SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ending September 30, 1995 Commission File #0-5704
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MAYNARD OIL COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 75-1362284
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(State or other jurisdic- (IRS Employer
tion of incorporation) Identification No.)
8080 N. Central Expressway, Suite 660, Dallas, Texas 75206
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Registrant's telephone number, including area code: (214) 891-8880
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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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of November 10, 1995.
4,890,315 shares of common stock, par value $0.10
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MAYNARD OIL COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Page
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Part I. Financial Information
Consolidated Balance Sheets
September 30, 1995 and December 31, 1994
Consolidated Statements of Operations
Nine Months and Three Months ended
September 30, 1995 and 1994
Consolidated Statements of Shareholders' Equity
Nine Months ended September 30, 1995
Consolidated Statements of Cash Flows
Nine Months ended September 30, 1995 and 1994
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Signatures
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
<CAPTION>
September 30 December 31,
------------ ------------
1995 1994
---- ----
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $12,486,691 $ 5,836,389
Accounts receivable, trade 2,590,845 2,411,451
Recoverable income taxes -- 320,500
Inventories 207,908 261,959
Prepaid expenses and other current
assets 187,089 199,628
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Total current assets 15,472,533 9,029,927
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Property and equipment, at cost:
Oil and gas properties, successful
efforts method 92,665,314 81,863,254
Other property and equipment 823,278 670,110
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93,488,592 82,533,364
Less accumulated depreciation and
amortization (48,083,862) (43,492,197)
---------- ----------
Net property and equipment 45,404,730 39,041,167 <PAGE>
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$60,877,263 $48,071,094
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 3,125,000 $ 1,750,000
Accounts payable 4,621,510 2,611,209
Accrued expenses 1,055,570 590,138
Income taxes payable 479,369 --
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Total current liabilities 9,281,449 4,951,347
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Deferred income taxes 1,882,510 1,732,510
Long-term debt 10,718,750 5,250,000
Shareholders' equity:
Preferred stock of $.50 par value.
Authorized 1,000,000 shares; none
issued -- --
Common stock of $.10 par value.
Authorized 20,000,000 shares;
4,890,352 and 4,891,379 shares
issued and outstanding at
September 30, 1995 and
December 31, 1994, respectively 489,035 489,138
Additional paid-in capital 18,831,138 18,725,538
Retained earnings 19,674,381 16,922,561
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Total shareholders' equity 38,994,554 36,137,237
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Commitments $60,877,263 $48,071,094
=========== ===========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
<CAPTION>
Nine Months ended Three Months ended
September 30, September 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales and
royalties $15,268,992 $9,703,628 5,120,668 $3,197,136
---------- ---------- ---------- ---------
Costs and expenses:
Operating expenses 6,328,838 3,760,704 2,309,875 1,309,057
Dry holes and abandonments 95,684 517,028 11,296 22,633
Lease rentals and seismic 34,723 335,050 12,130 75,596
General and administrative 635,666 1,312,870 200,851 382,688
Depreciation and
amortization 4,960,876 4,061,183 1,725,969 1,149,534
---------- ---------- ---------- ---------
12,055,787 9,986,835 4,260,121 2,939,508
---------- ---------- ---------- --------- <PAGE>
Operating profit (loss) 3,213,205 (283,207) 860,547 257,628
---------- ---------- ---------- ---------
Other income (deductions):
Interest income 352,165 338,058 158,243 126,780
Interest expense (719,541) (108,546) (279,509) (33,620)
Gain (loss) on disposition
of assets 1,010,806 20,244 870,405 6,092
---------- ---------- ---------- ---------
643,430 249,756 749,139 99,252
---------- ---------- ---------- ---------
Net income (loss) before
income taxes 3,856,635 (33,451) 1,609,686 356,880
Income tax expense (benefit) 945,500 (277,472) 395,500 (187,472)
---------- ---------- ---------- ---------
Net income (loss) $2,911,135 $244,021 $1,214,186 $544,352
========== ========== ========== =========
Weighted average number of
common shares outstanding 4,890,801 4,891,662 4,889,912 4,891,511
========== ========== ========== =========
Net income (loss)
per common share $ .60 $ .05 $ .25 $ .11
===== ===== ===== =====
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Nine Months Ended September 30, 1995
(Unaudited)
<CAPTION>
Common Stock Additional
