Attention Shareholders!
You will notice something new and different this year with our annual report!
The report has taken on a leaner look. Management decided to forego the
expensive glossy cover and furnish each shareholder with a complete Form 10-K
and the necessary proxy materials. These are also being furnished to
stockbrokers and financial institutions who have requested them. The
shareholders letter, which normally appears on the inside of the annual report,
is attached as the first page to the Form 10-K. It will, as in the past,
highlight last year's activities as well as bring you up to date as to the
events that have occurred since our fiscal year end on June 30, 1996. We hope
you, as a shareholder, approve of this new format.
AS A PARTY INTERESTED IN OUR COMPANY, YOU HAVE RECEIVED OUR FORM 10-K IN A
PREVIOUS MAILING. WE ARE NOW PROVIDING YOU WITH OUR SHAREHOLDER LETTER & PROXY
STATEMENT FOR YOUR ADDITIONAL INFORMATION.
<PAGE>
TO OUR SHAREHOLDERS
Tyrex completed its sixteenth year of operation with a small net loss of
$156,212 for the fiscal year compared to net income of $143,898 last fiscal
year. Working capital jumped substantially to $560,387 up from $147,727 at the
previous year end. The Company is in superior financial condition with total
long term debt of only $197,108 resulting in debt to equity of just 6.3% at
fiscal year end June 30, 1996. The Company also has available an unencumbered
$450,000 line of credit should a special need arise.
Total revenues for the fiscal year were $1,502,762, compared to $2,053,438
for the prior fiscal year. The decrease is primarily due to the absence of any
major property sales for the year ended June 30, 1996. Oil and gas sales were
down slightly by $80,789 or 5.7% from the previous year. Higher oil prices
helped to offset declining production rates and the absence of property sales.
Production expenses increased $97,864 or 16.3%. Greater than anticipated
equipment expenditures and repairs, two recompletions at the Antelope (Madison)
Unit, and the completion expense on the Puckett Federal 21-21 well, also
contributed to higher overall production expenses for the year.
During fiscal 1996, the Company produced approximately 81,328 barrels of
oil and 98,964 mcf of gas at an average price of $17.36 and $.44, respectively.
This compares to oil production of 87,926 barrels in fiscal 1995 at $15.03 per
barrel and 135,028 mcf at $.73. The Company's oil reserves increased by 14% to
658,080 barrels and our gas reserves decreased by 12% to 1,174,442 mcf of gas.
Please refer to the attached Form 10-K for additional detailed financial
information.
ACTIVITY REVIEW
Wind River Basin- Wyoming Poison Creek Prospect
Tyrex is pleased to announce that it closed on the sale of its Poison Creek
Prospect, T37N-R93W, Fremont County, Wyoming, on September 12, 1996. The sale,
to a large independent which is active in the Wind River Basin, included all of
our interest in 6,479 gross and 4,579 net acres of oil and gas leases, 100%
ownership in a 4.5 mile pipeline, and 51% ownership in the Puckett Federal #
21-21 well. The Company retains an override equal to the difference between
existing burdens and 80% on all leases sold.
Williston Basin-North Dakota Workovers-Raub Field
Tyrex successfully recompleted the State 42-16 well in the Raub Field, McLean
County, North Dakota. Prior to the workover the well was producing 33 barrels
of oil and 57 barrels of water. Following the cementing off of the water
bearing zones and reperforating the producing zone, the well was returned to
production at the daily rate of 50 barrels of oil and 12 barrels of water per
day. This represents a 50% increase in oil production and 78% reduction in the
water cut. The Company and its working interest partners should enjoy savings of
over $1,300 per month in operating expense and increased oil income of over
$6,000 per month. Tyrex has a 43.3 % working interest and a 35.3% net revenue
interest in the 42-16 well. We are extremely pleased with the results of this
workover.
A successful workover was also completed on the Peterson #F1, Smith Field,
Renville County, North Dakota. The well was producing 7 barrels of oil and
285 barrels of water per day prior to being shut-in. The company was
successful in cementing off the water bearing zones and returned the well to
production at the rate of 7 barrels of oil and only 5 barrels of water per day.
Although not as dramatic as the State well's results, this workover cut
operating expenses on the well by over $2,100 per month, doubling the net income
per month on the well.
Powder River Basin-Wyoming Spearhead Ranch Area
Tyrex Oil Company supported the drilling of a 10,240 foot Sussex test outside
the Spearhead Ranch Unit by Celsius Energy Company in Township 39 North, Range
74 West, Section 7, Converse County, Wyoming. The company farmed out its
working interest in the project, and retains a 7.5% override in the acreage and
the well in the event of production. The well was scheduled to commence in
September 1996.
Alabama Coal Fines Recovery Project
The Alabama Coal Fines Recovery Project continues to produce revenue to the
Company. Income on the sales of coal from the property was $28,363. This
represents an annualized 28% return on our investment. We wish all of our
properties could perform as well. Revenues on the project are expected to
remain constant or decrease slightly this year due to higher royalties being
paid to US Steel.
OUTLOOK
The Company continues to high grade its producing properties as well as its
entire operations. We will continue to sell those properties with limited
upside potential or that are uneconomic at current production levels.
Management intends to continue to look for properties to purchase that will give
immediate cash flow to the Company. As previously stated, the Company is in as
good a financial shape as it has been in years. Unfortunately, our share price
does not reflect our book value. Rest assured that we look daily for ways to
enhance shareholder value and increase our share price.
/S/ Tom N. Richardson
Tom N. Richardson October 7, 1996
President
<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1996
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 Number 0-9358
------
TYREX OIL COMPANY
(Exact name of Registrant as specified in its charter)
Wyoming 83-0245581
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 101, 777 North Overland Trail
P.O. Box 2459
Casper, Wyoming - 82601
- ----------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (307) 234-4260
--------------
Securities registered pursuant to Section 12(b) of the Act:
-None-
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
----------------------------
(Title of Each Class)
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 x No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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-K or any amendment to this
Form 10-K. [x]
At September 23, 1996, 10,960,091 common shares (the Registrant's only
class of voting stock) were outstanding. The aggregate market value of the
9,956,691 shares held by nonaffiliates of the registrant on that date was
approximately $2,041,000.*
- --------------
* Based upon multiplying the mean ($.205) of the closing bid and asked prices
of the common stock of the registrant on the NASDAQ system times the number
of shares held by nonaffiliates.
i
<PAGE>
Documents incorporated by reference:
Directors and Executive See "ELECTION OF DIRECTORS," "EXECUTIVE
COMPENSATION," and PRINCIPAL SHAREHOLDERS" in the
Officers of the Registrant. Registrant's definitive proxy statement to be used
in connection with its Annual Meeting of
Shareholders to be held December 5, 1996.
Executive Compensation
Security Ownership of Certain
Beneficial Owners and
Management.
Certain Relationships and
Related Transactions.
ii
<PAGE>
PART I
Item 1. Business.
- -----------------
Tyrex Oil Company (the "Company") was incorporated under Wyoming law on
November 8, 1979 for the purpose of acquiring whole or partial interests in oil
and gas leases, farming out all or a part of its interest in such leases to
others in the oil and gas industry and engaging in oil and gas exploration and
drilling activities. The Company also purchases interests in producing oil and
gas properties from time to time. The Company presently owns oil and gas
interests in several states. For further information concerning these
interests, and the Company's participation in oil and gas drilling activities
during the last three fiscal years, see Item 2 of this Report.
