UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[root] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
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OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From.................... to...................
Commission File Number 1-8287
RIO GRANDE, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 74-1973357
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10101 Reunion Place, Suite 210, San Antonio, Texas 78216-4156
(Address of Principal Executive Of (Zip Code)
Issuer's Telephone Number Including Area Code: 210-308-8000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
[root] No .
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
At May 31, 1996 there were 5,552,760 shares of the registrant's common
stock outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
RIO GRANDE, INC. AND SUBSIDIARIES
Condensed Combined Balance Sheet
(Dollars in thousands)
(unaudited)
April 30,
1996
---------
Assets
Current assets:
Cash and cash equivalents ........................................ $ 347
Trade receivables ................................................ 975
Prepaid expenses ................................................. 63
-------
Total current assets ............................................ 1,385
Property and equipment, at cost ................................... 11,344
Less accumulated depreciation, depletion and amortization ........ 3,196
Net property and equipment ...................................... 8,148
Other assets, net ................................................. 1,312
-------
$10,845
=======
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable ................................................. 492
Accrued expenses ................................................. 195
Current installments of long-term debt ........................... 1,146
Note payable ..................................................... 1,405
-------
Total current liabilities ....................................... 3,238
Accrued platform abandonment expense .............................. 1,082
Minority interest in combined limited partnership ................. 157
Long-term debt, excluding current installments .................... 4,789
-------
Total liabilities ............................................... 9,266
Shareholders' equity
Common stock ..................................................... 56
Additional paid in capital ....................................... 1,029
Retained earnings ................................................ 494
-------
Total shareholders' equity ...................................... 1 ,579
$10,845
See accompanying notes to condensed combined financial statements.
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Item 1. FINANCIAL STATEMENTS (continued)
RIO GRANDE, INC. AND SUBSIDIARIES
Condensed Combined Statements of Operations
(Dollars in thousands)
(unaudited)
Three Months
Ended
April 30,
---------------------------
1996 1995
----------- -----------
Revenues:
Oil and gas sales $ 1,149 1,028
----------- -----------
Costs and expenses:
Lease operating and other
production expense 541 477
Dry hole costs and lease
abandonments 160 (1)
Depreciation, depletion and amortization 273 348
Provisions for abandonment expense 46 45
General and administrative 307 307
----------- -----------
Total costs and expenses 1,327 1,176
----------- -----------
Loss from operations (178) (148)
----------- -----------
Other income (expenses):
Interest expense (115) (78)
Interest income 23 1
Gain on sale of assets 22 5
Other (net) 1 (7)
Minority interest in equity of combined limited
partnership (29) 3
----------- -----------
Total other income (expenses)) (98) (76)
----------- -----------
Loss before income taxes (276) (224)
Income taxes 2 2
----------- -----------
Net loss $ (278) (226)
============ ===========
Net earnings per common and common
equivalent share $ (0.05) (0.04)
============ ===========
Weighted average common and common
equivalent shares outstanding 5,462,092 5,927,760
See accompanying notes to condensed combined financial statements.
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<PAGE>
Item 1. FINANCIAL STATEMENTS (continued)
RIO GRANDE, INC. AND SUBSIDIARIES
Condensed Combined Statements of Cash Flows
(Dollars in thousands)
(unaudited)
Three Months
Ended
April 30,
--------------------
1996 1995
---- ----
Cash flows from operating activities:
Earnings from continuing operations (278) (226)
Adjustments to reconcile earnings from
continuing operations to net cash used
in operating activities:
Depreciation and other amortization 54 16
Depletion of oil and gas producing properties 219 332
Provision for abandonment expense 45 45
Gain on sale of assets (22) (5)
Minority interest in equity of limited
partnerships 29 (3)
(Increase) decrease in trade receivables (337) 67
(Increase) decrease in prepaid expenses (49) 15
Increase (decrease) in accounts payable and
accrued expenses (21) (14)
Increase in note payable 1,405 -
------ ------
Net cash provided by (used in) continuing operating
activities 1,045 227
------ ------
Cash flows from investing activities:
Purchase of oil and gas producing properties (4,104) (58)
Purchase of other property and equipment (6) -
Deletions from (additions to) platform abandonment
fund (47) (18)
Increase (decrease) in accrued platform abandonment
expense (2) -
Deletions from (additions to) other assets (68) 3
Proceeds from sale of property and equipment 31 3
------ ------
Net cash provided by (used in) investing activities (4,196) (70)
------- ------
Cash flows from financing activities:
Proceeds from long-term debt 3,883 -
Repayment of long-term debt (1,629) 16
Distribution to limited partners - (53)
------- ------
Net cash provided by (used in) financing activities 2,254 (37)
------- ------
Net increase (decrease) in cash and cash equivalents (897) 120
Cash and cash equivalents at beginning of period 1,244 195
------ ------
Cash and cash equivalents at end of period 347 315
====== ======
See accompanying notes to condensed combined financial statements.