------------ Paid-in
Capital Retained
Shares Amount Amount Earnings Total
------ ------ ------ -------- -----
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 4,891,379 $489,138 $18,725,538 $16,922,561 $36,137,237
Net income -- -- -- 2,911,135 2,911,135
Exercise of stock
options 24,000 2,400 105,600 -- 108,000
Purchase of common
stock (25,027) (2,503) -- (159,315) (161,818)
--------- -------- ----------- ----------- -----------
Balance at
September 30, 1995 4,890,352 $489,035 $18,831,138 $19,674,381 $38,994,554
========= ======== =========== =========== ===========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<CAPTION>
Nine Months Ended September 30,
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $2,911,135 $ 244,021
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,960,876 4,061,183
Deferred income taxes 150,000 33,000
Dry holes and abandonments 95,684 517,028
Current year costs of dry holes and
abandonments (95,684) (517,028)
(Gain) on disposition of assets (1,010,806) (20,244)
(Increase) decrease in current assets:
Accounts receivable (179,394) 493,964
Recoverable income taxes 320,500 (385,472)
Inventories 54,051 265,895
Prepaid expenses and other current assets 12,539 (34,187)
Increase (decrease) in current liabilities:
Accounts payable 2,010,301 (292,339)
Accrued expenses 465,432 190,049
Income taxes payable 479,369 (500,000)
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Net cash provided by operating
activities 10,174,003 4,055,870
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Cash flows from investing activities:
Proceeds from disposition of assets 3,404,198 40,091
Additions to property and equipment (13,717,831) (3,774,656)
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Net cash used by investing
activities (10,313,633) (3,734,565)
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Cash flows from financing activities:
Proceeds from issuance of long-term debt 9,500,000 --
Principal payments on long-term debt (2,656,250) (1,500,000)
Purchase of common stock (161,818) (63,615)
Exercise of stock options 108,000 53,935
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Net cash provided (used) by
financing activities 6,789,932 (1,509,680)
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Net increase (decrease) in cash and cash
equivalents 6,650,302 (1,188,375)
Cash and cash equivalents at beginning of year 5,836,389 12,404,197
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Cash and cash equivalents at end of period $12,486,691 $11,215,822
=========== ==========
See Accompanying Notes to Consolidated Financial Statements.<PAGE>
</TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1995
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments, consisting of all recurring
adjustments, necessary to present fairly the Company's financial position
as of September 30, 1995 and December 31, 1994, the results of operations
for the nine months ended September 30, 1995 and 1994 and changes in cash
and cash equivalents for the nine months ended September 30, 1995 and
1994.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in the 1994 Annual Report to
Shareholders.
2. Net income for the nine months ended September 30, 1995 is not
necessarily indicative of the results of the operations of Maynard Oil
Company and Subsidiaries for the year ending December 31, 1995, and is
subject to audit adjustments at year-end.
3. Net income (loss) per common share is based on the weighted average
number of shares outstanding in each period, which was 4,890,801 and
4,891,662 shares at September 30, 1995 and 1994, respectively. The
difference between primary and fully diluted earnings per share, which
assumes the exercise of stock options, is not significant.
4. Effective January 1, 1995, the Company purchased interests in
approximately 200 producing wells in eight West Texas counties from
Pennzoil Exploration and Production Company for a gross purchase price of
$10.5 million, which has been added to oil and gas properties on the
Consolidated Balance Sheet. This amount was adjusted for the results of
operations from January 1, 1995 through March 29, 1995, the closing date
for this transaction. The funds to acquire these properties were
provided from the Company's cash resources and additional bank borrowings
(See Note 5 below).
5. Long-term debt at September 30, 1995 is summarized as follows:
September 30
1995
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Amended term note due in 20 equal quarterly
installments commencing July 1, 1995, plus
one payment of $437,500 due April 1, 1995.
Interest paid quarterly at varying rates.
Secured by certain oil and gas properties. $13,843,750
Less current installments 3,125,000
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Long-term debt $10,718,750
===========
Effective March 29, 1995, the Company amended its loan agreement with
Bank One, Texas to increase its outstanding loan from $6,562,500 to
$16,062,500 in connection with the acquisition of the Pennzoil
properties discussed in Note 4 above. Under the terms of the loan
agreement, the normal 1995 payments would have totaled $1,656,250.
