<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1997
OR
( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 For the transition period from N/A to
------------- ------------
Commission File Number 2-70145
SOUTH TEXAS DRILLING & EXPLORATION, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2088619
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
9310 Broadway, Bldg. I, San Antonio, Texas 78217
(Address of principal executive offices)
(Zip Code)
210-828-7689
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, address and former fiscal year, if changed since last report)
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 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. N/A
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at February 10, 1998
----- --------------------------------
Common Stock, $.10 par value 5,832,194
<PAGE> 2
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1997 1997
------ ---- ----
<S> <C> <C>
Current Assets:
Cash $ 650,623 407,755
Receivables 2,744,350 642,677
Contract drilling in progress 1,110,939 593,162
Prepaid expenses 131,478 162,213
------------ ------------
Total current assets 4,637,390 1,805,807
------------ ------------
Property and equipment 15,339,680 10,887,935
Accumulated depreciation, depletion and amortization 8,243,585 7,642,458
------------ ------------
Net property and equipment 7,096,095 3,245,477
------------ ------------
Total assets 11,733,485 5,051,284
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Short-term debt 12,000 -
Current installments, long-term debt 671,409 261,394
Accounts payable 2,745,067 1,146,982
Prepaid drilling contracts 701,652 99,000
Accrued expenses 502,768 269,265
------------ ------------
Total current liabilities 4,632,896 1,776,641
Long term debt 2,938,740 1,220,103
------------ ------------
Total liabilities 7,571,636 2,996,744
------------ ------------
Shareholders' equity:
Preferred stock, noncumulative, $1.00 par value
Authorized 1,000,000 shares; issued and out-
standing no shares at December 31, and 235,000
shares at March 31, 1997 - 235,000
Preferred stock, 8%, cumulative, convertible,
$2.00 redemption and liquidation value. Authorized
400,000 shares; issued and outstanding 400,000 shares
at December 31, and no shares at March 31, 1997 800,000 -
Common stock, $0.10 par value
Authorized 15,000,000 shares; issued and out-
standing 6,171,961 at December 31 and
5,655,333 at March 31, 1997 617,196 565,533
Additional paid-in capital 16,357,006 15,914,169
Retained earnings (deficit) (13,475,448) (14,523,257)
------------ ------------
4,298,754 2,191,445
Less Treasury stock, at cost, 339,767 shares 136,905 136,905
------------ ------------
Total shareholders' equity 4,161,849 2,054,540
------------ ------------
Total Liabilities and shareholders equity $ 11,733,485 5,051,284
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
2
<PAGE> 3
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
----------------------- -----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Contract Drilling $ 5,475,953 1,911,088 13,302,979 5,917,026
Oil and gas 84,759 109,098 254,775 308,291
Management fees and other 24,123 36,394 93,069 108,697
----------- ----------- ----------- -----------
Total operating revenues 5,584,835 2,056,580 13,650,823 6,334,014
Costs and expenses:
Contract drilling 4,794,502 1,615,406 10,920,808 5,000,614
Oil and gas 42,170 49,643 126,526 132,404
Depreciation, depletion and amortization 310,513 160,481 748,367 464,212
General and administrative 204,809 132,404 606,203 408,737
Doubtful accounts - 25,250 - 25,250
----------- ----------- ----------- -----------
Total operating costs and expenses 5,351,994 1,983,184 12,401,904 6,031,217
----------- ----------- ----------- -----------
Earnings from operations 232,841 73,396 1,248,919 302,797
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (91,349) (44,934) (210,694) (131,253)
Interest income 6,007 5,149 18,335 11,237
Gain on sale of assets - - 13,248 6,862
----------- ----------- ----------- -----------
Total other income (expense) (85,342) (39,785) (179,111) (113,154)
----------- ----------- ----------- -----------
Earnings before income taxes 147,499 33,611 1,069,808 189,643
Income taxes 22,000 - 22,000 -
----------- ----------- ----------- -----------
Net earnings 125,499 33,611 1,047,808 189,643
Preferred stock dividend requirements 16,000 - 45,333 -
----------- ----------- ----------- -----------
Net earnings applicable to common
stockholders 109,499 33,611 1,002,475 189,643
=========== =========== =========== ===========
Earnings per common share-Basic $ 0.02 0.01 0.18 0.04
=========== =========== =========== ===========
Earnings per common share-Diluted $ 0.02 0.01 0.14 0.03
=========== =========== =========== ===========
</TABLE>
NOTE: At December 31, 1997 the Company has a remaining net operating loss
carryforward of approximately $14,750,000 and investment credit
carryforward of approximately $125,000.