Competition, Working Capital and Other Matters
----------------------------------------------
The Company is faced with competition from a large number of major oil and
gas companies and numerous smaller independent oil and gas operators. There are
no dominant companies in the type of oil and gas business in which the Company
engages. However, some of the Company's competitors are very large,
well-established companies with significant earnings records. The Company
usually is at a competitive disadvantage in acquiring oil and gas prospects and
carrying such prospects in its leasehold inventory, since it must compete with
these companies, of which many have greater financial resources to carry holding
costs of prospects and have larger technical staffs.
In light of the Company's acreage position as noted in Item 2 of this
Report, working capital is needed to advance delay rentals on oil and gas leases
should the Company continue to hold the leases without developing them or should
the Company be unable to make arrangements (usually through farmouts or sales)
whereby another party will pay delay rentals.
The Company has never declared bankruptcy, nor has it been in receivership,
reorganization, readjustment, or similar proceedings. Since inception, no
material changes have been made in the mode of conducting the Company's
business. The Company has no plans to enter any new lines of business. Since
the Company is engaged in the oil and gas business, it allocates no funds to
product research and development in the conventional sense. The Company has no
material patents, trade-marks, licenses, franchises, or concessions, other than
federal and state oil and gas leases (see Item 2). Backlog is not material to
an understanding of the Company's business. The Company's business is not
subject to renegotiation of profits or termination of contracts or subcontracts
at the election of the federal government. The Company's business is not
seasonal.
The Company's business is not dependent on a single customer or a few
customers. The three major customers of the Company for the fiscal year ended
June 30, 1996 were unaffiliated with the Company, and were: Amoco Oil Company,
Marathon Oil Company, and 88 Oil Company, who accounted for 41%, 33% and 11%,
respectively, of the Company's gross revenues for the fiscal year. The Company
believes there are entities engaged in the oil and gas business which would
purchase the Company's oil production if the Company were to lose these
customers, and that there are entities which will have an interest in acquiring
the acreage and prospects the Company has and intends to acquire in the future.
Oil and natural gas are raw materials essential to the Company's business.
However, the exploration, development, production, and sale of oil and natural
gas are subject to many factors which are outside the Company's control. These
factors include: worldwide production; the current and anticipated prices for
oil and gas; worldwide and domestic economic conditions; oil import quotas;
proximity of properties to pipelines; the supply and price of other fuels; and
the regulation of prices, production, transportation, and marketing by federal
and state governmental authorities.
1
<PAGE>
The Company is engaged in a facet of exploiting natural resources. It is
subject to various federal, state, and local provisions regarding environmental
and ecological matters. Environmental laws may necessitate significant capital
outlays, may materially affect the Company's revenue generating potential and
could cause material changes in the Company's proposed business. At the present
time, however, the existence of environmental laws has not materially hindered
nor adversely affected the Company's business. However, current and future
legislation may have the effect of limiting the production from certain wells or
altering the operations of the Company because the production of oil and gas is
subject to regulation under conservation laws. The Company may be required to
comply with a multitude of laws and regulations designed to protect the
environment.
At August 31, 1996, the Company had four full-time employees. The Company
has and expects to retain independent consultants from time to time on a limited
basis.
Executive Officers of the Company
---------------------------------
Information concerning the Company's executive officers is set forth below.
Positions with Period of Service as
Name and Age the Company Director or Officer
- ------------ ----------- -------------------
John D. Traut Chairman of the Board, 11/08/79 to present
Age: 69 and a Director
Tom N. Richardson President, Chief Executive 07/10/86 to present
Age: 46 and Financial Officer and
a Director
Doris K. Backus Secretary-Treasurer 12/05/91 to present
Age: 42 and a Director
John D. Traut received a B.S. degree in Geology from the University of
-------------
Wyoming in 1951. Mr. Traut was employed as a petroleum geologist for Marathon
Oil Company from 1951 to 1974. While employed with Marathon, he was engaged in
oil and gas exploration programs throughout the Rocky Mountains and in
Guatemala. From 1974 until formation of the Company in November, 1979, he was
an independent consulting geologist in Casper, Wyoming. Mr. Traut is a member
of the Wyoming Geological Association, of which he served as President during
1973. He is also a member of the American Association of Petroleum Geologists,
and is a Fellow in the Geological Society of America.
Tom N. Richardson graduated from the University of Wyoming in 1972 with a
-----------------
B.S. degree in Business Administration. From 1976 to 1980 he worked as a
Landman and Contracts Supervisor for Gulf Oil Corporation in Casper, Wyoming.
In 1980, he joined the Company as Manager of Land. He is a Certified
Professional Landman, a member of the Wyoming Association of Petroleum Landmen
and of the American Association of Petroleum Landmen. He was elected President
and Chief Financial Officer of the Company in March of 1994. He is currently
the Treasurer of the Petroleum Association of Wyoming and also serves on its
executive committee.
Doris K. Backus graduated from the National College of Business in 1974
---------------
with an Associate's Degree as a legal secretary. She has over 20 years
experience in various areas of the oil and gas business and has been employed by
the Company since 1983.
The Company's executive officers serve at the discretion of the Board of
Directors and have been appointed as officers until their resignation, removal
or death.
2
<PAGE>
Item 2. Properties.
- -------------------
Office Facilities
-----------------
The offices of the Company, consisting of 1,733 square feet, are located at
777 North Overland Trail, Casper, Wyoming, and are leased on a month to month
basis from a general partnership of which an officer and director of the Company
is a partner. Management believes that the facilities will be adequate to meet
the Company's needs during the coming fiscal year and that the rental rates are
comparable to similar office space in the general vicinity.
Other than oil and gas interests described below, the Company has no
physical facilities other than office furniture and equipment.
Oil and Gas Interests
---------------------
The following sets forth information concerning undeveloped leasehold
interests of the Company at August 31, 1996. Approximately 20,089 gross and
7,371 net acres are leased from the U.S. Bureau of Land Management. There are
no material contingencies which involve termination of leases, other than
expiration or their terms as discussed below.
Total Acres Oil and Gas
Undeveloped Working Interests
-----------------------------
State Gross Acres(a) Net Acres(b)
- ----- --------------- ------------
Montana 640 640
North Dakota 6,639 3,158
Utah 80 20
Wyoming 21,528 8,637
------- ------
Total 28,887 12,455
======= ======
- -------------------
(a) Gross acres are the total acreage involved in a single lease or group of
leases.
(b) Net acres represent the number of acres attributable to an owner's
proportionate working interest in a lease (e.g. a 50% working interest in a
lease covering 320 acres is equivalent to 160 net acres).
The annual delay rentals for the above leases are $12,455 and the
expiration dates on the leases vary from 1996 to 2006.
