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, 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, 3,880,651 shares having a par value of $.10 per share were
outstanding as of April 8, 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 February 28, 1998
and August 31, 1997 I.
Statements of Operations for the three and six months
ended February 28, 1998 and February 28, 1997 II.
Statements of Cash Flows for the six months
ended February 28, 1998 and February 28, 1997 III.
Notes to Financial Statements 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
BALANCE SHEETS
FEBRUARY 28, 1998 AND AUGUST 31, 1997
<CAPTION>
February 28, August 31,
1998 1997
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 392,262 $ 868,313
Accounts receivable 137,562 177,431
Lease application deposits 90,391 -
Total Current Assets 620,215 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 541,978 528,481
Developed properties 3,977,677 3,528,257
Corporate and other 256,404 239,387
4,776,059 4,296,125
Less accumulated depreciation, depletion and amortization 1,708,030 1,640,260
Net properties and equipment 3,068,029 2,655,865
Total Assets $ 3,782,146 $ 3,795,511
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 50,151 $ 147,396
Accrued production taxes 17,565 29,301
Line of credit arrangement 150,000 -
Total 217,716 176,697
DEFERRED INCOME TAXES 37,136 45,294
Total Liabilities 254,852 221,991
STOCKHOLDERS' EQUITY
Common stock, $.10 par value; authorized - 10,000,000 shares,
authorized 3,880,651 shares issued and outstanding 388,062 388,062
Capital in excess of par value 2,122,450 2,122,450
Retained earnings 1,016,782 1,063,008
Total Stockholders' Equity 3,527,294 3,573,520
Total Liabilities and Stockholders' Equity $ 3,782,146 $ 3,795,511
<FN>
See accompanying notes to 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, 28, 28, 28,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
REVENUES
Oil and gas sales $ 216,805 $ 194,698 $ 389,544 $ 362,160
Other income 304 301 1,093 15,357
Total 217,109 194,999 390,637 377,517
COSTS AND EXPENSES
Production costs 20,435 19,185 36,032 34,192
Production taxes 23,146 24,380 43,464 36,496
Exploration expenses 38,442 21,247 55,495 32,256
Write offs and abandonments 924 - 38,806 1,750
General and administrative 111,040 63,497 212,384 139,173
Depreciation and depletion 33,885 26,071 67,770 66,621
Total 227,872 154,380 453,951 310,488
INCOME (LOSS) FROM OPERATIONS (10,763) 40,619 (63,314) 67,029
OTHER INCOME (EXPENSE)
Loss on partnership interest - (2,983) - (2,983)
Interest income 1,344 8,853 9,239 9,237
Interest expense (309) (5,382) (309) (10,502)
1,035 488 8,930 (4,248)
INCOME (LOSS) BEFORE INCOME TAXES (9,728) 41,107 (54,384) 62,781
INCOME TAX EXPENSE (BENEFIT)
Current - - - -
Deferred (1,460) 9,579 (8,158) 9,579
Total (1,460) 9,579 (8,158) 9,579
NET INCOME (LOSS) $ (8,268) $ 31,528 $ (46,226) $ 53,202
BASIC/DILUTED
INCOME (LOSS) PER SHARE $ (.00) $ .01 $ (.01) $ .02
AVERAGE SHARES OUTSTANDING 3,880,651 3,516,382 3,880,651 3,112,156
DIVIDENDS PER SHARE OF COMMON STOCK $ - $ - $ - $ -
<FN>
See accompanying notes to financial statements.
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III.
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DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (46,226) $ 53,202
Charges to income not requiring cash:
Depreciation and depletion 67,770 66,621
Abandoned properties 5,577 831
Loss on partnership interests - 2,983
Decrease (increase) in operating assets:
Accounts receivable 39,869 (32,843)
Lease application deposits (90,391) -
Increase (decrease) in operating liabilities:
Accounts payable (97,245) (55,497)
Accrued production taxes (11,736) 10,467
Deferred tax liability (8,158) 9,579
Net cash provided by (used in) operating activities (140,540) 55,343
INVESTING ACTIVITIES:
Purchases of properties (485,511) (291,930)
Purchase of investment - (34,110)
Net cash (used in) investing activities (485,511) (326,040)
FINANCING ACTIVITIES:
Issuance of common stock - 1,524,571
Repayment of debt - (348,981)
Purchase of employee stock options - (13,200)
Stock offering costs paid - (116,320)
Proceeds from borrowings 150,000 98,981
Net cash provided by financing activities 150,000 1,145,051
INCREASE (DECREASE) IN CASH (476,051) 874,354
CASH AND CASH EQUIVALENTS
Beginning of period 868,313 41,232
End of period $ 392,262 $ 915,586
SUPPLEMENTAL DISCLOSURES OF CASH AND
NON-CASH TRANSACTIONS
Cash paid during the period for interest $ 309 $ 10,502
<FN>
See accompanying notes to financial statements.