See accompanying notes to condensed consolidated financial statements
3
<PAGE> 4
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,047,808 189,643
Adjustments to reconcile net earnings
to net cash provided (used) by operating activities:
Depreciation, depletion, amortization 748,367 464,212
Provision for doubtful accounts - 25,250
Stock issued to directors as compensation 55,000 -
Gain on sale of assets (13,248) (6,862)
Changes in current assets and liabilities:
Accounts and note receivable (2,101,673) (770,073)
Contract drilling in progress (517,777) 22,619
Prepaid expenses 30,735 (176,517)
Accounts payable 1,598,086 246,748
Prepaid drilling contracts 602,652 33,900
Accrued expenses 233,503 (31,523)
----------- -----------
Net cash provided (used) by operations 1,683,453 (2,603)
----------- -----------
Cash flows from financing activities:
Payments of debt (579,701) (1,110,071)
Proceeds from notes payable 171,236 1,603,724
Purchase of treasury stock - (7,000)
Purchase of preferred stock (75,000) -
Proceeds from issuance of preferred stock 765,000 -
Proceeds from exercise of warrants and options 14,500 375
----------- -----------
Net cash provided by financing activities 296,035 487,028
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (1,960,488) (634,698)
Proceeds from sale of equipment 223,868 7,982
----------- -----------
Net cash used by investing activities (1,736,620) (626,716)
----------- -----------
Net increase (decrease) in cash 242,868 (142,291)
Beginning cash and cash equivalents 407,755 325,568
----------- -----------
Ending cash and cash equivalents $ 650,623 183,277
=========== ===========
Equipment purchased with debt 2,549,118 -
Equipment purchased with stock 300,000 -
Officer's accrued compensation paid through the
issuance of 53,333 shares of common stock - 20,000
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE> 5
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements include the accounts
of South Texas Drilling & Exploration, Inc and its wholly-owned
subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.
2. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
3. The Company uses the asset and liability method of Statement 109 for
accounting for income taxes. Pursuant to this method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date.
4. At December 31, 1997, the Company had investment tax credit
carryforwards for Federal income tax purposes of approximately $125,000
(expiring 1997 through 2007) which are available to reduce future
Federal income taxes. In addition, the Company had net operating loss
carryforwards of approximately $14,750,000 (expiring 1998 through 2006)
which are also available to reduce future Federal income taxes.
5. In February, 1997, the Financial Accounting Standards Board issued
Financial Accounting Standards No. 128, "Earnings per Share" (FAS 128).
FAS 128 establishes standards for computing and presenting earnings per
share (EPS). FAS 128 replaces primary EPS, as computed under APB No.
15, "Earnings per Share," with basic EPS and also requires dual
presentation of basic EPS and diluted EPS on the income statement. FAS
128 is effective for financial statements ending after December 15,
1997 and requires restatement of all prior-period EPS data. The Company
has implemented the new provisions of FAS 128 in the accompanying
financial statements.
