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 June 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 August 8, 1995.
4,890,142 shares of common stock, par value $0.10
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<PAGE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Page
Part I. Financial Information
Consolidated Balance Sheets
June 30, 1995 and December 31, 1994
Consolidated Statements of Operations
Six Months and Three Months ended
June 30, 1995 and 1994
Consolidated Statements of Shareholders' Equity
Six Months ended June 30, 1995
Consolidated Statements of Cash Flows
Six Months ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information and Reports on Form 8-K
Item 4. Submission of Matters to a Vote of
Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
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1995 1994
---- ----
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,054,645 $ 5,836,389
Accounts receivable, trade 3,415,007 2,411,451
Recoverable income taxes 320,500 320,500
Inventories 220,940 261,959
Prepaid expenses and other current
assets 57,944 199,628
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Total current assets 13,069,036 9,029,927
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Property and equipment, at cost:
Oil and gas properties, successful
efforts method 94,284,392 81,863,254
Other property and equipment 837,221 670,110 <PAGE>
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95,121,613 82,533,364
Less accumulated depreciation and
amortization (46,471,382) (43,492,197)
----------- -----------
Net property and equipment 48,650,231 39,041,167
----------- -----------
$61,719,267 $48,071,094
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of
long-term debt $ 3,125,000 $ 1,750,000
Accounts payable 4,920,149 2,611,209
Accrued expenses 1,058,567 590,138
Income taxes payable 404,369 --
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Total current liabilities 9,508,085 4,951,347
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Deferred income taxes 1,882,510 1,732,510
Long-term debt 12,500,000 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;
4,890,442 and 4,891,379 shares
issued and outstanding at
June 30, 1995 and December 31,
1994, respectively 489,044 489,138
Additional paid-in capital 18,725,538 18,725,538
Retained earnings 18,614,090 16,922,561
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Total shareholders' equity 37,828,672 36,137,237
----------- -----------
Commitments $61,719,267 $48,071,094
=========== ===========
See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
Six Months ended Three Months ended
June 30, June 30,
----------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
Revenues:
Oil and gas sales and
royalties $10,148,324 $6,506,492 $5,884,593 $3,306,282
----------- ---------- ---------- ----------
Costs and expenses:
Operating expenses 4,018,963 2,451,647 2,223,488 1,245,329
Dry holes and abandonments 84,388 494,395 17,549 474,792
Lease rentals and seismic 22,593 259,454 12,578 150,120
General and administrative 434,815 930,182 184,485 477,021
Depreciation and
amortization 3,234,907 2,911,649 1,779,000 1,509,565
--------- --------- --------- ---------
7,795,666 7,047,327 4,217,100 3,856,827
--------- --------- --------- ---------
Operating profit (loss) 2,352,658 (540,835) 1,667,493 (550,545)
--------- --------- --------- ---------
Other income (deductions):
Interest income 193,922 211,278 112,344 113,580
Interest expense (440,032) (74,926) (310,700) (34,011)
Gain (loss) on
disposition of assets 140,401 14,152 (5,777) 7,920
--------- --------- --------- -------
(105,709) 150,504 (204,133) 87,489
--------- --------- --------- -------
Net income (loss) before
income taxes 2,246,949 (390,331) 1,463,360 (463,056)
Income tax expense (benefit) 550,000 (90,000) 350,000 (116,000)
--------- --------- --------- --------
Net income (loss) $1,696,949 $(300,331)$1,113,360 $(347,056)
========== ========= ========== =========
Weighted average number of
common shares outstanding 4,891,252 4,891,745 4,891,132 4,891,743
========== ========= ========= =========
Net income (loss) per
common share $ .35 $(.06) $ .23 $(.07)
===== ===== ===== =====
See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Six Months Ended June 30, 1995
(Unaudited)
Common Stock Additional
------------ Paid-in
Capital Retained
Shares Amount Amount Earnings Total
------ ------ ------ -------- -----
Balance at
December 31, 1994 4,891,379 $489,138 $18,725,538 $16,922,561 $36,137,237
Net income -- -- -- 1,696,949 1,696,949
Purchase of
common stock (937) (94) -- (5,420) (5,514)
--------- -------- ----------- ----------- ----------
Balance at
June 30, 1995 4,890,442 $489,044 $18,725,538 $18,614,090 $37,828,672
========= ======== =========== =========== ===========
See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30,
1995 1994
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Cash flows from operating activities:
Net income $1,696,949 $(300,331)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,234,907 2,911,649
Deferred income taxes 150,000 (90,000)
Dry holes and abandonments 84,388 494,395
Current year costs of dry holes and
abandonments (84,388) (494,395)
(Gain) on disposition of assets (140,401) (14,152)
(Increase) decrease in current assets:
Accounts receivable (1,003,556) 346,873
Inventories 41,019 (30,249)
Prepaid expenses and other current assets 141,684 29,845
Increase (decrease) in current liabilities:
Accounts payable 2,308,940 2,624
Accrued expenses 468,429 104,117
Income taxes payable 404,369 (500,000)
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Net cash provided by operating
activities 7,302,340 2,460,376
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Cash flows from investing activities:
