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, 1999
[ ] 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 5,751,259.
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
June 30, December 31,
1999 1998
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CURRENT ASSETS: (unaudited)
Cash $ 123,177 $ 1,375
Trading securities 2,880 2,880
Accounts receivable:
Due from investor -- 9,000
Oil and gas sales 85,337 50,026
Joint interest billings, less allowance for doubtful
accounts of $20,000 97,495 67,225
Income tax recoverable 4,200 48,000
Prepaid expenses 2,535 2,535
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Total current assets 315,624 181,041
PROPERTY AND EQUIPMENT:
Oil and gas properties (successful efforts method):
Unproved leasehold costs -- 180,000
Leasehold costs 2,142,044 1,115,176
Lease and well equipment 336,951 172,860
Furniture and equipment 31,432 31,432
Transportation equipment 74,945 74,945
Less accumulated depletion and depreciation (595,258) (523,258)
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Net property and equipment 1,990,114 1,051,155
EARNEST MONEY DEPOSIT -- 40,000
OTHER ASSETS 16,815 16,815
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Total assets $ 2,322,553 $ 1,289,011
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 591,754 $ 449,500
Accounts payable and accrued expenses 90,252 128,347
Oil and gas revenues payable 52,028 62,538
Due to related party 5,000 15,000
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Total current liabilities 739,034 655,385
LONG-TERM DEBT, net of current portion 649,556 374,070
COMMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 75,000,000 shares authorized;
5,659,259 and 4,613,259 shares issued and outstanding,
respectively 56,592 46,132
Additional paid-in capital 795,346 117,723
Retained earnings 83,975 97,801
Treasury stock, 195,000 and 210,000 shares, at cost (1,950) (2,100)
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Total stockholders' equity 933,963 259,556
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Total liabilities and stockholders' equity $ 2,322,553 $ 1,289,011
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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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1999 1998
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REVENUE: (unaudited) (unaudited)
Oil and gas sales $ 146,908 $ 119,705
Well operational and pumping fees 32,806 46,381
Other -- --
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Total revenue 179,714 166,086
COSTS AND EXPENSES:
Production expense 58,953 56,713
Depletion and depreciation 36,000 31,331
General and administrative 87,651 80,485
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Total costs and expenses 182,604 168,529
OTHER INCOME (EXPENSE):
Interest income (expense), net (12,091) (14,647)
Miscellaneous 24,504 946
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Total other income (expense) 12,413 (13,701)
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INCOME (LOSS) BEFORE INCOME TAXES 9,523 (16,144)
INCOME TAX BENEFIT (PROVISION) CURRENT -- 4,700
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NET AND COMPREHENSIVE INCOME (LOSS) 9,523 (11,444)
BASIC AND DILUTED NET AND
COMPREHENSIVE INCOME (LOSS) * *
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WEIGHTED AVERAGE SHARES OUTSTANDING 5,418,009 4,413,259
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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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1999 1998
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REVENUE: (unaudited) (unaudited)
Oil and gas sales $ 245,423 $ 223,658
Well operational and pumping fees 65,949 93,039
Other -- --
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Total revenue 311,372 316,697
COSTS AND EXPENSES:
Production expense 87,312 125,681
Depletion and depreciation 72,000 62,081
General and administrative 164,312 178,713
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Total costs and expenses 323,624 366,475
OTHER INCOME (EXPENSE):
Interest income (expense), net (30,435) (26,638)
Miscellaneous 24,661 5,524
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Total other income (expense) (5,774) (21,114)
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INCOME (LOSS) BEFORE INCOME TAXES (18,026) (70,892)
INCOME TAX BENEFIT (PROVISION) CURRENT 4,200 20,000
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NET AND COMPREHENSIVE INCOME (LOSS) (13,826) (50,892)
BASIC AND DILUTED NET AND
COMPREHENSIVE INCOME (LOSS) * (.01)
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WEIGHTED AVERAGE SHARES OUTSTANDING 5,141,259 4,413,259
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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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1999 1998
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(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (13,826) $ (50,892)
Adjustments to reconcile to net cash
provided by operating activities:
Depletion and depreciation 72,000 62,081
Stock compensation to consultant 20,750 9,732
Changes in assets and liabilities:
Accounts receivable (56,581) (17,361)
Income tax recoverable 43,800 (20,000)
Prepaid expenses and other assets -- (7,715)
Accounts payable and accrued expenses (38,095) 12,144
Oil and gas revenues payable (10,510) (4,379)
Due to related party (10,000) --
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Net cash (used) provided by operating activities 7,538 (16,390)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of oil and gas properties (1,010,959) (224,331)
Purchase of furniture and equipment -- (772)
Decrease in earnest money deposit 40,000 --
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Net cash used by investing activities (970,959) (225,103)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 760,000 375,000
Repayments of long-term debt (342,260) (80,709)
Proceeds from sales of common stock, net of offering fees 660,311 --
Proceeds from sales of treasury stock 7,172 --
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Net cash provided (used) by financing activities 1,085,223 294,291
NET INCREASE (DECREASE) IN CASH 121,802 52,798
CASH, beginning of the period 1,375 48,457
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CASH, end of the period $ 123,177 $ 101,255
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SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest $ 30,922 $ 27,416
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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 And Presentation
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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 Oklahoma, 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, 1998.
2. Acquisition of Working Interest in the state of Oklahoma
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During the period ended June 30, 1999, the Company acquired a 25% working
interest in certain leaseholds in the state of Oklahoma. A total purchase price
of $993,579 was paid for the interest and related equipment. The leases
currently have producing and non-producing oil and gas wells. The Company also
purchased all equipment related to the wells on the leases from Pontotoc
Production Inc. The entire purchase price was funded by proceeds from long term
debt and sales of Common Stock.
