<PAGE>
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 [FEE REQUIRED]
For the Fiscal Year ended: SEPTEMBER 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission File No. 0-9295
WINCO PETROLEUM CORPORATION
(Exact Name of Registrant as Specified in its Charter)
COLORADO 84-0794604
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1645 COURT PLACE, SUITE 312
DENVER, COLORADO 80202
(Address of Principal Executive Offices, Including Zip Code)
Registrant's Telephone Number, Including Area Code: (303) 623-9095
Securities Registered Pursuant to Section 12(b) of the Act: NONE.
Securities Registered Pursuant to Section 12(g) of the Act: COMMON STOCK, NO
PAR VALUE PER SHARE.
Indicate by check mark whether the Registrant (1) has 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 No X
--- ---
As of December 14, 1995, 23,000,000 shares of common stock were outstanding,
and the aggregate market value of the common stock of Winco Petroleum
Corporation held by nonaffiliates was approximately $39,856 based on the last
closing bid price at that date.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not 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. /X/
Documents incorporated by reference: NONE.
This Form 10-KSB consists of ____ pages. The Exhibit Index begins on page 12.
<PAGE>
ITEM 1. BUSINESS.
(A) GENERAL DEVELOPMENT OF BUSINESS. Winco Petroleum Corporation (the
"Registrant") with principal and executive offices at 1645 Court Place, Suite
312, Denver, Colorado 80202, telephone (303) 623-9095, was incorporated as a
Colorado corporation on June 21, 1979 primarily for the purpose of
exploration, development, and production of oil and gas reserves.
The Registrant attempts to obtain outside participation in its drilling
operations in the form of joint ventures and drilling programs depending on
the cost of drilling a prospect(s) and the Registrant's estimate of the risk.
Joint ventures currently and in the future will consist of affiliated and
non-affiliated oil and gas companies, non-company sponsored drilling funds
and individuals including Officers and Directors of the Registrant,
knowledgeable of the risks inherent in the oil and gas exploration industry.
While such practices decrease the risk to the Registrant on its unsuccessful
efforts, they also limit the Registrant's return on successful efforts.
The Registrant attempts to acquire both developed and undeveloped proper
ties that third persons may consider desirable for exploration and/or
development. If possible, the Registrant attempts to enter into agreements
with any such third persons whereby such properties may be sold to third
persons with the Registrant retaining an interest in the properties involved
or whereby the Registrant may agree to give up a portion of its interest in
such properties in exchange for a commitment by such third persons to explore
and/or develop the properties involved. If it is not possible to negotiate
an agreement of either nature, the Registrant may attempt to explore and/or
develop any such properties without such assistance from third persons.
(A) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. The Registrant's
activities are confined to oil and gas exploration and development, hence the
Registrant has no industry segments other than the oil and gas business. See
the Financial Statements for information concerning the Registrant's business.
(B) NARRATIVE DESCRIPTION OF BUSINESS.
GENERAL. The Registrant engages in the business of exploring and
developing oil and gas reserves and produces and sells crude oil and natural
gas in the United States. The Registrant intends to continue to participate
with others in oil and gas exploration to increase its ownership in proven
reserves.
(I) PRINCIPAL PRODUCTS PRODUCED AND SERVICES RENDERED AND PRINCIPAL
MARKETS. The Registrant's principal products are crude oil and natural gas.
Crude oil and natural gas are sold to various purchasers, including pipeline
companies, which generally service the areas in which the producing wells
are located.
(II) STATUS OF NEW PRODUCTS OR INDUSTRY SEGMENTS. There has been no
public announcement of, and no information otherwise has been made public
about, a new product or industry segment, which would require the investment
of a material amount of the Registrant's assets, or which otherwise is
material.
(III) SOURCES AND AVAILABILITY OF RAW MATERIALS. The existence of
commercial oil and gas reserves is essential to the ultimate realization of
value from the Registrant's properties, and thus may be considered a raw
material essential to the Registrant's business. However, the acquisition,
exploration, development, production and sale of oil and gas is subject to
many factors which are outside the Registrant's control. These factors
include national and international economic conditions, availability of
drilling rigs, casing, pipe and other equipment and supplies, proximity to
pipelines, the supply and price of other fuels, and the regulation of prices,
production, transportation, and marketing
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by the Department of Energy and other federal and state governmental
authorities. The Registrant acquires oil and gas properties from landowners,
other owners of interests in such properties, or governmental entities. For
information relating to specific properties of the Registrant, see Item 2
below. The Registrant currently is not experiencing any difficulty in
acquiring necessary supplies, including drilling rigs.
(IV) PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS. The
Registrant does not own any patents, trademarks, licenses, franchises, or
concessions except oil and gas interests granted from governmental
authorities or acquired from private landowners.
(V) SEASONAL NATURE OF BUSINESS. The Registrant's business is not
seasonal in nature, except to the extent that weather conditions at certain
times of the year may affect its access to oil and gas properties, and its
ability to drill oil and gas wells.
(VI) WORKING CAPITAL ITEMS. Practices and conditions with respect to
specific working capital items are not relevant to an understanding of the
Registrant's business. Working capital is not required to carry inventories
or accounts receivable, to meet rapid delivery requirements, or to assure
continuous allotments of goods from suppliers. However, access to
sufficient cash is essential to take advantage of opportunities to acquire
additional oil and gas properties.
(VII) MAJOR CUSTOMERS. The following table sets forth information
concerning customers, or any group of customers under common control, or
customers which are affiliates of each other, to which sales were made by the
Registrant during the fiscal year ended September 30, 1995, in an amount
which equals 10% or more of the Registrant's revenue and the Registrant's
relationship to each:
<TABLE>
<CAPTION>
AMOUNT OF
OIL AND GAS PERCENT
SALES AND OF TOTAL
CUSTOMER ROYALTIES REVENUE
-------- ----------- --------
<S> <C> <C>
Western Gas Resources, Inc. $14,877 13.22%
Texaco Trading, Inc. $62,983 55.97%
</TABLE>
The Registrant believes that if it should lose any of its present
customers, other customers for its oil and gas would be readily available.
Thus, the loss of these customers would not have a material adverse effect on
the Registrant due to the availability of other customers.
(VIII) BACKLOG. Backlog is not relevant to an understanding of the
Registrant's business.