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<PAGE>
Item 1. FINANCIAL STATEMENTS (continued)
RIO GRANDE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
(1) Accounting Policies
The accounting policies of Rio Grande, Inc. and Subsidiaries as set
forth in the notes to the Company's audited financial statements in
the Form 10-KSB Report filed for the year ended January 31, 1996, are
incorporated herein by reference. Refer to those notes for additional
details of the Company's financial condition, results of operations
and cash flows. All material items included in those notes have not
changed except as a result of normal transactions in the interim, or
any items which are disclosed in this report.
The condensed combined financial statements include the accounts of
Rio Grande, Inc. (the "Company") and its subsidiaries and
majority-owned limited partnership as follows:
Ownership Ownership
Form of Interest Before Interest After
Name Organization February 1, 1996 February 1, 1996
-------------------- ------------ ---------------- ----------------
Rio Grande Drilling Corporation 100% 100%
Company
("Drilling")
Rio Grande Desert Oil Corporation 100% 100%
Company
("RG-Desert")
Rio Grande Offshore, Partnership 80% 100%
Ltd.
("Offshore")
Rio Grande GulfMex, Partnership N/A 80%
Ltd.
("GulfMex")
Prior to February 1, 1996, Drilling's ownership interest in the oil
and gas properties acquired by Offshore was 80%. Robert A. Buschman
("Buschman"), H. Wayne Hightower and H. Wayne Hightower, Jr. (the
"Hightowers") owned the remaining 20% interest. As a result of the
Company's 80% ownership interest, Offshore's financial statements were
combined with the Company's financial statements prepared as of
January 31, 1996.
Effective February 1, 1996, Buschman and the Hightowers agreed to
restructure Offshore whereby the aggregate 20% minority limited
partnership interests of Buschman and the Hightowers would be
redeemed, and as a result of in kind distributions, Buschman and the
Hightowers became proportionate working interest owners of the onshore
oil and gas properties previously held by Offshore. All existing
interest in the oil and gas properties located offshore Louisiana held
by Offshore at January 31, 1996, were conveyed to GulfMex, a newly
formed Texas limited
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<PAGE>
Item 1.FINANCIAL STATEMENTS (continued)
partnership, which has the same proportionate ownership structure as
that of Offshore prior to the restructuring. Buschman and the
Hightowers no longer are limited partners of Offshore and are now 20%
limited partners in GulfMex. Subsequent to January 31, 1996, Offshore
is 100% indirectly owned by the Company and GulfMex is 80% indirectly
owned by the Company which will be reflected in the condensed combined
financial statements prepared subsequent to January 31, 1996. The
minority interests of Buschman and the Hightowers, prior to and after
the restructure, are set forth separately in the balance sheet and the
statements of operations of the Company.
All intercompany balances and transactions have been eliminated in
combination.
In the opinion of management, the condensed combined financial
statements reflect all adjustments which are necessary for a fair
presentation of the financial position and results of operations.
Adjustments made for the three months ended April 30, 1996 are
considered normal and recurring in nature.