The following table presents a reconciliation of the numerators and
denominators of the basic EPS and diluted EPS computations as required
by FAS 128:
5
<PAGE> 6
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Three Months Ended
December 31, 1997
-----------------
Income Shares
(Numerator) (Denominator) Per-Share Amount
----------- ------------- ----------------
<S> <C> <C> <C>
Net Earnings $ 125,499
Less: Preferred stock dividends (16,000)
------------
Basic EPS
Income available to common stockholders 109,499 5,813,672 $ 0.02
=======
Effect of Dilutive Securities
Warrants 128,008
Options 1,173,910
Preferred stock 16,000 800,000
------------- ---------
Diluted EPS
Income available to common stockholders and
assumed conversions $ 125,499 7,915,590 $ 0.02
============= ========= =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
December 31, 1996
-----------------
<S> <C> <C> <C>
Net earnings $ 33,611
---------
Basic EPS
Income available to common stockholders 33,611 5,315,008 $ 0.01
=======
Effect of Dilutive Securities
Warrants 97,638
Options 401,272
--------- ---------
Diluted EPS
Income available to common stockholders and
assumed conversions $ 33,611 5,813,918 $ 0.01
========= ========= =======
</TABLE>
6
<PAGE> 7
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Nine months Ended
December 31, 1997
-----------------
Income Shares
(Numerator) (Denominator) Per Share Amount
----------- ------------- ----------------
<S> <C> <C> <C>
Net earnings $ 1,047,808
Less: Preferred stock dividends (45,333)
-----------
Basic EPS
Income available to common stockholders 1,002,475 5,676,024 $ 0.18
=======
Effect of Dilutive Securities
Warrants 124,212
Options 1,031,522
Preferred stock 45,333 756,364
------------ ---------
Diluted EPS
Income available to common stockholders and
assumed conversions $ 1,047,808 7,588,122 $ 0.14
============ ========= =======
</TABLE>
<TABLE>
<CAPTION>
Nine months Ended
December 31, 1996
-----------------
<S> <C> <C> <C>
Net earnings $ 189,643
----------
Basic EPS
Income available to common stockholders 189,643 5,311,947 $ 0.04
=======
Effect of Dilutive Securities
Warrants 93,161
Options 289,575
---------- ---------
Diluted EPS
Income available to common stockholders and
assumed conversions $ 189,643 5,694,683 $ 0.03
========== ========= =======
</TABLE>
Subsequent to the end of the current quarter but prior to the
issuance of these statements, the Company sold 184,615 shares of Series
B 8% Convertible Preferred Stock, $1.00 par value, for $2,999,994.
Dividends on the stock are cumulative. This preferred stock is
convertible into 923,075 shares of the Company's common stock at a
conversion price of $3.25 per share. The stock is redeemable at the
Company's option at or following the first anniversary of the issuance
of such stock provided, generally, that the price of the Company's
common stock equals or exceeds $5.00 per share.
7
<PAGE> 8
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash and cash equivalents at December 31, 1997 were $650,623 compared to
$407,755 at March 31, 1997. The current ratio at December 31, 1997 was 1:1
compared to 1:1 at March 31, 1997. Working capital decreased to $4,494 at
December 31, 1997 from $29,166 at March 31, 1997. Accounts receivable increased
to $2,744,350 at December 31, 1997 from $642,677 at March 31, 1997. Contract
drilling in progress increased to $1,110,939 at December 31, 1997 from $593,162
at March 31, 1997.
Since March 31, 1997, property and equipment costs increased by
$4,451,745. Of this amount, $4,303,691 was spent on drilling equipment,
$116,114 was spent on transportation equipment, $4,846 was spent on furniture
and fixtures and $27,094 was spent on investment in oil and gas properties. The
primary element in the increase in drilling equipment was the expenditure of
$1,500,000 for the acquisition, described below, of equipment from San Patricio
Corporation. In addition to the two drilling rigs purchased, the Company
assumed San Patricio's lease of a third rig. In the current quarter, the
Company also invested $1,075,000 in a land drilling rig which, after
refurbishment, will be placed into service.
In June, 1997, the Company completed the acquisition of the drilling
operations of San Patricio Corporation. Assets acquired by the Company included
two land drilling rigs, rig hauling trucks and trailers and miscellaneous
drilling equipment. In addition, the Company assumed a lease of a third land
drilling rig. As a result of the acquisition, the Company now operates seven
land drilling rigs, primarily in central and south Texas. The transaction was
accounted for as a purchase.
