FORM 10Q
UNITED STATES
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 September 30, 1998
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: 12,629,440
<PAGE>
ITEM I: Financial Statements
EQUITY OIL COMPANY
Statements of Operations
For the Nine Months Ended September 30, 1998 and 1997
(Unaudited)
1998 1997
------------ -----------
REVENUES
Oil and gas sales ...................... $ 9,622,792 $ 12,504,373
Partnership income ..................... 23,500 225,000
Interest income ........................ 48,887 113,339
Other .................................. 178,069 747,620
------------ ------------
9,873,248 13,590,332
EXPENSES
Operating costs ........................ 4,592,540 4,520,122
Depreciation, depletion and
amortization ......................... 3,700,000 3,300,000
Leasehold abandonments ................. 170,601 82,420
Equity loss in
Symskaya Exploration, Inc. ....... 399,457 236,589
3D seismic ............................. 431,075 --
Exploration ............................ 1,918,606 1,930,692
General and administrative ............. 1,595,641 1,575,129
Interest ............................... 959,731 550,458
------------ ------------
13,767,651 12,195,410
Income (loss) before income taxes ........... (3,894,403) 1,394,922
Provision for (benefit from)
income taxes ....................... (1,107,843) 501,495
------------ ------------
NET INCOME (LOSS) ........................... $ (2,786,560) $ 893,427
============ ============
Basic and diluted net
income (loss) per common share .......... $ (0.22) $ 0.07
============ ============
Cash dividends declared per share ........... $ .00 $ .00
Weighted average shares outstanding ......... 12,620,885 12,696,093
The accompanying notes are an integral part of these statements.
<PAGE>
EQUITY OIL COMPANY
Statements of Operations
For the Three Months Ended September 30, 1998 and 1997
(Unaudited)
1998 1997
----------- -----------
REVENUES
Oil and gas sales ..................... $ 3,105,521 $ 3,758,655
Partnership income .................... 8,000 75,000
Interest income ....................... 8,561 29,821
Other ................................. 76,364 195,463
------------ ------------
3,198,446 4,058,939
EXPENSES
Operating costs ....................... 1,561,678 1,481,187
Depreciation, depletion and
amortization ........................ 1,250,000 1,100,000
Leasehold abandonments ................ 6,510 41,468
Equity loss in
Symskaya Exploration, Inc. ...... 80,344 92,752
3D seismic ............................ 302 --
Exploration ........................... 1,172,724 702,645
General and administrative ............ 498,502 467,111
Interest .............................. 389,826 226,286
------------ ------------
4,959,886 4,111,449
Loss before income taxes ................... (1,761,440) (52,510)
Benefit from income taxes .................. (510,614) (4,352)
------------ ------------
NET LOSS ................................... $ (1,250,826) $ (48,158)
============= ============
Basic and diluted net
loss per common share .................. $ (0.10) $ (0.00)
============ ============
Cash dividends declared per share .......... $ .00 $ .00
Weighted average shares outstanding ........ 12,629,440 12,678,883
The accompanying notes are an integral part of these statements.
<PAGE>
EQUITY OIL COMPANY
Balance Sheet
as of September 30, 1998 and December 31, 1997
(Unaudited)
September 30, December 31,
ASSETS 1998 1997
- ------ ------------ ------------
Current assets:
Cash and cash equivalents ........ $ 50,223 $ 378,801
Accounts and advances receivable . 3,232,001 3,641,535
Income taxes receivable .......... 41,275 88,174
Deferred tax asset ............... 17,929 18,934
Other current assets ............. 388,866 514,713
------------- -------------
3,730,294 4,642,157
Property and equipment ............. 116,506,929 113,371,891
Less accumulated depletion,
depreciation and amortization .... 68,431,805 64,846,514
------------- -------------
48,075,124 48,525,377
Other assets:
Investment in Raven Ridge
Pipeline Partnership ........... 229,140 268,821
Other assets ..................... 73,699 105,284
------------- -------------
302,839 374,105
TOTAL ASSETS ....................... $ 52,108,257 $ 53,541,639
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................. $ 1,402,782 $ 1,327,120
Accrued liabilities .............. 202,251 120,039
Accrued profit sharing ........... 144,000 188,973
Income taxes payable ............. 546,713 354,002
------------- -------------
2,295,746 1,990,134
Revolving credit facility .......... 16,500,000 13,978,830
Deferred income taxes .............. 3,298,636 4,851,966
------------- -------------
19,798,636 18,830,796
Stockholders' equity
Common stock ..................... 12,794,040 12,761,100
Paid in capital .................. 3,714,493 3,667,707
Retained earnings ................ 14,033,644 16,820,204
Less cost of treasury stock ...... (528,302) (528,302)
------------- -------------
30,013,875 32,720,709
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ............. $ 52,108,257 $ 53,541,639
============= =============
The accompanying notes are an integral part of these statements.
