U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly period ended Commission File
May 31, 1998 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, 3,932,651 shares having a par value of $.10 per share were
outstanding as of July 1, 1998.
Transitional Small Business Disclosure format (check one):
Yes No X
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DOUBLE EAGLE PETROLEUM AND MINING COMPANY
INDEX
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PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets as of May 31, 1998 (Unaudited)
and August 31, 1997 I.
Statements of Operations for the three and nine months
ended May 31, 1998 and 1997 (Unaudited) II.
Statements of Cash Flows for the nine months
ended May 31, 1998 and 1997 (Unaudited) III.
Notes to Financial Statements (Unaudited) IV.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations V. - VI.
PART II. OTHER INFORMATION
Item 6. Exhibits and Report 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
BALANCE SHEETS
MAY 31, 1998 AND AUGUST 31, 1997
<CAPTION>
May 31, August 31,
1998 1997
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 221,087 $ 868,313
Accounts receivable 141,730 177,431
Total Current Assets 362,817 1,045,744
OTHER ASSETS
Gas balancing arrangement 82,277 82,277
Investment 125 125
Other 11,500 11,500
Total Other Assets 93,902 93,902
PROPERTY AND EQUIPMENT
Undeveloped properties 562,618 528,481
Developed properties 4,022,432 3,528,257
Corporate and other 256,404 239,387
4,841,454 4,296,125
Less accumulated depreciation, depletion and 1,741,915 1,640,260
amortization
3,099,539 2,655,865
Total Assets $ 3,556,258 $ 3,795,511
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 48,375 $ 147,396
Accrued production taxes 20,566 29,301
Total 68,941 176,697
DEFERRED INCOME TAXES 24,613 45,294
Total Liabilities 93,104 221,991
STOCKHOLDERS' EQUITY
Common stock, $.10 par value; authorized -
10,000,000 shares, authorized 3,932,651
shares issued and outstanding 393,262 388,062
Capital in excess of par value 2,126,625 2,122,450
Retained earnings 943,267 1,063,008
Total Stockholders' Equity 3,463,154 3,573,520
Total Liabilities and Stockholders' Equity $ 3,556,258 $ 3,795,511
<FN>
See accompanying notes to financial statements.
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II.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the Three Months Ended For the Nine Months Ended
May 31, May 31, May 31, May 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
REVENUES
Sales of oil and gas $ 137,989 $ 131,684 $ 527,533 $ 493,844
Sales of nonproducing leases 50,000 7,800 50,000 7,800
Other - primarily zeolites 4,083 91 5,176 15,448
Total 192,072 139,575 582,709 517,092
COSTS AND EXPENSES
Production costs 32,574 29,169 68,606 63,361
Production taxes 21,941 10,763 65,405 47,259
Cost of nonproducing leases sold 4,216 5,111 4,216 5,111
Exploration 42,559 33,183 131,283 65,439
Write offs and abandonments 2,008 4,899 7,585 6,649
General and administrative 147,578 60,567 359,962 199,740
Depreciation and depletion 33,885 33,999 101,655 100,620
Total 284,761 177,691 738,712 488,179
INCOME (LOSS) FROM OPERATIONS (92,689) (38,116) (156,003) 28,913
OTHER INCOME (EXPENSE)
Loss on partnership interest - - - (2,983)
Interest income 8,426 11,345 17,665 20,582
Interest expense (2,225) - (2,534) (10,502)
6,201 11,345 15,131 7,097
INCOME (LOSS) BEFORE INCOME TAXES (86,488) (26,771) (140,872) 36,010
INCOME TAX EXPENSE (BENEFIT)
Current - - - -
Deferred (12,973) (3,812) (21,131) 5,767
Total (12,973) (3,812) (21,131) 5,767
NET INCOME (LOSS) $ (73,515) $ (22,959) $ (119,741) $ 30,243
BASIC/DILUTED
INCOME (LOSS) PER SHARE $ (.02) $ (.01) $ (.03) $ .01
AVERAGE SHARES OUTSTANDING 3,909,477 3,880,621 3,890,365 3,371,126
DIVIDENDS PER SHARE OF COMMON STOCK $ .00 $ .00 $ .00 $ .00
<FN>
See accompanying notes to financial statements.