3
<PAGE>
The following sets forth information with respect to the Company's
overriding royalty interests in oil and gas leases at August 31, 1996:
Non-Producing
State Gross Acres Overriding Royalty Interest
- ----- ------------ ---------------------------
Colorado 2,069 3.00%
Nevada 8,935 5.00%
Utah 1,720 5.00%
Wyoming 5,075 0.07% to 7.50%
-------
Total 17,719
=======
The expiration dates of the leases under which the royalty interests exist
vary from 1996-1998. It should be noted that since all operating rights in the
leases are held by third parties, the Company cannot compel exploration or
development of the leases.
The following table sets forth information with respect to developed oil
and gas acreage held by the Company at June 30, 1996. The acreage is calculated
using applicable state regulatory requirements relating to well spacing.
Total Acres - Developed Leases
-------------------------------
State Gross Acres Net Acres
- ----- ----------- ---------
Montana 320 240
North Dakota 1,276 3,603
Wyoming 6,219 562
Utah 640 32
-------- -------
Total 18,455 4,437
======== =======
Drilling Activities
-------------------
The table below sets forth the Company's drilling participation as a
working interest owner in oil and gas wells during the fiscal year ended June
30, 1994. In both fiscal years ended June 30, 1995 and 1996, the Company did
not participate in any drilling activities.
Fiscal Year Ended
June 30, 1994
---------------------------------------
Exploratory Development Total
----------- ----------- -----
Gross Wells (a) -- 2.00 2.00
Net Wells (b) -- .70 .70
Net Oil Wells -- .35 .35
Net Gas Wells -- -- --
Net Dry Wells -- .35 .35
- ------------------
(a) A gross well is a well in which a working interest is owned. The number of
gross wells is the total number of wells in which a working interest is
owned.
(b) A net well is deemed to exist when the sum of fractional ownership working
interests in gross wells equals one. The number of net wells is the sum of
the fractional working interests owned in gross wells expressed as whole
numbers and fractions thereof.
4
<PAGE>
The Company, as of June 30, 1996, had working interests in 92 producing
gross (15.14 net) oil wells and 5 gross (.89 net) gas wells. At August 31,
1996, the Company had an interest in 3 gross (.41 net) shut-in gas wells. The
Company also at that date held small overriding royalty interests in 82
producing oil wells and 8 producing gas wells.
From the period June 30, 1996 through September 20, 1996 the Company did
not participate in the drilling of any wells.
Proved Oil and Gas Reserves
---------------------------
For information concerning the Company's estimated proved oil and gas
reserves, average lifting and sales costs of production, estimated future net
cash flows therefrom, and present value of such net cash flows, see Note 8 to
the Financial Statements in Item 8 of this report. The reserve information is
based on estimates prepared by Allen & Crouch, independent petroleum engineers,
from data, including ownership interests, operating expenses, production
information and current prices furnished by the Company. The Company is not
obligated to provide a fixed and determinable quantity of oil or gas in the
future under any contract or agreement. Since the date of the reserve estimates
there has not been any discovery of oil or gas that has a significant effect of
the estimates.
The Company has not filed any reports containing oil or gas reserve
estimates with any federal or foreign government authority or agency within the
past 12 months other than the Securities and Exchange Commission.
Item 3. Legal Proceedings.
- --------------------------
The Company is not a party to any material pending legal proceedings, nor
have any such proceedings been threatened and none are contemplated.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
No matter was submitted during the fourth quarter of the fiscal year ended
June 30, 1996 to a vote of security holders.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
- --------------------------------------------------------------------------
Matters.
- --------
The Company's common stock is traded in the over-the-counter market under
the symbol "TYRX." Public trading of the common stock commenced on September 5,
1980.
5
<PAGE>
The table below presents the range of high and low bid quotations for the
calendar quarters of the Company's last two fiscal years ended June 30, 1996 as
reported by the NASDAQ quotation system. The quotations represent prices
between dealers and do not include retail markup, markdown or commissions;
hence, they may not represent actual transactions.
Bid
-----------------------
High Low
---- -----
Calendar 1994
-------------
Third Quarter $ .22 $ .09
Fourth Quarter $ .22 $ .13
Calendar 1995
-------------
First Quarter $ .22 $ .16
Second Quarter $ .25 $ .16
Third Quarter $ .25 $ .09
Fourth Quarter $ .19 $ .09
Calendar 1996
-------------
First Quarter $ .22 $ .13
Second Quarter $ .25 $ .16
The number of holders of record of the Company's common stock as of
September 20, 1996 was approximately 2,100.
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the common stock
have been paid by the Company, nor does the Company anticipate that dividends
will be paid in the foreseeable future.
<TABLE>
Item 6. Selected Financial Data.
- --------------------------------
<CAPTION>
Year Ended June 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total Revenues $1,502,762 $2,053,438 $1,792,654 $2,155,627 $1,774,009
Income (loss) before
extraordinary item $ (156,212) $ 143,893 $ (559,213) $ (223,432) $ 35,353
Income (loss) before
extraordinary item
per share $ (.01) $ .01 $ (.05) $ (.02) $ -
Cash dividends per
common share $ - $ - $ - $ - $ -
At year end:
Total assets $2,795,087 $2,920,497 $3,360,097 $3,928,128 $3,352,676
Long-term obligations $ 154,001 $ - $ 336,724 $ 453,409 $ -
Working capital
(deficit) $ 560,387 $ 147,727 $ (161,747) $ 246,322 $ 708,555
Stockholders' equity $2,430,083 $2,576,039 $2,435,493 $2,991,106 $3,214,809
</TABLE>
6
<PAGE>
- -----------------------
(a) An extraordinary item of $6,239 in fiscal year 1992 was recognized due to
the reduction of income tax expense from the utilization of operating loss
carryforwards from the prior years.
Item 7. Management's Discussion and Analysis of Financial Condition and Re
- -----------------------------------------------------------------------------
sults of Operations.
- -------------------
The following discussion should be read in conjunction with the financial
statements and notes thereto in Item 8 of this report.
Liquidity and Capital Resources
- -------------------------------
At June 30, 1996, the Company had working capital of approximately
$560,387. Management believes that the Company's working capital, combined with
expected cash flow from operations, will be sufficient to meet the Company's
capital needs for operations in fiscal 1997.
The Company's external source of liquidity is its unsecured line of credit
with Key Bank in the amount of $450,000. The line of credit was established to
facilitate the Company's short-term capital requirements during a prior drilling
program. Any balance under the line, which is currently zero, may be converted
into a long-term obligation if warranted.
Management expects that long-term liquidity will depend on the Company's
cash flows. It is management's goal, however, that the Company not use
significant amounts of its liquid capital to develop its undeveloped oil and gas
properties. Rather, the Company attempts to have outside parties fund the
development of its properties, although, during fiscal 1996 and fiscal 1995, the
Company expended $123,100 and $196,132, respectively, in exploration of its
properties. The Company has in the past also used capital to participate in
exploration ventures brought to it by other parties. The category exploration
expense also contains lease rentals which were $19,857 and $29,609,
respectively, for such years. Due to the Company's limited amount of working
capital, management does not intend to incur significantly higher exploration
costs in fiscal year 1997 above those of the prior year.
Results of Operations
- ---------------------
Fiscal 1996 Compared to Fiscal 1995
- ----------------------------------------
Total revenues for the year decreased by $550,676 or 26.8%. Oil and gas
sales decreased by $80,789 or 5.7% from the previous year due to the sale of
certain producing properties and the natural decline in production rates.