<PAGE>
EQUITY OIL COMPANY
Statement of Cash Flows
For the Nine Months Ended September 30, 1998 and 1997
(Unaudited)
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................. $(2,786,560) $ 893,427
Adjustments
Depreciation, depletion and
amortization .............................. 3,700,000 3,300,000
Partnership distributions in
excess of income .......................... 39,681 106,314
(Gain) loss on
property dispositions ..................... 167,887 (210,063)
Equity loss in
Symskaya Exploration, Inc. ............ 399,457 236,589
Change in other assets .................. 31,585 31,586
Common stock issued for services ............ 79,725 29,375
Decrease in deferred income taxes ........... (1,552,325) (334,498)
Increase (decrease) from changes in:
Accounts and advances receivable ............ 409,534 289,738
Other current assets ........................ 125,847 (72,727)
Accrued profit sharing ...................... (44,973) (35,100)
Accounts payable and accrued
liabilities ............................... 157,874 (1,117,173)
Income taxes receivable/payable ............. 239,610 346,248
Net cash provided ----------- -----------
by operating activities ..................... 967,342 3,463,716
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to Symskaya Exploration .............. (399,457) (236,589)
Proceeds from sale of properties .............. -- 339,385
Sale of temporary cash investments ............ -- 49,802
Capital expenditures .......................... (3,417,633) (4,656,248)
----------- -----------
Net cash used in
investing activities ...................... (3,817,090) (4,503,650)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock .................... -- (162,706)
Net borrowings on
revolving credit facility .............. 2,521,170 700,000
Net cash provided by financing ----------- -----------
activities ................................. 2,521,170 537,294
----------- -----------
NET DECREASE IN CASH ............................. (328,578) (502,640)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD ........................ 378,801 787,961
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD .............................. $ 50,223 $ 285,321
=========== ===========
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Income taxes $ 246,185 $ 607,694
Interest $ 959,731 $ 550,458
The accompanying notes are an integral part of these statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1. Interim Financial Statements
The accompanying financial statements of Equity Oil Company (the Company)
have not been audited by independent accountants, except for the Balance Sheet
at December 31, 1997. 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
September 30, 1998, and the results of its operations for the three and nine
month periods ended September 30, 1998 and 1997, and its cash flows for the nine
month periods ended September 30, 1998 and 1997.
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 1997 Annual Report on Form 10-K, and the
Company's Form 10-Q's for the first and second quarters of 1998.
The results for the three and nine month periods ended September 30, 1998
are not necessarily indicative of future results.
Note 2. Net Income (Loss) Per Share
Earnings per share for all periods presented has been restated to reflect
the adoption of Statement of Financial Accounting Standards No. 128, Earnings
Per Share ("SFAS 128"). SFAS 128 requires companies to present basic earnings
per share, and if applicable, diluted earnings per share, instead of primary and
fully diluted earnings per share. Basic earnings per share excludes dilution and
is computed by dividing net earnings available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if options
to issue common stock were exercised into common stock.
