FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________________ to ________________
Commission File Number: 0-9500
MOUNTAINS WEST EXPLORATION, INC.
(Exact name of small business issuer as specified in its charter)
New Mexico 85-0280415
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
616 CENTRAL AVE. SE. SUITE 213
ALBUQUERQUE, NEW MEXICO 87102
(Address of principal executive offices) (Zip Code)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the receding 12 months (or for such shorter period that the issuer was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the issuer's common stock, par value $.001
per share, at May 12, 1997, was 37,034,270 shares.
PART I
ITEM 1. FINANCIAL STATEMENTS
MOUNTAINS WEST EXPLORATION, INC.
CONDENSED BALANCE SHEET
UNAUDITED
March 31, 1997
ASSETS
Current Assets
Cash ...................................................... $ 35,507
Account receivable/prepaid expenses ....................... 7,424
___________
Total current assets ................................... 42,931
Furniture and Equipment
Office furniture and equipment, at cost ................... 17,119
Less accumulated depreciation ............................. (9,541)
___________
Net furniture and equipment ............................ 7,578
Oil and gas properties, using the successful
efforts method (Note 3) .................................. 2,758,907
Less accumulated depreciation, depletion and
amortization ............................................. (14,778)
___________
Net oil and gas properties ............................. 2,744,129
Other assets
Term deposit account - restricted (Note 3) ............... 53,042
Note receivable, officer ................................. 100,000
Investment in partnership ................................ 15,000
Mineral Interest ......................................... 40,083
___________
Total other assets ..................................... 208,125
___________
Total assets ........................................... $ 3,002,763
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Advances ................................................. $ 24,363
Accounts payable ......................................... 16,002
Accrued liabilities ...................................... 4,331
Note payable officer ..................................... 16,370
Due to affiliates ........................................ 2,693,352
___________
Total current liabilities .............................. 2,754,418
Stockholders' equity
Common Stock, $.001 par value, authorized:
50,000,00 shares, issued and outstanding
37,034,270 shares ....................................... 37,035
Capital in excess of par value ........................... 1,608,757
Accumulated deficit ..................................... (1,397,447)
___________
Total Stockholders Equity .............................. 248,345
___________
Total liabilities and stockholders equity .............. $ 3,002,763
===========
MOUNTAINS WEST EXPLORATION, INC.
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
REVENUES
Oil and Gas Sales ........................ $ 10,895 $ 3,680
Lease Income ............................. 13,655 --
Interest in sale of
oil & gas property .................... -- 170,000
____________ ____________
24,550 173,680
EXPENSES
Production costs ......................... 4,205 106,096
Depreciation and depletion ............... 366 1,276
Consulting ............................... 264 --
General and administrative ............... 26,536 41,937
____________ ____________
Total expenses ........................ 31,371 149,309
(Loss) Gain from operations ............... (6,821) 24,371
OTHER INCOME
Interest income .......................... 1,090 2,063
Interest expense ......................... (313) --
Other expense ............................ (230) --
____________ ____________
Total other income (loss) ............. 547 2,063
____________ ____________
Net earnings .............................. $ (6,274) $ 26,434
============ ============
Earnings (loss) per common share: ......... $ 0.00 $ 0.00
============ ============
Weighted Average Number of Shares
Outstanding (Note 2) .................... 37,034,270 36,635,720
============ ============
MOUNTAINS WEST EXPLORATION, INC.
CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
Cash flows from operating activities
Cash received from customers ....................... $ 49,295 $ 173,680
Cash paid to suppliers & employees ................. (52,441) (146,752)
Interest received .................................. 90 2,063
Interest paid ...................................... (313) --
_________ _________
Net cash (used) provided
by operating activities ........................ (3,369) 28,991
Cash flows from investing activities
Proceeds from advances ............................. -- 10,000
Purchases related to oil and gas venture ........... -- (8,496)
_________ _________
Net cash provided by investing activities ......... -- 1,504
Cash flows from financing activities
Purchase of Treasury Stock ......................... -- (2,040)
_________ _________
Net cash used by financing activities ............. -- (2,040)
_________ _________
Net (decrease) increase in cash ..................... (3,369) 28,455
Cash at beginning of period ......................... 38,876 115,329
_________ _________
Cash at end of period ............................... $ 35,507 $ 143,784
========= =========
Reconciliation of net (loss) earnings to cash flows
from operating activities:
Net (loss) earnings ................................. $ (6,274) $ 26,434
Adjustments
Depreciation, depletion and
amortization ...................................... 366 1,276
(Increase) decrease in prepaid
expenses and accounts receivable .................. (1,000) 875
Increase in advances, accounts payable
and accrued liabilities ........................... 3,539 406
_________ _________
Net cash (used) provided by
operating activities ........................... (3,369) 28,991
========= =========
Noncash Investing or Financing Activities:
MWEX was loaned $116,623 and $315,043 in the first quarter 1997 and 1996,
respectively, which was invested in its oil and gas property in Papua, New
Guinea.
