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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
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(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITES
EXCHANGE ACT OF 1934
For the Transition Period from _______ to _______
Commission File Number 0-10337
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OKLAHOMA ENERGY CORPORATION
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(Exact name of small business issuer as specified in its charter)
An Oklahoma Corporation 73-1129531
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification No.)
2 West Main Street, Cyril, OK 7329-0579
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(Address of principal executive offices)
(580) 464-3759
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(Issuer's telephone number)
Cayman Resources Corporation 6 East 5th Street , Ste. 800, Tulsa OK
74103-4444
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act 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__ No__
State the number of shares outstanding of each issuer's classes of common equity
as of September 30, 1998 Common 47, 861, 109
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Changes in Control of Registrant and resignations of Registrant Directors
On July 2, 1998 David Whitney resigned as President and CEO of the Oklahoma
Energy Corporation. Arthur E. Juhl was appointed President/CEO and Director,
also Richard Shaw and James Fuller were appointed directors. Immediately
following the appointment of the three new directors, Robert M. Hoover Jr.,
David Whitney and William Anthony Hogan resigned as directors.
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ITEM 1. FINANCIAL STATEMENTS
OKLAHOMA ENERGY CORPORATION
CONDENSED CONSOLIDATION BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
(00'S OMITTED)
ASSETS
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<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ (44,780)
Receivable and other, less allowance for
doubtful accounts of $88 50,805
Prepaid expenses and other 1,500
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Total Current Assets 7,525
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PROPERTY AND EQUIPMENT, AT COST:
Refinery $ 10,284,476
Other 348,214
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$ 10,632,690
Less accumulated depreciation, depletion,
and amortization (1,680,178)
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8,952,512
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TOTAL ASSETS $ 8,960,037
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts and revenues payable $ 7,375,603
Notes payable and current portion of
long term debt 184,221
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Total current liabilities $ 7,559,824
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LONG-TERM ACCOUNTS PAYABLE AND LONG-TERM DEBT,
NET 1,252,533
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DEFERRED INCOME TAXES 775,608
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RESERVE FOR REFINERY CLEANUP 1,213,420
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STOCKHOLDER'S EQUITY: 63,866
Preferred stock 2,379,413
Common stock 28,133,405
Accumulated deficit (32,397,787)
Treasury stock, at cost (20,154)
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Total Stockholders' deficit (1,841,348)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,960,037
</TABLE>
THE ACCOMPANYING NOTE IS AN INTEGRAL PART OF THE
CONDENSED CONSOLIDATION FINANCIAL STATEMENTS.
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OKLAHOMA ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(00'S OMITTED, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
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SEPT. SEPT.
1998 1997
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OPERATING REVENUES:
Oil and gas sales 0 9,034
Product sales 0 0
Management and overhead fees 0 53,923
Other 0 27,327
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TOTAL OPERATING REVENUES 0 90,284
OPERATING COSTS AND EXPENSES:
Oil and gas production 0 768
Cost of product sales 0 16,384
General and administrative 0 159,498
Operating expense 0 55,469
Interest expense 0 43,104
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TOTAL OPERATION COSTS AND EXPENSES 0 266,223
LOSS BEFORE INCOME TAXES 0 (175,939)
INCOME TAXES 0 0
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NET LOSS 0 (175,939)
</TABLE>
The accompanying note is an integral part of the
condensed consolidation financial statements.
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OKLAHOMA ENERGY CORPORATION
NOTE TO CONDENSED CONSOLIDATION FINANCIAL STATEMENTS
September 30, 1998
A. The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission and, in the opinion of management,
include all adjustments, consisting only of normal recurring accruals, necessary
to present fairly the resulting operations for the indicated periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed consolidates
financial statements be read in conjunction with the financial statements and
the notes thereto included in the Company's latest annual report on Form 10-KSB.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
Presently, the Company has no working capital with which to operate.
The Company lacks necessary capital to meet its obligations. The Company is
attempting to reorganize, restructure, and settle its obligations with capital
raised from outside investors.
SIGNIFICANT EVENTS
Reactivation of Cyril Refinery
In January of 1994, the Company began its Cyril Refinery operations.
The Company shut down refinery operations in April of 1995. During the sixteen
months of operation, the Company experienced substantial mechanical problems and
was unable to meet the product specifications demanded by its customers. As a
result, the Company realized significant losses from its operation of the Cyril
Refinery which caused the loss of its crude oil credit lines and the ultimate
shut down of refinery operations.