The Company utilizes the successful efforts method of accounting for
its oil and gas properties. Under this method, the acquisition costs
of oil and gas properties acquired with proven reserves are
capitalized and amortized on the unit-of-production method as
produced. Development costs or exploratory costs are capitalized and
amortized on the unit-of-production method if proved reserves are
discovered, or expensed if the well is a dry hole.
Earnings per share computations are based on the weighted average
number of shares and dilutive common stock equivalents outstanding
during the respective periods. Fully dilutive earnings per share is
the same as earnings per common and common equivalent shares.
(2) Recently Issued Accounting Pronouncements
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation, which requires adoption of
the disclosure provisions no later than fiscal years beginning after
December 15, 1995. Companies are permitted to continue to account for
such transactions under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," but will be required to
disclose in a note to the financial statements pro forma net income
and, if presented, earnings per share as if the company had applied
the new method of accounting, as outlined in SFAS No. 123. The Company
has not yet determined the effect the new standard will have on net
income and earnings per share should it elect to make such a change.
Adoption of the new standard will have no effect on the Company's cash
flows.
Statement of Financial Accounting Standards No. 121 "Accounting for
the Impairment of Long- Lived Assets and for Long-Lived Assets to be
Disposed Of" establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of. This Statement
is effective for financial statements for fiscal years beginning after
December 15, 1995. The effect of adopting this Statement is not
expected to be material to the Company.
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<PAGE>
Item 1. FINANCIAL STATEMENTS (continued)
(3) Acquisition of Oil and Gas Properties
On March 11, 1996, Offshore acquired a 3.125% leasehold interest in a
non-operated producing federal oil and gas lease and platform ("Block
76") located offshore Louisiana for approximately $932,000.
On April 12, 1996, Offshore acquired various leasehold interests in 31
oil wells located in Mississippi and Louisiana ("Mississippi
Properties") for a net purchase price of approximately
$2,800,000,which includes 23 wells to be operated by Drilling. Due to
the timing of closing the acquisition, the March 1996 revenues and
related lease operating expenses have been recorded as an adjustment
to the acquisition price.
The following pro forma financial information for the three months
ended April 30, 1996 and 1995 give effect to the above acquisitions as
though they were effective at the beginning of those respective
periods. The pro forma information may not be indicative of the
results that would have occurred if the acquisitions had been
effective on the dates indicated or of the results that may be
obtained in the future. The pro forma information should be read in
conjunction with the financial statements and notes thereto of the
Company.
Three Months Ended April 30,
-----------------------------
1996 1995
------------ ----------
Net revenues $ 1,365,000 1,505,000
Net income (loss) $ (126,000) 14,000
Net earnings (loss) per share $ (0.03) 0.00
Weighted average common and common
equivalent shares outstanding 5,462,092 5,927,760
(4) Long-Term Debt
On March 8, 1996, the Company executed a loan agreement with Comerica
Bank - Texas ("Comerica") which provides a new senior credit facility
("Senior Credit Facility") in an aggregate principal amount of up to
$10,000,000. The initial available credit under this credit facility
was $4,967,000 (the "Borrowing Base"). The Senior Credit Facility was
used to refinance the Company's existing senior indebtedness of
$1,575,000 on March 11, 1996 and provide $900,000 to purchase the
3.125% working interest in Block 76.
On March 26, 1996, the Company acquired various leasehold interests in
three gas wells located in Wheeler County, Texas for a net purchase
price of approximately $370,500 of which approximately $320,500 was
financed with Comerica.
Comerica financed approximately $1,100,000 of the $2,800,000
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<PAGE>
acquisition price of the Mississippi Properties on April 12, 1996 for
a total outstanding bank indebtedness of approximately $3,800,000 on
that date. Approximately, $300,000 was funded from working capital. By
agreement with the seller, the remaining balance of approximately
$1,400,000 was financed by a seller's note which will be payable with
interest on August 30, 1996.
