.
During the corresponding quarter in 1996, the Company sold a large nonproducing
property for $130,000. The Company had no such sales in the current quarter.
Production costs, including production taxes, increased by $7,000 or 19%
compared to the same quarter one year ago. The increase coincides with the
increase in revenue. Depreciation and depletion was slightly lower during the
current quarter due to revisions in reserve estimates used to complete depletion
calculations by the Company at fiscal year end.
Exploration costs during the current quarter increased $7,600 as the Company is
increasing efforts in the areas of geological expense as they investigate ways
to increase production.
General and administrative costs during the current quarter decreased by $11,100
compared to the corresponding quarter one year ago. The Company incurred costs
associated with the annual audit, annual report and shareholder expenses earlier
in the year.
<PAGE>
VII.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the annual stockholders' meeting on February 24, 1997 the following
directors were elected:
Richard B. Laudon
William N. Heiss
Tom R. Creager
Stephen H. Hollis
Ken M. Daraie
Hocker, Lovelett, Hargens & Skogen, P.C. was approved as auditor for the year
ending August 31, 1997, with 2,872,073 votes for, 310 votes against, and 2,800
abstaining.
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
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Richard B. Laudon
Treasurer and Principal Financial Officer
Date: April 14, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> FEB-28-1997
<CASH> 223,265
<SECURITIES> 692,321
<RECEIVABLES> 234,585
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,067,894
<PP&E> 3,948,367
<DEPRECIATION> 1,536,587
<TOTAL-ASSETS> 3,573,576
<CURRENT-LIABILITIES> 82,664
<BONDS> 0
0
0
<COMMON> 388,062
<OTHER-SE> 2,940,472
<TOTAL-LIABILITY-AND-EQUITY> 3,573,576
<SALES> 377,517
<TOTAL-REVENUES> 383,771
<CGS> 0
<TOTAL-COSTS> 310,488
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,502
<INCOME-PRETAX> 62,781
<INCOME-TAX> 9,579
<INCOME-CONTINUING> 53,202
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,202
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
