<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
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 No. 0-9617
TERRITORIAL RESOURCES, INC.
(Formerly Egret Energy Corporation)
(Exact name of small business issuer as specified in its charter)
STATE OF COLORADO 84-0821158
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1300 MAIN STREET, SUITE 1840
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 713/658-0850
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 February 12, 1996, the issuer had 20,570,656 shares of Common Stock
issued and outstanding.
Transitional Small Business Disclosure Format Yes No X
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TERRITORIAL RESOURCES, INC.
Income Statements - Unaudited
December 31, 1995 and 1994
($1,000)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1995 1994
---------- ----------
<S> <C> <C>
REVENUES:
Oil & Gas Sales $ 3 $ 10
Other Income 1 -
---------- ----------
Total Revenues 4 10
---------- ----------
COSTS AND EXPENSES:
Production Costs 1 2
Depreciation, Depletion
and Amortization 6 9
General and Administrative 6 7
---------- ----------
Total Costs & Expenses 13 18
---------- ----------
NET INCOME (LOSS) BEFORE INCOME TAXES (9) (8)
---------- ----------
Income Tax Provision - -
---------- ----------
NET INCOME (LOSS) $ (9) $ (8)
---------- ----------
---------- ----------
Average Common Shares Outstanding:
Primary 20,570,656 12,560,000
Assuming full dilution 22,570,656 12,560,000
Net Income (Loss) per Common Shares:
Primary $ (.0004) $ (.001)
Assuming full dilution (.0004) (.001)
</TABLE>
See notes to condensed financial statements.
1
<PAGE>
PART I. FINANCIAL INFORMATION - Continued
TERRITORIAL RESOURCES, INC.
Income Statements - Unaudited
December 31, 1995 and 1994
($1,000)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
------------------------------
1995 1994
---------- ----------
<S> <C> <C>
REVENUES:
Oil & Gas Sales $ 16 $ 58
Other Income 2 -
---------- ----------
Total Revenues 18 58
---------- ----------
COSTS AND EXPENSES:
Production Costs 2 24
Depreciation, Depletion
and Amortization 18 25
General and Administrative 30 50
---------- ----------
Total Costs & Expenses 50 99
---------- ----------
NET INCOME (LOSS) BEFORE INCOME TAXES (32) (41)
---------- ----------
Income Tax Provision - -
---------- ----------
NET INCOME (LOSS) $ (32) $ (41)
---------- ----------
---------- ----------
Average Common Shares Outstanding:
Primary 20,570,656 12,216,455
Assuming full dilution 22,570,656 12,216,455
Net Income (Loss) per Common Shares:
Primary $ (.001) $ (.003)
Assuming full dilution (.001) (.003)
</TABLE>
See notes to condensed financial statements.
2
<PAGE>
PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Balance Sheets
Assets
($1,000)
<TABLE>
<CAPTION>
UNAUDITED
DECEMBER 31, MARCH 31,
1995 1995
------------ ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 42 $ 50
Accounts Receivable:
Oil and Gas Sales 1 17
Other 2 5
Prepaids 3 -
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Total Current Assets 48 72
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NOTE RECEIVABLE 10 -
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INVESTMENT IN SOCO TAMTSAG
MONGOLIA, INC. 132 128
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PROPERTY AND EQUIPMENT, AT COST:
Oil and Gas (full cost accounting) 7,950 7,975
Less: Accumulated depreciation,
depletion & amortization (7,784) (7,766)
------- -------
Total Property & Equipment 166 209
------- -------
TOTAL ASSETS $ 356 $ 409
------- -------
------- -------
</TABLE>
See notes to condensed financial statements.
3
<PAGE>
PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Balance Sheets
Liabilities and Stockholders' Equity
($1,000)
<TABLE>
<CAPTION>
UNAUDITED
DECEMBER 31, MARCH 31,
1995 1995
------------ ---------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 1 $ 19
Accrued liabilities and other 1 4
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Total Current Liabilities 2 23
------- -------
Total Liabilities 2 23
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STOCKHOLDERS' EQUITY:
Common stock, no par value, $.001
stated value; 30,000,000 shares
authorized; 20,576,112 and 11,791,112
shares issued at December 31, 1995
and March 31, 1995, respectively 21 12
Stock subscriptions to acquire
8,785,008 shares of common stock - 9
Additional paid-in capital 3,854 3,853
Accumulated deficit, $5,121 deficit
eliminated in quasi-reorganization
effective March 31, 1986 (3,504) (3,471)
Treasury stock, 5,456 shares, at cost (17) (17)
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TOTAL STOCKHOLDERS' EQUITY 354 386
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 356 $ 409
------- -------
------- -------
</TABLE>
See notes to condensed financial statements.