3. Stockholders Equity
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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. The consultant
exercised 30,000 options during the period ended June 30, 1999. Also during the
period the Company issued 17,500 shares of common stock and 10,000 shares of
treasury stock to a consultant in lieu of cash for services rendered.
As of June 30, 1999 the Company issued 998,500 shares of common stock through
its ongoing unit offering priced at $0.75 per unit, each unit consist of one (1)
share of common stock and one (1) class A warrant.
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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, from bank financing and
from the sale of common stock. The Company categorises its operating expenses
into the categories of production expenses and other expenses. Due to lower 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, 1999
were lower than net expenses for the period ended June 30, 1998.
Comparison of three months ended June 30, 1999 to the three months ended June
30, 1998
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Results of Operations
Revenues increased 8% or $13,628 to $179,714 for the three month period ended
June 30, 1999 from the comparable 1998 period, this was due to the overall
increase in the average price received for oil and gas sales and the acquisition
of the Oklahoma properties in May 1999. Production volumes increased 20% on a
BOE basis. Average oil sales prices increased 26% to $15.08 for the period ended
June 30, 1999 compared to $12.00 for the period ended June 30, 1998. Average gas
sales prices remained relatively stable at $1.54 for the three month period
ended June 30, 1999 compared to $1.58 (revised) for the period ended June 30,
1998.
Production expenses increased 4% or $2,240 to $58,953 for the three month period
ended June 30, 1999 from the comparable 1998 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, 1999 compared to the 1998
period. General and administrative overhead cost increased 9% or $7,166 to
$87,651 for the three month period ended June 30, 1999 from the three month
period ended June 30, 1998. This was primarily due to costs associated with
evaluating acquisitions and consulting fees.
Net other income for the three months ended June 30, 1999 was $12,413 compared
to an expense of $13,701 for the 1998 period. This decrease was primarily due to
an increase in miscellaneous income in 1999.
Comparison of six months ended June 30, 1999 to the six months ended
June 30, 1998
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Results of Operations
Revenues decreased 2% or $5,327 to $311,372 for the six month period ended June
30, 1999 from the comparable 1998 period due to the overall decrease in well
operational and pumping fees offset by an increase in oil and gas sales. The
primary reason for the decrease in fees is the Company has purchased additional
working interest in the Serbin field from other working interest owners.
Production volumes increased 17% on a BOE basis. Average oil sales prices
remained relatively stable at $12.93 for the period ended June 30, 1999 compared
to $13.04 (revised) for the period ended June 30, 1998. Average gas sales prices
decreased 12% to $1.36 for the six month period ended June 30, 1999 compared to
$1.55 (revised) for the period ended June 30, 1998.
<PAGE>
Production expenses decreased 30% or $38,369 to $87,312 for the six month period
ended June 30, 1999 from the comparable 1998 period, this was primarily due to a
reduction in expenses related to additional workovers in the form of remedial
repairs. Depletion and depreciation increased 15% to $72,000, this was due to
the purchase of leasehold and related equipment during the period ended June 30,
1999 compared to the 1998 period. General and administrative overhead cost
decreased 8% or $14,401 to $164,312 for the six month period ended June 30, 1999
from the six month period ended June 30, 1998. This was attributable to lower
legal fees and cost associated with evaluating acquisitions.
Net other expenses for the six months ended June 30, 1999 was $5,774 compared to
$21,114 for the comparable 1998 period. The decreased was primarily due to an
increase in miscellaneous income during 1999.
Liquidity and Capital Resources
Cash flow provided by operating activities was $7,538 for the six month period
ended June 30, 1999, as compared to $16,390 in cash flow used by operating
activities in the 1998 period. The increase in cash from operating activities
was primarily due to recovery of income tax in 1999.
Cash flow used by investing activities was $970,959 in the period ended June 30,
1999, compared to $225,103 for June 30, 1998. This is primarily due to the
purchase of additional oil and gas properties. Cash flow from financing
activities was $1,085,223 for the period ended June 30, 1999, compared to a use
of $294,291 for the same period in 1998. This was due to increases in long-term
debt and proceeds from the sale of common stock in 1999.
The Company cannot predict how prices will vary during 1999 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.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
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The Company is a party to a lawsuit arising in the ordinary course of business.
In the opinion of management, final judgement or settlement, if any, that may be
awarded or entered into in connection with this suit would not have a material
adverse effect on the Company's financial position or results of operations.
Item 2. Changes in Securities
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SALE OF RESTRICTED SECURITIES. During the three months ended June 30, 1999, the
Company sold approximately 15.5 Units, each Unit consisting of 30,000 shares of
Common Stock and 30,000 Warrants to purchase Common Stock, at a purchase price
of $22,500 per Unit. Each Warrant is exercisable to purchase one share of Common
Stock at $1.25 per share until expiration in year 2002. In connection with such
sales the Company paid cash commissions to W.B.
McKee Securities, Inc. in the amount of $32,625.
With respect to these sales, the Company relied on Section 4 (2) of the Act, and
Rule 501 and Rule 506 of Regulation D promulgated thereunder. The investors were
given a copy of a Private Placement Memorandum containing information concerning
the Company, a form D was filed with the SEC and the Company complied with the
other applicable requirements of Rule 501 and 506.
Item 3. Default Upon Senior Securities
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None
Item 4. Submission of Matters to a Vote of Security Holders
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None.
Item 5. Other Information
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None.
Item 6. Exhibits and Reports on Form 8-K
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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 14, 1999 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
authorised.
Date: 7/12/99 By: /s/ Ray Reaves
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Ray Reaves, Treasurer, Chief Financial Officer