(IX) RENEGOTIATION OR TERMINATION OF GOVERNMENTAL CONTRACTS. The
Registrant has no portion of its business which may be subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
(X) COMPETITIVE CONDITIONS. The exploration for and development and
production of oil and gas are subject to intense competition. The principal
methods of competition in the industry for the acquisition of oil and gas
leases are the payment of bonus payments at the time of acquisition of
leases, delay rentals, location damage supplement payments, the use of
differential royalty rates, the amount of annual rental payments and
stipulations requiring exploration and production commitments by the lessee.
Companies with greater financial resources, staff and labor forces,
equipment for exploration, and vast experience will be in a better position
than the Registrant to compete for such leases. In addition, the ability of
the Registrant to market any oil or gas which it might produce could be
severely limited by its inability to compete with larger companies operating
in the same area who
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may be willing or able to offer any oil or gas produced by them at a price
lower than that of the Registrant. In addition, the availability of a ready
market for oil and gas will depend upon numerous factors beyond the
Registrant's control, including the extent of domestic production and imports
of oil, proximity and capacity of pipelines, and the affect of federal and
state regulation of oil and gas sales. The Registrant has an insignificant
competitive position in the oil and gas industry.
(XI) RESEARCH AND DEVELOPMENT. The Registrant has not engaged and
does not currently engage in any research and development activities.
(XII) ENVIRONMENTAL PROTECTION. The Registrant is subject to various
federal, state, and local provisions regarding environmental matters, the
existence of which has not hindered nor adversely affected the Registrant's
business. Although the Registrant does not believe its business operations
presently impair environmental quality, compliance with federal, state and
local regulations which have been enacted or adopted regulating the discharge
of materials into the environment could have an adverse effect upon the
capital expenditures, earnings and competitive position of the Registrant.
Since inception, the Registrant has not made any material capital
expenditures for environmental control facilities and does not expect to make
any such expenditures during the current and following fiscal years.
(XIII) EMPLOYEES. As of September 30, 1995, the Registrant had one
full-time employee consisting of its President, L. W. Winkler, Jr. and 2 part
time employees, an office manager and bookkeeper. The Registrant also
utilizes the services of 2 independent contractors on a when-needed basis.
(C) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES. The Registrant has no operations in foreign countries and no portion
of its sales or revenues is derived from customers in foreign countries.
ITEM 2. PROPERTIES.
OFFICE FACILITIES. The Registrant's offices are located at 1645 Court
Place, Suite 312, Denver, Colorado 80202, in space which the Registrant rents
from a non-affiliated third party. The Registrant leases approximately 750
square feet and pays a monthly rental for such premises of $450. The
Registrant believes that its present office facilities are adequate for its
present operations.
OIL AND GAS PROPERTIES. The following table summarizes the Registrant's
developed and undeveloped oil and gas acreage which the Registrant held a
working interest as of September 30, 1995:
<TABLE>
<CAPTION>
DEVELOPED ACREAGE UNDEVELOPED ACREAGE
------------------- -------------------
STATE GROSS NET GROSS NET
----- ----- --- ----- ---
<S> <C> <C> <C> <C>
Wyoming 1160.63 1160.63 160.00 160.00
</TABLE>
OIL AND GAS RESERVES. Information concerning the Registrant's
capitalized costs, costs incurred in producing oil and gas activities,
revenues from producing oil and gas activities, oil and gas reserves,
estimated future net revenues, and the present value of estimated future net
revenues attributable thereto are provided in Notes 3 and 8 of Notes to
Financial Statements appearing elsewhere in this Form 10-KSB. Reserves
reported in this Form 10-KSB are based on the net revenue interest owned by
the Registrant.
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ESTIMATES OF TOTAL PROVED NET OIL AND GAS RESERVES FILED WITH OR
REPORTS TO OTHER FEDERAL AUTHORITIES OR AGENCIES. There have been no reserve
estimates filed with any federal or foreign governmental authority or agency
during the past twelve months.
LONG-TERM OR SIMILAR AGREEMENTS. The Registrant has no oil and gas
reserves or production subject to long-term supply or similar arrangements
with foreign governments or authorities in which the Registrant acts as
producer.
NET OIL AND GAS PRODUCTION. The following table sets forth the net
quantities of oil and gas produced by the Registrant for each of the fiscal
years ended September 30, 1995 and 1994:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1995 1994
---- ----
<S> <C> <C>
Crude Oil and Condensate (bbls.) 5,630 6,204
Natural Gas (MCF) 11,671 18,400
</TABLE>
AVERAGE SALES PRICE AND PRODUCTION COSTS PER UNIT OF PRODUCTION. The
following table sets forth the average sales price and production cost per
barrel of oil for the fiscal years ended September 30, 1995 and 1994:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1995 1994
---- ----
<S> <C> <C>
Average Sales Price per
Equivalent Barrel $17.42 $13.40
Average Production (Lifting)
Costs per Equivalent
Barrel $11.59 $10.06
</TABLE>
PRODUCING WELLS AND ACREAGE. The following table sets forth, as of
September 30, 1995, the approximate number of gross and net producing oil and
gas wells and their related developed acres owned by the Registrant.
Productive wells are producing wells and wells capable of production,
including shut-in wells. Developed acreage consists of acres spaced or
assignable to productive wells.
<TABLE>
<CAPTION>
PRODUCING WELLS
- -------------------------------------------------
OIL GAS DEVELOPED ACRES
- -------------------- --------------------- --------------------
GROSS(1) NET(2) GROSS(1) NET(2) GROSS(1) NET(2)
- -------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
12 6.65 0 0 1160.63 1160.63
</TABLE>
_____________________
(1) A "gross well" or "gross acre" is a well or acre in which a working
interest is held. The number of gross wells or acres is the total
number of wells or acres in which a working interest is owned.
(2) A "net well" or "net acre" is deemed to exist when the sum of
fractional ownership interests in gross wells or acres equals one.
The number of net wells or net acres is the sum of the
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fractional working interests owned in gross wells or gross acres
expressed as whole numbers and fractions thereof.