Production expenses increased by $97,864 or 16.3% due to a higher incidence of
equipment repairs and replacements, recompletion attempts on two wells in the
Antelope Field, and the workover expense at the Puckett Federal well. As
producing properties mature, operating costs also naturally increase due to the
age of the equipment and lower production volumes associated with the
properties. During fiscal 1996, the Company produced approximately 81,328
barrels of oil and 98,964 mcf of gas at average prices of $17.36 and $.44,
respectively. This compares to oil production of 87,926 barrels in fiscal 1995
at an average price of $15.03 per barrel and 135,028 mcf at an average price of
$.73. Management expects that gas revenues in fiscal 1997 will decrease over
fiscal 1996 due to decreasing production and the sale of certain gas properties.
Sales of oil and gas properties decreased substantially when compared to last
fiscal year. The prior fiscal year property sales, however, also resulted in
lower monthly production rates for the fiscal year ended June 30, 1996. The
Company incurred a net loss in fiscal 1996 of $156,000 compared to net income of
$144,000 in fiscal 1995. However, a large part of revenues and net income in
1995 consisted of sales of oil and gas properties in the amount of $453,000.
7
<PAGE>
It is expected that interest income will increase, as the Company's cash
reserves have increased over the previous year. Depreciation and depletion
increased slightly by $52,730 or 17% due to lower production rates and higher
production costs. Interest expense decreased compared to the prior year, and
management expects that interest expense will continue to decline as the debt is
paid down in fiscal 1997. General and administrative expense decreased by
$30,770 or 9.3% due to reductions in staff and the implementation of various
cost containment measures. Management expects further reductions in 1997 due to
general cost savings measures and the consolidation and reduction of leased
office space.
Fiscal 1995 Compared to Fiscal 1994
-----------------------------------
Total revenues for the year increased by $260,784 or 14.5%. Oil and gas
sales decreased by $51,835 or 3.5% from the previous year due to the sale of
certain producing properties. Production expenses also decreased $287,388 or
32.3% because of the sale and the properties sold had high operating costs
associated with them. During fiscal 1995 the Company produced approximately
89,926 barrels of oil and 135,028 mcf of gas at an average price of $15.03 and
$.73, respectively. This compares to oil production of 108,873 barrels in
fiscal 1994 at $12.14 per barrel and 133,719 mcf at $.69. Management expects
that gas revenues in fiscal 1996 will increase over fiscal 1995 due to increased
production. Sales of oil and gas properties increased due to the sale of
certain properties in North Dakota and Wyoming. The property sales, however,
caused lower production rates. The Company achieved net income in fiscal 1995
of $144,000. However, a large part of revenues consisted of sales of oil and
gas properties ($453,000).
Management expects that interest income will remain stable, as the Company
has a small amount of liquid funds on hand. Depreciation and depletion
decreased significantly by $116,807 (27.4%) due to the property sale discussed
above. Interest expense decreased due to the large reduction of $580,146 in
total debt by the Company. Management expects that interest expense will
continue to decrease in fiscal 1996 as the Company reduces its total debt
obligations.
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
Index
(1) Financial Statements:
--------------------
Report of Independent Certified
Public Accountants F-1
Balance Sheets as of June 30, 1996 and 1995 F-2
Statements of Operations for the Years Ended June 30,
1996, 1995 and 1994 F-3
Statements of Stockholders' Equity for the Years Ended
June 30, 1996, 1995 and 1994 F-4
Statements of Cash Flows for the Years Ended
June 30, 1996, 1995 and 1994 F-5
Notes to Financial Statements F-6
8
<PAGE>
(2) Additional Financial Information Required to be Furnished Pursuant to
----------------------------------------------------------------------
the Requirement of Form 10-K:
----------------------------
Report of Independent Certified Public Accountants on
Supplementary Schedules F-15
Schedules for the years ended June 30, 1996, 1995, and 1994
V Property and Equipment F-16
VI Accumulated Depreciation and Depletion F-17
Item 9. Disagreements on Accounting and Financial Disclosure.
- --------------------------------------------------------------
There were no disagreements of the type required to be reported under this
item between the Company and its independent accountants during the 24 months
prior to the date of the financial statements included herein.
PART III
Item 10. Directors and Executive Officers of the Registrant.
- ------------------------------------------------------------
See Item 13 below.
Item 11. Executive Compensation.
- --------------------------------
See Item 13 below.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
See Item 13 below.
Item 13. Certain Relationships and Transactions.
- ------------------------------------------------
Items 10, 11, 12 and 13 incorporate by this reference the information set
forth in the Company's definitive proxy statement under the headings "Election
of Directors," "Executive Compensation" and "Principal Shareholders" to be used
in connection with the Annual Meeting of Shareholders to be held on December 5,
1996.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
- -------------------------------------------------------------------------
(a)(1) Financial Statements.
--------------------
The following financial statements of the Company, along with the report of
independent certified public accountants, are included in Part II, Item 8
of this Report:
Balance Sheets as of June 30, 1996 and 1995
Statements of Operations for the Years Ended June 30, 1996, 1995 and 1994
9
<PAGE>
----------------------------------------
HOCKER, LOVELETT, HARGENS & YENNIE, P.C.
----------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Stockholders and Board of Directors
Tyrex Oil Company
We have audited the balance sheets of Tyrex Oil Company as of June 30, 1996 and
1995, and the related statements of operations, stockholders' equity, and cash
flows for the years ended June 30, 1996, 1995 and 1994. 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amount 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 Tyrex Oil Company as of June
30, 1996 and 1995, and the results of its operations and its cash flows for the
years ended June 30, 1996, 1995 and 1994, in conformity with generally accepted
accounting principles.
/s/Hocker, Lovelett, Hargens & Yennie, P.C.
Casper, Wyoming
August 28, 1996
F-1
<PAGE>
<TABLE>
TYREX OIL COMPANY
BALANCE SHEETS
JUNE 30, 1996 and 1995
<CAPTION>
1996 1995
<S> <<C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents - Note 11 and 14 $ 478,195 $ 330,381
Certificates of Deposit 105,000 5,000
Accounts receivable 154,683 123,237
Prepaid maintenance fees - Note 15 862 1,810
Accrued interest receivable 159 5,297
Total 738,899 465,725
OTHER ASSETS
Investment - Notes 10 and 13 89,109 91,897
Other 6,777 521
Total 95,886 92,418
PROPERTY AND EQUIPMENT, at cost - Notes 2 and 8
Oil and gas properties using successful
efforts
method, net of accumulated depreciation and
depletion of $2,792,301 in 1996 and
$2,443,458 in 1995 1,994,961 2,392,508
Less: impairment allowance (40,603) (40,603)
1,954,358 2,351,905
Other equipment, net of accumulated
depreciation
of $64,137 in 1996 and $62,133 in 1995 5,944 10,449
Total 1,960,302 2,362,354
Total $ 2,795,087 $ 2,920,497
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 68,775 $ 41,975
Accrued expenses 64,144 108,550
Lease payable - Note 15 2,486 4,268
Current portion of debt - Notes 4 and 12 43,107 163,205
Total 178,512 317,998
DEFERRED COMPENSATION - Note 5 32,491 26,460
LONG-TERM DEBT - Note 12 154,001 -
Total 365,004 344,458
STOCKHOLDERS' EQUITY - Note 5
Common stock, $.01 par value; authorized -
50,000,000 shares; issued and outstanding -
10,960,091 shares in 1996 and 10,795,091
shares in 1995 109,601 107,951
Additional paid-in capital 5,396,910 5,385,669
Retained (deficit) (3,070,441) (2,914,229)
Total 2,436,070 2,579,391
Less: Treasury stock, at cost, 45,000 shares
in 1996 and 25,000 shares in 1995 (5,987) (3,352)
2,430,083 2,576,039
Total $ 2,795,087 $ 2,920,497
<FN>
See accompanying notes to financial statements.