Proceeds from disposition of assets 297,610 25,857
Additions to property and equipment (13,001,180) (1,890,400)
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Net cash used by investing
activities (12,703,570) (1,864,543)
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Cash flows from financing activities:
Proceeds from issuance of long-term debt 9,500,000 --
Purchase of common stock (5,514) (62,075)
Exercise of stock options -- 53,935
Principal payments on long-term debt (875,000) (1,000,000)
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Net cash provided (used) by
financing activities 8,619,486 (1,008,140)
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Net increase (decrease) in cash and cash
equivalents 3,218,256 (412,307)
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 $ 9,054,645 $11,991,890
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See Accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 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 June 30, 1995 and December 31, 1994, the
results of operations for the six months ended June 30, 1995 and 1994
and changes in cash and cash equivalents for the six months ended
June 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 six months ended June 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 4,890,442 and
4,891,379 shares at June 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 June 30, 1995 is summarized as follows:
June 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. $15,625,000
Less current installments 3,125,000
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Long-term debt $12,500,000
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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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Six Months Ended June 30, 1995 Compared to Six Months Ended June 30, 1994
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The Company reported net income of $1,696,949, or thirty-five cents per
share, on revenues of $10,148,324 for the six months ended June 30, 1995
compared with a loss of $300,331, or six cents per share, on revenues of
$6,506,492 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 six months. Oil volumes rose 188,579
barrels during the current period with 73% of the increase coming from the
newly acquired properties. Oil pricing increases also helped current period
results; the average price received during the 1994 period was $14.45
compared to $17.43 per barrel during the 1995 period, a 21% increase. Gas
volumes improved 132,210 mcf (thousand cubic feet) of gas because of the
property acquisitions, but failed to offset the gas pricing decline of 51
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 $495,367 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
$646,868 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. The utilization of cash to acquire the
properties reduced interest income in 1995, and the bank financing of the
properties increased interest expense in 1995; additionally, a gain was
generated when one of the newly acquired properties was sold. Thus, in 1994,
$150,504 was added to net income while $105,709 was charged against earnings
in 1995.
Quarter Ended June 30, 1995 Compared with Quarter Ended June 30, 1994
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For the quarter ended June 30, 1995, the Company earned $1,113,360, or
twenty-three cents per share, compared with a loss of $347,056, or a loss of
seven cents per share, for the same quarter a year ago. The current
quarter s results improved because of the property acquisitions discussed
above and the related revenue increases.
Liquidity and Capital Resources
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The Company ended its first six months of 1995 with working capital of
approximately $3,500,000 and a current ratio of 1.4 to 1, compared to working
capital of approximately $9,144,000 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, $5,644,000, was caused by the $20 million acquisition of producing
properties for cash and additional bank financing. At June 30, 1995 the
Company's total debt was $15,625,000. 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.<PAGE>
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
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At the Annual Meeting of Stockholders held on May 17, 1995, the
stockholders elected Ralph E. Graham, Robert B. McDermott, and
James G. Maynard to serve as directors of the corporation for a
term expiring in 1996. 4,354,750 shares were cast for the
election and 23,000 were withheld.
ITEM 6. Exhibits and Reports on Form 8-K
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(a) Exhibit 27 - Financial Data Schedule.
(b) On April 13, 1995, the Registrant filed its Current Report on
Form 8-K with the Securities and Exchange Commission reporting
the acquisition of certain producing oil and gas properties
which closed on March 29, 1995.<PAGE>
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
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Kenneth W. Hatcher
Vice President of Finance
Dated: August 9, 1995 <PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 9,055
<SECURITIES> 0
<RECEIVABLES> 3,778
<ALLOWANCES> 43
<INVENTORY> 221
<CURRENT-ASSETS> 13,069
<PP&E> 95,122
<DEPRECIATION> 46,471
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<COMMON> 489
0
0
<OTHER-SE> 37,339
<TOTAL-LIABILITY-AND-EQUITY> 61,719
<SALES> 10,148
<TOTAL-REVENUES> 10,148
<CGS> 4,019
<TOTAL-COSTS> 7,796
<OTHER-EXPENSES> (334)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 440
<INCOME-PRETAX> 2,247
<INCOME-TAX> 550
<INCOME-CONTINUING> 1,697
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,697
<EPS-PRIMARY> 0.35
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