UNDEVELOPED ACREAGE. At September 30, 1995, the Registrant had
undeveloped acreage as set forth below:
<TABLE>
<CAPTION>
UNDEVELOPED ACRES(1)
----------------------
LOCATION GROSS NET
-------- ----- ---
<S> <C> <C>
Wyoming 640 160
</TABLE>
_____________________
(1) Undeveloped acreage is considered to be those lease acres 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.
OVERRIDING ROYALTIES. The following table sets forth information
concerning the Registrant's current overriding royalties as of September 30,
1995:
<TABLE>
<CAPTION>
STATE GROSS ACRES NET ACRES ORR
----- ----------- --------- ---
<S> <C> <C> <C>
Wyoming 200 200 .0600
</TABLE>
DELIVERY COMMITMENTS. The Registrant is not obligated to provide a
fixed and determinable quantity of oil or gas in the future pursuant to
existing contracts or agreements.
ITEM 3. LEGAL PROCEEDINGS.
The Registrant knows of no material pending legal proceedings to which
the Registrant is a party or of which any of its properties is the subject
and no such proceedings are known to the Registrant to be contemplated by
governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
No matters were submitted during the fourth quarter of the fiscal year
ended September 30, 1995 covered by this Report to a vote of Registrant's
security holders through the solicitation of proxies or otherwise.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY STOCK AND RELATED STOCKHOLDER
MATTERS.
(a) PRINCIPAL MARKET OR MARKETS. The Registrant's common stock, no
par value, is traded in the national over-the-counter market and quotes for such
common stock are reported by the National Association of Securities Dealers,
Inc. on its "pink sheets" under the symbol "WNCO." The range of high and low
bid prices for each quarterly period during the two most recent fiscal years
ended September 30, 1995 and 1994 are reported as follows:
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
------------------- ------ ------
<S> <C> <C>
December 30, 1993 $.0025 $.0025
March 31, 1994 $.0025 $.0025
June 30, 1994 $.0025 $.0025
September 30, 1994 $.0025 $.0025
December 30, 1994 $.0025 $.0025
March 31, 1995 $.0025 $.0025
June 30, 1995 $.0025 $.0025
September 30, 1995 $.0025 $.0025
</TABLE>
The trading market for the Registrant's common stock is extremely
sporadic and limited. The foregoing bid quotations represent the last known
trading activity and/or inter-dealer quotations, without retail mark-ups, mark-
downs or commissions and may not necessarily represent actual trans actions.
(b) SECURITY HOLDERS. The approximate number of security holders of
record of the Registrant's no par value common stock as of September 30, 1995
was approximately 2,350.
(c) DIVIDENDS. Holders of Common Stock are entitled to receive such
dividends as may be declared by the Registrant's Board of Directors. No
dividends have been paid with respect to the Registrant's common stock and the
Registrant has no present plans to pay dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL INFORMATION.
The following is a summary of selected financial data which the
Registrant believes highlights its financial condition and results of
operations.
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<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1995 1994
-------- --------
<S> <C> <C>
Revenues $109,663 $119,358
-------- --------
Net Earnings (Loss) $(59,881) $(57,423)
-------- --------
Net Earnings (Loss)
Per Common Share $ -- * $ -- *
-------- --------
-------- --------
Total Assets $393,944 $447,153
-------- --------
Long-term Obligations -- --
-------- --------
-------- --------
___________________
* Less than one cent per share.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES. During the fiscal year ended
September 30, 1995, the Registrant's working capital decreased from $214,333 at
September 30, 1994, to $175,169 at September 30, 1995.
The Registrant expects that its existing working capital and the
funds generated from operations in fiscal 1996 will be sufficient to meet its
anticipated 1996 activities. However, the Registrant intends to utilize funds
for acquisition of properties. Therefore, the Registrant expects investment
income to decrease significantly in fiscal 1996.
The Registrant sold approximately 4,570 barrels of oil during fiscal
year 1995. The Registrant had on hand, in tanks, approximately 1,170 barrels of
saleable oil at September 30, 1995. All of the Registrant's production is
hauled by the purchaser, rather than flowing through a pipeline. The Registrant
expects income from production to remain stable through fiscal year 1996.
The Registrant sold approximately 10,650 MCF of natural gas during the
fiscal year ended September 30, 1995, as compared to 18,400 MCF during the
fiscal year ended September 30, 1994.
The Registrant intends to pursue participation in drilling prospects
with industry partners. Such participation will be limited by available capital
and evaluation of such prospects.
RESULTS OF OPERATIONS - FISCAL YEAR ENDED SEPTEMBER 30, 1995. Oil and
gas income decreased due to the natural production decline of the Registrant's
wells but was offset by the increase in the sales price of oil and gas.
Operating expenses increased due to repairs incurred in certain wells. A
producing property was contributed to the Company by a major
Shareholder/Director.
RESULTS OF OPERATIONS - FISCAL YEAR ENDED SEPTEMBER 30, 1994. Oil and
gas income decreased due to the natural production decline of the Registrant's
wells and the decrease in the sales price of oil and gas. Operating expenses
decreased due to the resulting decline in production. For no consideration, the
Company assigned its interest in two marginal oil wells to the operator and
joint owner of the wells.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Part IV, Page F-1 of this Report.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
IDENTIFICATION OF OFFICERS AND DIRECTORS. The following table sets
forth the names and ages of all Officers and Directors of the Registrant,
indicating all positions and offices with the Registrant held by each such
person, and any periods during which he has served as such:
<TABLE>
<CAPTION>
ALL POSITIONS PERIOD SERVED
AND OFFICES HELD AS DIRECTOR
NAME AND ADDRESS AGE WITH THE REGISTRANT OF REGISTRANT
---------------- --- ------------------- -------------
<S> <C> <C> <C>
L. W. Winkler, Jr. 76 President, Director, June 21, 1979
775 Ivanhoe Street Treasurer and to Present
Denver, Colorado 80220 Chief Executive
Officer
G. Allan Nelson 73 Secretary and April 7, 1989
1776 Lincoln, #1002 Director to Present
Denver, Colorado 80203
</TABLE>
The Registrant's Directors hold office until the next annual meeting
of the Registrant's shareholders. There is no arrangement or understanding
between any Director or nominee for Director of the Registrant and any other
person or persons pursuant to which such Director was or is to be selected as a
Director or a nominee for Director.