</TABLE>
F-2
<PAGE>
<TABLE>
TYREX OIL COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1996, 1995, AND 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
REVENUES
Oil and gas sales - Note 3 $ 1,330,128 $ 1,410,917 $ 1,462,752
Sales of oil and gas properties 6,903 453,100 160,223
Sale of investments 7,232 16,426 -
Sale of other equipment 500 - -
Interest 5,110 10,460 5,867
Coal 28,363 51,960 -
Other, primarily operating fees 124,526 110,575 163,812
Total 1,502,762 2,053,438 1,792,654
COSTS AND EXPENSES
Oil and gas production 697,998 600,134 887,522
Production taxes 134,339 169,347 164,772
Cost of oil and gas properties sold 7,894 254,679 61,572
Cost of investments sold 13,703 11,526 -
Cost of other equipment sold 14 - -
Loss on abandonments - - 52,366
Exploration 123,100 196,132 280,635
Depreciation, depletion and valuation
allowance 361,581 308,851 425,658
Interest 20,590 38,346 50,740
General and administrative - Notes 5 and 6
299,755 330,525 428,602
Total 1,658,974 1,909,540 2,351,867
INCOME (LOSS) BEFORE INCOME TAXES (156,212) 143,898 (559,213)
INCOME TAX EXPENSE (CREDITS) - Note 7
Current - - -
Deferred - - -
- - -
NET INCOME (LOSS) $ (156,212) $ 143,898 $ (559,213)
DIVIDENDS PER SHARE $ - $ - $ -
INCOME (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE $ (.01) $ .01 $ (.05)
WEIGHTED AVERAGE SHARES OUTSTANDING 10,897,707 10,795,091 10,795,091
<FN>
See accompanying notes to financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
TYREX OIL COMPANY
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1996, 1995, AND 1994
<CAPTION>
Additional Total Stock-
Common Stock Treasury Paid - In Retained holders'
Shares Amount Stock Capital (Deficit) Equity
<S> <C> <C> <C> <C> <C>
Balance June 30,
1993 10,795,091 $107,951 $ - $ 5,385,669 $(2,502,514) $2,991,106
Prior period
adjust-
ment - Note 13 - - - - 3,600 3,600
Net loss for the
year ended June
30, 1994 - - - - (559,213) (559,213)
Balance June 30,
1994 10,795,091 107,951 - 5,385,669 (3,058,127) 2,435,493
Purchases of
25,000 shares
treasury stock - - (3,352) - - (3,352)
Net income for the
year ended June
30, 1995 - - - - 143,898 143,898
Balance June 30,
1995 10,795,091 107,951 (3,352) 5,385,669 (2,914,229) 2,576,039
Purchases of
20,000 shares
treasury stock - - (2,635) - - (2,635)
Stock bonuses 165,000 1,650 - 11,241 - 12,891
Net loss for the
year ended June
30, 1996 - - - - (156,212) (156,212)
Balance June 30,
1996 10,960,091 $109,601 $ (5,987) $ 5,396,910 $(3,070,441) $2,430,083
<FN>
See accompanying notes to financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
TYREX OIL COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
Increase (Decrease) in Cash and Cash Equivalents
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash from oil and gas sales $ 1,401,954 $ 1,647,736 $ 1,689,075
Cash paid for production, exploration and
general and administrative expense (1,144,131) (1,156,951) (1,619,060)
Interest received 10,248 10,460 5,867
Interest paid (20,590) (38,346) (50,740)
Net cash provided by operating
activities 247,481 462,899 25,142
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of properties 7,403 453,100 160,223
Purchases of properties (67,871) (208,691) (406,747)
Proceed from sale of investments 7,232 16,426 -
Purchase of investments (17,171) (12,655) -
Investment income 28,363 - -
Certificates of deposit and treasury
bills (purchased) redeemed (100,000) - 200,000
Net cash provided by (used in)
investing activities (142,044) 248,180 (46,524)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 125,000 - 335,000
Repayments on borrowings and leases (92,879) (578,021) (363,678)
Purchase of treasury stock (2,635) (3,352) -
Issuance of common stock 12,891 - -
Net cash provided by (used in)
financing activities 42,377 (581,373) (28,678)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 147,814 129,706 (50,060)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 330,381 200,675 250,735
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 478,195 $ 330,381 $ 200,675
<FN>
See accompanying notes to financial statements.
</TABLE>
F-5
<PAGE>
TYREX OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
a.General - The Company was organized November 8, 1979, and is engaged in
oil and gas exploration and development within the Rocky Mountain
region of the United States. Its sales are primarily to other energy
oriented companies with payment terms normally being upon transfer of
ownership or within thirty days.
b.Cash and Cash Equivalents - For purposes of the Statement of Cash
Flows, the Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
c.Oil and Gas Properties - The Company follows the successful efforts
method of accounting for its oil and gas activities. Under this
accounting method, costs associated with the acquisition, drilling, and
equipping of successful exploratory and development wells are
capitalized. Geological and geophysical costs, delay rentals, and
drilling costs of unsuccessful exploratory wells are charged to expense
as incurred. Depletion and depreciation of the capitalized costs for
producing oil and gas properties are provided by the unit-of-production
method based on proved oil and gas reserves.
d.Other Equipment - Leasehold improvements, processing equipment, office
equipment and furniture are depreciated by the straight-line and
accelerated methods over estimated useful lives of three to seven
years.
e.Income Taxes - Deferred income taxes are provided for the tax effect of
timing differences arising from certain costs and expenses which are
recognized in different periods for income tax and financial reporting
purposes. For additional information regarding income taxes, see Note
7 to the financial statements.
f.Income (Loss) Per Share - Income per share is computed on the basis of
the weighted average number of common stock and common stock equivalent
shares outstanding during the period. Net loss per share is computed
on the basis of the weighted average number of common stock shares only
as shares subject to warrants and stock options would have an
antidilutive effect.
g.Bad Debts - The direct write off method of accounting for uncollectible
accounts receivable is utilized whereby an account is written off only
when determined to be uncollectible. The results of this method do not
vary materially from the preferred method.
h.Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. Impaired Oil and Gas Properties
The Company provides an allowance for impaired value of undeveloped and
developed properties on an annual basis. An impairment allowance has been
provided for two producing properties at June 30, 1996 and 1995; a property
in Utah with a book value of $33,742 and a North Dakota property for
$6,861. The impairment was provided due to the fact that net future
estimated revenues are not expected to be great enough to offset the costs
that the Company has in the properties. The impairment loss has been
included in exploration costs shown on the Statement of Operations for the
year ended June 30, 1995.