Under the terms of the Senior Credit Facility, monthly reductions of
$82,000 to the Borrowing Base commenced April 1, 1996 and will
continue to February 1, 1997. On April 30, 1996, approximately
$1,100,000 of the Company's Borrowing Base was available to the
Company to refinance the Seller's Note. The availability of the
Borrowing Base is reduced monthly unless principal payments equivalent
to $82,000 are made. Beginning March 1, 1997, the Borrowing Base will
be subject to monthly reductions of $108,833 through January 1, 1998.
When the outstanding principal under the Senior Credit Facility
exceeds the Borrowing Base, the Company must make principal payments
to reduce the outstanding balance to an amount equal to or less then
the Borrowing Base. On February 1, 1998, which is the maturity date of
the Senior Credit Facility, the principal then outstanding shall be
due and payable. The interest rate to be charged on the outstanding
principal balance is based on Comerica's prime rate plus 1%. All of
the Company's interests (direct or indirect) in existing oil and gas
properties, miscellaneous assets, and future oil and gas property
acquisitions will serve as collateral for the credit facility. The
Senior Credit Facility contains various restrictions including, but
not limited to, restrictions on payments of dividends or distributions
other than those capital distributions to Buschman and the Hightowers
in GulfMex, maintenance of positive working capital, and no change in
the ownership control or the President of the Company.
Comerica's commitment to provide the Company a Senior Credit Facility
required that the Company obtain certain modifications and amendments
from the holders ("Holders") of the 11.50% Subordinated Notes (the
"Notes") dated September 27, 1995 before the Comerica loan agreement
could be concluded. Such consents and amendments were approved by the
Holders on March 8, 1996. The repayment terms of the Notes were
amended to provide for a final maturity on September 30, 2002 (instead
of September 30, 2000) and the quarterly amortization of principal
over four years, commencing in December 1998, at annual rates of
12.5%, 12.5%, 37.5% and 37.5% of the original principal amount
(instead of amortization of principal over three years, commencing in
December 1997, at annual rates of 12.5%, 37.5% and 50% of the original
principal amount).
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
1. Material Changes in Financial Condition.
There were no material changes in the financial
condition of the Company for the period from the
fiscal year ended January 31, 1996 through the three
months ended April 30, 1996, except for the
acquisition of various oil and gas properties and the
restructuring of and addition to bank debt as
described below.
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<PAGE>
2. Material Changes in Results of Operations.
Oil and Gas Production Segment
For the quarter ended April 30, 1996, revenues from
oil and gas production were approximately $1,149,000
as compared to $1,028,000 for the quarter ended April
30, 1995. Production operating expenses for the
quarter ended April 30, 1996 were approximately
$488,000 as compared to the production operating
expenses of $477,000 for the quarter ended April 30,
1995. The increase in revenues is due mainly to
additional revenues of approximately $153,000 earned
as the result of the oil and gas properties acquired
in March and April 1996. The slight increase in
production operating expenses is also due to the
additional properties acquired in the first quarter
of 1996 but is offset by reduced production operating
expenses on existing properties.
The Company utilizes the successful efforts method of
accounting for its oil and gas properties.
Amortization expenses for the quarter ended April 30,
1996 based on the unit-of-production method were
approximately $219,000 for 391 MMCF equivalent units
of production. Amortization expenses for the quarter
ended April 30, 1995, were approximately $332,000 for
509 MMCF equivalent units of production.
Interest expense for the quarter ended April 30, 1996
was approximately $115,000. Interest expense for the
quarter ended April 30, 1995 was approximately
$78,000. For the quarter ended April 30, 1996,
interest expense increased due to the addition of
$2,320,000 bank debt used for the acquisition of oil
and gas properties in March and April 1996 and the
issuance in September 1995 of $2,000,000 of 11.50%
subordinated notes to finance a development program
on certain oil and gas properties located in Texas.
The average interest rate incurred on senior debt
during the quarter ended April 30, 1996 was
approximately 9.7%.