The Registrant does not employ any person, other than the above-named
Executive Officers, who make or are expected to make significant contributions
to the business of the Registrant.
There is no family relationship between any Director or Executive
Officer or person nominated or chosen by the Registrant to become a Director or
Executive Officer.
BUSINESS EXPERIENCE OF DIRECTORS AND OFFICERS.
L. W. WINKLER, JR. Mr. Winkler has been the President, Treasurer,
Chief Executive Officer and Director of the Registrant since June 21, 1979. For
the past five years, Mr. Winkler has been an independent oil producer.
G. ALLAN NELSON. Mr. Nelson was appointed to the Board of Directors and
elected Secretary of the Registrant on April 7, 1989. Mr. Nelson holds a
degree in geology from the University of Texas. He has been a member of the
American Association of Petroleum Geologists since 1948, and an active member
since 1954. Mr. Nelson is also an active member of the Rocky Mountain
Association of Geologists, the Wyoming Geological Association, and the East
Anschutz Ranch Field Unit Arbitration Panel. Mr. Nelson is an independent
consulting geologist.
No Director holds a directorship in any company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934 or subject to the requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company Act of 1940.
COMMITTEES, MEETINGS OF THE BOARD OF DIRECTORS. The Registrant has no
audit or compensation committees. The Registrant's Board of Directors held
three (3) meetings during the fiscal year ended
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September 30, 1995, at which time all of the then Directors were present or
consented in writing to the actions taken at such meetings.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth certain information regarding the
compensation paid or accrued by the Company to or for the account of the Chief
Executive Officer, and any other Executive Officer of the Company to earn in
excess of $100,000, for services rendered in all capacities during the fiscal
years ended September 30, 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAY-OUTS
-------------------------------------- -------------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
OTHER RESTRICTED
NAME AND ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL YEAR SALARY BONUS COMPENSATION AWARD(S) SARS PAY-OUTS COMPENSATION
POSITION (1) ($) ($) ($)(2) ($) (#)(2) ($) ($)
- --------- ---- ------- ----- ------------ ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. W. Winkler, 1995 $31,059 $0 $0 N/A -0- N/A $
President 1994 $31,155 $0 $0 - $
and CEO 1993 $32,429 $0 $0 - $
</TABLE>
(1) Periods presented are for the years ended September 30.
(2) Represents payments for insurance.
BONUSES AND DEFERRED COMPENSATION. During the fiscal year ended
September 30, 1995, the Registrant paid no bonuses and deferred no compensation
to the persons and group named in the preceding table.
COMPENSATION PURSUANT TO PLANS. In December, 1982, the Board of
Directors executed a Simplified Employee Pension - IRA Contribution Agreement.
Under the terms of the agreement, the Registrant may contribute the lesser of
$15,000 or 15% of each employee's salary. In fiscal 1995, the Registrant
contributed $2,022 to the Registrant's assistant secretary/employee's IRA and
$4,659 to an Officer and Director's IRA. The Registrant's contributions under
this plan are determined annually by the Board of Directors.
There is no compensatory plan or arrangement with respect to any
individual named above which results or will result from the resignation,
retirement or any other termination of employment with the Registrant, or from a
change in control of the Registrant.
STOCK OPTION AND STOCK APPRECIATION RIGHT PLANS. No warrants or stock
options have been granted to any director, officer or any other employee of the
Registrant. However, such warrants and/or options may be granted in the future
at the discretion of the Registrant's Board of Directors.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The
following table sets forth as of September 30, 1995, information with respect to
the ownership of the Registrant's no par value common stock by each person known
by the Registrant to own beneficially more than 5% of the outstanding common
stock, and by each of its officers and directors and by all officers and
directors collectively as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS (1)
- -------------- ------------------- ------------ ----------
<S> <C> <C> <C>
Common Stock, L. W. Winkler, Jr. 7,049,300(2) 30.65%
No Par Value 775 Ivanhoe
Denver, CO 80220
Common Stock, G. Allan Nelson 8,300(3) 0.04%
No Par Value 1776 Lincoln, #1002
Denver, CO 80203
Common Stock, All Officers and 7,057,600 30.69%
No Par Value Directors as a Group
(3 Persons)
</TABLE>
___________________
(1) Based on 23,000,000 shares of common stock outstanding.
(2) Mr. Winkler owns of record 3,807,000 shares of the Registrant's common
stock and owns 3,242,300 shares beneficially by virtue of his wife's
ownership of said shares.
(3) Mr. Nelson has sole voting and investment power with respect to his
shares.
CHANGES IN CONTROL. The Registrant knows of no contractual
arrangements, including any pledge by any person of securities, which may at
a subsequent date result in a change in control of the Registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
No Director or Officer of the Registrant, nominee for election as
Director, any security holder who is known to the Registrant to own of record or
beneficially more than 5% of any class of the Registrant's voting securities, or
any relatives or spouse of any of the foregoing persons, or any member of the
immediate family of any such persons, has had any transaction, or series of
similar transactions, since the beginning of the Registrant's last fiscal year,
or has any presently proposed transaction, or series of similar transactions, to
which the Registrant was or is to be a party, in which the amount involved
exceeds $60,000 and in which any of such persons had or will have any direct or
indirect material interest.
No director or executive officer of the Registrant, nominee for
election as a director, any member of the immediate family of such persons, the
corporation or organization (other than the Registrant or a majority-owned
subsidiary of the Registrant) of which any of such persons is an executive
officer or partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities, or any trust or other estate in which
any of such persons has a substantial beneficial interest
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or as to which such person serves as a trustee or in a similar capacity, has
been indebted to the Registrant or its subsidiaries at any time since the
beginning of the Registrant's last fiscal year in any amount. Any loan made
to a Director and/or Officer of the Registrant must be approved by the Board
of Directors. Any loan made to a Director must also be approved by a majority
of the shareholders of the Registrant pursuant to the requirements of the
Colorado Corporation Code.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT. Section
16(a) of the Securities Exchange Act of 1934 requires the Company's directors
and officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors and greater than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms
received by it during the fiscal year ended September 30, 1995, and written
representations that no other reports were required, the Company believes that
except as described below each person who, at any time during such fiscal year,
was a director, officer or beneficial owner of more than 10% of the Company's
Common Stock complied with all Section 16(a) filing requirements during such
fiscal year or prior fiscal years.