3. Major Customers
Certain customers who accounted individually for more than 10% of the
Company's oil and gas sales are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Company A $ 548,778 $ 558,371 $ 489,966
Company B 440,535 451,785 220,754
Company C 144,745 147,345 -
Company D - - 415,691
</TABLE>
4. Line of Credit
Effective December 3, 1993, the Company entered into an agreement with a
local bank for a $450,000 unsecured line of credit. At June 30, 1996 and
1995, the Company had $0 and $125,000 outstanding against the line of
credit.
5. Employees' Incentive Stock Option Plan
Under an employees' incentive stock option plan approved by the
stockholders in December, 1991, 750,000 shares of common stock have been
authorized and reserved for issuance to employees. Options granted under
this plan expire five years from the date of grant. The option price is
equal to 50% of the market value of the common stock on the date of grant.
Employees gain vesting in approximately one half of the options equally
over five years. The vesting in the remaining options is dependent upon the
Company achieving certain financial goals. Non-cash compensation to
employees in fiscal years 1995-96, 1994-95 and 1993-94 was recognized in
the amount of $8,148, $8,820 and $8,820 per year, respectively, due to
vested options. There are presently four options outstanding which will
expire if not exercised on or before January 17, 1997.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. Employees' Incentive Stock Option Plan (Continued)
Changes in the status of options outstanding under the plan for fiscal
years ended June 30, 1996, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
Shares
1996 1995 1994
<S> <C> <C> <C>
Beginning of year 630,000 630,000 630,000
Granted - - -
Terminated 48,000 - -
End of year 582,000 630,000 630,000
Option Price $ .14 $ .14 $ .14
</TABLE>
The Company also granted 165,000 shares in stock bonuses during the year
ended June 30, 1996 for which $12,891 is recognized as compensation in the
Statement of Operations.
6. Related Party Transactions
The Company rents a portion of its office facilities from an officer-
director on a month-to-month basis. Payments to this individual were
$10,278 in each year ended June 30, 1996 and 1995.
7. Income Taxes
The company follows FASB Statement 109 - Accounting for Income Taxes, which
applies an asset and liability approach requiring the recognition of
deferred tax assets and liabilities with respect to the expected future tax
consequences of events that have been recorded in the financial statements
and tax returns. Income tax at the statutory rate is reconciled to the
Company's actual income tax (benefit) expensed at 15% for the years ended
June 30, 1996 and 1995. The Company has no foreign, state or other income
taxes.
All of the company's earnings are within the United States.
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Income Tax (Credits)
Current $ - $ - $ -
Deferred - - -
Total $ - $ - $ -
</TABLE>
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. Income Taxes (Continued)
Deferred tax liabilities (assets) are comprised of the following at June
30:
<TABLE>
<CAPTION>
Tax effects of temporary differences 1996 1995 1994
<S> <C> <C> <C>
1st year federal lease rentals $ 61,887 $ 61,887 $ 61,612
Intangible drilling costs 184,771 184,771 183,151
Lease impairments 6,090 6,090 -
Total deferred tax liabilities 252,748 252,748 244,763
Depletion of intangible drilling costs (152,804) (140,458) (131,994)
Cost of lease surrendered (36,873) (36,873) (36,873)
Depreciation (2,670) (2,670) (2,670)
Other assets (13,799) (14,436) (14,436)
Net operating loss carryforwards (535,928) (524,959) (547,119)
Total deferred tax assets (742,074) (719,396) (733,092)
Valuation allowances 489,326 466,648 488,329
Net deferred tax assets $ - $ - $ -
</TABLE>
At June 30, 1996, the Company had unused deductions and credits which may
be applied against future taxable income and which expire as follows:
<TABLE>
<CAPTION>
Percent-
age Net
Depletion Operating
Year in Excess Loss Invest-
Ending of Cost Carry- ment Tax
June 30, Depletion forward Credit
<S> <C> <C> <C>
1998 $ - $ 77,756 $ -
1999 - 1,134,902 1,641
2000 - - 3,397
2001 - 770,086 890
2002 - 76,105 -
2004 - 170,572 -
2005 - 218,090 -
2006 - 142,283 -
2008 - 184,962 -
2009 - 648,866 -
2011 - 73,124 -
Indefinite 209,675 - -
</TABLE>
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. Income Taxes (Continued)
In the opinion of management, very immaterial differences exist between the
net operating loss carryforwards available for tax purposes and financial
reporting purposes.
8. Oil and Gas Producing Activities
Capitalized costs relating to oil and gas producing activities at June 30:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Undeveloped properties $ 452,164 $ 550,012 $ 592,083
Developed properties 4,335,098 4,285,955 4,551,453
Total 4,787,262 4,835,967 5,143,536
Accumulated depreciation and
depletion (2,792,301) (2,443,458) (2,290,974)
Net $ 1,994,961 $ 2,392,509 $ 2,852,562
</TABLE>
Costs incurred in oil and gas property acquisitions, exploration, and
development activities for the years ended June 30, (all located in the
United States):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Property acquisition:
Proved $ 55,342 $ 37,171 $ -
Unproved 7,629 60,448 278,638
Exploration 123,100 196,132 280,635
Development 5,223 108,319 199,416
Total $ 191,294 $ 402,070 $ 758,689
</TABLE>
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. Oil and Gas Producing Activities (Continued)
Reserve quantity information (unaudited) for the years ended June 30, (all
located in the United States):
<TABLE>
<CAPTION>
Proved Developed Reserves
1996 1995 1994
Oil Gas Oil Gas Oil Gas
(bbls) (mcf) (bbls) (mcf) (bbls) (mcf)
<S> <C> <C> <C> <C> <C> <C>
Beginning of year 575,088 1,174,442 668,925 1,309,470 728,393 1,235,385
Revisions of previous estimates 165,551 (190,831)(22,276) - 62,304 217,224
Purchases (sales) of minerals in
place - net (1,231) 147,234 18,365 - (37,369) (9,420)
Discoveries - - - - 24,470 -
Production (81,328) (98,964)(89,926) (135,028) (108,873) (133,719)
End of year 658,080 1,031,881 575,088 1,174,442 668,925 1,309,470
</TABLE>
<TABLE>
<CAPTION>
Proved Undeveloped Reserves
1996 1995 1994
Oil Gas Oil Gas Oil Gas
(bbls) (mcf) (bbls) (mcf) (bbls) (mcf)
<S> <C> <C> <C> <C> <C> <C>
Beginning of year - - - - - -
Revisions of previous estimates - - - - - -
Purchases (sales) of minerals in
place - - - - - -
Discoveries - - - - - -
Production - - - - - -
End of year - - - - - -
</TABLE>
The above reserve information is based on estimates prepared by Allen &
Crouch, independent petroleum engineers, from data including ownership
interests, operating expenses, production information and current prices
furnished to them by the Company. Estimates of gas and oil reserves and
their estimated values require numerous engineering assumptions as to the
productive capacity and production rates of existing geological formations
and require the use of certain SEC guidelines as to assumptions regarding
costs to be incurred in developing and producing reserves and prices to be
realized from the sale of future production. Revisions of previous year
estimates can have a significant impact on these values. Also, exploration
costs in one year may lead to significant discoveries in later years and may
significantly change previous estimates of proved reserves and their
valuation. Accordingly, estimates of reserves and their value are inherently
imprecise and are subject to constant revision and change and should not be
construed as representing the actual quantities of future production or cash
flows to be realized from the Company's gas and oil properties or the fair
market value of such properties.