Options to purchase approximately 912,000 shares of common stock at prices
of $3.56 to $6.00 per share were outstanding during the first nine months of
1998. Options to purchase approximately 922,500 shares of common stock at prices
of $3.56 to $6.00 per share were outstanding during the first nine months of
1997. The outstanding options were not included in the computation of diluted
earnings per share because the exercise prices of the options were greater than
the average market price of the Company's common shares during the period. Basic
and diluted earnings (loss) per share are the same for each of the periods
presented.
<PAGE>
PART I
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
RESULTS OF OPERATIONS
Financial Results
The Company's financial results continue to be adversely affected by
depressed oil prices in 1998. The Company recorded a net loss for the first nine
months this year in the amount of $(2,786,560), or $(.22) per share, compared to
net income for the first nine months of 1997 in the amount of $893,427, or $.07
per share. Total revenues for the first nine months of 1998 were $9,873,248, a
decrease of 27% from revenues of $13,590,332 recorded during the same period of
1997. The decline in revenues reflects the 36% decrease in oil prices received
year-to-date in 1998.
The Company recorded a net loss for the third quarter of 1998 in the amount
$(1,250,826), or $(.10) per share on revenues of $3,198,446. This compared to a
net loss during the third quarter of 1997 of $(48,158), or $(.00) per share, on
revenues of $4,058,939.
Operating Activities
Sharply reduced cash flows have caused the Company to decrease the number
of wells drilled in 1998 from the prior year. The Company has participated in a
total of 11 wells year to date in 1998, completing 1 oil and 6 gas wells, with
the remaining wells being plugged and abandoned. Included in the well count are
10 exploratory wells. Six of those wells have been completed as oil or gas
wells, and 4 were dry holes.
Six wells have been drilled on the Company's 3D projects in the Sacramento
Basin of California, 5 of which have been successful. Current plans call for 1
additional well to be drilled in California during the fourth quarter of 1998.
Included in the 1998 well count is an exploratory well drilled in
California on the Company's 16 square mile Merlin 3-D seismic project. The #1-15
Henning, located in Glenn County, California, tested at a rate of 1.4 million
cubic feet per day from perforations at 5,565 - 5,568 feet in the Cretaceous
Forbes formation and 5.9 million cubic feet per day from 5,518 to 5,556 feet.
The well is currently on production from the lower zone at a rate of 1.3 million
cubic feet per day. Equity operates and has a 50% working interest in the well
and the Merlin project.
A second discovery on the Merlin project, the Equity #1-21 Otto Lohse
tested 2.4 million cubic feet per day from perforations at 5,525-5,540 feet, in
the Cretaceous Forbes formation. In addition, a second Forbes reservoir from
5,414 - 5,463 feet, which drill stem tested 6.5 million cubic feet per day,
represents proved behind pipe reserves. A third well, the Equity #1-22 Otto
Lohse, was drilled, plugged, and abandoned in the third quarter as a dry hole.
At the Company's Davis Ranch prospect, also located in the Sacramento
Basin, the Equity #1-8 Westcott drill stem tested 7.5 million cubic feet per day
from the Cretaceous Forbes formation at a depth of 7,507-7,524 feet. This well
is currently producing 2.5 million cubic feet per day. The Company has a 60%
working interest at Davis Ranch.
Slawson Exploration completed the #1-18 Armstrong during the second
quarter. Equity is a 25% working interest participant in the well and the 16
square mile West Orion Sacramento Basin 3D project, where the well was drilled.
In addition, Slawson also completed the #1-30 Driver and the #1-25 Border Tule
wells, drilled on the same prospect, in the third quarter. All three wells will
be placed on production during the fourth quarter.
Following the successful production testing in April of 1998 of a second
pay zone in the Westport Oil and Gas Company #24-15 Beaver Creek in Golden
Valley County, North Dakota, the well was placed on production at a rate
exceeding 1,100 barrels of oil per day, and continued to produce at an average
daily rate of 1,000 barrels per day during the month of September. Equity has a
32.5% working interest in the well. Westport Oil and Gas Company operates the
well and holds the remaining working interest.