Liquidity and Capital Resources
In March 1996, the Company entered into a commitment
letter with a new lender to replace the Company's
then existing bank indebtedness of approximately
$1,575,000. The commitment letter required that the
Company obtain certain modifications and amendments
from the Holders before the new credit facility could
be concluded. Such consents and amendments were
approved by the Holders on March 8, 1996. As amended,
the Notes provide for a final maturity on September
30, 2002 (instead of September 30, 2000) and the
quarterly amortization of principal over four years,
commencing in December 1998, at annual rates of
12.5%, 12.5%, 37.5% and 37.5% of the original
principal amount (instead of amortization of
principal over three years, commencing in December
1997, at annual rates of 12.5%, 37.5% and 50% of the
original principal amount). In addition to other
provisions amended, the exercise price of the
warrants granted was reduced from $.40 per share to
$.20 per share.
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<PAGE>
The Company's new Senior Credit Facility provides for
up to $10,000,000 in borrowings, subject to
limitations on availability as a result of the
Borrowing Base determination. The initial borrowing
base ("Borrowing Base") under the Senior Credit
Facility is $4,967,000. The Borrowing Base will be
redetermined by the lender each year on February 1 or
sooner, if specially requested by the Company. The
Borrowing Base is an amount as determined by the
lender, at its sole discretion, using procedures and
standards customary for its petroleum industry
customers, as the amount which the Company's oil and
gas properties will support the principal balance
outstanding under the Senior Credit Facility. Initial
proceeds from the Borrowing Base were used to
refinance the Company's existing senior indebtedness
of $1,575,000 on March 11, 1996 and provide $900,000
to purchase a 3.125% working interest in Block 76
located offshore Louisiana. The Block 76 acquisition
increased the Company's net proved gas reserves by
927,000 mcf. Block 76 consists of only one offshore
well and therefore presents a greater degree of risk
than the acquisition of multiple properties.
On April 30, 1996, production from Block 76 was
suspended due to mechanical problems incurred with
the production equipment. The operator of Block 76
has concluded the inspection of the equipment and has
proposed a major workover to the well which is
expected to commence before the end of June 1996. The
operator expects the workover will require
approximately two weeks to complete. The total cost
for the workover is budgeted at approximately $1.6
million of which the Company's share is approximately
$50,000. There can be no assurance that the workover
will be successful. Block 76's average monthly cash
flow for March and April 1996 was approximately
$30,000.
On March 26, 1996, Offshore-New acquired leasehold
interests in three gas wells located in Wheeler
County, Texas for a net purchase price of
approximately $370,500. Funds of $320,500 from the
Borrowing Base and working capital of $50,000 were
used by the Company to make the acquisition of these
wells. The total net proved reserves acquired by this
acquisition were 3,000 bbls oil and condensate and
868,000 mcf gas. Drilling will operate the gas wells.
On April 12, 1996, Offshore-New acquired the
Mississippi Properties for an acquisition of price of
approximately $2,800,000, which includes 23 wells to
be operated by Drilling. The total net proved
reserves acquired were 725,000 bbls oil and
condensate. At closing, the Company funded half of
the acquisition price with approximately $1,100,000
from the Borrowing Base and approximately $300,000 of
working capital. By agreement with the seller, the
remaining half of the acquisition price of
approximately $1,450,000 was financed by a seller's
note ("Seller's Note") which will be payable with
interest payable at prime on August 30, 1996. The
Seller's Note is secured by a one-half undivided
interest in the Mississippi Properties.
Under the terms of the Senior Credit Facility,
monthly reductions of $82,000 to the Borrowing Base
commenced April 1, 1996 and will continue to February
1, 1997. On April 30, 1996, approximately $1,100,000
of the Company's Borrowing Base was available to the
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Company to refinance the Seller's Note. The
availability of the Borrowing Base is reduced monthly
unless principal payments equivalent to $82,000 are
made. Beginning March 1, 1997, the Borrowing Base
will be subject to monthly reductions of $108,833
through January 1, 1998. When the outstanding
principal under the Senior Credit Facility exceeds
the Borrowing Base, the Company must make principal
payments to reduce the outstanding balance to an
amount equal to or less then the Borrowing Base. On
February 1, 1998, which is the maturity date of the
Senior Credit Facility, the principal debt then
outstanding shall be due and payable. The interest
rate to be charged on the outstanding principal
balance is based on the lender's prime rate plus 1%.