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. Oil and Gas Producing Activities (Continued)
The following is a standardized measure of the discounted net future cash
flows and changes applicable to proved oil and gas reserves required by the
SFAS 69 of the FASB. The future cash flows are based on estimates of oil
and gas reserves utilizing prices and costs in effect as of year end
discounted at 10% per year and assuming continuation of existing economic
conditions.
Standardized measure of discounted future net cash flows and changes
therein relating to proved oil and gas reserves at June 30, (unaudited):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Future cash flows $ 11,878,297 $ 9,500,916 $ 9,024,284
Future production costs (6,844,832) (4,766,970) (6,659,005)
Future development costs (310,024) (281,840) (256,218)
Future income taxes (194,972) (174,388) (316,359)
Future net cash flows 4,528,469 4,277,718 1,792,702
10% annual discount (1,358,541) (1,283,315) (537,811)
Discounted future net
cash flows $ 3,169,928 $ 2,994,403 $ 1,254,891
</TABLE>
The following are the principal sources of changes in the standardized
measure of discounted future net cash flows for the years ended June 30,
(unaudited):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Sales, net of production
costs $ (497,791) $ (641,437) $ (410,459)
Discoveries - - 93,231
Purchases (67,728) 149,675 -
Revisions of previous
quantity estimates 1,463,140 (181,548) 205,365
Net changes in prices and
production costs (1,039,089) 2,113,382 (2,151,606)
Accretion of discount 316,993 299,440 319,851
Net changes $ 175,525 $ 1,739,512 $ (1,943,618)
</TABLE>
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. Oil and Gas Producing Activities (Continued)
Unaudited sales prices and costs are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Sales price
Oil (per bbl) $ 17.36 $ 15.03 $ 12.14
Gas (per mcf) .44 .73 .69
Production costs,
including taxes
Oil (per bbl) 8.99 6.88 8.33
Gas (per mcf) .90 .69 .83
</TABLE>
9. Statements of Cash Flows
Reconciliation of Net Income (Loss) to Net Cash Provided By Operating
Activities:
<TABLE>
<CAPTION>
June 30
1996 1995 1994
<S> <C> <C> <C>
Net income (loss) $ (156,212) $ 143,898 $ (559,213)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and depletion 361,581 308,851 425,658
Sales of properties (14,635) (469,526) (160,223)
Costs of properties disposed 21,611 266,205 61,572
Investment revenue reinvested (28,363) - -
(Increase) Decrease In:
Interest receivable 5,138 (2,189) 51
Accounts receivable (31,446) 76,473 62,511
Prepaid maintenance 948 (1,810) -
(Decrease) Increase In:
Accounts payable and accrued
expenses (17,606) (15,213) 7,440
Leases payable - 4,268 -
Deferred compensation 6,031 8,820 8,820
Surrendered leases 100,434 143,122 178,526
Total adjustments 403,693 319,001 584,355
Net Cash Provided By
Operating Activities $ 247,481 $ 462,899 $ 25,142
</TABLE>
F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. Commitments and Contingencies
As one of the conditions required for participation in the investment
package discussed further in Note 13 to the financial statements, the
Company has guaranteed its proportionate share of a line of credit with an
Alabama commercial bank for the benefit of the mining company. The maximum
amount of the line of credit is $200,000 and Tyrex's share of the potential
liability is $14,000. There have been no borrowings to date against the
line of credit by the mining company.
11. Off-Balance Sheet Risk of Financial Instruments
Interest bearing, time deposits are held by the Company in commercial banks
in excess of the Federal Deposit Insurance Corporation's maximum limits.
The excess deposits totaled $282,743 at June 30, 1996 and $88,395 at June
30, 1995.
12. Long-Term Debt and Collateralized Assets
The following is a summary of notes payable at June 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Note payable to Key Bank in monthly
installments of $5,345 including interest
at 9.625%, due November 11, 2000 secured
by a mortgage security agreement on
certain producing properties $ 197,108 $ -
Note payable to Key Bank, quarterly
interest only payments, interest at
9.375%, due December 31, 1995, unsecured - 125,000
Note payable to Key Bank in monthly
installments of $14,280 including interest
at 8%, due May 1, 1998 secured by a
mortgage security agreement on producing
properties - 38,205
Less: Current maturities (43,107) (163,205)
$ 154,001 $ -
</TABLE>
F-14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. Long-Term Debt and Collateralized Assets (Continued)
Following are the current maturities of long-term debt for each of the next
five years:
<TABLE>
<CAPTION>
June 30,
<S> <C>
1997 $ 43,107
1998 51,554
1999 56,741
2000 45,706
$ 197,108
</TABLE>
The $125,000 note payable was refinanced as long-term debt in November,
1995
13. Prior Period Adjustment
In 1992, the Company invested in a loan/lease agreement with a coal mining
company located in Alabama. Prior to the end of the 1993-94 fiscal year,
the investment form was changed to a limited partnership known as the
Concord Coal Recovery Limited Partnership. This was done with the mutual
consent of all investors but the Company did not change the classification
of the investment and its accounting method at that time.
The investment is now being accounted for by the Equity method and the June
30, 1994 balance sheet has been restated to reflect this change. The change
resulted in a $3,600 decrease in the retained deficit at June 30, 1994
The investment in the limited partnership was $89,109 at June 30, 1996 and
$91,897 at June 30, 1995.
14. Cash Equivalents
During the years ended June 30, 1996 and 1995, the Company invested $1,440
and $31,029, respectively in a money market mutual fund redeemable at par
value with Key Investments, Inc. The mutual fund has been included as a
cash equivalent.
15. Capital Lease
During the fiscal year 1995, the Company entered into a capital lease for a
copier which is recorded in the balance sheet under Other Equipment. Cost
of the copier was $2,500 and accumulated depreciation at June 30, 1996 was
$1,300.
F-15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
15. Capital Lease (Continued)
Future minimum lease payments under the capital lease as of June 30, 1996
for each of the next five years or less and in the aggregate are:
<TABLE>
<CAPTION>
Year ending June 30, Amount
<S> <C>
1997 $ 1,809
1998 677
Total minimum lease payments 2,486
Less: amount representing maintenance
fees (861)
Present value of net minimum lease
payment $ 1,625
</TABLE>
F-16
<PAGE>
------------------------------------------------
HOCKER, LOVELETT, HARGENS & YENNIE, PC.
--------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SUPPLEMENTARY SCHEDULES
The Stockholders and Board of Directors
Tyrex Oil Company
In connection with our audit of the basic financial statements of Tyrex Oil
Company, we have also audited Schedules V, and VI, contained herein, for the
years ended June 30, 1994, 1995, and 1996, which support the financial
statements.
In our opinion, such supplementary schedules present fairly the data required
to be set forth therein in conformity with generally accepted accounting
principles.