Although the Company is now pursuing financing which will enable it to
start up operations of the Refinery again, there is absolutely no assurance that
the Company will be successful. If the Company is unable to secure such
financing, it will eventually be forced to close down operations entirely and
liquidate the Cyril Refinery.
Sale of Company's Oil and Gas Assets to Satisfy Working Capital Debt
Effective January 1, 1995 the Company assigned substantially all its
oil and gas production to the Cayman Lenders Limited Liability Corporation in
exchange for a release of indebtedness and in lieu of foreclosure on the
$1,600,000 in debt loaned to it by a group of individuals known as the Capital
Investors. Such funds were borrowed by the Company in 1993 to finance the Cyril
Refinery.
Cyril Refinery Vendor Payables
The Company and its subsidiary have a substantial amount of past-due
vendor payables for which it has no source of repayment. The Company is
currently developing a plan to offer such vendors a settlement plan to be
financed with new investment funding. The Company has not now secured such new
financing and can in no way be assured of securing such financing.
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Oklahoma Industrial Finance Authority $750,000 Loan
On November 10, 1993, the Company secured a $750,000 loan from the Oklahoma
Industrial Finance Authority (OIFA), which funds were used to satisfy a portion
of the Company's start-up working capital needs. The OIFA loan was for one year
and is now in default with interest accruing at eight percent (8%). The OIFA has
decided not to foreclose at this time in anticipation of the Company's ability
to secure new financing and pay off the loan. However, this decision is not
binding and the OIFA could decide to begin such proceedings at any time.
Environmental Considerations
In 1988, the property formerly owned by Oklahoma Refining Corporation (ORC site)
in Cyril, Oklahoma, including that portion of the Cyril Refinery owned by CPC
was placed on the National Priority List (NPL). This action was taken by the EPA
in accordance with the Comprehensive Environment Response Compensation Liability
Act of 1980 (CERCLA), as amended by the Superfund and Reauthorization Act of
1986 (SARA). In 1991, the EPA concluded a Remedial Investigation/Feasibility
Study (RIFS) of the Cyril Refinery site. The RIFS identified certain areas where
contamination and hazardous chemicals exist. The RIFS conclusion was that the
contaminants found at the ORC site did not pose an immediate hazard of
significant risk to human health at off-site testing locations used by the
study. It was therefore determined that the contaminants contained within the
ORC site could be remediatied over a period of time. In 1991, the EPA issued a
Proposed Plan of Action (PPA) which outlined several alternative actions which
could be taken to either contain, remediate or remove the identified
contaminated material. Following public hearings, the EPA issued its Record of
Decision (ROD) which together with the PPA outlines in general the EPA's plan to
clean up the entire ORC site.
In April of 1996, the Oklahoma Department of Environmental Quality (ODEQ) filed
an announcement of changes to the CRC site remediation plan which greatly
reduced the scope and cost of the "clean up" work. They announced that rather
than building a bioremedition plant, they plan to isolate the remaining soil
into one location on the ORC property (not on the Company's property) where they
will "encapsulate" the material with concrete. The ODEQ and EPA have informed
the Company that they will transport approximately 1,500 cubic yards of soil
from the Company's property to the EPA/ODEQ-controlled property to be
encapsulated.
The Company is aware of the need to cooperate with State and Federal
agencies to provide a plan and implement that plan to clean up any and all
identifiable hazards on its property. In January 1992, the Company executed a
Consent Agreement and Final Order with the Oklahoma State Department of Health.
All of the work required by such Consent Order has now been completed by the
Company. In addition to the requirements made of the Company in accordance with
the Oklahoma State Department of Health (OSDH) and the EPA to complete the
remediation of all hazardous areas located on the CPC property. The Company had
developed a plan to achieve this goal and believes that those plans are
feasible. Management estimates, based upon review and evaluation of the above
studies, that the cost to transport the remaining soil to the EPA encapsulation
site is approximately $100,000. This will substantially complete the Company's
requirement under the Consent Order dated January 1, 1992.
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Item 3. EXHIBITS AND REPORTS ON FORM 8-K
A) Exhibits
None
B) Reports on Form 8-K
One
SIGNATURE
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.
DATED: December 15, 1998 OKLAHOMA ENERGY CORPORTION
By: Arthur E. Juhl
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Arthur E. Juhl
President and Chief Executive Officer