All of the Company's interests (direct and indirect)
in existing oil and gas properties, miscellaneous
assets, and future oil and gas property acquisitions
serve as collateral for the Senior Credit Facility.
The Senior Credit Facility contains various
restrictions including, but not limited to,
restrictions on payments of dividends or
distributions other than capital distributions to
Buschman and the Hightowers in GulfMex, maintenance
of positive working capital, and no change in the
ownership control or the President of the Company.
The Company's ability to meet its current financial
commitments, including those imposed by the Seller's
Note, the Senior Credit Facility and other existing
debt agreements, and to have access to additional
working capital to operate and develop its existing
oil and gas properties is principally dependent on
the market prices for oil and natural gas, the
production levels of the Company's properties, and
the success of the development program commenced by
the Company. Currently the Company expects to utilize
its remaining Borrowing Base under the Senior Credit
Facility to fund a portion of the Seller's Note, but
management expects a shortfall of approximately
$300,000 between the available Borrowing Base and the
$1,450,000 due on the Seller's Note. Management does
not currently anticipate that the Company will have
working capital available to fund this shortfall and
is considering alternatives to provide the necessary
financing, including, but not limited to, additional
borrowings, an extension of payment terms on a
portion of the Seller's Note, and/or a possible
equity infusion. However, the Company has no
commitment for additional financing and there can be
no assurance that the Company will be successful in
obtaining financing when and as required. If the
Company is unable to obtain additional financing when
needed, it would consider, among other alternatives,
sale of certain of its leasehold interests for
additional capital, the curtailment of property
acquisitions or development activities until
internally generated funds become available, or other
strategic alternatives in an effort to meet its
financial requirements.
The Company is not obligated to provide a fixed or
determinable quantity of oil or gas in the future
under any existing contracts, agreements or any hedge
or swap arrangements.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed on the accompanying Index to Exhibits on page
E-1 are filed as part of this Form 10-QSB. The Company will
furnish a copy of any exhibit to a requesting shareholder upon
payment of a fee of $.25 per page.
(b) Reports on Form 8-K
March 26, 1996 Acquisition of 3.125% working interest in an
existing producing federal oil and gas lease in
South Timbalier Area, Block 76, OCS-G-4460
Offshore Louisiana on March 11, 1996.
New Senior Credit Facility in an aggregate
principal amount of up to $10,000,000 with
Comerica Bank - Texas on March 8, 1996.
April 29, 1996 Acquisition of oil and gas leases located in
Louisiana and Mississippi from Belle Oil, Inc., et
al on April 12, 1996.
May 24, 1996 Financial Statements - Statements of Revenues and
Direct Operating Expenses for the Fortune
Properties. Pro Forma Financial Information - Pro
Forma Condensed Combined Statements of Operations.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RIO GRANDE, INC.
Date: June 14, 1996 By: /s/ Guy R. Buschman
--------------------------------------
Guy R. Buschman, President
Date: June 14, 1996 By: s/ Gary Scheele
--------------------------------------
Gary Scheele, Secretary and Treasurer
(principal financial officer)
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<PAGE>
INDEX TO EXHIBITS
The following exhibits are numbered in accordance with Item 601 of Regulation
S-B:
3(a) Certificate of Incorporation of the Company (incorporated by reference
to Exhibit 3(a) to Form 8-K dated December 29, 1986 (File No. 1-8287).
3(b) Bylaws of the Company (incorporated by reference to Exhibit 3(b) to
Form 8-K dated December 29, 1986 (File No. 1-8287).
4(a) Specimen stock certificate (incorporated by reference to Exhibit 4(a)
to Form 8-K dated December 29, 1986 (File No. 1-8287).
4(b) Specimen Stock Purchase Warrant (incorporated by reference to Exhibit
4(b) to form 8-K dated December 29, 1986 (File No. 1- 8287).