The Company also participated in an additional successful development well
in 1998 at its Siberia Ridge field in Sweetwater County, Wyoming. The well was
placed on production at a rate of 700 MCFD. The Company has a 50% interest in
the well.
The Company recently announced that it has reached an agreement with a
private company to begin a drilling program in the Mancos formation on the
Rangely anticline in Rio Blanco County, Colorado. Under the terms of the
agreement, the first five wells drilled will be funded 100% by the Company's
partner. Each well will earn an interest in 20 acres. Any well completed for
commercial production will be owned 50% by Equity. Using modern logging
technology to identify fracture systems downhole, and new drilling techniques
such as horizontal drilling, it may be possible to find new reserves in this
field, where production dates back to 1906. Equity owns a 100% working interest
in over 10,000 acres in the shallow Mancos zone, having reserved horizons down
to 2,500 feet in its 1943 farmout to Chevron of the deeper Weber sandstone.
Drilling should begin before the end of 1998.
The Company is continuing to pursue additional outside financing for its
Symskaya project in Russia. The Company recently announced that its 50% owned
subsidiary, Symskaya Exploration, Inc. has entered into a Bottom Hole
Contribution Agreement with the Committee for Natural Resources of the
Krasnoyarsk Krai in Eastern Siberia to support the drilling of the Averinskaya -
150 well, an exploratory well that is being drilled near the town of Yeniseysk.
The well is adjacent to the southern block of acreage that Symskaya holds as
part of its 1.1 million acre exploration, development and production license.
The well is being drilled to evaluate the oil and gas potential of the same
geologic section that Symskaya targeted in the drilling of its Lemok No. 1 well
on the northern acreage block of its license area.
In exchange for a nominal payment, Symskaya will receive all pre-drilling
data from the well, drilling data acquired during the drilling of the well, and
all final reports on the well including logs, test results, core and drill
cutting samples, and samples of any oil, water or gas recovered during drilling.
In addition, Symskaya personnel will have complete access to the drill site
during drilling, the right to collect drill cuttings and other samples, and the
right to witness all coring and testing. The well is currently drilling below
7,000 feet, and is projected to be drilled to a total depth of 11,500 feet.
CAPITAL RESOURCES AND LIQUIDITY
Cash, cash equivalents, and temporary cash investments totaled $50,223 as
of September 30, 1998, a decrease of $328,578 since year-end 1997. Working
capital at September 30, 1998 was $1,434,548, and the Company's ratio of current
assets to current liabilities was 1.62 to 1. Cash flow from operating
activities, also negatively impacted by lower oil prices and their resultant
reduced revenues, decreased from $3,463,716 during the first nine months of 1997
to $967,342 in the same period of 1998.
Investment in property and equipment for the first nine months of 1998
totaled $3,417,633. Investment in property and equipment for the same period of
1997 totaled $4,656,248. As a result of the severely depressed oil prices, and
their negative effects on cash flows, the Company has reduced its 1998 capital
budget. The Company continues to high-grade both exploratory and development
projects based on their assumed risks and rewards, balancing this with projects
that have specific lease related drilling commitments. Other projects have been
delayed or deferred until oil prices strengthen and cash flows increase.
The Company purchased 51,000 shares of its stock on the open market during
the first nine months of 1997, at an average price of $3.19 per share. No
treasury stock was purchased during the first nine months of 1998.
During the first nine months of 1997, the Company increased borrowings
under its credit facility by $700,000, compared to borrowings of $2,521,170 in
1998, which were used to fund investments in property and equipment and for
working capital purposes. On March 30, 1998, the Company amended its credit
agreement, increasing the current commitment from $15 million to $18 million. In
addition, on June 24, 1998, the facility was further amended in order to set the
first principal payment date under the facility to July 1, 2001 from July 1,
1999.
The Company's commitment under its borrowing base credit facility is
subject to a redetermination as of July 1 and January 1 of each year, with
estimated future prices being determined by the Company's lender. Using a
reduced oil price deck, brought about by continued low oil prices, the Company's
borrowing base was lowered to $17 million after the July 1, 1998
redetermination, and the Company was notified to this effect in September of
1998. Accordingly, at September 30, 1998, the Company had approximately $500,000
of remaining availability on the facility. The Company is in compliance with all
its facility covenants.
