<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934
HARKEN ENERGY CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the Form 8-K - Current Report dated
November 4, 1994 as set forth in the pages attached hereto:
Part I. Item 7 Financial Statements and Pro Forma Financial
Statements
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
HARKEN ENERGY CORPORATION
(Registrant)
By /s/ Bruce N. Huff
Bruce N. Huff
Senior Vice President and
Chief Financial Officer
Date: January 3, 1995
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<PAGE> 2
ITEM 7: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S> <C>
HARKEN ENERGY CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . 3
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements . . . . . . . . . . . 6
CHAP VENTURE
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Balance Sheets - September 30, 1994 and December 31, 1993 . . . . . . . . . . . . . . . . . . . 9
Statements of Operations - Year Ended December 31, 1993, and
Nine Months Ended September 30, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 10
Statements of Partners' Capital - Year Ended December 31, 1993, and
Nine Months Ended September 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Statements of Cash Flows - Year Ended December 31, 1993, and
Nine Months Ended September 30, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 12
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
HARKEN ENERGY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1994
(Unaudited)
<TABLE>
<CAPTION>
Harken Additional
Energy CHAP
ASSETS Corporation Interest Pro Forma
------ -------------- ----------- --------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash, temporary investments, and notes $ 3,140,000 $ 117,000 $ 3,257,000
Accounts receivable, net 376,000 144,000 520,000
Accounts receivable from former subsidiaries 984,000 6,000 990,000
Prepaid expenses and other 315,000 65,000 380,000
Marketable equity securities 931,000 - 931,000
-------------- ----------- --------------
Total current assets 5,746,000 332,000 6,078,000
PROPERTY AND EQUIPMENT, NET 18,395,000 1,319,000 19,714,000
INVESTMENTS IN FORMER SUBSIDIARIES 8,459,000 - 8,459,000
NOTES RECEIVABLE FROM RELATED PARTIES,
INCLUDING INTEREST 464,000 - 464,000
OTHER ASSETS 885,000 14,000 899,000
-------------- ----------- --------------
Total assets $ 33,949,000 $ 1,665,000 $ 35,614,000
============== =========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Trade payables $ 274,000 $ - $ 274,000
Accrued liabilities and other 2,238,000 92,000 2,330,000
Revenues and royalties payable 1,279,000 43,000 1,322,000
Notes payable 900,000 - 900,000
-------------- ----------- --------------
Total current liabilities 4,691,000 135,000 4,826,000
COMMITMENTS AND CONTINGENCIES
DEFERRED REVENUE, net of current portion 77,000 - 77,000
REDEEMABLE PREFERRED STOCK 1,868,000 - 1,868,000
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value 654,000 10,000 664,000
Additional paid-in capital 131,052,000 1,520,000 132,572,000
Retained deficit (83,636,000) - (83,636,000)
Treasury stock (20,757,000) - (20,757,000)
-------------- ----------- --------------
Total stockholders' equity 27,313,000 1,530,000 28,843,000
-------------- ----------- --------------
Total liabilities and stockholders' equity $ 33,949,000 $ 1,665,000 $ 35,614,000
============== =========== ==============
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
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<PAGE> 4
HARKEN ENERGY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(Unaudited)
<TABLE>
<CAPTION>
Harken Additional
Energy CHAP
Corporation Interest Pro Forma
----------- ---------- -----------
<S> <C> <C> <C>
REVENUES:
Oil and gas operations $ 2,817,000 $1,035,000 $ 3,852,000
Interest income 67,000 2,000 69,000
Other income 562,000 37,000 599,000
----------- ---------- -----------
3,446,000 1,074,000 4,520,000
COSTS AND EXPENSES:
Oil and gas operating expenses 991,000 337,000 1,328,000
General and administrative expenses, net 2,372,000 96,000 2,468,000
Depreciation and amortization 1,444,000 92,000 1,536,000
Interest expense and other 68,000 - 68,000
----------- ---------- -----------
4,875,000 525,000 5,400,000
----------- ---------- -----------
Income (loss) before income taxes (1,429,000) 549,000 (880,000)
INCOME TAX EXPENSE - - -
----------- ---------- -----------
