U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarterly Period Ended June 30, 1998
[ ] Transition Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period from __________ to
_________
Commission file number: 0-9435
FieldPoint Petroleum Corporation
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(Exact name of small business issuer as specified in its charter)
Colorado 84-0811034
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1703 Edelweiss Drive
Cedar Park, Texas 78613
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(Address of principal executive offices) (Zip Code)
(512) 250-8692
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(Issuer's telephone number)
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
As of July 31, 1998, the number of shares outstanding of the Registrant's $.01
par value Common Stock was 4,413,259.
Transitional Small Business Disclosure Format (Check one):
Yes No X
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PART I
Item 1. Condensed Consolidated Financial Statements
FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
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June 30, December 31,
1998 1997
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(unaudited)
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CURRENT ASSETS:
Cash $ 101,255 $ 48,457
Trading securities 2,880 2,880
Accounts receivable:
Oil and gas sales 60,880 73,159
Joint interest billings, no allowance for doubtful
accounts considered necessary 91,032 61,392
Taxes recoverable 20,000 --
Prepaid expenses 2,535 1,635
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Total current assets 278,582 187,523
PROPERTY AND EQUIPMENT:
Oil and gas properties (successful efforts method):
Leasehold costs 1,105,676 954,995
Lease and well equipment 169,154 95,504
Furniture and equipment 31,530 30,758
Transportation equipment 74,945 74,945
Less accumulated depletion and depreciation (416,016) (353,935)
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Net property and equipment 965,289 802,267
OTHER ASSETS 26,815 20,000
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Total assets $ 1,270,686 $ 1,009,790
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Current portion of long-term debt $ 261,712 $ 160,544
Accounts payable and accrued expenses 123,399 111,255
Oil and gas revenues payable 92,133 96,512
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Total current liabilities 477,244 368,311
LONG-TERM DEBT, net of current portion 449,000 255,877
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 75,000,000 shares authorized;
4,413,259 and 4,000,000 shares issued and outstanding,
respectively 44,132 44,132
Additional paid-in capital 95,778 83,906
Retained earnings 206,672 257,564
Treasury stock, 214,000 shares of common stock (2,140) --
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Total stockholders' equity 344,442 385,602
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Total liabilities and stockholders' equity $ 1,270,686 $ 1,009,790
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See accompanying notes to these consolidated financial statements
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FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months Ended
June 30,
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1998 1997
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(unaudited) (unaudited)
REVENUE:
Oil and gas sales $ 119,705 $ 138,630
Well operational and pumping fees 46,381 44,913
Other -- 2,000
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Total revenue 166,086 185,543
COSTS AND EXPENSES:
Production expense 56,713 45,759
Depletion and depreciation 31,331 27,750
General and administrative 80,485 70,395
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Total costs and expenses 168,529 143,904
OTHER INCOME (EXPENSE):
Interest income (expense), net (14,647) (2,081)
Acquisition expenses -- (45,000)
Miscellaneous 946 (857)
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Total other income (expense) (13,701) (47,938)
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INCOME (LOSS) BEFORE INCOME TAXES (16,144) (6,299)
INCOME TAX BENEFIT (PROVISION) CURRENT 4,700 (12,000)
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NET AND COMPREHENSIVE INCOME (LOSS) (11,444) (18,299)
BASIC AND DILUTED NET AND
COMPREHENSIVE INCOME (LOSS) * *
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WEIGHTED AVERAGE SHARES OUTSTANDING 4,413,259 4,000,000
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* Less than $.01 per share.
See accompanying notes to these consolidated financial statements
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FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Six Months Ended
June 30,
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1998 1997
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(unaudited) (unaudited)
REVENUE:
Oil and gas sales $ 223,658 $ 287,025
Well operational and pumping fees 93,039 90,826
Other -- 2,000
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Total revenue 316,697 379,851
COSTS AND EXPENSES:
Production expense 125,681 87,712
Depletion and depreciation 62,081 55,500
General and administrative 178,713 144,161
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Total costs and expenses 366,475 287,373
OTHER INCOME (EXPENSE):
Interest income (expense), net (26,638) (12,765)
Acquisition expenses -- (45,000)
Miscellaneous 5,524 2,781
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Total other income (expense) (21,114) (54,984)
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INCOME (LOSS) BEFORE INCOME TAXES (70,892) 37,494
INCOME TAX BENEFIT (PROVISION) CURRENT 20,000 (24,000)
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NET AND COMPREHENSIVE INCOME (LOSS) (50,892) 13,494
BASIC AND DILUTED NET AND
COMPREHENSIVE INCOME (LOSS) (.01) *
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WEIGHTED AVERAGE SHARES OUTSTANDING 4,413,259 4,000,000
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* Less than $.01 per share.