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IV.
NOTES TO FINANCIAL STATEMENTS
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 February 28, 1998, are not
necessarily indicative of the operating results for the full year.
4. Correction of Previous Quarter Results
An error was made in the previous quarter, resulting in the overstatement of
oil and gas revenues and production costs and production taxes. The result of
the error was the overstatement of assets of $69,240, liabilities of $18,035
and net income of $51,205. The information for the current quarter contained
in the income statement is reflective of the adjustments made to the prior
quarter.
5. Earnings Per Share
In February, 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share" ("SFAS No. 128"). SFAS No. 128 established new
standards for computing and presenting earnings per share, effective for
financial statements issued for all periods ending after December 15, 1997,
including interim statements. The Company has adopted SFAS No. 128, effective
for these financial statements. The Company's Basic earnings per share is
essentially net income divided by the weighted shares outstanding, and the
Diluted earnings per share is computed by taking into consideration those
instruments, such as stock options, that may have a dilutive effect on
earnings per share. Basic and Dilute earnings per share would be comparable,
respectively, to Primary and Fully Diluted earnings per share, if earnings
per share were being reported under the old method.
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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 six months ended February 28, 1998 resulted in the
consumption of cash of $140,000. Payments on current liabilities was the primary
use of cash. Working capital declined by $467,000. The primary use of working
capital was expended on further development of the Graham Field. The Company is
working on obtaining transportation for production on the Graham Field. The
Company has $350,000 line of credit arrangement with a financial institution,
and has borrowed $150,000 on this line to meet current operating needs.
RESULTS OF OPERATIONS
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Year to Date Results of Operations Compared to Prior Year to Date Results
- -------------------------------------------------------------------------
Oil and gas sales increased 8% over the same six month period of one year ago.
The source of the increase - production was offset somewhat by a decline in oil
and gas pricing. The increase in revenues was offset by an increase in
production costs and taxes. Exploration expenses and write offs and abandonments
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 75%, or
$47,500. The main component of the increase was an increase in costs relative to
shareholder relations, and legal fees relating to proposed acquisitions of
properties.
Current Quarter Compared to Previous Quarter
- --------------------------------------------
Revenues from oil and gas sales increased by approximately $44,000, or 25%,
compared to the previous quarter. This increase was due primarily to an increase
in production. The increase was partially offset by corresponding increases in
production costs and taxes.
Exploration expenses decreased by $12,000 in the current quarter as compared to
the previous quarter as the company did not participate in any exploratory
drilling activities during the current quarter, other than continuing costs on
the Company's participation in the unsuccessful drilling of the Buffalo Robe
well. The Company's efforts for the current quarter were focused on possible
acquisitions of producing properties.
General and administrative costs increased by approximately 10%, due primarily
to the addition of staff required as the Company continues to expand the scope
of its activities.
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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)
Current Quarter Compared to Corresponding Quarter of Prior Year
- ---------------------------------------------------------------
Oil and gas revenues increased 11% 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 and gas pricing. The growth in production can be
attributed primarily to production the Waltman 21-19 well, along with an
increase in production on the Marianne Field, and an additional acquired
interest in the Long Butte Field which was acquired in the prior fiscal year.
Exploration costs increased by $17,000 for the current quarter as compared to
the corresponding quarter of a year ago. The Company incurred additional costs
in the current quarter for its participation in the unsuccessful drilling of the
Buffalo Robe well, which began in the previous quarter.
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VII.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the annual stockholders' meeting on January 21, 1998 the following
directors were elected:
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, 1998, with 2,188,640 votes for, 521 votes against, and 4,674
abstaining.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
No Forms 8-K were filed during the period covered by this report.
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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: April 13, 1998
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 392,262
<SECURITIES> 0
<RECEIVABLES> 137,562
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 620,215
<PP&E> 4,776,059
<DEPRECIATION> 1,708,030
<TOTAL-ASSETS> 3,782,146
<CURRENT-LIABILITIES> 217,716
<BONDS> 0
0
0
<COMMON> 388,062
<OTHER-SE> 3,139,232
<TOTAL-LIABILITY-AND-EQUITY> 3,782,146
<SALES> 389,544
<TOTAL-REVENUES> 390,637
<CGS> 0
<TOTAL-COSTS> 453,951
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 309
<INCOME-PRETAX> (54,384)
<INCOME-TAX> (8,158)
<INCOME-CONTINUING> (46,226)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,226)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