/s/Hocker, Lovelett, Hargens & Yennie, P.C.
Casper, Wyoming
August 28, 1996
F-17
<PAGE>
<TABLE>
TYREX OIL COMPANY
SCHEDULE V - PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Balance at
Beginning Additions Retire- End of
Classification of Period at Cost ments Period
<S> <C> <C> <C> <C><C> <C>
Year ended June 30, 1994
Oil & gas properties:
Producing properties $ 5,041,701 $ 584,866 $ 1,075,114(B)(C) $ 4,551,453
Undeveloped properties 445,420 278,638 131,975(A) 592,083
Equipment stored 2,000 - 1,675 325
Processing equipment 25,000 - 25,000 -
Office furniture & equipment 70,811 709 - 71,520
Totals $ 5,584,932 $ 864,213 $ 1,233,764 $ 5,215,381
Year ended June 30, 1995
Oil & gas properties:
Producing properties $ 4,551,453 $ 152,037 $ 417,536(C) $ 4,285,954
Undeveloped properties 592,083 60,448 102,519(A) 550,012
Equipment stored 325 - - 325
Office furniture & equipment 71,520 6,952 6,214 72,258
Totals $ 5,215,381 $ 219,437 $ 526,269 $ 4,908,549
Year ended June 30, 1996
Oil & gas properties:
Producing properties $ 4,285,954 $ 60,565 $ 11,421(C) $ 4,335,098
Undeveloped properties 550,012 7,629 105,477(A) 452,164
Equipment stored 325 - 325 -
Office furniture & equipment 72,258 - 2,177 70,081
Totals $ 4,908,549 $ 68,194 $ 119,400 $ 4,857,343
<FN>
(A) Includes property abandonments of $126,160, $-0- and $-0- for the years
ended June 30, 1994, 1995, and 1996, respectively.
(B) Includes property abandonments of $283,156.
(C) Includes property sold of $364,297, $417,536 and $11,300 for the years
ended June 30, 1994, 1995 and 1996, respectively.
</TABLE>
F-18
<PAGE>
<TABLE>
TYREX OIL COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND DEPLETION
FOR THE YEARS ENDED JUNE 30, 1994, 1995, AND 1996
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance Charged to Balance
Description at Costs & Retire- at End of
Beginning Ex- ments Period
of Period penses(A)
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1994
Oil & gas properties:
Producing properties $ 2,385,744 $ 513,108 $ 607,878 $2,290,974
Undeveloped properties- allowance
for impairment - - - -
Processing equipment 13,000 4,800 17,800 -
Office furniture & equipment, 3 to 7
year life 59,664 4,428 - 64,092
Totals $ 2,458,408 $ 522,336 $ 625,678 $2,355,066
Year ended June 30, 1995
Oil & gas properties:
Producing properties $ 2,290,974 $ 295,010 $ 142,526(B) $2,443,458
Producing properties - allowance for
impairment - 40,603 - 40,603
Office furniture & equipment, 3 to 7
year life 64,092 4,256 6,214 62,134
Totals $ 2,355,066 $ 339,869 $ 148,740 $2,546,195
Year ended June 30, 1996
Oil & gas properties:
Producing properties $ 2,443,458 $ 357,415 $ 8,572 $2,792,301
Producing properties - allowance for
impairment 40,603 - - 40,603
Office furniture & equipment, 3 to 7
year life 62,134 4,166 2,163 64,137
Totals $ 2,546,195 $ 361,581 $ 10,735 $2,897,041
<FN>
(A) Oil and gas properties are depreciated by the unit-of-production method.
Other equipment is depreciated by the straight-line and accelerated
methods.
(B) Properties sold.
</TABLE>
F-18
<PAGE>
Statements of Stockholders' Equity for the Years Ended June 30, 1996, 1995
and 1994
Statements of Cash Flows for the Years Ended June 30, 1996, 1995 and 1994
Notes to Financial Statements
(a)(2) Financial Statement Schedules.
-------------------------------
The following financial statement schedules are included in Part II, Item 8
of this Report:
Schedule V - Property and Equipment
Schedule VI - Accumulated Depreciation and Depletion
All other schedules are omitted because they are not required, are
inapplicable, or the information is otherwise shown in the financial
statements or notes thereto.
(a)(3) Exhibits.
---------
The following exhibits are filed herewith or have been filed pursuant to
Item 601 of Regulation S-K:
Exhibit Item 601 Document
Number as Cross Reference Form 10-K Exhibit Location
- ------ ------------------ ----------------- ---------
3.1 (3) Articles of Incorporation, as Amended (a)
3.2 (3) By-Laws (a)
4.1 (4) Employees' Incentive Stock Option Plan (a)
Employees' Non-Qualified Stock Option (g)
Plan - September 4, 1991
11.1 (11) Statement Regarding Per Share Earnings (b)
86.10.1 (10) Maynard Oil Company Purchase (c)
Agreement, Buck Creek Field, Niobrara
County, Wyoming
88.10.1 (10) Management and Marketing Agreement (d)
- John P. Ellbogen, Ellbogen Company
and Apache Corporation
89.10.2 (10) Assignments and Bill of Sale - Crook (e)
and Campbell Counties - Mobil Oil
Corporation
89.10.10 (10) Assignment and Bill of Sale - Amoco (f)
Production Company - Antelope Madison
Unit
10
<PAGE>
93.10.1 (10) Purchase and Sale Agreement by and (h)
among Marathon Oil Company and Tyrex
Oil Company dated February 1, 1993
93.10.2 (10) Loan Documents - Key Bank of Wyoming (h)
- -------------------
(a) These documents are previously filed documents incorporated herein by
reference to the Company's Registration Statement on Form S-2 (No. 2-
68269).
(b) The Company's statement regarding computation of per share earnings is
contained in Note 1 to the financial statements in Part II, Item 8 of this
Report.
(c) Filed with Form 8-K dated September 30, 1986.
(d) Filed with Form 8-K dated April 12, 1988.
(e) Filed with Form 8-K dated September 27, 1989.
(f) Filed with Form 8-K dated May 11, 1989.
(g) Filed with Form 10-K for year ended June 30, 1991.
(h) Filed with Form 8-K dated March 1, 1993.
No other exhibits are required or necessary.
(b) Reports on Form 8-K.
-------------------
None.
(c) Exhibits.
--------
See (a)(3) above.
(d) Financial Statement Schedules.
------------------------------
See (a)(2) above.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
TYREX OIL COMPANY
Date: September 27, 1996 By /s/Tom N. Richardson
--------------------
Tom N. Richardson, 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.
Date: September 27, 1996 /s/ John D. Traut
-----------------
John D. Traut, Chairman of Board
Date: September 27, 1996 /s/Tom N. Richardson
---------------------
Tom N. Richardson, President and
Chief Executive and Financial Officer
and Director
Date: September 27, 1996 /s/William P. Gruman
--------------------
William P. Gruman, Director
Date: September 27, 1996 /s/Doris K. Backus
------------------
Doris K. Backus, Secretary/Treasurer
and Director
Date: September 27, 1996 /s/Morris R. Massey
-------------------
Morris R. Massey, Director
12
<PAGE>
