SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended:
March 31, 2000 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 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 3,072,690 May 4, 2000
Page 1 of 9 sequentially numbered pages.
<PAGE>
GREAT NORTHERN GAS COMPANY
INDEX
PART I. FINANCIAL INFORMATION Page No. (s)
-----------
Balance Sheets as of March 31, 2000
and December 31, 1999 (Unaudited) 3-4
Statements of Operations for the Three
Months Ended March 31, 2000 and 1999 (Unaudited) 5
Statements of Cash Flows for the Three Months
Ended March 31, 2000 and 1999 (Unaudited) 6
Notes to Unaudited Financial Statements for
the Three Months Ended March 31, 2000 and 1999 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION 9
SIGNATURES 9
Page 2
<PAGE>
GREAT NORTHERN GAS COMPANY
BALANCE SHEETS
(UNAUDITED)
ASSETS
March 31, December 31,
2000 1999
---------- ------------
CURRENT ASSETS:
Cash and cash equivalents $1,273,357 $1,516,081
Trading securities 219,832 --
Accounts receivable:
Oil and gas sales 35,055 43,836
Joint interest billings 4,575 4,336
Affiliate 1,103 1,103
Other 9,619 9,619
---------- ----------
Total current assets 1,543,541 1,574,975
---------- ----------
PROPERTY AND EQUIPMENT, at cost:
Oil and gas properties, accounted for
using the full cost method 2,577,292 2,546,038
Furniture, fixtures and automobile 35,433 35,433
---------- ----------
2,612,725 2,581,471
Less accumulated depreciation, depletion
and amortization 1,042,461 1,013,993
---------- ----------
Net property and equipment 1,570,264 1,567,478
---------- ----------
$3,113,805 $3,142,453
========== ==========
The accompanying notes to unaudited financial statements are an
integral part of these statements.
Page 3
<PAGE>
GREAT NORTHERN GAS COMPANY
BALANCE SHEETS - CONTINUED
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2000 1999
------------ ------------
CURRENT LIABILITIES:
Accounts payable:
Oil and gas sales $ 149,625 $ 124,360
Income taxes 5,856 64,886
Other 5,995 9,667
------------ ------------
Total current liabilities 161,476 198,913
------------ ------------
DEFERRED INCOME TAXES 88,318 84,978
------------ ------------
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value;
authorized 50,000,000 shares,
issued 3,072,690 shares at
March 31, 2000 and December 31, 1999 30,727 30,727
Additional paid-in-capital 38,674,814 38,674,814
Accumulated deficit (35,841,530) (35,846,979)
------------ ------------
Total stockholders' equity 2,864,011 2,858,562
------------ ------------
$ 3,113,805 $ 3,142,453
============ ============
The accompanying notes to unaudited financial statements are an
integral part of these statements.
<PAGE>
GREAT NORTHERN GAS COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
2000 1999
----------- -----------
REVENUES:
Oil and gas sales $ 119,621 $ 60,961
Interest and other income 78,118 28,631
Unrealized gain on trading securities 11,640 --
----------- -----------
209,379 89,592
----------- -----------
EXPENSES:
Lease operating 62,000 23,941
Production taxes 2,624 4,292
Depreciation, depletion and amortization 28,468 35,856
General and administrative 107,497 103,344
----------- -----------
200,589 167,433
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES 8,790 (77,841)
INCOME TAX (EXPENSE) BENEFIT (3,340) 29,579
----------- -----------
NET EARNINGS (LOSS) $ 5,450 $ (48,262)
=========== ===========
BASIC EARNINMGS PER SHARE OF COMMON STOCK $ -- $ (.02)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 3,072,690 3,079,037
=========== ===========
The accompanying notes to unaudited financial statements are an
integral part of these statements.
Page 5
<PAGE>
<TABLE>
<CAPTION>
GREAT NORTHERN GAS COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Earnings (Loss) $ 5,450 $ (48,262)
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 28,468 35,856
Decrease in accounts receivable 8,542 4,684
Decrease in current liabilities (37,437) (20,707)
Deferred income tax expense (benefit) 3,340 (29,579)
Purchase of trading securities (219,832) --
----------- -----------
Net cash used in operating activities (211,469) (58,008)
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Issuance of note receivable to related party -- (400,000)
Additions to property and equipment (31,255) (246,506)
----------- -----------
Net cash used in investing activities (31,255) (646,506)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Repurchase of Common Stock -- (3,780)
----------- -----------
Net cash provided by (used in) financing activities -- (3,780)
----------- -----------
DECREASE IN CASH AND
CASH EQUIVALENTS (242,724) (708,294)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,516,081 2,075,657
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,273,357 $ 1,367,363
=========== ===========
The accompanying notes to unaudited financial statements are an
integral part of these statements.
</TABLE>
Page 6
<PAGE>
GREAT NORTHERN GAS COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
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 and results of operations 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, 1999 financial statements and the notes thereto as reported on the
Company's Annual Report on Form 10-KSB.
Results of operations for the three month period ended March 31, 2000 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 March 31, 2000 and December 31,
1999 primarily relates to book basis being in excess of tax basis partially
offset by loss carryforwards.
Page 7
<PAGE>
GREAT NORTHERN GAS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Liquidity and Capital Resources
- -------------------------------
At March 31, 2000 the Company had working capital of $1,382,065 compared to
working capital of $1,376,062 at December 31, 1999.
Net cash used in operating activities was $211,469 for the first three
months of 2000 compared to $58,008 for the comparable period of 1999. Such
change is primarily due to the purchase of trading securities.
Analysis of Results of Operations
- ---------------------------------
The $119,621 in oil and gas sales for the first three months of 2000 is
$58,660 more than for the same period in 1999 primarily due to the the purchase
of the Manta oil producing prospect in 1999 and a significant increase in price
received for oil. Lease operating expenses are more than 1999 also mainly due to
the purchase of the Manta Prospect in 1999. Other income has increased over 1999
due to an adjustment relative to the East Plateau and Rangely sales.
Depreciation, depletion, and amortization have decreased due to an overall
decline in quantities of oil and gas sold.
Page 8
<PAGE>
PART II - OTHER INFORMATION
Items 1 through 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: May 11, 2000 By: /s/ Frank S. DiGrappa
------------ ------------------------------------
Frank S. DiGrappa
Chairman of the Board,
and Treasurer
Dated: May 11, 2000 By: /s/ Thomas L. DiGrappa
------------ ------------------------------------
Thomas L. DiGrappa
President and Chief
Operating Officer
Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,273,357
<SECURITIES> 219,832
<RECEIVABLES> 40,733
<ALLOWANCES> 0
<INVENTORY> 9,619
<CURRENT-ASSETS> 1,543,541
<PP&E> 2,612,725
<DEPRECIATION> 1,042,461
<TOTAL-ASSETS> 3,113,805
<CURRENT-LIABILITIES> 161,476
<BONDS> 88,318
0
0
<COMMON> 30,727
<OTHER-SE> 2,833,284
<TOTAL-LIABILITY-AND-EQUITY> 3,113,805
<SALES> 119,621
<TOTAL-REVENUES> 209,379
<CGS> 0
<TOTAL-COSTS> 62,000
<OTHER-EXPENSES> 138,589
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,790
<INCOME-TAX> (3,340)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,450
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
