SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended:
September 30, 1998 Commission File No. 0-9675
GREAT NORTHERN GAS COMPANY
(Exact name of registrant as specified in its charter)
Colorado 38-1900351
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
621 Seventeenth Street
Suite 2150
Denver, Colorado 80293
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 295-0938
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 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
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock as of the latest practicable date:
Shares As of Close of
Title of Class Outstanding Business on
Common Stock,
$.01 Par Value 3,082,710 October 30, 1998
Page 1 of 10 sequentially numbered pages.
<PAGE>
GREAT NORTHERN GAS COMPANY
INDEX
PART I. FINANCIAL INFORMATION Page No. (s)
------------
Balance Sheets as of September 30, 1998
and December 31, 1997 (Unaudited) 3-4
Statements of Operations for the Three
Months Ended September 30, 1998 and 1997 (Unaudited) 5
Statements of Operations for the Nine Months
Ended September 30, 1998 and 1997 (Unaudited) 6
Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and 1997 (Unaudited) 7
Notes to Unaudited Financial Statements for the Nine Months
Ended September 30, 1998 and 1997 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION 10
SIGNATURES 10
2
<PAGE>
GREAT NORTHERN GAS COMPANY
BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
------
September 30, December 31,
1998 1997
---- ----
CURRENT ASSETS:
Cash and cash equivalents $2,155,299 $1,812,386
Accounts receivable:
Oil and gas sales 33,662 90,902
Joint interest billings 149,393 139,201
Other 9,619 9,619
---------- ----------
Total current assets 2,347,973 2,052,108
---------- ----------
PROPERTY AND EQUIPMENT, at cost:
Oil and gas properties, accounted for
using the full cost method 1,749,944 2,682,627
Furniture, fixtures and automobile 60,105 60,105
---------- ----------
1,810,049 2,742,732
Less accumulated depreciation, depletion
and amortization 1,032,563 881,735
---------- ----------
Net property and equipment 777,486 1,860,997
---------- ----------
$3,125,459 $3,913,105
========== ==========
The accompanying notes to unaudited financial statements are an
integral part of these statements.
3
<PAGE>
GREAT NORTHERN GAS COMPANY
BALANCE SHEETS - CONTINUED
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 30, December 31,
1998 1997
---- ----
CURRENT LIABILITIES:
Accounts payable:
Trade $ 20,718 $ 24,404
Oil and gas sales 175,553 229,707
Income taxes 1,286 17,286
Other 66,878 88,099
------------ ------------
Total current liabilities 264,435 359,496
------------ ------------
DEFERRED INCOME TAXES 51,042 192,161
------------ ------------
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value;
authorized 50,000,000 shares,
issued 3,083,210 shares at
September 30, 1998 and 3,297,343
shares at December 31, 1997 30,832 32,975
Additional paid-in-capital 38,684,834 39,004,013
Accumulated deficit (35,905,684) (35,675,540)
------------ ------------
Total stockholders' equity 2,809,982 3,361,448
------------ ------------
$ 3,125,459 $ 3,913,105
============ ============
The accompanying notes to unaudited financial statements are an
integral part of these statements.
4
<PAGE>
GREAT NORTHERN GAS COMPANY
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
Three Months Ended September 30,
--------------------------------
1998 1997
---- ----
REVENUES:
Oil and gas sales $ 135,413 $ 132,507
Interest and other income 40,891 35,491
----------- -----------
176,304 167,998
----------- -----------
EXPENSES:
Lease operating 36,807 54,785
Production taxes 9,320 11,112
Depreciation, depletion and amortization 55,837 45,963
General and administrative 386,909 94,347
----------- -----------
488,873 206,207
----------- -----------
LOSS BEFORE INCOME TAXES (312,569) (38,209)
INCOME TAX BENEFIT 118,815 14,520
----------- -----------
NET LOSS $ (193,754) $ (23,689)
=========== ===========
LOSS PER COMMON SHARE $ (.06) $ (.01)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 3,093,241 3,392,861
=========== ===========
The accompanying notes to unaudited financial statements are an
integral part of these statements.
5
<PAGE>
GREAT NORTHERN GAS COMPANY
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
Nine Months Ended September 30,
-------------------------------
1998 1997
---- ----
REVENUES:
Oil and gas sales $ 450,472 $ 631,387
Interest and other income 107,595 157,374
----------- -----------
558,067 788,761
----------- -----------
EXPENSES:
Lease operating 144,268 164,214
Production taxes 33,525 48,471
Depreciation, depletion and amortization 150,828 190,721
General and administrative 600,709 437,822
----------- -----------
929,330 841,228
----------- -----------
GAIN FROM SALE OF PROPERTIES -- 155,864
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (371,263) 103,397
INCOME TAX BENEFIT (PROVISION) 141,119 (39,290)
----------- -----------
NET EARNINGS (LOSS) $ (230,144) $ 64,107
=========== ===========
EARNINGS (LOSS) PER COMMON SHARE $ (.07) $ .02
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 3,123,241 3,477,326
=========== ===========
The accompanying notes to unaudited financial statements are an
integral part of these statements
6
<PAGE>
<TABLE>
<CAPTION>
GREAT NORTHERN GAS COMPANY
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
Nine Months Ended September 30,
-------------------------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C>
Net earnings (loss) $ (230,144) $ 64,107
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 150,828 190,721
Gain on sale of properties -- (155,865)
Decrease in accounts receivable 47,048 73,308
(Decrease) Increase in current liabilities (95,061) 12,693
Deferred income tax (benefit) provision (141,119) 39,291
----------- -----------
Net cash provided by (used in) operating activities (268,448) 224,255
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sale of oil and gas properties 1,206,046 1,570,979
Proceeds from sale of short-term investments -- 242,474
Additions to property and equipment (273,363) (1,090,640)
----------- -----------
Net cash provided by investing activities 932,683 722,813
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repurchase of Common Stock (321,322) (402,411)
----------- -----------
Net cash used in financing activities (321,322) (402,411)
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 342,913 544,657
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,812,386 1,404,099
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 2,155,299 $ 1,948,756
=========== ===========
The accompanying notes to unaudited financial statements are an
integral part of these statements
7
</TABLE>
<PAGE>
GREAT NORTHERN GAS COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Note 1 - Financial Statements - Basis of Presentation
- -----------------------------------------------------
Great Northern Gas Company (the "Company") is exclusively engaged in the
business of oil and gas exploration, development and production.