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III.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income $ (119,741) $ 30,243
Charges to income not requiring cash:
Depreciation and depletion 101,655 100,620
Abandoned properties 7,585 5,730
Gain on sale of assets (45,784) (2,688)
Loss on partnership interests - 2,983
Decrease (increase) in operating assets:
Accounts receivable 35,701 (29,481)
Increase (decrease) in operating liabilities:
Accounts payable (99,021) (33,909)
Accrued production taxes (8,735) 8,967
Deferred tax liability (21,131) 5,767
Net cash (used in) provided by operating activities (149,471) 88,232
INVESTING ACTIVITIES:
Proceeds from sale of properties 50,000 7,800
Purchase of properties (557,130) (384,372)
Purchase of investment - (34,110)
Net cash (used in) investing activities (507,130) (410,682)
FINANCING ACTIVITIES:
Issuance of common stock 9,375 1,524,571
Net repayments - (250,000)
Purchase of employee stock options - (13,499)
Stock offering costs paid - (116,320)
Net cash provided by financing activities 9,375 1,144,752
(DECREASE) INCREASE IN CASH (647,226) 822,302
CASH AND CASH EQUIVALENTS
Beginning of period 868,313 41,232
End of period $ 221,087 $ 863,534
SUPPLEMENTAL DISCLOSURES OF CASH AND
NON-CASH TRANSACTIONS
Cash paid during the period for interest $ 2,534 $ 10,502
<FN>
See accompanying notes to 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, 1997, for a description of the accounting policies which have been
continued without change. Also, refer to the footnotes with those annual
statements for additional details of the Company's financial condition,
results of operations, and cash flows. The details in those notes have not
changed except as a result of normal transactions in the interim.
2. Management Representation
In management's opinion, all adjustments necessary for a fair presentation
are reflected in the interim financial statements. Such adjustments are of a
normal recurring nature.
3. Interim Results of Operations
The results of operations for the period ended May 31, 1998, are not
necessarily indicative of the operating results for the full year.
4. Statement of Cash Flows Supplemental Information
Noncash investing activities:
During the nine months ended May 31, 1997, a partnership in which the Company
acquired a significant interest was liquidated. The Company received $39,543
in Partnership assets in exchange for the Partnership interest.
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V.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
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Operating activities for the nine months ended May 31, 1998 resulted in the
consumption of cash of $150,000. The loss experienced on operations and payments
on current liabilities were the primary uses of cash. Working capital declined
by $575,000. The primary use of working capital was expended on further
development of the Graham Field, for which the Company is still working on
obtaining transportation for production. The Company has a non-binding
indication from a bank that it would be willing to provide the Company with a
$1,000,000 line of credit to meet future operating needs.
RESULTS OF OPERATIONS
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Results of Operations for Nine Months Ended May 31, 1998 Compared to Prior Year
- -------------------------------------------------------------------------------
Period
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Oil and gas sales increased 7% for the nine months ended May 31, 1998 over the
same period of one year ago. The source of the increase - production, was offset
somewhat by a decline in oil and gas pricing. Natural gas production increased
47% from 157,132 to 230,901 mcf. Oil production decreased 44% from 13,808 to
9,312 barrels of oil. The increase in revenues was offset by an increase in
production costs and taxes. Exploration expenses saw significant increases for
the current period, due primarily to an increase in lease rentals for properties
in Montana that were acquired in the prior fiscal year, and the Company's
participation in the unsuccessful drilling of the Buffalo Robe well.
General and administrative expenses saw a significant increase of 80%, or
$160,000. The main component of the increase were an increase in costs relative
to shareholder relations, legal and accounting fees and the addition of
personnel.
Current Quarter Compared to Previous Quarter
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Revenues from oil and gas sales declined 36%, or $79,000 compared to the
previous quarter. This decrease was due primarily to a decline in the pricing of
oil coupled with a decrease in the demand for natural gas. Natural gas
production decreased 20% from 84,933 to 67,773 mcf. Oil production decreased 2%
from 3,012 to 2,957 of oil.
General and administrative costs increased by 33%, due primarily to the costs
for shareholder relations and the addition of staff required as the Company
continues to expand the scope of its activities.
Current Quarter Compared to Corresponding Quarter of Prior Year
- ---------------------------------------------------------------
Revenues from oil and gas sales experienced a modest increase of $6,000 or 5%
for the current quarter as compared to the corresponding quarter of a year ago,
due primarily to an increase in production, offset by a decrease in oil pricing
and by increases in production costs and taxes. Natural gas production increased
25% from 54,244 to 67,773 mcf. Oil production decreased 28% from 4,102 to 2,957
barrels of oil.
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VI.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
General and administrative expenses saw a significant increase of 144%, or
$87,000. The main components of the increase were legal and accounting fees, an
increase in costs relative to shareholder relations and the addition of staff
for expansion of the scope of the Company's activities.
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VII.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
No Forms 8-K were filed during the period covered by this report.
<PAGE>
VIII.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
(Registrant)
/s/ Stephen H. Hollis
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Stephen H. Hollis
Treasurer and Principal Financial Officer
Date: July 14, 1998
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> MAY-31-1998
<CASH> 221,087
<SECURITIES> 0
<RECEIVABLES> 141,730
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 362,817
<PP&E> 4,841,454
<DEPRECIATION> 1,741,915
<TOTAL-ASSETS> 3,556,258
<CURRENT-LIABILITIES> 68,941
<BONDS> 0
0
0
<COMMON> 393,262
<OTHER-SE> 3,069,892
<TOTAL-LIABILITY-AND-EQUITY> 3,556,258
<SALES> 577,533
<TOTAL-REVENUES> 582,709
<CGS> 0
<TOTAL-COSTS> 738,712
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,534
<INCOME-PRETAX> (140,872)
<INCOME-TAX> (21,131)
<INCOME-CONTINUING> (119,741)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (119,741)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
