UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Amendment No. One)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (fee required)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (no fee required)
For the transition period to
Commission file number 0-16487
INLAND RESOURCES INC.
(Name of small business issuer in its charter)
Washington 91-1307042
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
475 17th Street, Suite 1500,
Denver, Colorado 80202
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (303)
292-0900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
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
(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
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained herein, and none will be
contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. [
]
The registrant's revenues for its most recent fiscal year were:
$2,230,988
The aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the average bid and
asked price of such stock, was $7,089,000 as of March 1, 1996.
At March 1, 1996, the registrant had outstanding 40,927,999
shares of par value $.001 common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-KSB incorporates
certain information by reference from the definitive Proxy
Statement for the registrant's Annual Meeting of Stockholders
scheduled to be held on May 22, 1996.
Transitional Small Business Disclosure Format (check one):
Yes ______ No X
<PAGE>
TABLE OF CONTENTS
PART II
ITEM 7. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 1
PART III
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8K . . . . . . 1
i<PAGE>
INLAND RESOURCES INC.
PART II
ITEM 7. FINANCIAL STATEMENTS
The financial statements required by this item begin at
page F-1 hereof.
PART III
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this
Annual Report on Form 10-KSB:
1. Financial Statements: The financial
statements filed as part of this report are listed
in the "Index to Financial Statements" on Page F-1
hereof.
2. Exhibits required to be filed by Item 601
of Regulation S-B:
Exhibit
Number Description of Exhibits
2.1 Agreement and Plan of Merger between the
Company, IRI Acquisition Corp. and Lomax
Exploration Company ("IPC") (exclusive of all
exhibits) (Filed as exhibit 2.1 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and
incorporated herein by this reference).
3.1 Articles of Incorporation, as amended through
May 5, 1993 (filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-18,
Registration No. 33-11870-F, and incorporated
herein by reference).
3.1.1 Articles of Amendment to Articles of
Incorporation dated May 6, 1993 (filed as
1<PAGE>
Exhibit 3.1.1 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1993, and incorporated herein by
reference).
3.1.2 Articles of Amendment to Articles of
Incorporation dated August 16, 1994
designating a series of stock (filed as
Exhibit 3.1.2 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein by
reference).
3.1.3 Articles of Amendment to Articles of
Incorporation filed with Secretary of State of
Washington on August 30, 1994 (filed as
Exhibit 3.1.3 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein by
reference).
3.1.4 Articles of Correction to Articles of
Amendment dated August 31, 1994 (filed as
Exhibit 3.1.4 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein by
reference).
3.2 By-Laws of the Company (filed as Exhibit 3.2
to the Company's Registration Statement on
Form S-18, Registration No. 33-11870-F, and
incorporated herein by reference).
3.2.1 Amendment to Article IV, Section 1 of the
Bylaws of the Company adopted February 23,
1993 (filed as Exhibit 3.2.1 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated
herein by reference).
3.2.2 Amendment to the Bylaws of the Company adopted
April 8, 1994 (filed as Exhibit 3.2.2 to the
Company's Registration Statement on Form S-4,
2<PAGE>
Registration No. 33-80392, and incorporated
herein by reference).
3.2.3 Amendment to the Bylaws of the Company adopted
April 27, 1994 (filed as Exhibit 3.2.3 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
*4.1 Credit Agreement between the Company, IPC and
Trust Company of the West and various
affiliated entities (collectively, "TCW")
dated November 29, 1995 (exclusive of all
exhibits and schedules).
*4.1.2 Royalty Agreement dated November 29, 1995,
between IPC, TCW DR IV Royalty Partnership,
L.P. and TCW (exclusive of all exhibits and
schedules).
*4.1.3 Conveyance of Adjustable Overriding Royalty
Interest dated November 29, 1995 between IPC
and TCW DR IV Royalty Partnership, L.P.
(exclusive of all exhibits and schedules).
*4.1.4 Deed of Trust, Mortgage, Line of Credit
Mortgage, Assignment, Security Agreement,
Fixture Filing and Financing Statement dated
November 29, 1995 between IPC, First American
Title Company of Utah, Trustee, and TCW Asset
Management Company, Collateral Agent
(exclusive of all exhibits and schedules).