The Company believes that existing cash balances, cash flow from operating
activities, and funds available under the Company's credit facility will provide
adequate resources to meet all of its remaining capital and exploration spending
objectives for 1998, which have been significantly curtailed due to low oil
prices. Should the low oil price environment continue for an extended period of
time, the Company may have difficulty in meeting its ongoing exploration and
development drilling objectives. The Company has adequate liquidity to maintain
its operations as they currently exist.
COMPARISON OF THIRD QUARTER 1998 WITH THIRD QUARTER 1997
Oil and gas sales decreased 17% in the third quarter of 1998 to $3,105,521
versus $3,758,655 in the same quarter of last year. Sharply lower oil prices
were offset somewhat by increases in both oil and gas production. Total revenues
decreased 21% from 1997 to 1998.
Oil production increased 11% in the third quarter of 1998, primarily due to
production from the Westport #24-15 Beaver Creek well in North Dakota. Oil
production for the quarter was 177,000 barrels, compared to 159,400 barrels in
the third quarter of 1997. Gas production increased 15% from 524,000 Mcf in 1997
to 600,000 Mcf in 1998. The increase in gas production is a result of the
Company's continued successful exploration program in northern California.
Average prices received for crude oil were $12.04 per barrel during the
third quarter of 1998, down 33% from the $17.99 received in 1997. Gas prices
also dropped during the third quarter to $1.60 per Mcf in 1998, compared to
$1.78 in 1997, a decrease of 10%.
During the third quarter of 1997, the Company sold its minority interest in
an oil field technology research company. In connection with the sale, the
Company recognized a gain of $175,000, which is included in other income. There
were no similar transactions during 1998.
Despite higher production levels, lease operating costs increased only
slightly over the prior year. The small increase was accomplished by shutting in
high-cost, marginal production during the quarter due to low prices, and lower
value-based production taxes. The increase in production in 1998 did contribute
to higher depreciation, depletion, and amortization (DD&A) charges. In addition,
DD&A per unit charges increased slightly from $4.50 per BOE to $4.57 per BOE in
1998.
Higher exploration expenses in 1998 resulted from higher dry hole costs in
the third quarter. During the period, the Company drilled 4 dry holes, incurring
total costs of $745,000. Dry holes during the same quarter of 1996 were only
$337,000. Included in the 1998 third quarter dry holes were the first
exploratory well drilled at the Company's O'Brien Springs 3D project in Wyoming,
where the Company maintained a 50% working interest, as well as the
aforementioned #1-22 Otto Loshe well in California, also a 50% owned well.
General and administrative expenses increased slightly in 1998, primarily
due to increased compensation and investor relations expenses. Higher interest
costs in 1998 reflect the higher amount of debt outstanding under the Company's
credit facility.
The income tax benefits recorded for both periods result primarily from the
deferred tax benefits associated with net losses reported.
COMPARISON OF FIRST NINE MONTHS OF 1998 WITH FIRST NINE MONTHS OF 1997
Oil and gas sales decreased 23% in the first nine months of 1998 to
$9,622,792 versus $12,504,373 in the same period of last year. This decrease was
caused by lower oil prices, partially offset by increased oil and gas
production. Oil production for the first nine months was 517,000 barrels, up 9%
from 1997 production of 476,000 barrels. Gas production for the period increased
16% to 1,770,000 Mcf from 1,526,000 Mcf in 1997.
Average prices received for crude oil were $12.54 per barrel during the
first nine months of 1998, compared to $19.52 received in 1996, a decrease of
36%. Gas prices decreased slightly to $1.84 per Mcf in 1998, compared to $1.90
in 1997.
During the first nine months of 1997, the Company recorded a gain on the
sale of certain oil and gas properties of approximately $325,000. In addition,
in 1997 the Company sold its minority interest in an oil field technology
research company. In connection with the sale, the Company recognized a gain of
$175,000. There were no corresponding events in 1998.