-13-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) FINANCIAL STATEMENTS. The following financial statements
are filed as part of this report:
Page
----
Reports of Independent Certified Public
Accountants......................................... F-1
Balance Sheets - September 30, 1995 and 1994........ F-2
Statements of Operations for the years
ended September 30, 1995 and 1994................... F-3
Statements of Stockholders' Equity
for the years ended September 30,
1995 and 1994....................................... F-4
Statement of Cash Flows for the years
ended September 30, 1995 and 1994................... F-5
Notes to Financial Statements....................... F-6 - F-13
All Schedules are omitted because they are not required, inapplicable, or
the information is included in the financial statements or notes thereto.
(3) EXHIBITS. Reserve Reports prepared by McCartney Engineering, Inc.
(B) REPORTS ON FORM 8-K. The Registrant filed no reports on Form 8-K
during the last quarter of the period covered by this report.
-14-
<PAGE>
[LETTERHEAD]
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT
BOARD OF DIRECTORS AND STOCKHOLDERS
WINCO PETROLEUM CORPORATION
We have audited the accompanying balance sheets of Winco Petroleum
Corporation as of September 30, 1995 and 1994, and the related statements of
operations, stockholders' equity and cash flows for the years then ended.
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 audits 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 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 Winco Petroleum
Corporation as of September 30, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended, in conformity
with generally accepted accounting principles.
Lawrence E. Van Zetten, P.C.
Denver, Colorado
January 4, 1996
F-1
<PAGE>
WINCO PETROLEUM CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30
----------------------
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents including
certificates of deposit of $106,429
in 1994 $ 155,911 $ 204,041
Accounts receivable 39,057 31,241
Prepaid expenses and other 6,559 7,018
---------- ---------
Total current assets 201,527 242,300
Investment in oil and gas properties at cost
(full cost method) net of accumulated
depreciation, depletion and amortization of
$965,046 and $944,335 in 1995 and 1994
respectively (Notes 1A, 1B and 3) 118,793 121,740
Well equipment inventory-at lower of cost
or market (Note 1C) 59,993 68,318
Furniture, fixtures and vehicles-at cost net of
accumulated depreciation of $20,567 and $19,403
for 1995 and 1994 respectively (Note 1D) 2,131 3,295
Other assets 11,500 11,500
---------- ---------
$ 393,944 $ 447,153
---------- ---------
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -
Trade $ 3,470 $ 4,086
Directors and shareholders 482 682
Accrued liabilities 22,406 23,199
---------- ---------
Total current liabilities 26,358 27,967
---------- ---------
Commitment (Note 5)
Stockholders' Equity:
Common stock, no par value; 50,000,000 shares
authorized; 23,000,000 shares issued and
outstanding 173,000 173,000
Additional paid-in capital 1,249,320 1,241,039
Deficit (1,054,734) (994,853)
---------- ---------
Total stockholders' equity 367,586 419,186
---------- ---------
$ 393,944 $ 447,153
---------- ---------
---------- ---------
</TABLE>
See Notes to Financial Statements
F-2
<PAGE>
WINCO PETROLEUM CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30
----------------------
1995 1994
---- ----
<S> <C> <C>
REVENUES:
Oil and gas sales (Note 3) $ 106,740 $ 111,845
Investment income 5,130 4,465
Other oil and gas income (loss) (2,207) 3,048
-------- ---------
109,663 119,358
-------- ---------
COSTS AND EXPENSES:
Lease operating, including production
taxes (Note 3) 79,438 76,673
Depreciation, depletion and amortization
(Notes 1A and 1D) 21,876 17,900
General and administrative (Note 5) 68,193 74,256
Write-down of well equipment inventory (Note 1C) 37 7,952
-------- ---------
169,544 176,781
-------- ---------
Loss before income taxes (59,881) (57,423)
Income tax expense (benefit) (Notes 1F and 4) - -
-------- ---------
Net loss $(59,881) $ (57,423)
-------- ---------
Net earnings (loss) per common share (Note 1G) $ (-) $ (-)
-------- ---------
-------- ---------
</TABLE>
See Notes to Financial Statements
F-3
<PAGE>
WINCO PETROLEUM CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
COMMON ADDITIONAL
STOCK COMMON PAID-IN
ISSUED STOCK CAPITAL DEFICIT
------ ------ ---------- -------
<S> <C> <C> <C> <C>
Balance - October 1, 1993 23,000,000 $173,000 $1,241,039 $ (937,430)
Net loss -- -- -- (57,423)
---------- -------- ---------- -----------
Balance - September 30, 1994 23,000,000 173,000 1,241,039 (994,853)
Contributions (Note 7) 8,281
Net loss -- -- -- (59,881)
---------- -------- ---------- -----------
Balance - September 30, 1995 23,000,000 $173,000 $1,249,320 $(1,054,734)
---------- -------- ---------- -----------
---------- -------- ---------- -----------
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
WINCO PETROLEUM CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30
--------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (59,881) $ (57,423)
Adjustments to reconcile net loss to net cash
used in operating activities -
Depreciation, depletion and amortization 21,876 17,900
Write-down of well equipment inventory 37 7,952
Loss on sale of well equipment inventory 2,206
Change in current assets and current
liabilities -
Accounts receivable (7,816) 24,177
Prepaid expenses 459 (443)
Accounts payable (816) (7,348)
Accrued expenses (793) 787
--------- ---------
Net cash (used for) operating activities (44,728) (14,398)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in oil and gas properties and office
equipment (9,484) (7,474)
Proceeds from sale of inventory 6,082
--------- ---------
Net cash provided from (used for)
investing activities (3,402) (7,474)
--------- ---------
Net (decrease) in cash and cash equivalents (48,130) (21,872)
Cash and cash equivalents at beginning of year 204,041 225,913
--------- ---------
Cash and cash equivalents at end of year $155,911 $204,041
--------- ---------
--------- ---------
Supplemental schedule of noncash operating and
investing activities:
Contribution, by stockholder, of oil and gas
property $ 8,281 $ --
--------- ---------
--------- ---------
</TABLE>
There were no payments of interest or income taxes during 1995 or 1994
fiscal years.