Debt obligations in the form of notes payable, both short term and long
term, increased by $2,140,652 from March 31, 1997 to December 31, 1997. The
primary elements of the increase were the purchase of drilling equipment from
San Patricio Corporation mentioned above and the purchase of the additional
drilling rig. The purchase of San Patricio's assets was accomplished with the
use of $900,000 in third-party financing, $300,000 in seller financing and the
issuance of $300,000 of the Company's common stock. The total third-party
financing was $1,050,000. This note carries an interest rate of prime (8.5% at
December 31, 1997) plus 2.25% and is due in June, 1999. The note provides for
monthly payments of $12,500 (based on seven year amortization) plus interest.
Concurrent with the issuance of this note, the third party lender also modified
the terms of the loans taken out in May, 1997. The interest rate on both the
revolving loan and the term loan was reduced to prime plus 2.25% and the due
date was extended to June, 1999. The $300,000 of seller financing is payable in
monthly payments of $5,000 plus interest at 10%. This note is due in June,
2002. The purchase of the additional rig in October, 1997, was financed by a
combination of a $600,000 note and cash from operations. The note carries an
interest rate of prime plus 2.25% and is due in October, 1999. The note
provides for monthly payments of $7,143 (based on seven year amortization) plus
interest. Additionally, the Company obtained a $600,000 line of credit to fund
capital expenditures. This note carries an interest rate of prime plus 2.25%.
Amounts funded under this loan are payable in 36 equal monthly payments plus
interest. At December 31, 1997, $482,000 was outstanding under this line of
credit.
Accounts payable at December 31, 1997 were $2,745,067, an increase of
$1,598,085 from $1,146,982 at March 31, 1997. Accrued expenses increased to
$502,768 at December 31, 1997 from $269,265 at March 31, 1997. The primary
reason for the increase in accounts payable was the additional work generated
by the rigs acquired in June, 1997.
In April, 1997, the Company issued a new Series A 8% Convertible Preferred
Stock. The issue consisted of 400,000 shares with a designated redemption and
liquidation value of $2.00 per share. Dividends on the stock are cumulative.
This preferred stock is convertible into two shares of common stock for each
share of preferred stock and one share of common stock for each $.50 of due but
unpaid dividends on the Series A 8% Convertible Preferred Stock. The stock is
redeemable at the Company's option at or following the third anniversary of the
issuance of such stock provided, generally, that the price of the Company's
common stock equals or exceeds $2.50 per share. The proceeds from the stock
were used to reduce trade
8
<PAGE> 9
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
accounts payable, bank debt and to acquire drilling equipment. Prior to the
issuance of this new Series A Preferred Stock, the Company redeemed its
previously issued and outstanding Series A Preferred Stock consisting of
235,000 shares of stock with a stated par value of $1.00 per share. The
outstanding shares were redeemed for a cash payment of $75,000.
Subsequent to the end of the current quarter but prior to the issuance of
these statements, the Company sold 184,615 shares of Series B 8% Convertible
Preferred Stock, $1.00 par value, for $2,999,994. Dividends on the stock are
cumulative. This preferred stock is convertible into 923,075 shares of the
Company's common stock. The stock is redeemable at the Company's option at or
following the first anniversary of the issuance of such stock provided,
generally, that the price of the Company's common stock equals or exceeds $5.00
per share. The proceeds from the stock will be used for equipment purchases,
debt reduction and working capital.
Results of Operations
Contract drilling revenue for the quarter ended December 31, 1997 was
$5,475,953 compared to $1,911,088 in the same quarter a year earlier. This
increase in drilling revenue was the result of an increase in drilling days, a
higher percentage of jobs drilled under footage and turnkey contracts in the
current quarter and increased day rates. In the current quarter, the Company
had 548 drilling days compared to 296 drilling days in the same quarter in
fiscal 1997. The reason for the increase in the number of drilling days in the
current quarter was the utilization of seven rigs in the current quarter
compared to four rigs in the same quarter in fiscal 1997 and an increase in the
rig utilization rate for the current quarter to 85% compared to 80% in the same
quarter a year earlier. The rig utilization rate will not reach 100% because
drilling days are defined as actual days drilled and do not include days for
mobilization of the rig. The average daily drilling rate increased to $9,993
from $6,456 in the corresponding quarter of fiscal 1997, which reflects both
the change in the types of jobs drilled and increased day rates.