Total expenses in the first nine months of 1998 increased 13% over 1997
levels. Lease operating costs remained flat, while depreciation, depletion and
amortization increased 12%, primarily due to increased oil and gas production in
1998.
The Company incurred 3D seismic charges of $431,075 in 1998 associated with
its Sequoia project in the San Joaquin Basin of California. The initial well at
Sequoia has been delayed until the first half of 1999. The Company did not
participate in any 3D seismic programs during the first nine months of 1997.
The Company abandoned certain undeveloped leaseholds during the first nine
months of 1998 associated with a Lodgepole prospect that was acquired in 1995
and 1996. This was the primary cause of a 1998 charge to expense of $170,601 for
leasehold abandonments. The Company did not renew selected leases in the area on
their renewal date due to a lack of prospectivity.
Higher interest costs in 1998 reflect the higher amount of debt outstanding
under the Company's credit facility.
The equity loss in Symskaya Exploration increased by approximately $163,000
during the first nine months of 1998. This increase included a write down of
approximately $125,000 of accrued interest income on a senior note between
Symskaya and the Company that had been recognized in prior periods. In addition,
the 1998 increase included the Company's share of a bottom hole contribution
discussed earlier. There were no corresponding events in 1997.
OTHER ITEMS
In June of 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income. The
Statement establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains, and losses) in a full set
of general-purpose financial statements. This Statement is effective for fiscal
years beginning after December 15, 1997. The adoption of this Statement did not
have a material effect on the Company's financial statements.
The Company has reviewed all recently issued, but not yet adopted,
accounting standards in order to determine their effects, if any, on the results
of operations or financial position of the Company. Based on that review, the
Company believes that none of these pronouncements will have a significant
effect on current or future earnings or operations.
YEAR 2000
The Company uses computers principally for processing and analyzing
geological and engineering data, map making, and administrative functions such
as word processing, accounting, and financial reporting. The Company does not
use any software developed specifically for its own use, and all of it's
principal computer systems have been purchased since December 31, 1995. The
Company has an ongoing program to ensure that its operational and financial
systems will not be adversely affect by year 2000 software failures. While the
Company believes it is taking all appropriate steps to assure year 2000
compliance, it is dependent substantially on vendor compliance. The Company
intends to modify or replace those systems that are not year 2000 compliant.
The Company is requiring its systems and software vendors to represent that
the services and products provided are, or will be, year 2000 compliant, and has
an on-going program to test compliance. The Company's financial accounting
system is year 2000 compliant. Software vendors for the Company's technical
software have represented that their software is on track to be compliant by
mid-1999. The Company estimates that the cost to redevelop, replace, or repair
any technology as needed will not be material.
FORWARD LOOKING STATEMENTS
Forward-looking statements in this Form 10-Q, future filings by the Company
with the Securities and Exchange Commission, the Company's press releases and
oral statements by authorized officers of the Company are intended to be subject
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements involve risks
and uncertainty, including without limitation, the risk of a significant natural
disaster, the inability of the Company to ensure against certain risks, the
adequacy of its loss reserves, fluctuations in commodity prices, the inherent
limitations in the inability to estimate oil and gas reserves, changing
government regulations, as well as general market conditions, competition and
pricing. The Company believes that forward-looking statements made by it are
based upon reasonable expectations. However, no assurances can be given that
actual results will not differ materially from those contained in such
forward-looking statements. The words "estimate", "anticipate", "expect",
"predict", "believe" and similar expressions are intended to identify
forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The answers to items listed under Item 3 are inapplicable or negative.
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: November 6, 1998 By /s/ Paul M. Dougan
----------------------- -------------------
Paul M. Dougan, President
Chief Executive Office
DATE: November 6, 1998 By /s/ Clay Newton
------------------------ ----------------
Clay Newton, Treasurer
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 50,223
<SECURITIES> 0
<RECEIVABLES> 3,232,001
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