4
<PAGE>
PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Statements of Cash Flows - Unaudited
For the Three Months Ended December 31, 1995 and 1994
($1,000)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1995 1994
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (9) $ (8)
Adjustments to reconcile net income to
cash provided (used) by operations:
Depreciation, depletion and
amortization 6 9
Changes in operating assets
and liabilities:
Accounts receivable 1 (1)
Prepaid Expenses - -
Accounts payable - (4)
Current maturity of long-term debt - -
Accrued liabilities - -
----- -----
Cash provided by (used in) operations (2) (4)
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CASH FLOW FROM INVESTMENT ACTIVITIES:
Additions to Property & Equipment (7) -
Investment in SOCO TAMTSAG MONGOLIA, INC. (2) -
Proceeds from sales of property 3 4
------ -----
Cash provided from investment activities (6) 4
------ -----
CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of Debt - -
Advances from affiliate - -
Note receivable advances - -
Issuance of common stock - 1
Other - -
------ -----
Cash provided by (used in)
financing activities - 1
------ -----
Change in cash balance (8) 1
------ -----
Cash balance - beginning 50 32
------ -----
Cash balance - ending $ 42 $ 33
------ -----
------ -----
</TABLE>
See notes to condensed financial statements.
5
<PAGE>
PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Statements of Cash Flows - Unaudited
For the Nine Months Ended December 31, 1995 and 1994
($1,000)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
------------------------------
1995 1994
----- -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (32) $ (41)
Adjustments to reconcile net income to
cash provided (used) by operations:
Depreciation, depletion and
amortization 18 25
Changes in operating assets
and liabilities:
Accounts receivable 19 5
Prepaid Expenses (3) -
Accounts payable (18) -
Current maturity of long-term debt - (48)
----- -----
Accrued liabilities (3) (4)
----- -----
Cash provided by (used in) operations (19) (63)
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CASH FLOW FROM INVESTMENT ACTIVITIES:
Addition to Property & Equipment (7) (5)
Investment in SOCO TAMTSAG MONGOLIA, INC. (4) -
Proceeds from sales of property 32 51
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Cash provided from investment activities 21 46
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CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of Debt - -
Advances from affiliate - -
Note receivable advances (10) -
Issuance of common stock - 49
Other - -
----- -----
Cash provided by (used in)
financing activities (10) 49
----- -----
Change in cash balance (8) 32
----- -----
Cash balance - beginning 50 1
----- -----
Cash balance - ending $ 42 $ 33
----- -----
----- -----
</TABLE>
See notes to condensed financial statements.
6
<PAGE>
TERRITORIAL RESOURCES, INC.
Notes to Condensed Financial Statements
December 31, 1995 (Unaudited)
(1) The information presented in this report on Form 10-QSB is condensed from
what would appear in annual financial statements. Accordingly, the
financial statements included herein should be read in conjunction with
the consolidated financial statements and notes thereto contained in the
Territorial Resources, Inc., March 31, 1995 Form 10-KSB.
(2) The results for the interim period are not necessarily indicative of
results to be expected of the Company for the fiscal year ended March 31,
1996, due to seasonal or other factors. The Company believes that the
interim period reports filed on Form 10-Q are representative of its
financial position, changes in financial position and results of operations
for the periods covered thereby.
(3) There is no provision for income taxes for the three month period ended
December 31, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Oil and gas revenue and production costs for the quarter ending December
31, 1995, decreased due to declining production and the sale of reserves in
place. These reserve sales are part of the Company's overall strategy of
liquidating most of its domestic properties while focusing on foreign
opportunities, primarily in Mongolia. The Company plans to continue
selling its domestic and Canadian properties in order to obtain funds for
its Mongolian activities.
The Company will have ongoing capital expenditure requirements in Mongolia,
initially for the testing of a recently drilled well, as previously
disclosed. This testing is currently scheduled to commence in March, 1996,
and, if the testing results are favorable, could result in material
exploratory and development drilling costs. The Company is presently
evaluating opportunities to acquire additional indirect interest in this
well. Any such acquisitions will proportionately increase the Company's
capital requirements in Mongolia, as mentioned above.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Not Applicable
(b) The Company filed a Form 8-K on November 7, 1995, relating to a press
release on the Company's indirect interest in a Mongolian Well.
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TERRITORIAL RESOURCES, INC.
Dated: February 12, 1996 By: /s/ BRIAN LINGARD
-------------------------------------------
Brian Lingard
President and Chief Financial Officer
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TERRITORIAL
RESOURCES, INC. BALANCE SHEET AS OF DECEMBER 31, 1995 INCOME STATEMENT FOR NINE
MONTHS ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 42
<SECURITIES> 0
<RECEIVABLES> 6
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 48
<PP&E> 8,092
<DEPRECIATION> (7,784)
<TOTAL-ASSETS> 356
<CURRENT-LIABILITIES> 2
<BONDS> 0
0
0
<COMMON> 21
<OTHER-SE> 333
<TOTAL-LIABILITY-AND-EQUITY> 356
<SALES> 16
<TOTAL-REVENUES> 18
<CGS> 2
<TOTAL-COSTS> 50
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32)
<EPS-PRIMARY> (.001)
<EPS-DILUTED> (.001)
</TABLE>
