FORM 10Q/A
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, 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 number: 0-610
EQUITY OIL COMPANY
(Exact name of registrant as specified in its charter)
COLORADO 87-0129795
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 806, #10 West Third South, Salt Lake City, Utah 84101
(Address of principal executive offices)
(Zip Code)
(801) 521-3515
Registrant's telephone number, including area code
(Former name, former 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 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
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. 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: 12,537,100
<PAGE>
ITEM I: Financial Statements
EQUITY OIL COMPANY
Statement of Operations
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
------------ --------
REVENUES
Oil and gas sales $3,022,602 $2,622,442
Partnership income 75,000 74,300
Interest income 60,259 50,613
Other 178,553 3,039
--------- ---------
3,336,414 2,750,394
EXPENSES
Operating costs 1,153,138 1,195 031
Depreciation, depletion and
amortization 1,150,000 1,050,000
Leasehold abandonments 11,200 13,850
Exploration 308,699 408,183
3-D Seismic 237,604 -
General and administrative 402,445 410,200
Interest 14,006 20,796
--------- ---------
3,277,092 3,098,060
Income (loss) before income taxes 59,322 (347,666)
Provision (benefit) for income taxes (50,783) (110,708)
NET INCOME (LOSS) $ 110,105 $ (236,958)
========== ===========
Net income per common share $ 0.01 $(0.02)
========== ===========
Cash dividends per share declared $.00 $.00
Weighted average shares outstanding 12,541,011 12,537,700
The accompanying notes are an integral part of these statements.
<PAGE>
EQUITY OIL COMPANY
Balance Sheet
as of March 31, 1995, and December 31, 1994
(Unaudited)
March 31, December 31,
ASSETS 1995 1994
- ------ ---------- -------
Current assets:
Cash and cash equivalents $ 583,947 $ 363,342
Temporary cash investments 1,987,106 2,466,728
Accounts and advances receivable 3,587,299 3,434,955
Income taxes receivable 293,440 293,440
Deferred income taxes 48,281 48,281
Other current assets 486,265 389,613
---------- ----------
6,986,338 6,996,359
Property and equipment 95,555,065 95,048,505
Less accumulated depreciation,
depletion and amortization 55,386,588 54,236,588
40,168,477 40,811,917
Other assets:
Investment in and notes receivable
from Symskaya Exploration 3,903,435 3,415,123
Other assets 43,633 -
Investment in Raven Ridge
Pipeline Partnership 643,528 684,937
--------- ----------
4,590,596 4,100,060
TOTAL ASSETS $51,745,411 $51,908,336
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,265,687 $ 1,156,611
Accrued liabilities 153,041 151,948
Federal, state, and foreign
income taxes payable 109,482 50,931
Deferred lease rental income - 178,553
Accrued profit sharing 39,000 157,073
Current portion - note payable - 460,000
--------- ---------
1,567,210 2,155,116
Note payable - 460,000
Revolving credit facility 920,000 920,000
Deferred income taxes 9,952,973 10,088,189
---------- ----------
10,872,973 10,548,189
Stockholders' Equity
Common stock 12,593,631 12,583,631
Paid in capital 2,934,792 2,934,792
Retained earnings 23,898,923 23,788,818
Less cost of treasury stock (122,118) (112,210)
---------- ----------
39,305,228 39,205,031
Total liabilities and
stockholders' equity $51,745,411 $51,908,336
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
EQUITY OIL COMPANY
Statement of Cash Flows
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 110,105 $ (236,958)
Adjustments
Depreciation, depletion and
amortization 1,150,000 1,050,000
Partnership distributions
in excess of income 41,409 39,869
Property dispositions 11,201 13,850
Decrease in deferred income taxes (135,216) (74,378)
Increase (decrease) from changes in:
Accounts and advances receivable (152,344) 192,662
Other current assets (96,652) 1,074
Accounts payable and accrued
liabilities 110,169 201,192
Income taxes receivable/payable 58,551 (99,180)
Deferred lease revenue (178,553) -
Accrued profit sharing (118,073) (113,550)
---------- ----------
Net cash provided
by operating activities 800,596 974,581
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (517,760) (1,202,108)
Advances to Symskaya Exploration (488,312) (125,077)
Sale of temporary cash investments 479,622 -
---------- ----------
Net cash used in investing activities (526,450) (1,327,185)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (9,908) -
Increase in other assets (43,633) -
