UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 0-8609
Future Petroleum Corporation
(Exact name of small business issuer as specified in charter)
Utah 87-0239185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2351 West Northwest Highway, Suite 2130, Dallas, Texas 75220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:214/350-7602
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 [x] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The Company had approximately 3,486,779 shares of common
stock, par value $0.01 per share, issued and outstanding as of
June 5, 1996.
Transitional Small Business Disclosure Format (Check One):
Yes [ ] No [X]
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. However, in the opinion of
management, all adjustments (which consist only of normal recurring
adjustments) necessary to present fairly the financial position and results
of operations for the periods presented have been made. These condensed
consolidated financial statements should be read in conjunction with
financial statements and the notes thereto included in the Company's Form
10-KSB filing for the year ended December 31, 1995.
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FUTURE PETROLEUM CORPORATION
Balance Sheets
MARCH 31, 1996
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and interest-bearing deposits $ 96,534
Current portion of notes receivable $ 283,186
Trade accounts receivable:
Joint interest billings 85,514
Accrued oil and gas sales 91,387
_________
Total Current Assets 556,621
PROPERTY AND EQUIPMENT:
Proved oil and gas properties, using
the full cost method of accounting 161,094
Other 48,138
_________
209,231
Less accumulated depletion, depreciation,
amortization and impairment (85,325)
_________
Net Property and Equipment 123,907
OTHER ASSETS:
Investment in partnership 750,544
Mining properties held for sale 39,977
Other 1,945
_________
TOTAL OTHER ASSETS 792,466
TOTAL ASSETS $ 1,472,994
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<PAGE>
<TABLE>
FUTURE PETROLEUM CORPORATION
Balance Sheets
MARCH 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES:
Trade accounts payable $ 177,986
Current portion of notes payable 82,500
Advances from shareholder 6,000
Accrued oil and gas proceeds payable 155,298
__________
Total Current Liabilities 421,784
DEFERRED GAIN ON SALE 103,329
LONG TERM NOTES PAYABLE 37,143
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 200,000 shares
authorized, no shares issued --
Common stock, $.01 par value, 30,000,000
shares authorized, shares issued and
outstanding; 3,486,779 at March 31, 1996 and
3,376,903 at March 31, 1995 34,868
Additional paid-in capital 1,031,209
Accumulated deficit (155,339)
__________
Total Stockholders' Equity 910,737
Total Liabilities and Stockholders' Equity $ 1,472,994
</TABLE>
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<TABLE>
FUTURE PETROLEUM CORPORATION
Statement of Operations and Accumulated Deficit
Three Months Ended
March 31,
____________________
1996 1995
____________________
<S> <C> <C>
REVENUES:
Oil and gas sales $ 13,507 $ 38,000
Well operation fees 47,204 10,000
Other 10,878 1,000
____________________
Total Revenues 71,589 49,000
COSTS AND EXPENSES:
Lease operations and production taxes 33,573 24,000
General and administrative 24,976 27,000
Depletion, depreciation and
amortization 16,331 10,000
___________________
Total Expenses 75,399 61,000
OTHER INCOME:
Gain on sale of assets 8,152 9,000
Income from equity investment 3,641 --
Interest income 8,245 10,000
___________________
20,037 19,000
NET INCOME 16,228 7,000
BEGINNING ACCUMULATED DEFICIT (171,567) (229,000)
___________________
ENDING ACCUMULATED DEFICIT $ (155,339) $ (222,000)
NET INCOME PER COMMON SHARE $ 0.01 $ 0.01
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,487,000 3,377,000
</TABLE>
<PAGE>
<TABLE>
FUTURE PETROLEUM CORPORATION
Statements of Cash Flows
Three Months Ended
March 31,
___________________
1996 1995
____________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
Net Income $ 16,228 $ 7,000
Adjustments to reconcile to net
cash used in continuing operations:
Depreciation, depletion, and amortization 16,331 10,000
Gain on sale of assets (8,152) (9,000)
Decrease (increase) in receivables (49,216) 2,000
(Decrease) increase in accounts payable
and accrued expenses 112,469 3,000
Other assets -- (2,000)
Current notes receivable 83,215 --
____________________
Net cash provided by (used in)
operations 170,875 11,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment 56,004 (71,000)
Distribution from partnerships (3,088) --
Proceeds from sale of oil and gas
and mining properties -- 60,000
____________________
Net cash provided by (used in)
investing activities 52,916 (11,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 14,550 --
Collection of notes receivable (2,324) --
Additions to long-term debt -- --
-------------------
Net cash provided by financing
activities 12,226 --
____________________
NET INCREASE (DECREASE) IN CASH 130,168 --
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of
period $ (33,634) $ --
CASH AND CASH EQUIVALENTS, end of period $ 96,534 $ --
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATIONS
General
Prior to August 1993, the Company was engaged primarily in the business of
mining for gold, silver, lead, zinc and gypsum and held several mining
properties. In August 1993, the Company acquired all of the issued and
outstanding stock of Future Petroleum Corporation ("Future"), which was
engaged in the acquisition and production of oil and gas reserves.
Management of the Company has determined to dispose of most of its mining
properties and concentrate on the oil and gas business previously conducted by
Future. The historical financial statements are those of Future combined with
Intermountain beginning in August 1993.
During 1995, the Company concentrated on acquiring oil and gas leases,
performing seismic surveys and geological evaluations covering acreage that
was to be acquired or contributed to Future Acquisition 1995, Ltd.
