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, 1997 Commission File #0-5704
MAYNARD OIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 75-1362284
(State or other jurisdic- (IRS Employer
tion of incorporation) Identification No.)
8080 N. Central Expressway, Suite 660, Dallas, Texas 75206
Registrant's telephone number, including area code: (214)891-8880
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 7, 1997.
4,889,450 shares of common stock, par value $0.10
MAYNARD OIL COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Page
Part I. Financial Information
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996
Consolidated Statements of Operations
Nine Months and Three Months ended
September 30, 1997 and 1996
Consolidated Statements of Shareholders' Equity
Nine Months ended September 30, 1997
Consolidated Statements of Cash Flows
Nine Months ended September 30, 1997 and 1996
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
<CAPTION>
September 30 December 31,
1997 1996
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,393,471 $ 21,817,447
Accounts receivable, trade 3,330,667 4,274,439
Other current assets 974,411 585,021
Total current assets 27,698,549 26,676,907
Property and equipment, at cost:
Oil and gas properties, successful
efforts method 105,601,151 103,223,604
Other property and equipment 565,506 540,736
106,166,657 103,764,340
Less accumulated depreciation and
amortization (54,363,218) (49,183,946)
Net property and equipment 51,803,439 54,580,394
$ 79,501,988 $ 81,257,301
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 5,000,000 $ 5,000,000
Accounts payable 2,977,159 3,592,404
Accrued expenses 2,505,781 1,710,681
Income taxes payable 540,234 3,431,476
Total current liabilities 11,023,174 13,734,561
Deferred income taxes 2,524,000 2,219,000
Long-term debt 12,500,000 16,250,000
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;
4,889,450 shares issued and
outstanding 488,945 488,945
Additional paid-in capital 18,831,138 18,831,138
Retained earnings 34,134,731 29,733,657
Total shareholders' equity 53,454,814 49,053,740
Commitments $ 79,501,988 $ 81,257,301
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,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales and royalties $19,971,221 $22,951,258 $ 5,994,485 $ 8,075,656
Interest and other 892,693 382,661 305,769 150,289
Gain on sale of assets 204,524 6,176,109 147,232 5,694,865
21,068,438 29,510,028 6,447,486 13,920,810
Costs and expenses:
Operating expenses 7,530,286 7,539,495 2,578,098 2,512,760
Exploration, dry holes and
abandonments 447,821 196,691 57,061 11,024
General and administrative 824,936 890,137 163,530 368,731
Depreciation and amortization 5,268,165 7,054,655 1,775,900 2,326,365
Interest and other 1,008,656 1,283,188 324,533 368,702
15,079,864 16,964,166 4,899,122 5,587,582
Income before income taxes 5,988,574 12,545,862 1,548,364 8,333,228
Income tax expense 1,587,500 2,700,000 117,500 1,450,000
Net income $ 4,401,074 $ 9,845,862 $ 1,430,864 $6,883,228
Weighted average number of common
shares outstanding 4,889,450 4,889,768 4,889,450 4,889,607
Net income per common share $ .90 $2.01 $ .29 $1.41
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Nine Months Ended September 30, 1997
(Unaudited)
<CAPTION>
Additional
Common Stock Paid-in
Capital Retained
Shares Amount Amount Earnings Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 4,889,450 $488,945 $18,831,138 $29,733,657 $49,053,740
Net income -- -- -- 4,401,074 4,401,074
Balance at September 30, 1997 4,889,450 $488,945 $18,831,138 $34,134,731 $53,454,814
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,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $4,401,074 $9,845,862
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,268,165 7,054,655
Deferred income taxes 305,000 550,000
Exploration, dry holes and abandonments 447,821 180,224
Current year costs of exploration dry holes
and abandonments (447,821) (90,514)
(Gain) on disposition of assets (204,524) (6,176,109)
(Increase) decrease in current assets:
Accounts receivable 943,772 (1,427,243)
Inventories (23,595) 27,332
Prepaid expenses and other current assets (365,795) (23,780)
Increase (decrease) in current liabilities:
Accounts payable (615,245) (454,375)
Accrued expenses 795,100 633,839
Income taxes payable (2,891,242) 370,901
Net cash provided by operating
activities 7,612,710 10,490,792
Cash flows from investing activities:
Proceeds from disposition of assets 276,089 8,892,728
Additions to property and equipment (2,562,775) (1,683,826)
Net cash provided (used) by
investing activities (2,286,686) 7,208,902
Cash flows from financing activities:
Principal payments on long-term debt (3,750,000) (3,562,500)
Purchase of common stock -- (4,055)
Net cash provided (used) by
financing activities (3,750,000) (3,566,555)
Net increase in cash and cash equivalents 1,576,024 14,133,139
Cash and cash equivalents at beginning of year 21,817,447 6,138,903
Cash and cash equivalents at end of period $23,393,471 $20,272,042
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
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, 1997 and December 31, 1996, the
results of operations for the nine months ended September 30, 1997 and
1996 and changes in cash and cash equivalents for the nine months ended
September 30, 1997 and 1996.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in the 1996 Annual Report to
Shareholders.