4(c) Note Purchase Agreement, dated September 27, 1995, by and among the
Company, Rio Grande Drilling Company, and the various purchasers of
11.50% Subordinated Notes due September 30, 2000 (incorporated herein
by reference from October 31, 1995 Form 10-QSB).
4(d) Form of Common Stock Purchase Warrant issued in connection with the
Offering described in this report (incorporated herein by reference
from October 31, 1995 Form 10-QSB).
4(e) Amendments to Note Purchase Agreement, by and among the Company,
Drilling and the Holders (incorporated herein by reference from March
26, 1996 Form 8-K).
4(f) Amendments to Notes, by and among the Company and the Holders
(incorporated herein by reference from March 26, 1996 Form 8-K).
4(g) Consents to Proposed Transactions by the Holders to the Company
(incorporated herein by reference from March 26, 1996 Form 8-K).
4(h) Amendment to Warrant Agreement among the Company and the Holders
(incorporated herein by reference from March 26, 1996 Form 8-K).
10(a) Asset Purchase Agreement dated June 26, 1992 by and between SHV Oil
and Gas Company and Rio Grande Drilling Company.
10(b) Agreement of Limited Partnership dated June 25, 1992 for Rio Grande
Offshore, Ltd. between Rio Grande Drilling Company, Robert A.
Buschman, H. Wayne Hightower and H. W. Hightower, Jr.
10(c) Loan Agreement by and between International Bank of Commerce and Rio
Grande Drilling Company dated June 26, 1992.
10(d) Purchase and Sale Agreement dated May 24, 1995, between Newfield
Exploration Company and Rio Grande Offshore, Ltd. for the sale of
Ewing Bank Blocks 947/903 and Ship Shoal Block 356 at a sales price of
$1,200,000 (incorporated by reference from July 31, 1995 Form 10-QSB).
E-1
<PAGE>
10(e) Consulting Agreement dated August 10, 1995, between Hobby A. Abshier
and Rio Grande, Inc. (incorporated by reference from July 31, 1995
Form 10-QSB).
10(f) Closing Agreement between Fortune Petroleum Corporation, Pendragon
Resources, L.L.C. and Rio Grande Offshore, Ltd. dated March 6, 1996
for the acquisition of South Timbalier Block 76 (incorporated by
reference from March 26, 1996 Form 8-K).
10(g) Loan Agreement between Comerica Bank-Texas, Rio Grande, Inc. and Rio
Grande Drilling Company dated March 8, 1996 for a senior credit
facility of $10,000,000 (incorporated herein by reference from March
26, 1996 Form 8-K).
10(h) Purchase and Sale Agreement between Belle Oil, Inc., Belle
Exploration, Inc., Louisiana Well Service Co., Alton J. Ogden, Jr.,
Alton J. Ogden, Sr., Jeff L. Burkhalter and Rio Grande Offshore, Ltd.
(incorporated herein by reference from April 29, 1996 Form 8-K).
27 Financial Data Schedule (E-3).
99(a) Private Offering Memorandum of the Company dated August 27, 1995
(incorporated herein by reference from October 31, 1995 Form 10-QSB).
E-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the April 30, 1996 Form 10-QSB.
This is page E-3.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Jan-31-1996
<PERIOD-END> Apr-30-1996
<CASH> 347194
<SECURITIES> 0
<RECEIVABLES> 974788
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1384549
<PP&E> 11343781
<DEPRECIATION> 3195909
<TOTAL-ASSETS> 10844808
<CURRENT-LIABILITIES> 3237479
<BONDS> 4789171
0
0
<COMMON> 55528
<OTHER-SE> 1522970
<TOTAL-LIABILITY-AND-EQUITY> 10844808
<SALES> 1148888
<TOTAL-REVENUES> 1148888
<CGS> 1020213
<TOTAL-COSTS> 1327402
<OTHER-EXPENSES> 37189
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115416
<INCOME-PRETAX> (275995)
<INCOME-TAX> 1936
<INCOME-CONTINUING> (277931)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (277931)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