MOUNTAINS WEST EXPLORATION, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
The balance sheet at March 31, 1997 and statements of operations and statements
of cash flows for the three months ended March 31, 1997 and 1996 have been
prepared by the company, without audit. In the opinion of management, all
adjustments, including normal recurring adjustments necessary to present fairly
the financial position, results of operations and cash flows, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the Company's audited financial statements at
December 31, 1996. The results of operations for the three months ended March
31, 1997 are not necessarily indicative of operating results for the full year.
2. NOTES TO FINANCIAL STATEMENTS.
Net income or loss per common share has been computed based on the weighted
average number of shares outstanding during the period.
3. OIL AND GAS PROPERTIES
Capitalized costs using the successful efforts method related to the Company's
oil and gas activities as of March 31, 1997 are as follows:
Proved developed properties $ 14,779
Proved shut - in property 2,744,129
Accumulated depreciation, depletion,
amortization and valuation allowances (14,779)
___________
Net capitalized costs $ 2,744,129
===========
4. CONTINGENCIES
MWEX has $53,042 of cash in a term deposit account that is restricted for the
purpose of guaranteeing a performance bond related to PPL#165. The performance
bond was acquired in 1995 to guarantee that exploratory procedures would be
performed on the property. The ownership of this cash remains with MWEX even
though PPL#165 was sold to Gedd, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
During the quarter ended March 31, 1997, oil and gas sales were $10,895 as
compared to $3,680 for the same period in the prior year. Significant increases
in such revenues are not anticipated by management to occur during the remainder
of the current fiscal year or until there is production from the Southeast Gobe
Oil and Gas Field.
As previously reported, certain transactions involving the Company's Papua New
Guinea operations occurred that will have a material effect on the Company in
future quarters and years. Those are:
a. The three oil wells in which the Company has an interest have been included
in Petroleum Development License (PDL) has been unitized with Chevron Oil
Company's existing PDL to the north. The two new PDLs will be developed into the
Southeast Gobe and Gobe Main oil and gas Fields. Development of this field is
well under way with an anticipated first production scheduled for early 1998. As
a result of the government's exercising its option to acquire a 22.5% interest
in the unitized PDLs, the Company's interest in the unitized PDL will be a net
0.88%. Management anticipates that this interest will result in initial
production to the Company's interest of approximately 200 barrels of oil per
day. The Company's expenses in this unit are to be carried until production from
the wells located in the Southeast Gobe field is first sold.
b. The costs of the gathering system that will be required to get the oil from
the unit to sale has been estimated at more than $175,000,000, none of which
will be borne by the Company until after the first sale of production. After
that time, all of the money realized from the sale of the oil will be devoted to
repayment of the Company's carried cost in the project. Management estimates
that the Company's total carried cost will be approximately $3,000,000, which,
at the production rate of 200 barrels per day to the Company's interest will
take approximately 36 months to pay out after production begins.
c. During the quarter ended March 31, 1997, the government notified the partners
of its election to exercise its option to acquire 22.5% of the PDL's.
Finalization of the acquisition occurred on April 29, 1997. As a part of the
acquisition the government paid each partner 22.5% of its costs in the project.