Proceeds from credit facility 920,000 -
Payment of long term debt (920,000) -
---------- ----------
Net cash used in financing
activities (53,541) -
----------- ----------
NET INCREASE (DECREASE) IN CASH 220,605 (352,604)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 363,342 5,194,013
---------- ----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 583,947 $ 4,841,409
========== ==========
CASH, CASH EQUIVALENTS AND
TEMPORARY CASH INVESTMENTS
AT END OF PERIOD $ 2,571,053 $ 4,841,409
========== ==========
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Income Taxes $ 25,882 ---
Interest $ 14,006 $ 20,796
The accompanying notes are an integral part of these statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Interim Financial Statements
The accompanying consolidated financial statements of Equity Oil Company (the
Company) have not been audited by independent accountants, except for the
Balance Sheet at December 31, 1994. In the opinion of the Company's management,
the financial statements reflect the adjustments, all of which are of a normal
and recurring nature, necessary to present fairly the financial position of the
Company as of March 31, 1995, and the results of its operations and its cash
flows for the three month periods ended March 31, 1995 and 1994.
The financial statements and the accompanying notes to financial statements have
been prepared according to rules and regulations of the Securities and Exchange
Commission. Accordingly, certain notes and other information have been condensed
or omitted from the interim financial statements presented in this Quarterly
Report on Form 10-Q. These financial statements should be read in conjunction
with the Company's 1994 Annual Report on Form 10-K.
The results for the three month period ended March 31, 1995 are not necessarily
indicative of future results.
Note 2. Net Income (Loss) Per Share
Net income (loss) per share is based on the weighted average number of common
shares outstanding during the period. Primary and fully diluted earnings per
share are essentially the same.
Note 3. Reclassifications
Certain balances in the March 31, 1994 financial statements have been
reclassified to conform with the current year presentation. These changes had no
effect on previously reported net income, total assets, liabilities or
stockholders' equity.
<PAGE>
PART I
ITEM 2
Managements Discussion and Analysis of Financial Condition
and Results of Operation
RESULTS OF OPERATIONS
First quarter 1995 oil prices reversed their weakening trend from the
first quarter of 1994, combining with income from a lease option agreement and
an income tax benefit to enable the Company to record net income of $91,584, or
$.01 per share. This compares to a net (loss) of $(236,958), or $(.02) per
share, in 1994. The posted price for Western Colorado crude oil, which accounts
for 64% of the Company's total oil production, averaged $18.11 during the first
quarter of 1995, an increase of 20% from $15.04 during the same quarter of 1994.
Prices at other Company properties increased at similar levels. As a result,
total revenues of $3,336,414 were up 21% from 1994 revenues of $2,750,394.
Total production increased year-to-year on an equivalent barrel basis.
The Company maintained its oil production level from year to year, with 149,000
barrels produced in both 1995 and 1994. Gas production rose from 289,012 Mcf in
1994 to 310,633 Mcf in 1995.
Other income includes the recognition in the first quarter of 1995 of
income arising from a lease option agreement that was deferred in 1994.
Total expenses increased 7% over 1994 first quarter levels, primarily
as a direct result of 3-D seismic expenses incurred in connection with the
Company's California exploration programs. The largest of these 3-D programs is
a 41.5 square mile survey for which data acquisition was completed in March of
1995. Processing and interpretation of the data is expected to be completed by
the end of the first half of 1995, and result in the development of a minimum of
seven drillable gas prospects with per-well targeted reserves of 1.5 billion
cubic feet in the Forbes formation at depths of 7,000 to 8,000 feet. The project
is adjacent to the Grimes field, which has been a prolific gas producer in the
Sacramento Basin for many years. Depending on the results of the work currently
underway, the 3-D survey may be expanded to include an additional 17 square
miles to be undertaken in the fall of 1995. Equity has a 25% working interest in
this program.