Disclosure of accounting policy:
For purposes of reporting cash flows, cash and cash equivalents include cash,
short-term cash investments and certificates of deposit with a maturity of
less than 90 days at the date of purchase.
See Notes to Financial Statements
F-5
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS -
The Company, incorporated on June 21, 1979, is engaged in the business
of acquiring and developing interests in domestic oil and gas
properties, primarily in southeastern Wyoming.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
A. OIL AND GAS PROPERTIES
The Company follows the "full-cost" method of accounting for oil and
gas properties. Under this method, all costs associated with property
acquisition, exploration and development activities are capitalized in
one cost center, including internal costs that can be identified with
those activities. No gains or losses are recognized on the sale or
abandonment of oil and gas properties, unless it involves the
disposition of significant reserves.
Depreciation, depletion and amortization of the full-cost pool is
computed using a unit-of-production method based on proved reserves as
determined annually by the Company and independent engineers. An
additional depletion, depreciation and amortization provision is made
if the total capitalized costs of oil and gas properties in the cost
center exceed the "capitalization ceiling" which is the sum of (1) the
present value of future net revenues from estimated production of
proved oil and gas reserves applicable to such cost center plus (2) the
carrying value of the cost center's unproved properties.
At September 30, 1995, and 1994, the total capitalized cost of oil and
gas properties did not exceed the capitalization ceiling. Therefore, no
additional depletion, depreciation and amortization provision was made
for fiscal 1995 or 1994.
Based on independent engineer's estimates for fiscal 1995 and 1994, the
provision for depreciation, depletion and amortization on a per
equivalent barrel basis during fiscal 1995 and 1994 was approximately
$2.73 and $1.79, respectively.
B. UNDEVELOPED OIL AND GAS PROPERTIES
Undeveloped oil and gas leases represent leasehold and other costs of
acquiring leases. Leases are stated at the lower of cost or market
using the specific identification method.
C. WELL EQUIPMENT INVENTORY
Well equipment inventory used by the Company is transferred to the
full-cost pool at its carrying value. The inventory is stated at the
lower of cost or market using the first-in, first-out method.
D. FURNITURE, FIXTURES AND VEHICLES
Furniture, fixtures and vehicles are depreciated using accelerated
methods over estimated useful lives ranging from three to seven years.
F-6
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES, continued -
E. RETIREMENT BENEFITS
The Company has no plans in effect to provide post-retirement benefits,
other than as described in Note 5.
F. INCOME TAXES
The Company provides deferred income taxes for intangible drilling
and developmental costs and other costs incurred that enter into the
determination of taxable income and accounting income in different
periods when applicable. The excess of statutory depletion over cost
depletion for income tax purposes will be recognized as a permanent
difference in the period in which the excess occurs.
G. EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share is computed utilizing the weighted
average number (23,000,000) of common shares outstanding.
NOTE 2. INVESTMENTS:
As of September 30, 1995 and 1994, cost of noncurrent marketable
securities, adjusted for permanent declines in value, was $1,000.
There was no allowance for unrealized temporary losses on noncurrent
marketable equity securities as adjusted cost approximated or was lower
than estimated market value at September 30, 1994 and 1995.
NOTE 3. OIL AND GAS ACTIVITIES:
Oil and gas operations -
Information relating to the Company's oil and gas operations, including
costs incurred in such, is summarized below:
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30
------------------
1995 1994
------- -------
<S> <C> <C>
Capitalized costs -
Property acquisition costs $ 8,281 $ -
Exploration costs 9,484 7,251
Recovery of costs/transfer to well
equipment inventory - -
------- -------
17,765 7,251
------- -------
Production costs -
Lease operating costs 65,162 62,434
Production and transportation taxes 12,865 12,665
Ad Valorem taxes 1,411 1,574
------- -------
79,438 76,673
------- -------
$97,203 $83,924
------- -------
------- -------
</TABLE>
Net revenues from production (oil and gas sales less production costs)
were $27,302 in 1995 and $35,172 in 1994.
F-7
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. OIL AND GAS ACTIVITIES, continued:
Capitalized costs -
Capitalized costs associated with oil and gas producing activities and
related accumulated depreciation, depletion and amortization are as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Proved properties $1,083,839 $1,066,075
Unproved properties - -
---------- ----------
1,083,839 1,066,075
---------- ----------
Accumulated depreciation,
depletion and amortization 231,052 210,341
Additional accumulated
depreciation, depletion
and amortization -
"capitalization ceiling" 733,994 733,994
---------- ----------
965,046 944,335
---------- ----------
Net capitalized costs $ 118,793 $ 121,740
---------- ----------
---------- ----------
</TABLE>
Major customers -
The Company's oil and gas sales consisted of sales to unaffiliated
purchasers primarily as follows:
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30
-------------------
PURCHASER 1995 1994
--------- ------- --------
<S> <C> <C>
A $62,983 $ 69,854
B 14,877 39,691
------- --------
$79,860 $109,545
------- --------
------- --------
% to total oil and gas sales 69.19% 97.9%
------- --------
------- --------
</TABLE>
F-8
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. INCOME TAXES:
Effective October 1,1993, the Company changed its method of accounting
for income taxes to conform to the requirements of Financial Accounting
Standards Board Statement No. 109, Accounting for Income Taxes. Under
the provisions of FASB 109, an entity recognizes deferred tax assets
and liabilities for future tax consequences of events that have
previously been recognized in the Company's financial statements or tax
returns. The measurement of deferred tax assets and liabilities is
based on provisions of the enacted tax law. The effects of future
changes in tax laws or rates have not been anticipated. There was no
cumulative effect in applying the new method retroactively.
The net deferred tax assets (liabilities) include the following
components.
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax liabilities -
Depletion, depreciation and amortization $ (7,300) $ (7,300)
-------- --------
Deferred tax assets -
Adjustment to value of well equipment
inventory 17,700 17,700
Net operating loss carryforward 272,200 272,000
-------- --------
289,900 289,700
-------- --------
Net deferred tax asset 282,600 282,400
Valuation allowance 282,600 282,400
-------- --------
Net deferred tax asset (liability) $ 0 $ 0
-------- --------
-------- --------
</TABLE>
The Company has investment tax credit carryforwards of $8,666 for
both financial reporting and income tax purposes at September 30, 1995
which expire in varying amounts from 1996 through 1999.