Income (loss) from continuing operations (1,429,000) 549,000 (880,000)
DISCONTINUED OPERATIONS:
Income (loss) from operations of discontinued well service
and contract drilling segment (507,000) - (507,000)
Gain on sale of well service and contract
drilling rigs 286,000 - 286,000
----------- ---------- -----------
(221,000) - (221,000)
----------- ---------- -----------
Net income (loss) $(1,650,000) $ 549,000 $(1,101,000)
=========== ========== ===========
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO
COMMON STOCK:
Loss from continuing operations $ (0.03) $ (0.02)
Discontinued operations (0.00) (0.00)
----------- -----------
Net income (loss) $ (0.03) $ (0.02)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 59,482,853 60,442,853
=========== ===========
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
-4-
<PAGE> 5
HARKEN ENERGY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(Unaudited)
<TABLE>
<CAPTION>
Harken Additional
Energy CHAP
Corporation Interest Pro Forma
------------ ---------- ------------
<S> <C> <C> <C>
REVENUES:
Oil and gas operations $ 4,970,000 $2,135,000 $ 7,105,000
Well servicing operations 2,074,000 - 2,074,000
Management fee income 300,000 - 300,000
Interest income 225,000 4,000 229,000
Other income 1,106,000 53,000 1,159,000
------------ ---------- ------------
8,675,000 2,192,000 10,867,000
COSTS AND EXPENSES:
Cost of sales and operating expenses-
Oil and gas operations 1,825,000 676,000 2,501,000
Well servicing operations 936,000 - 936,000
General and administrative expenses, net 4,219,000 199,000 4,418,000
Depreciation and amortization 3,254,000 299,000 3,553,000
Provision for impairment of contract drilling rigs
and related equipment 3,112,000 - 3,112,000
Provision for asset impairments 726,000 - 726,000
Interest expense and other 97,000 13,000 110,000
------------ ---------- ------------
14,169,000 1,187,000 15,356,000
------------ ---------- ------------
Net income (loss) before income taxes (5,494,000) 1,005,000 (4,489,000)
INCOME TAX EXPENSE - - -
------------ ---------- ------------
Net income (loss) $ (5,494,000) $1,005,000 $ (4,489,000)
============ ========== ============
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO
COMMON STOCK:
Net income (loss) $ (0.09) $ (0.08)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 58,392,901 59,352,901
============ ============
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
-5-
<PAGE> 6
HARKEN ENERGY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
Effective August 1, 1994, Harken Energy Corporation (the "Company"), purchased
an additional 20.35625% interest in the CHAP Venture (the "Venture") from three
of the partners in the Venture for consideration of 960,000 restricted shares
of common stock of the Company. The Company purchased 11.625% from Crusader,
Inc., 5.23125% from Australian Hydrocarbons, Inc., and 3.50% from C.A.B.
Resources, Inc. These percentages represent all of the respective partners'
interest in the Venture. As a result of the purchase, the Company and its
subsidiaries hold a 70.35625% total interest in the Venture at October 20,
1994, the closing date of the transaction.
The accompanying unaudited pro forma balance sheet presents the proportionately
consolidated combined pro forma financial position of the Company and the
Venture as of September 30, 1994, assuming that the additional interest in the
Venture had been acquired on that date. The accompanying unaudited pro forma
statements of operations present the proportionately consolidated combined pro
forma results of the Company and the Venture for the nine months ended
September 30, 1994, and for the year ended December 31, 1993, assuming that the
additional interest in the Venture had been acquired on January 1, 1994 and
1993, respectively.
The amounts for the additional CHAP interest shown in the above mentioned pro
forma financial statements reflect the 20.35625% acquired interest after making
pro forma adjustments to reflect the purchase price of the additional interest
based on the issuance of 960,000 restricted shares of Harken Energy Corporation
common stock, the calculation of depreciation and amortization based on the
adjusted basis of the Company in the oil and gas properties under purchase
accounting, and the reduction of certain Venture contingent liabilities from
which the Company has been indemnified by the selling partners.