Three other Sacramento Basin prospects were set up in 1994. One
incorporates a three square mile 3-D survey to be completed in March of 1995. If
the results are positive, the survey will be followed by an initial 5,000 foot
Forbes test drilled in the second quarter of the year. The second prospect is
also a Forbes play, developed on 2-D seismic leads, and should be drilled in the
first half of 1995. Equity has a 25% working interest in each prospect. The
third prospect, where Equity has a 50% working interest, is based on 2-D seismic
data purchased by the Company in 1994, and should yield a drillable Forbes test
in 1995.
Other exploration expenses decreased over 1994 because of reduced
drilling activity in 1995. During the 1st quarter of 1994, the Company
participated in the drilling of eight wells, compared to one well in 1995. Two
exploratory wells were plugged and abandoned in 1994, and there were no dry
holes in 1995.
Drilling in 1995 has been conducted at the Company's Retlaw prospect in
Alberta, Canada. The first Retlaw well, the Retlaw No. 14-13-12-19 drilled in
1974, identified 26 billion cubic feet of gross gas reserves, or 3.2 billion
cubic feet net to Equity. Market availability and regulatory production
allowances have until this year curtailed production from this well to 2 million
cubic feet per day. With the intention of accelerating the production of these
reserves, the operator proposed the drilling of the second well, and obtained
regulatory approval to produce both wells at 5.5 million cubic feet per day, for
a combined rate of 11 million cubic feet per day. Both wells should be on
production at the new rate by April of 1995. The increased production has the
potential to increase Equity's 1995 gas production by 500 million cubic feet.
Equity has a net working interest of 14.1% in the wells.
Further development drilling will take place at the Siberia Ridge and
Cessford fields, where the Company expects to participate in the drilling of up
to eight wells in 1995.
Depreciation, depletion, and amortization charges increased
year-to-year as the result of reserve write-downs on marginal properties which
occurred at the end of 1994.
The Company's tax provision for the first quarter of 1995 is lower than
the statutory rate because of excess allowable percentage depletion and the use
of foreign tax credits.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Cash, cash equivalents, and temporary cash investments totaled
$2,571,052 as of March 31, 1995, a decrease of 9% since year-end 1994. Working
capital at March 31, 1995 was $5,407,857, up 12% from working capital of
$4,841,243 at December 31, 1994. For the first three months of 1995, cash
provided by operating activities decreased 18% over the same period of 1994 to
$800,596, primarily due to increases in receivables and the recognition of
deferred lease revenue.
During the first quarter of 1995, the Company established a revolving
credit facility with a $20 million borrowing base to facilitate the acquisition
of oil and gas reserves as a key element in the Company's growth strategy.
The facility was used to pay off the Company's $920,000 Note Payable.
Investment in property and equipment, including advances to Symskaya
Exploration, for the first three months of 1995 totaled $1,006,072, a 24%
decrease from the amount recorded during the corresponding three months of 1994.
This decrease in capital spending is a reflection of the Company's reduced
drilling program to date in 1995.
The Company believes that existing cash balances, cash flow, and funds
available under the Company's credit facility will provide adequate resources to
meet all of its current capital and exploration spending objectives.
PART II
OTHER INFORMATION
The answers to items listed under Part II are inapplicable or negative.
SIGNATURES
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.
EQUITY OIL COMPANY
(Registrant)
DATE: May 4, 1995 By /s/ Paul M. Dougan
---------------------- -------------------
Paul M. Dougan, President
DATE: May 4, 1995 By /s/ Clay Newton
----------------------- ----------------
Clay Newton, Treasurer
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 583,947
<SECURITIES> 0
<RECEIVABLES> 3,587,229
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,986,338
<PP&E> 95,555,065
<DEPRECIATION> 55,386,588
<TOTAL-ASSETS> 51,745,411
<CURRENT-LIABILITIES> 1,567,210
<BONDS> 0
<COMMON> 12,593,631
0
0
<OTHER-SE> 0
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<SALES> 3,022,602
<TOTAL-REVENUES> 3,336,414
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<TOTAL-COSTS> 3,263,086
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,006
<INCOME-PRETAX> 59,322
<INCOME-TAX> (50,783)
<INCOME-CONTINUING> 110,105
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<EXTRAORDINARY> 0
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