In addition, the Company has a capital loss carryover of approximately
$17,700 which expires in 2007.
The Company has net operating loss carryforwards for financial
reporting and income tax purposes at September 30, 1995 as follows:
<TABLE>
<CAPTION>
INCOME TAX
-----------------------
YEAR NET OPERATING LOSS FINANCIAL ALTERNATIVE
CARRYFORWARD EXPIRES REPORTING REGULAR MINIMUM
----------------------- ---------- -------- -----------
<S> <C> <C> <C>
1997 $ - $174,000 $174,000
1998 21,000 23,000 23,000
2000 167,000 53,000 53,000
2001 380,000 89,000 89,000
2002 59,000 64,000 64,000
2003 56,000 115,000 86,000
2004 94,000 106,000 100,000
2005 19,000 - -
2006 54,000 18,000 16,000
2007 28,000 35,000 35,000
2008 59,000 58,000 58,000
2009 57,000 68,000 68,000
2010 60,000 61,000 61,000
---------- -------- --------
$1,054,000 $864,000 $827,000
---------- -------- --------
---------- -------- --------
</TABLE>
F-9
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. RETIREMENT PLAN:
In December, 1982, the Board of Directors executed a Simplified
Employee Pension - IRA Contribution Agreement. Under the terms of the
agreement, the Company may contribute the lesser of $15,000 or 15% of
each employee's salary. In fiscal 1995 and 1994, the Company
contributed $6,681 and $6,737, respectively, to the plan. The Company's
contributions under this plan are determined annually by the Board of
Directors.
NOTE 6. OFF BALANCE SHEET RISK:
The Company's future production revenues, development costs and
production expenses are dependent on economic and operating conditions,
such as pricing and production taxes, which are not within the
Company's control. At December 31, 1995, the price of crude oil was
approximately $18.75 per Bbl. versus $16.75 at September 30, 1995.
UNAUDITED OIL AND GAS RESERVE INFORMATION:
The reserve estimates presented as of September 30, 1995 and 1994 were
prepared by independent petroleum consultants. The Company cautions
that there are many uncertainties inherent in estimating proved reserve
quantities and in projecting future production rates and the timing of
development expenditures. In addition, reserve estimates of new
discoveries that have little production history are more imprecise than
those of properties with more production history. Accordingly, these
estimates are expected to change as future information becomes
available.
Proved oil and gas reserves are the estimated quantities of crude oil,
condensate, 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 reserves expected to be
recovered through existing wells with existing equipment and operating
methods.
NOTE 7. ADDITIONAL PAID-IN CAPITAL:
During the year a major shareholder/director/officer contributed a
producing well to the Company. The property has been valued at the
year-end discounted value times the estimated reserves at the time
of the transfer.
F-10
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. UNAUDITED OIL AND GAS RESERVE INFORMATION, continued:
Net quantities of proved reserves and proved developed reserves
of crude oil (including condensate) and natural gas (all of
which are located within the United States) are as follows:
RESERVE QUANTITY INFORMATION
For the years ended September 30, 1994 and 1995
<TABLE>
<CAPTION>
OIL (BBLS) GAS (MCF)
---------- ---------
<S> <C> <C>
PROVED RESERVES
Estimated quantity, October 1, 1993 47,900 147,500
Revisions of previous estimates 200 26,800
Production (6,200) (18,400)
------ -------
Estimated quantity, September 30, 1994 41,900 155,900
Proved reserves donated 2,200
Revisions of previous estimates (1,700) (67,700)
Production (5,600) (11,700)
------ -------
Estimated quantity, September 30, 1995 36,800 76,500
------ -------
------ -------
</TABLE>
<TABLE>
<CAPTION>
PROVED RESERVES
DEVELOPED UNDEVELOPED TOTAL
--------- ----------- -----
<S> <C> <C> <C>
Oil (Bbls)
September 30, 1994 41,900 - 41,900
September 30, 1995 36,800 - 36,800
Gas (Mcf)
September 30, 1994 155,900 - 155,900
September 30, 1995 76,500 - 76,500
</TABLE>
F-11
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. UNAUDITED OIL AND GAS RESERVE INFORMATION, continued:
The following table sets forth a standardized measure of the
discounted future net cash flows attributable to the Company's
proved oil and gas reserves. Future cash inflows were computed by
applying year-end prices of oil and gas to the estimated future
production of proved oil and gas reserves. The future production
and development costs represent the estimated future expenditures
(based on current costs) to be incurred in developing and producing
the proved reserves, assuming continuation of existing economic
conditions. Future income tax expenses were computed by applying
statutory income tax rates to the difference between pre-tax net
cash flows relating to the Company's proved oil and gas reserves and
the tax basis of proved oil and gas properties and available net
operating loss carryforwards, reduced by investment tax credits.
Discounting the annual net cash inflows at 10% illustrates the
impact of the time value of money on these future cash inflows.
STANDARDIZED MEASURE OF DISCOUNTED
FUTURE NET CASH FLOWS AND CHANGES
THEREIN RELATING TO PROVED OIL AND GAS RESERVES
AT SEPTEMBER 30,
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Future cash inflows $ 706,800 $ 935,600
Future production and development costs (432,200) (542,200)
Future income tax expenses - -
--------- ---------
Future net cash flows 274,600 393,400
10% annual discount for estimated
timing of cash flows (89,000) (129,600)
--------- ---------
Standardized measure of
discounted future net cash flows $ 185,600 $ 263,800
--------- ---------
--------- ---------
</TABLE>
Following are the principal sources of change in the standardized
measure of discounted future net cash flows during the years ended
September 30:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Standardized measure of discounted
future net cash flows, beginning $ 263,800 $ 303,300
--------- ---------
Sales and transfers of oil and gas
produced, net of production costs (28,100) (35,700)
Net changes in prices and production
costs 79,400 21,300
Sales of minerals in place - -
Acquisition of reserves 8,800 -
Development costs incurred during the
period and change in estimated
future development costs - -
Revisions of previous quantity estimates (164,700) (38,300)
Accretion of discount 26,400 13,200
Net change in income taxes - -
--------- ---------
(78,200) (39,500)
--------- ---------
Standardized measure of discounted
future net cash flows, ending $ 185,600 $ 263,800
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
WINCO PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. UNAUDITED OIL AND GAS RESERVE INFORMATION, continued:
ESTIMATED FUTURE NET REVENUES FROM
PROVED RESERVES OF OIL AND GAS
(Based on current prices and current cost)
<TABLE>
<CAPTION>
FISCAL PROVED TOTAL
YEAR ENDING DEVELOPED PROVED
SEPTEMBER 30 RESERVES RESERVES
------------ --------- --------
<S> <C> <C>
1996 $ 47,000 $ 47,000
1997 39,600 39,600
1998 33,500 33,500
Remainder 154,500 154,500
-------- --------
$274,600 $274,600
-------- --------
-------- --------
</TABLE>
PRESENT VALUE OF FUTURE NET CASH FLOWS
OF PROVED RESERVES DISCOUNTED AT 10% PER YEAR
<TABLE>
<CAPTION>
SEPTEMBER 30
1995 1994
-------- --------
<S> <C> <C>
Proved developed $185,600 $263,800
Proved undeveloped - -
-------- --------
Total proved $185,600 $263,800
-------- --------
-------- --------
</TABLE>
F-13
<PAGE>
McCartney Engineering, Inc.