At the date of this Report, the Company is not able to state what the effect
this transaction will have on its financial statements other that its anti-
cipated reduction of debt and carrying cost of the assets to the extent of the
payment.
d. The effect of the exercise of the government's option has been a reduction in
all of the partners' interest in the Southeast Gobe field. The Company's
interest in the Southeast Gobe Field was reduced from 2.5% to 1.93% which is an
interest of approximately 0.88 of the unitized field.
e. The northern part of PPL 56 is now PPL 190-Fold Belt License. This block of
approximately 462,632 acres (17,409 net to the Company's interest) has many very
prospective surface structures located on it. One of these structures will be
drilled during the first two years of the license. A reallocation of interests
has increased the Company's interest in this license from 2.5% to 3.763%. During
the first few months of the new License existence the Company will have to fund
its share of a new seismic program which it is estimated will be approximately
$37,630. The Iehi shut-in gas field lies on this license but the reserves are
insignificant at this time. The Company will have to fund its percentage of most
of the work program of the license which calls for a total expenditure of
$13,500,000 over the next six years. Of the total costs that must be incurred by
the Company on this new License, 2.5% are subject to the carried interest
granted in PPL 56, therefore, the Company is obligated to pay only 1.263% of the
total costs incurred prior to production from any of the properties originally
encompassed by PPL 56. Management estimates that the Company's cost in this new
concession over the next year will be approximately $200,000.
f. The southern part of PPL 56 has been reissued as Foreland PPL 189
Application, which contains approximately 483,661 acres (24,429 net acres to the
Company's interest.) As a result of a reallocation of interests, the Company's
interest in this License has been increased from 2.5% to 5.051%. This license
has the Barikewa shut-in gas field located on it, which has gas reserves
estimated from 163 billion cubic feet to as high as 1590 billion cubic feet.
Further evaluation will be made to more precisely define the true reserves of
this field. Plans to build at least one LNG plant near Port Moresby has been
announced and Chevron has announced plans to build a gas pipeline from Papua,
New Guinea into Northern Australia which, it plans to have in operation within
four years. Either an LNG plant or the proposed pipeline should greatly increase
the value of the gas reserves at Barikewa. The Company will have to fund most of
its share of the work program of this license which calls for an expenditure of
approximately $6,250,000 over a period of six years, with approximately $56,000
to be paid by the Company over the next year.
g. Petroleum Prospecting License No. 165, owned by the Company and Gedd PNG is
being evaluated at this time. An aeromagnetic survey has been completed and the
Company is awaiting the results of the survey which will determine if there is
one or more drillable structures on the license. Gedd is funding the work
program of this license.
With the increased activity and development in Papua New Guinea, the Company is
now seeking funds to carry forward the programs which are currently under way.
With oil production only a little over a year away and the gas reserves in Papua
New Guinea currently being studied for early development, the Company believes
that it will be able to acquire the necessary funds, either through borrowing or
through sale of equity, to meet its payment obligations under each of the
licenses. However, the Company does not presently have the liquidity that may be
necessary to meet any call for payment of expenses and the Company has no
present assurance of the availability of any of the funds that may be needed at
the time needed. The failure of the Company to meet any cash call made on it for
its share of the expenses incurred on any concession could result it its losing
its interest in the concession.
Changes in Financial Condition
The Company has experienced a decline in cash but has increased total assets
through the first three months of the current fiscal year. The Company's primary
liability is a continually developing carried interest in certain New Guinea oil
and gas rights. Total liabilities aside from this obligation are approximately
$60,000. It is Management's belief that the Company will be able to continue to
meet its financial commitments during the coming fiscal year.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other than the judgment described in the Company's annual report on form 10KSB,
incorporated herein by reference, management knows of no legal proceedings or
unsatisfied judgments which have not been provided for in any court or agency to
which the Company or any of its officers or directors are or may be a party.
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS IN SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits required by Item 601 of regulation S-K
(b) Reports on Form 8-K. States whether any reports on Form 8-K have
been filed during the quarter for which this report is filed, listing
the items reported, any financial statement filed, and the dates of any
such reports.
NONE
SIGNATURES
In accordance with section 13 to 15 (d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Robert A. Doak, Jr. May 12, 1997
________________________________________________________
Robert A. Doak, Jr. President, Chief Executive Officer
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 35507
<SECURITIES> 0
<RECEIVABLES> 7424
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42931
<PP&E> 2776026
<DEPRECIATION> 24319
<TOTAL-ASSETS> 3002763
<CURRENT-LIABILITIES> 2754418
<BONDS> 0
0
0
<COMMON> 37035
<OTHER-SE> 211310
<TOTAL-LIABILITY-AND-EQUITY> 3002763
<SALES> 10895
<TOTAL-REVENUES> 24550
<CGS> 4205
<TOTAL-COSTS> 4205
<OTHER-EXPENSES> 27709
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 313
<INCOME-PRETAX> (6274)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6274)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6274)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