Geological evaluations were performed on the Azalea Field in anticipation of
drilling two wells. These wells have been drilled as of May 14, 1996, and
are now awaiting completion in the Grayburg and San Andres Formations.
Strategic Developments
In December 1995, the Company's subsidiary Future Petroleum Corporation, a
Texas corporation ("Future-Texas"), contributed a substantial portion of its
oil and gas properties to Future Acquisition 1995, Ltd., a limited
partnership in which Future-Texas is the general partner. The partnership
has two limited partners, which contributed cash to the partnership to be
used in the acquisition and development of oil and gas properties. Revenues,
costs and expenses are generally allocated 15% to the general partner and 85%
to the limited partners until the limited partners have recovered their
investment and a 20% return as defined in the agreement. After that point, the
general partner is allocated 75% of revenues, costs and expenses. Certain
acquisition and development costs are allocated 100% to the limited partners.
As operator of the properties the general partner is entitled to receive copas
overhead charges which will generate income to the general partner in addition
to the 15% of revenues reserved until the 20% rate of return has been generated
to the limited partners, at which time the general partner will be allocated
75% of revenues.
Business Strategy
Operating Strategy. The Company's business strategy is to increase its
proved producing reserves by continuing its drilling activities in Texas
and Oklahoma and by pursuing acquisitions of proved oil and gas properties,
either in the form of asset purchases or mergers with other companies. The
Company will focus on producing properties with additional development
potential to augment existing production while also expanding and
diversifying its reserve base. Acquisition criteria will include reserve
life, development opportunity, profit enhancement potential, geographic
concentration and ownership levels permitting operation of acquired properties.
Under this strategy, the Company will initially seek to increase its
concentration in Texas and eventually diversify its interests outside this
core area. As of the date of this Report, the Company has no acquisition
commitments but has implemented an active program for ongoing evaluation
of opportunities meeting its acquisition criteria.
Because of the nature of the Company's business, the results of operations
for any interim period are not necessarily indicative of the
results of operations that may be expected for an entire fiscal year.
Financial Condition
Liquidity and Capital Resources
General. The Company incurred consolidated net income of $16,228, and of
$7,000, for the three months ended March 31, 1996 and 1995, respectively.
At March 31, 1996, the Company had working capital of approximately $31,508,
which was a $171,492 reduction from the $203,000 working capital that the
Company had as of March 31, 1995. This reduction in working capital was due
primarily to the contribution of oil and gas properties to Future Acquisition
1995, Ltd., which the Company's subsidiary Future-Texas.
The Company requires capital to continue with its acquisition of producing
oil and gas properties and drilling prospects as well as to complete drilling
on existing properties and to earn an interest in prospects developed by
others under standard industry farmout arrangements. The Company has
established a financial relationship through the limited partnership it has
formed through its subsidiary Future-Texas. The Company believes that
through the limited partnership it now has the ability to acquire producing
oil and gas properties as well as fund development drilling and uphole
recompletions as required.
The Company anticipates completing a drilling prospect and/or other
explorations during the next 12 months as well as acquiring additional
producing oil and gas properties. The Company believes that these projects
will be funded through the limited partnership it has formed through its
subsidiary Future-Texas. This included 2D seismic acquisition on the Price
Ranch Prospect in anticipation of the drilling of the Marty A-1 well which
has been drilled and completed in the Brown Dolomite Formation. The well
is now in a testing phase while waiting on pipeline connection. The Company
has also completed the drilling of two development wells that are pending
completion in the Grayburg and the San Andres formations in the Azalea Field.
During the three months ended March 31, 1996, operating activities provided
net cash of approximately $171,000 which, when offset by non-cash expenses
for depreciation, depletion, and amortization, increases in accounts payable
and increases in receivables, resulted in net income of approximately $16,228
for the period. In the same period during 1995, operations provided net cash
of approximately $11,000, which resulted in a net profit from operations of
$7,000. Investing activities provided approximately $53,000 and required
$11,000 for the three month period ended March 31, 1996 and 1995, respectively.
Results of Operations
Total revenues for the three months ended March 31, 1996, increased 46% over
revenues for the preceding year, as well operation fees increased by 372% and
other income increased by $1,037.
Lease operations and production expenses were higher for the three months
interim period ended March 31, 1996, as compared to the corresponding period
a year earlier as a result of the Company's increased level of operations.
General and administrative expenses decreased by 7% in the three month
interim period during 1996, as compared to a year earlier.
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
None.
b. Reports on Form 8-K.
None.
During the quarter ended March 31, 1996, the Company did not file
any report on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FUTURE PETROLEUM CORPORATION
Registrant
Dated: June 4, 1996 By: /s/ B. Carl Price
B. Carl Price, President,
Principal Financial and Accounting Officer
(Signature)
Dated: June 4, 1996 By: /s/ Robert D. Price
Robert D. Price,
Director
(Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1995
<CASH> 96,534
<SECURITIES> 0
<RECEIVABLES> 283,186
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 556,621
<PP&E> 1,001,697
<DEPRECIATION> (85,325)
<TOTAL-ASSETS> 1,472,994
<CURRENT-LIABILITIES> 1,438,126
<BONDS> 0
<COMMON> 34,868
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,472,994
<SALES> 13,507
<TOTAL-REVENUES> 71,589
<CGS> 0
<TOTAL-COSTS> 75,399
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,228
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