Oil and gas revenue for the quarter ended December 31, 1997 was $84,759
compared to $109,098 in the same quarter a year earlier. This decrease in
revenue in the current quarter was due to lower production of both oil and gas
and a lower average price for oil and gas. In the current quarter, production
was the equivalent of 4,682 barrels of oil while in the same quarter a year
earlier production was the equivalent of 5,176 barrels of oil. In the current
quarter, the average prices received by the Company were $18.78 per barrel of
oil and $2.91 per mcf of gas compared to $23.97 per barrel of oil and $3.02 per
mcf of gas in the same quarter a year earlier.
Total operating costs and expenses for the quarter ended December 31, 1997
were $5,351,994, up $3,368,810 from operating costs and expenses of $1,983,184
in the same quarter a year earlier. When compared with the same quarter a year
earlier, contract drilling costs increased $3,179,096 in the quarter ended
December 31, 1997. Average drilling costs per day in the current quarter were
$8,749 compared to $5,457 in the same quarter a year earlier. The average daily
drilling margin (daily drilling revenue less daily drilling costs), increased
to $1,244 per day in the current quarter from $999 per day in the corresponding
quarter a year earlier. This increase was accomplished despite the Company's
loss of approximately $368,000 on a turnkey contract during the current
quarter. Because of the problems with the well, the Company was required to
re-drill the well for the operator and also incurred additional costs in
attempting to correct the problems on the original job. Oil and gas costs and
expenses were $42,170 in the quarter ended December 31, 1997 compared with
$49,643 in the same quarter a year earlier. Depreciation, depletion and
amortization costs increased to $310,513 in the quarter ended December 31, 1997
from $160,481 in the quarter ended December 31, 1996. This increase was the
result of increased depreciation expense due to the addition of equipment since
December 31, 1996. General and administrative expenses increased to $204,809 in
the current quarter from $132,404 in the same quarter a year earlier. This
increase was primarily the result of increased payroll costs associated with
the preferred stock issued in June ($44,000) and franchise taxes ($37,000). The
payroll costs associated with the stock issue have been accrued but have not
been paid at December 31, 1997.
Other income and expense decreased to $(85,342) in the current quarter
from $(39,785) in the same quarter a year earlier, primarily due to increased
interest expense.
9
<PAGE> 10
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
10
<PAGE> 11
SOUTH TEXAS DRILLING & EXPLORATION, INC. AND SUBSIDIARIES
Pursuant to the requirements 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.
SOUTH TEXAS DRILLING &
EXPLORATION, INC.
/s/ Robert R. Marmor
----------------------------------
Robert R. Marmor
Chairman of the Board
Dated: February 10, 1998
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Robert R. Marmor Chairman of the Board February 10, 1998
- ---------------------------
Robert R. Marmor
/s/Wm Stacy Locke President and Chief February 10, 1998
- --------------------------- Executive Officer
Wm. Stacy Locke
/s/Chris F. Parma Vice President and Chief February 10, 1998
- --------------------------- Financial Officer
Chris F. Parma
</TABLE>
11
<PAGE> 12
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000320575
<NAME> SOUTH TEXAS DRILLING & EXPLORATION, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 650,623
<SECURITIES> 0
<RECEIVABLES> 2,744,350
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,637,390
<PP&E> 15,339,680
<DEPRECIATION> 8,243,585
<TOTAL-ASSETS> 11,733,485
<CURRENT-LIABILITIES> 4,632,896
<BONDS> 0
0
800,000
<COMMON> 617,196
<OTHER-SE> 2,744,653
<TOTAL-LIABILITY-AND-EQUITY> 11,733,485
<SALES> 254,775
<TOTAL-REVENUES> 13,650,823
<CGS> 126,526
<TOTAL-COSTS> 12,401,904
<OTHER-EXPENSES> 179,111
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,069,808
<INCOME-TAX> 22,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,047,808
<EPS-PRIMARY> .18
<EPS-DILUTED> .14
</TABLE>