The financial statements included herein are unaudited. In the opinion of
management, such statements include all adjustments, consisting of normal
recurring adjustments, necessary to present fairly the Company's financial
position for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted as permitted by the rules and regulations of the
Securities and Exchange Commission. Although the Company believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these financial statements be read in conjunction with the
December 31, 1997 financial statements and the notes thereto as reported on the
Company's Annual Report on Form 10-KSB.
Results of operations for the nine month period ended September 30, 1998
are not necessarily indicative of the results to be expected for the full year.
Note 2 - Income Taxes
- ---------------------
The Company's net deferred tax liability at September 30, 1998 and December
31, 1997 primarily relates to book basis being in excess of tax basis partially
offset by loss carryforwards.
Note 3 - Sale of Properties
- ---------------------------
On March 13, 1998 , the Company closed on the sale of its interest in all
the Haybarn properties in Freemont County, Wyoming. These properties were
acquired in September of 1997. These properties were sold for $1,136,046. On
June 1, 1998, the Company closed on the sale of its interest in all the East
Plateau properties in Mesa County, Colorado. These properties were sold for
$70,000. The proceeds have been recorded as a reduction of the full cost pool.
Note 4 - Repurchase of Common Stock
- -----------------------------------
During the first, second and third quarters of 1998 the Company repurchased
214,133 shares of the Company's Common Stock. The shares were retired.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
At September 30, 1998 the Company had working capital of $2,083,538
compared to working capital of $1,692,612 at December 31, 1997. The increase in
working capital is primarily related to the proceeds from the sale of the
Haybarn properties partially offset by operating expenses in excess of revenues,
and of the purchase of common stock of the Company.
Net cash used in operating activities was $268,448 for the first nine
months of 1998 compared to net cash provided by operating activities of $224,255
for the comparable period of 1997. Such change is primarily due to the reduction
in oil and gas revenues as stated below.
Analysis of Results of Operations:
- ----------------------------------
Three Months Ended September 30, 1998
- -------------------------------------
The $135,413 in oil and gas sales for the three months ended September 30,
1998 is $2,906 more than for the same period in 1997. Other income has increased
by $5,400 primarily due to interest income that was generated by the funds in
escrow from the Haybarn sale. Lease operating expenses have decreased by $17,978
primarily due to the sale of the Haybarn properties. General and administrative
expenses increased by $292,562 for the three months ended September 30 1998
compared to the same period in 1997 mainly due to bonuses paid in 1998.
Nine Months Ended September 30, 1998
- ------------------------------------
The $450,472 in oil and gas sales for the first nine months of 1998 is
$180,915 less than for the same period in 1997 primarily due to the sale of
South Douglas Creek, White River Dome and Gasaway properties in 1997. Other
income has decreased due to the well operation income that was generated by
Gasaway and White River Dome Properties. Production taxes have decreased also
primarily due to the sale of these properties. General and administrative
expenses for the nine months ended September 30, 1998 increased compared to the
same period in 1997 mainly due to bonuses paid in 1998.
Management's assessment of Year 2000 issues
- -------------------------------------------
The company is currently evaluating the year 2000 issues.
9
<PAGE>
PART II - OTHER INFORMATION
Items 1 thru 5 not applicable.
Item 6 - Exhibits and Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREAT NORTHERN GAS COMPANY
(Registrant)
Dated: February 19, 1999 By: /s/ Frank S. DiGrappa
-------------------------------
Frank S. DiGrappa
Chairman of the Board,
and Treasurer
Dated: February 19, 1999 By: /s/ Thomas L. DiGrappa
-------------------------------
Thomas L. DiGrappa
President and Chief
Operating Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,155,299
<SECURITIES> 0
<RECEIVABLES> 183,055
<ALLOWANCES> 0
<INVENTORY> 9,619
<CURRENT-ASSETS> 2,347,973
<PP&E> 1,810,049
<DEPRECIATION> (1,032,563)
<TOTAL-ASSETS> 3,125,459
<CURRENT-LIABILITIES> 264,435
<BONDS> 51,042
0
0
<COMMON> 30,832
<OTHER-SE> 2,779,150
<TOTAL-LIABILITY-AND-EQUITY> 3,125,459
<SALES> 450,472
<TOTAL-REVENUES> 558,067
<CGS> 177,793
<TOTAL-COSTS> 328,621
<OTHER-EXPENSES> 600,709
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (371,263)
<INCOME-TAX> 141,119
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230,144)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