2. Net income for the nine months ended September 30, 1997 is not
necessarily indicative of the results of the operations of Maynard Oil
Company and Subsidiaries for the year ending December 31, 1997, and is
subject to audit adjustments at year-end.
3. Net income per common share is based on the weighted average number of
shares outstanding in each period, which was 4,889,450 and 4,889,768
shares at September 30, 1997 and 1996, respectively.
4. The provision for income taxes consists of the following (thousands of
dollars):
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Current $1,283 $2,150 $ 68 $ 700
Deferred 305 550 50 750
$1,588 $2,700 $ 118 $1,450
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996
The Company reported net income of $4,401,074, or ninety cents per share,
on revenues of $21,068,438 for the nine months ended September 30, 1997 compared
with net income of $9,845,862, or two dollars and one cent per share, on
revenues of $29,510,028 for the same period a year ago. Earnings for the
current nine month period were less than the same period a year ago primarily
due to the 1996 sale of approximately 130 producing oil and gas properties from
which the Company posted a pre-tax gain of $6,176,109, or $1.26 per share. Oil
and gas revenues also declined almost 13% due to the loss of hydrocarbon volumes
after last year's property sales and also because of reduced oil prices. Oil
volumes fell 10% and gas volumes were 38% lower than a year ago. Gas price
increases helped offset the production volumes lost; the average gas price
received during the current nine months was $2.50 per thousand cubic feet of gas
sold (mcf) compared to $1.96 per mcf for the 1996 period, a 28% increase. Oil
prices over the same nine months declined twenty-six cents per barrel from an
average of $19.90 per barrel to $19.64 per barrel, a decline slightly in excess
of 1%. Interest income more than doubled at $892,693 due to the cash proceeds
realized from the prior year property dispositions and cash generated from
continuing operating activities. However, this interest earned was not
sufficient to offset the gains that were recognized from the property sales
during the prior year.
Exploration costs, which include dry holes and abandonments, increased
$251,130, between the two nine month periods. During the 1996 period, the
Company drilled a dry hole and incurred approximately $15,000 on its three-
dimensional seismic programs, while the current nine months includes the costs
associated with a dry hole plus approximately $268,000 in three-dimensional
seismic work.
Depreciation and amortization expense declined 25% between the first nine
months of 1996 and 1997 due to lower production volumes.
Interest expense decreased over 21% between the prior period and the
current nine months because of scheduled debt payments.
Quarter Ended September 30, 1997 Compared with Quarter Ended September 30, 1996
For the quarter ended September 30, 1997, the Company earned $1,430,864, or
twenty-nine cents per share, compared with net income of $6,883,228, or one
dollar and forty-one cents per share, for the same quarter a year ago. The
current quarter's results declined because of reduced oil and gas sales related
to the loss of production volumes attributable to last year's property sales,
reduced oil pricing during the third quarter of 1997, and the gains from
property sales which were posted a year ago, but were nonrecurring during the
current quarter.
Liquidity and Capital Resources
At September 30, 1997, the Company's primary source of liquidity was
$23,393,471 in cash and marketable securities. Historically, the cash
generated by operating activities and proceeds from bank borrowings have been
utilized to finance the growth of the Company. The Company anticipates
utilizing the same strategy to finance future property acquisitions and planned
development and exploratory work.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
SIGNATURES
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.
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 14, 1997
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Maynard Oil
Company's Form 10-Q and is qualified in its entirety by reference to such Form
10-Q filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 23,393
<SECURITIES> 0
<RECEIVABLES> 3,381
<ALLOWANCES> 50
<INVENTORY> 0
<CURRENT-ASSETS> 27,699
<PP&E> 106,167
<DEPRECIATION> 54,363
<TOTAL-ASSETS> 79,502
<CURRENT-LIABILITIES> 11,023
<BONDS> 0
0
0
<COMMON> 489
<OTHER-SE> 52,966
<TOTAL-LIABILITY-AND-EQUITY> 79,502
<SALES> 19,971
<TOTAL-REVENUES> 21,068
<CGS> 7,530
<TOTAL-COSTS> 15,080
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,009
<INCOME-PRETAX> 5,989
<INCOME-TAX> 1,588
<INCOME-CONTINUING> 4,401
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<NET-INCOME> 4,401
<EPS-PRIMARY> 0.90
<EPS-DILUTED> 0.90
</TABLE>