The accompanying unaudited pro forma financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information required in audited financial statements
prepared in accordance with generally accepted accounting principles has been
omitted pursuant to those rules and regulations. The consolidated financial
statements of the Company and the related notes thereto presented in the Annual
Report on Form 10-K as of December 31, 1993, and the Quarterly Report on Form
10-Q as of September 30, 1994, as well as the financial statements of CHAP
Venture and related notes thereto included in this report should be read in
conjunction with these pro forma statements.
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<PAGE> 7
CHAP VENTURE
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1993
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Operator of
CHAP Venture:
We have audited the accompanying balance sheet of CHAP Venture as of December
31, 1993, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the
responsibility of the Venture's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit 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 amounts 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 audit provides 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 CHAP Venture as of December
31, 1993, and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
December 22, 1994
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<PAGE> 9
CHAP VENTURE
BALANCE SHEETS
AS OF DECEMBER 31, 1993, AND SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1994 1993
------ ------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 573,000 $ 919,000
Accounts receivable-
Oil, gas, and NGL sales 706,000 704,000
Related party 31,000 31,000
Other - 3,000
Inventory of oil field equipment 317,000 308,000
------------- -------------
Total current assets 1,627,000 1,965,000
OIL AND GAS PROPERTY AND EQUIPMENT:
Oil and gas properties, full cost method 38,757,000 38,453,000
Accumulated depreciation and amortization (21,588,000) (19,704,000)
------------- -------------
Net oil and gas property and equipment 17,169,000 18,749,000
OTHER PROPERTY AND EQUIPMENT:
Aneth gas plant 1,261,000 1,839,000
Furniture, fixtures, and vehicles 572,000 800,000
Accumulated depreciation and amortization (1,009,000) (909,000)
------------- -------------
Net investment in other property and equipment 824,000 1,730,000
OTHER ASSETS 71,000 97,000
------------- -------------
Total assets $ 19,691,000 $ 22,541,000
============= =============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,303,000 $ 2,210,000
Revenues payable 212,000 340,000
Related party payables - 135,000
------------- -------------
Total current liabilities 2,515,000 2,685,000
PARTNERS' CAPITAL 17,176,000 19,856,000
------------- -------------
Total liabilities and partners' capital $ 19,691,000 $ 22,541,000
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-9-
<PAGE> 10
CHAP VENTURE
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1993 AND 1994
<TABLE>
<CAPTION>
(Unaudited)
Nine-Month Period
Ended September 30, Year Ended
--------------------------- December 31,
1994 1993 1993
---------- ---------- ------------
<S> <C> <C> <C>
REVENUES:
Oil sales $3,357,000 $5,859,000 $ 7,125,000
Gas and NGL sales 781,000 842,000 1,243,000
Aneth plant income 943,000 1,691,000 2,124,000
Service income 95,000 173,000 227,000
Other 99,000 39,000 56,000
---------- ---------- ------------
Total revenues 5,275,000 8,604,000 10,775,000
---------- ---------- ------------
EXPENSES:
Oil and gas operating 575,000 707,000 895,000
Production taxes 405,000 993,000 1,174,000
Aneth plant expense 584,000 854,000 1,148,000
Depreciation and amortization 2,042,000 3,117,000 5,581,000
General and administrative 470,000 735,000 980,000
Service expense 86,000 67,000 99,000
Other - 11,000 66,000
---------- ---------- ------------
Total expenses 4,162,000 6,484,000 9,943,000
---------- ---------- ------------
NET INCOME $1,113,000 $2,120,000 $ 832,000
========== ========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-10-
<PAGE> 11
CHAP VENTURE
STATEMENT OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1993 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
<S> <C>
BALANCE, at January 1, 1993 $23,056,000
Capital contributions 5,140,000
Distributions (9,172,000)
Net income 832,000
-----------
BALANCE, at December 31, 1993 19,856,000
Capital contributions 1,569,000
Distributions (5,362,000)
Net income 1,113,000
-----------
BALANCE, at September 30, 1994 (unaudited) $17,176,000
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-11-
<PAGE> 12
CHAP VENTURE
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1993 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1993 AND 1994
<TABLE>
<CAPTION>
(Unaudited)
Nine-Month Period
Ended September 30, Year Ended
--------------------------- December 31,
1994 1993 1993