Consulting Petroleum Engineers
______________________________________________________________________________
1888 Sherman Street, Suite 760 Denver, CO 80203 (303) 830-7208 Fax(303)830-7004
January 17, 1996
Mr. L.W. Winkler, Jr.
President
1645 Court Place, Suite 312
Denver, Colorado 80202
Re: Property Evaluation
Dear Mr. Winkler:
Pursuant to your request, we have estimated the remaining reserves and future
net revenue for certain developed oil properties owned by Winco Petroleum
Corporation. The effective date of this study is September 30, 1995. Results
are summarized below:
<TABLE>
<CAPTION>
Net Remaining Reserves Estimated Future Net Revenue
As of September 30, 1995 Discounted at
Reserve Category Oil (BBL) Gas (MCF) Undiscounted 10 Percent
--------------- --------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Proved Producing 36,766 76,467 274,552 185,488
</TABLE>
Table #1 is a tabulation by lease of the working and net revenue interests,
gross and net reserves, and projected discounted net revenues of the
individual leases. Table #2 is a cash flow summary reflecting the estimated
remaining reserves and revenue of the Winco Petroleum Corporation properties.
Also included in the report are cash flow projections and performance curves
for the individual leases.
SOURCE OF DATA
Lease names, locations, completion data, performance history, and logs were
supplied by Winco Petroleum Corporation for use in this study. Working
interests and net revenue interests were supplied by Winco personnel, as were
historic oil prices and lease operating expenses. This data was accepted by
McCartney Engineering, Inc. as presented. McCartney Engineering, Inc.
reserves the right to revise the associated reserve and economic projections
if future information indicates discrepancies in the data provided. No
independent well tests or property inspections were made in conjunction with
this study.
<PAGE>
Mr. L.W. Winkler
January 17, 1996
Page 2
RESERVE CATEGORY
The reserves included in this report are classified in the proved developed
producing category. Proved developed reserves are those which are expected to
be recovered through existing wells with existing equipment and operating
methods. Proved developed producing reserves are those which are expected to
be produced from existing completion intervals now open for production in
existing wells.
METHOD OF ASSIGNING RESERVES
Reserves were determined through the application of evaluation methods
generally accepted in the oil and gas industry. Sufficient production
history was available to estimate remaining reserves from an extrapolation of
past performance.
OIL AND GAS PRICES
A crude price of $16.50/BBL was used on all leases. This was the posted
price in effect on September 30, 1995, plus a bonus of $1.25/BBL. The gas
prices used in the evaluation were based on the average price received in the
previous fiscal year. No increases or decreases in future sales prices were
considered in these cash flow projections.
EXPENSES
The estimated future operating costs were based on historic expense data
supplied by Winco Petroleum Corporation. No provisions were made for
increases or decreases in future operating expenses. Applicable severance, ad
valorem, and production taxes were considered in the cash flow projections.
No deductions were made for general or corporate overhead, depletion,
depreciation, or any other indirect costs. The estimated net income is
before state and federal income tax and does not consider any encumbrances
against the properties, if such exist. The value of salvageable equipment
has not been included in this evaluation.
GENERAL
The accuracy of any reserve estimate, especially when based on volumetric
analysis or limited production history, is a function of available data and
of engineering and geological interpretation and judgment. While the reserve
estimates used herein are believed reasonable, they should be accepted with
the understanding that subsequent reservoir performance, changes in pricing
structure, or market demand may justify their revision. Reserve estimates
based on volumetric analysis and reserves assigned to behind pipe intervals
are inherently less reliable than those based on a lengthy production history.
<PAGE>
Mr. L.W. Winkler
January 17, 1996
Page 3
In our opinion, the above reserve and revenue estimates fairly and
approximately present the proved reserves of Winco Petroleum Corporation with
respect to definitions, assumptions, and methodology described above.
We appreciate the opportunity to provide you with this study. All related
data is in our file and is available for your review.
Very truly yours,
McCartney Engineering, Inc.
/s/ JACK A McCARTNEY
Jack A McCartney
President
JAM/ldm
<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.
WINCO PETROLEUM CORPORATION
Dated: January , 1996 By ______________________________
L. W. Winkler, Jr., President
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.
SIGNATURE TITLE DATE
--------- ----- ----
_______________________ President, Chief January , 1996
L. W. Winkler, Jr. Executive Officer,
Treasurer (Principal
Financial and Ac-
counting Officer)
and Director
_______________________ Secretary and January , 1996
G. Allan Nelson Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
BALANCE SHEET AND STATEMENT OF OPERATIONS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 156
<SECURITIES> 0
<RECEIVABLES> 39
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202
<PP&E> 117
<DEPRECIATION> 986
<TOTAL-ASSETS> 394
<CURRENT-LIABILITIES> 264
<BONDS> 0
0
0
<COMMON> 173
<OTHER-SE> 195
<TOTAL-LIABILITY-AND-EQUITY> 394
<SALES> 107
<TOTAL-REVENUES> 110
<CGS> 101
<TOTAL-COSTS> 101
<OTHER-EXPENSES> 68
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (60)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