See accompanying notes to these consolidated financial statements
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FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
June 30,
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1998 1997
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(unaudited) (unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (50,892) $ 13,494
Adjustments to reconcile to net cash
provided by operating activities:
Depletion and depreciation 62,081 55,500
Stock compensation to consultant 9,732 --
Changes in assets and liabilities:
Accounts receivable (17,361) 4,598
Taxes recoverable and other (20,000) 581
Prepaid expenses and other assets (7,715) --
Accounts payable and accrued expenses 12,144 (18,528)
Oil and gas revenues payable (4,379) (2,286)
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Net cash (used) provided by operating activities (16,390) 53,359
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of oil and gas properties (224,331) (169,992)
Purchase of furniture and equipment (772) (19,043)
Decrease (increase) in restricted cash -- 100,000
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Net cash used by investing activities (225,103) (89,035)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 375,000 --
Repayments of long-term debt (80,709) (9,805)
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Net cash provided (used) by financing activities 294,291 (9,805)
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NET INCREASE (DECREASE) IN CASH 52,798 (45,481)
CASH, beginning of the period 48,457 57,454
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CASH, end of the period $ 101,255 $ 11,973
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SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest $ 27,416 $ 35,773
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Cash paid during the period for income taxes -- --
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See accompanying notes to these consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Business, Organization And Basis of Preparation
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FieldPoint Petroleum Corporation (the "Company") is incorporated under the laws
of the state of Colorado. The Company is engaged in the acquisition, operation
and development of oil and gas properties, which are located in south central
Texas and Wyoming.
The Company began operations as Bass Petroleum, Inc. (Bass) in October 1989. On
December 31, 1997, the shareholders of Bass exchanged all their shares for
approximately 97% (including the 6% of EPC previously purchased by Bass) of
Energy Production Company (EPC), a public company, and Bass became a wholly
owned subsidiary of EPC. The management of Bass became the management of the
combined company. Concurrent with the transaction, the Company changed its name
to FieldPoint Petroleum Corporation and declared a 75 to 1 reverse stock split.
Although EPC is the acquiring entity for legal purposes, Bass is considered the
acquirer for accounting purposes, and the financial statements of the combined
company reflect the historical accounts of Bass and include the operations of
EPC beginning May 22, 1997. However, because EPC is the acquiring entity for
legal purposes, all stockholders' equity information in the accompanying
financial statements and footnotes has been restated to conform to EPC's capital
structure.
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which consist only of
normal recurring adjustments) necessary to present fairly the financial position
and results of operations for the periods presented have been made. These
condensed consolidated financial statements should be read in conjunction with
financial statements and the notes thereto included in the Company's Form 10-KSB
filing for the year ended December 31, 1997.
2. Acquisition of Working Interest in Shade Lease
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On February 18, 1998, the Company acquired a 97.9% working interest in the Shade
lease, which carries a 76.9565% net revenue interest in oil and gas production.
A total purchase price of $190,000 was paid for the interest and related
equipment. The lease currently has 3 producing oil and gas wells. The Company
also purchased all equipment related to the three wells on the lease from Fred
Bowman, Inc. The entire purchase price was funded by proceeds from long term
debt.
3. Stockholders Equity
-------------------
On January 1, 1998, the Company granted 50,000 options to purchase the Company's
common stock at $0.75 per share to a public relations consultant. The options
expire, if unused, on December 31, 1999. The value of the option at the date of
grant, as calculated pursuant to SFAS 123, of $9,732 is included in general and
administrative expenses for the quarter ended June30, 1998.
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PART I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Company's
Financial Statements, and respective notes thereto, included elsewhere herein.
The information below should not be construed to imply that the results
discussed herein will necessarily continue into the future or that any
conclusion reached herein will necessarily be indicative of actual operating
results in the future. Such discussion represents only the best present
assessment of the management of FieldPoint Petroleum Corporation.
General
FieldPoint Petroleum Corporation derives its revenues from its operating
activities including sales of oil and gas and operating oil and gas properties.
The Company's capital for investment in producing oil and gas properties has
been provided by cash flow from operating activities and from bank financing.
The Company categories its operating expenses into the categories of production
expenses and other expenses. Due to cost associated with being a public company
and additional workovers in the form of remedial repairs, the Company's net
expenses for the period ended June 30, 1998 were substantially higher than net
expenses for the period ended June 30, 1997.