---------- ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,113,000 $2,120,000 $ 832,000
Adjustments to reconcile net income to cash
provided by operating activities-
Depreciation and amortization 2,042,000 3,117,000 5,581,000
Decrease in accounts receivable 27,000 1,256,000 1,035,000
Decrease in accounts payable and
accrued expenses (401,000) (1,133,000) (1,043,000)
Decrease/(increase) in inventory (9,000) 28,000 (41,000)
(Gain)/loss on sale of assets (75,000) 4,000 4,000
---------- ---------- -----------
Net cash provided by operating activities 2,697,000 5,392,000 6,368,000
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (304,000) (2,186,000) (2,409,000)
Proceeds from sale of property and equipment 1,054,000 113,000 113,000
---------- ---------- -----------
Net cash provided by (used in)
investing activities 750,000 (2,073,000) (2,296,000)
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners 1,569,000 4,191,000 5,140,000
Distributions to partners (5,362,000) (8,069,000) (9,172,000)
---------- ---------- -----------
Net cash used in financing activities (3,793,000) (3,878,000) (4,032,000)
---------- ---------- -----------
NET INCREASE (DECREASE) IN
CASH AND EQUIVALENTS (346,000) (559,000) 40,000
CASH AND EQUIVALENTS,
at beginning of period 919,000 879,000 879,000
---------- ---------- -----------
CASH AND EQUIVALENTS,
at end of period $ 573,000 $ 320,000 $ 919,000
========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-12-
<PAGE> 13
CHAP VENTURE
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Chap Venture (the "Venture") is a joint venture, which was organized on August
1, 1988, to explore for, develop, and produce oil and gas in the Paradox Basin
in Utah, Arizona, and New Mexico on the Navajo Indian Reservation. The
operator of the Venture is Harken Southwest Corporation (HSW), a wholly owned
subsidiary of Harken Energy Corporation. The accompanying financial statements
are presented in accordance with generally accepted accounting principles for
the Venture and do not necessarily reflect the cost basis of the individual
venture partners.
Revenues, costs and expenses, and distributions are allocated among the
partners in accordance with the terms of the venture agreement.
Oil and Gas Properties
The Venture follows the full cost method of accounting. Under this method, all
costs associated with property acquisition, exploration, and development
activities are capitalized and amortized on a venturewide unit-of-production
method over the estimated productive life of the recoverable oil and gas
reserves. All geological and geophysical costs, delay rentals, dry hole costs,
costs of exploratory wells, and development costs are capitalized. When leases
are surrendered or abandoned, their costs remain a part of the net capitalized
costs of the cost center.
Under the full cost method of accounting, capitalized costs of evaluated oil
and gas properties are limited primarily to the present value of the estimated
future net revenues to be derived from the properties based on current costs
and current prices paid for oil and gas. The Venture recognized a writedown in
the carrying value of its evaluated oil and gas properties of approximately
$1,600,000 at December 31, 1993, which is included in depreciation and
amortization expense in the accompanying statement of operations.
Oil and gas leasehold costs are capitalized when incurred. Unproved oil and
gas properties with significant acquisition costs are periodically assessed and
any impairment in value is charged to expense. The costs of unproved
properties which are not individually significant are assessed periodically in
the aggregate based on historical experience and any impairment in value is
charged to expense. The costs of unproved properties which are determined to
be productive are transferred to proved oil and gas properties. The Venture's
net investment in unproved properties was $1,135,000 and $1,187,000 at
September 30, 1994, and December 31, 1993, respectively.
The Aneth gas plant and other property and equipment are depreciated on the
straight-line method over their estimated useful lives ranging from three to
twenty-two years.
Income Taxes
The Venture records no federal income taxes since these taxes are the
responsibility of the individual partners.
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<PAGE> 14
Statement of Cash Flows
For the purpose of the statement of cash flows, the Venture considers all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.
2. RELATED PARTY TRANSACTIONS:
Each CHAP partner pays its respective participating interest share of costs and
expenses and receives its participating interest share of revenues. HSW is the
operator of the Venture. As operator, HSW is reimbursed by the Venture for
indirect costs incurred on behalf of the Venture or in the pursuit of Venture
activities.
In addition, HSW receives a monthly overhead fee for managing the Venture.