However, due to the sale of one of the properties acquired from
Pennzoil, an additional $1,000,000 was paid to the bank.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Nine Months Ended September 30, 1995
Compared to Nine Months Ended September 30, 1994
------------------------------------------------
The Company reported net income of $2,911,135, or sixty cents per share,
on revenues of $15,268,992 for the nine months ended September 30, 1995
compared with net income of $244,021 or five cents per share, on revenues of
$9,703,628 for the same period a year ago. Earnings for the 1995 period were
favorably impacted by the results of operations on the two property
acquisitions consummated over the last nine months. Oil volumes rose 304,394
barrels during the current period with 71% of the increase coming from the
newly acquired properties and the balance of the increase from the success
of the Company s development drilling program. Oil pricing increases also
helped current period results; the average price received during the 1994
period was $15.17 compared to an average of $17.15 per barrel during the 1995
period, a 13% increase. Gas volumes improved 243,839 mcf (thousand cubic
feet) of gas because of the property acquisitions, but failed to offset the
gas pricing decline of 56 cents per mcf.
Expense categories are difficult to compare because of the two property
acquisitions. Lease operating expense and depreciation and amortization
expense have increased, as would be expected with additional properties.
However, general and administrative expenses are $677,204 less than the same
period a year ago, in spite of the addition of the new properties referred to
above. The Company's accounting procedure offsets the monies earned from
being operator of oil and gas properties against general and administrative
expenses. There were approximately 200 properties acquired in December, 1994
on which the Company is now the operator, thus lowering the overall general
and administrative costs. Dry hole expense and lease rentals and seismic are
$721,671 less in 1995 than 1994 due to a slowing of the Company s exploration
activities. Other income (deductions) have also been impacted by the
Company s property acquisitions. Interest expense grew in 1995 due to bank
borrowings to finance the properties acquired; additionally, a gain of almost
one million dollars was generated when two of the newly acquired properties
were sold. Thus, in 1994, $249,756 was added to net income in the other
income (deductions) category, while $643,430 was contributed to earnings in
1995.
Quarter Ended September 30, 1995 Compared
with Quarter Ended September 30, 1994
-----------------------------------------
For the quarter ended September 30, 1995, the Company earned $1,214,186, or
twenty-five cents per share, compared with earnings of $544,352, or eleven
cents per share, for the same quarter a year ago. The current quarter s
results improved because of revenue increases associated with the property
acquisitions discussed above and the gain related to the sale of one of
properties recently acquired.
Liquidity and Capital Resources
-------------------------------
The Company ended its first nine months of 1995 with working capital of
approximately $6,200,000 and a current ratio of 1.7 to 1, compared to working
capital of approximately $8,584,000 and a current ratio of 2.7 to 1 a year
ago. The decline in working capital between the current period and a year
ago, $2,384,000, was caused by the $20 million acquisition of producing
properties for cash and additional bank financing. At September 30, 1995 the
Company's total debt was $13,843,750. The Company believes that it has
sufficient cash being generated from operating activities or additional
borrowing capacity to fund its planned development and exploratory work.
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.
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
----------------------------
Glenn R. Moore
President
By: /s/ Kenneth W. Hatcher
-----------------------------
Kenneth W. Hatcher
Vice President of Finance
Dated: November 10, 1995<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 12,487
<SECURITIES> 0
<RECEIVABLES> 2,634
<ALLOWANCES> 43
<INVENTORY> 208
<CURRENT-ASSETS> 15,743
<PP&E> 93,489
<DEPRECIATION> 48,084
<TOTAL-ASSETS> 60,877
<CURRENT-LIABILITIES> 9,281
<BONDS> 0
<COMMON> 489
0
0
<OTHER-SE> 37,339
<TOTAL-LIABILITY-AND-EQUITY> 60,877
<SALES> 15,269
<TOTAL-REVENUES> 15,269
<CGS> 6,239
<TOTAL-COSTS> 12,056
<OTHER-EXPENSES> (1,363)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 720
<INCOME-PRETAX> 3,857
<INCOME-TAX> 946
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<CHANGES> 0
<NET-INCOME> 2,911
<EPS-PRIMARY> 0.60
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</TABLE>