Comparison of three months ended June 30, 1998 to the three months ended
June 30, 1997
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Results of Operations
Revenues decreased 10% or $19,457 to $166,086 for the three month period ended
June 30, 1998 from the comparable 1997 period, this was due to the overall
decrease in the average price received for oil and gas sales. Production volumes
increased 11% on a BOE basis. Average oil sales prices decreased 34% to $12.00
for the period ended June 30, 1998 compared to $18.24 for the period ended June
30, 1997. Average gas sales prices decreased 12% to $1.20 for the three month
period ended June 30, 1998 compared to $1.36 for the period ended June 30, 1997.
Production expenses increased 24% or $10,954 to $56,713 for the three month
period ended June 30, 1998 from the comparable 1997 period, this was primarily
due to additional workovers in the form of remedial repairs. Depletion and
depreciation increased slightly due to the purchase of additional oil and gas
properties and related equipment during the period ended June 30, 1998 compared
to the 1997 period. General and administrative overhead cost increased 14% or
$10,090 to $80,485 for the three month period ended June 30, 1998 from the three
month period ended June 30, 1997. This was primarily due to higher legal fees
and costs associated with evaluating acquisitions.
Net other expenses for the three months ended June 30, 1998 was $13,701 compared
to $47,938 for the 1997 period. This decrease was primarily due to acquisition
expenses incurred in 1997 in connection with the reverse merger.
Comparison of six months ended June 30, 1998 to the six months ended
June 30, 1997
- --------------------------------------------------------------------
Results of Operations
Revenues decreased 17% or $63,154 to $316,697 for the six month period ended
June 30, 1998 from the comparable 1997 period, this was due to the overall
decrease in the average price received for oil and gas sales. Production volumes
increased 25% on a BOE basis. Average oil sales prices decreased 35% to $12.76
for the period ended June 30, 1998 compared to $19.75 for the period ended June
30, 1997. Average gas sales prices decreased 27% to $1.20 for the six month
period ended June 30, 1998 compared to $1.64 for the period ended June 30, 1997.
<PAGE>
Production expenses increased 43% or $37,969 to $125,681 for the six month
period ended June 30, 1998 from the comparable 1997 period, this was primarily
due to expenses related to additional workovers in the form of remedial repairs.
Depletion and depreciation increased 12% to $62,081, this was due to the
purchase of leasehold and related equipment during the period ended June 30,
1998 compared to the 1997 period. General and administrative overhead cost
increased 24% or $34,552 to $178,713 for the six month period ended June 30,
1998 from the six month period ended June 30, 1997. This was attributable to
audit fees booked during the period, also an increase in salaries, and cost
related to an option granted during the period pursuant to SFAS 123.
Net other expenses for the six months ended June 30, 1998 was $21,114 compared
to $54,984 for the comparable 1997 period. The decreased was primarily due to
acquisition expenses incurred during 1997 in connection with the reverse merger.
Liquidity and Capital Resources
Cash flow used by operating activities was $16,390 for the six month period
ended June 30, 1998, as compared to $53,359 in cash flow provided by operating
activities in the 1997 period. The decrease in cash from operating activities
was primarily due to the net loss in 1998.
Cash flow used by investing activities was $225,103 in the period ended June 30,
1998, compared to $89,035 for June 30, 1997. This is primarily due to the
purchase of additional oil and gas properties. Cash flow from financing
activities was $294,291 for the period ended June 30, 1998, compared to a use
of $9,805 for the same period in 1997. This was due to increases in long-term
debt during 1998.
The Company cannot predict how prices will vary during 1998 and what effect they
will ultimately have on the Company. However, management believes that the
Company will be able to generate sufficient cash from operations to service its
bank debt and provide for maintaining current production of its oil and gas
properties.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings
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The Company knows of no material litigation pending, threatening or contemplated
unsatisfied judgements against it, or any other proceeding in which the company
is a party. The company knows of no material legal actions pending or threatened
or judgements entered against any officers or the Board of Directors of the
Company in their capacity as such.
Item 2. Changes in Securities
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None.
Item 3. Default Upon Senior Securities
- ---------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
Item 5. Other Information
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None.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
The following Reports were filed by the Company on Form 8-K during the Second
Quarter of 1998:
a. A report on Form 8-K/A filed on May 1, 1998 reporting an event under Item
2. Acquisition or Disposition of Assets and Item 7. Financial Statements
and Exhibits.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: 8/7/98 By: /s/ Ray Reaves
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Ray Reaves, Treasurer, Chief Financial Officer