This overhead fee totaled $333,000 and $780,000 for the nine months ended
September 30, 1994, and the year ended December 31, 1993, respectively.
During 1993, the Venture transferred certain office equipment to HSW in
exchange for a monthly reduction in the above discussed monthly overhead fee
for a period of five years beginning January 1, 1993. A loss of approximately
$4,000 was recognized on this transfer.
3. SUBSEQUENT EVENT
Effective August 1, 1994, Harken Energy Corporation (the "Company") purchased
the interest in CHAP from three of the current partners in the CHAP joint
venture. The Company purchased 11.625% from Crusader, Inc., 5.23125% from
Australian Hydrocarbons, Inc., and 3.50% from C.A.B. Resources, Inc. These
percentages represent all of the respective partners' interest in the Venture.
As a result of the purchase, the Company and its subsidiaries hold a 70.35625%
total interest in the Venture.
Subsequent to December 31, 1993, the Venture's interest in the Aneth gas plant
was reduced due to an annual redetermination based on each owner's relative
percentage of natural gas volumes processed by the plant. The Venture received
a cash payment of approximately $664,000 in compensation for its reduction in
ownership interest.
4. CONTINGENCIES:
The Venture's exploration and development activities and production of oil and
gas are subject to various Navajo, federal and state laws, and regulations
designed to protect the environment. Compliance with these regulations is part
of the Venture's day-to-day operations. Accruals are made to comply with such
regulations as sites of environmental concern are identified.
Management has accrued an estimate of certain contingent liabilities on
outstanding operational and environmental claims related to its operations.
Such accruals totaled approximately $1,850,000 at December 31, 1993. Should
these contingent liabilities become due and payable, the Venture would pay such
obligations with existing cash balances, future partners' capital
contributions, and/or the sale of certain Venture assets, as appropriate. It
is not anticipated that the realization of these contingent liabilities would
have a significant adverse effect on the financial position of the Venture.
-14-
<PAGE> 15
5. OIL AND GAS PRODUCING ACTIVITIES AND RESERVE INFORMATION:
Set forth below is certain information regarding the aggregate capitalized
costs of oil and gas properties and costs incurred in oil and gas property
acquisitions and development activities:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
----------- -----------
(Unaudited)
<S> <C> <C>
Capitalized Costs:
Proved properties $37,622,000 $37,266,000
Unproved properties 1,135,000 1,187,000
----------- -----------
38,757,000 38,453,000
Accumulated depreciation and amortization (21,588,000) (19,704,000)
----------- -----------
$17,169,000 $18,749,000
=========== ===========
Costs Incurred:
Property Acquisitions-
Proved properties $ -
Unproved properties -
Development costs 1,009,000
Exploration costs 583,000
-----------
$ 1,592,000
===========
</TABLE>
The following unaudited table sets forth proved oil and gas reserves at
December 31, 1993:
<TABLE>
<CAPTION>
December 31, 1993
--------------------------
(Bbls) (Mcf)
---------- ------------
<S> <C> <C>
Proved Reserves
Beginning of period 2,665,000 9,906,000
Purchases of minerals in place - -
Extensions and discoveries 2,000 1,453,000
Production (465,000) (785,000)
--------- ----------
End of period 2,202,000 10,574,000
========= ==========
Proved Developed Reserves 1,328,000 3,455,000
========= ==========
</TABLE>
-15-
<PAGE> 16
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved
Reserves (Unaudited):
<TABLE>
<CAPTION>
December 31,
1993
------------
<S> <C>
Cash Flows Relating to Proved Reserves:
Future Cash Flows $53,888,000
Future Costs-
Production (18,455,000)
Development (6,270,000)
-----------
Future Net Cash Flows 29,163,000
10% Discount Factor (11,653,000)
-----------
Standardized Measure of Discounted Future Net Cash Flows $17,510,000
===========
</TABLE>
Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves:
<TABLE>
<CAPTION>
Year Ended
December 31,
1993
------------
<S> <C>
Standardized Measure - beginning of year $21,947,000
Increase (decrease)
Sales, net of production costs (6,299,000)
Extensions and discoveries, net of future costs 1,862,000
Purchases of reserves in place -
-----------
Standardized Measure, end of year $17,510,000
===========
</TABLE>
-16-