*4.1.5 Guaranty dated November 29, 1995, executed by
Inland Resources Inc. in favor of TCW and
other named parties.
10.1 1988 Option Plan of Inland Gold and Silver
Corp. (filed as Exhibit 10(15) to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988, and
incorporated herein by reference).
3<PAGE>
10.1.1 Amended 1988 Option Plan of Inland Gold and
Silver Corp. (filed as Exhibit 10.10.1 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, and
incorporated herein by reference).
10.1.2 Amended 1988 Option Plan of the Company, as
amended through August 29, 1994 (including
amendments increasing the number of shares to
2,128,000 and changing "formula award") (filed
as Exhibit 10.1.2 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1994, and incorporated
herein by reference).
10.2 Warrant Agreement and Warrant Certificate
between Kyle R. Miller and the Company dated
February 23, 1993 (filed as Exhibit 10.2 to
the Company's Current Report on Form 8-K dated
February 23, 1993, and incorporated herein by
reference).
10.2.1 Warrant Certificate between Kyle R. Miller and
the Company dated October 15, 1993
representing 31,500 shares (filed as Exhibit
10.2.1 to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31,
1994, and incorporated herein by reference).
10.2.2 Warrant Certificate between Kyle R. Miller and
the Company dated March 22, 1994 representing
57,142 shares (filed as Exhibit 10.2.2 to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994, and
incorporated herein by reference).
10.2.3 Warrant Certificate between Kyle R. Miller and
the Company dated September 21, 1994
representing 448,108 shares (filed as Exhibit
10.2.3 to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31,
1994, and incorporated herein by reference).
4<PAGE>
10.2.4 Warrant Certificate between Kyle R. Miller and
the Company dated September 21, 1994
representing 385,225 shares (filed as Exhibit
10.2.4 to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31,
1994, and incorporated herein by reference).
10.2.5 Warrant Certificate between Kyle R. Miller and
the Company dated September 21, 1994
representing 300,000 shares (filed as Exhibit
10.2.5 to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31,
1994, and incorporated herein by reference).
10.2.6 Amendment to Warrant Certificates filed as
Exhibits 10.2, 10.2.1 and 10.2.2 (filed as
Exhibit 10.2.6 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein by
reference).
*10.2.7 Warrant Certificate between Kyle R. Miller and
the Company dated November 16, 1993
representing 15,000 shares.
*10.2.8 Warrant Certificate between Kyle R. Miller and
the Company dated March 15, 1995 representing
12,500 shares.
*10.2.9 Warrant Certificate between Kyle R. Miller and
the Company dated November 6, 1995
representing 300,000 shares.
10.2.10 First Amendment to Warrant Agreement between
the Company and Kyle R. Miller dated October
19, 1995 (filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-QSB for
the fiscal quarter ended September 30, 1995,
and incorporated herein by reference).
10.3 Employment Agreement between Kyle R. Miller
and the Company dated February 23, 1993 (filed
as Exhibit 10.1 to the Company's Current
5<PAGE>
Report on Form 8-K dated February 23, 1993,
and incorporated herein by reference).
10.4 Lease Agreement - Commercial Premises (short
form) dated August 12, 1988 by and between
Broadway Management Company and the Company,
together with Addendums to Lease dated October
2, 1989, November 6, 1991 and March 8, 1993
(filed as Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated
herein by reference).
10.5 Purchase and Sale Agreement between the
Company and Evertson Oil Company, Inc. dated
March 15, 1993 (filed as Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, and
incorporated herein by reference).
10.6.1 Wrap Around Agreement between Petroglyph Gas
Partners, L.P. ("PGP") and the Company dated
January 31, 1994 (filed as Exhibit 10.20.1 to
the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1993, and
incorporated herein by reference).
10.6.2 Assignment of Purchase and Sale Agreement from
the Company to PGP (filed as Exhibit 10.20.2
to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1993,
and incorporated herein by reference).
10.6.3 Ratification of Purchase and Sale Agreement
between Evertson Oil Company, Inc. and the
Company dated January 31, 1994 (filed as
Exhibit 10.20.3 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1993, and incorporated herein by
reference).
10.6.4 Letter from PGP to the Company dated January
28, 1994 (filed as Exhibit 10.20.4 to the
6<PAGE>
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1993, and
incorporated herein by reference).
10.6.5 Asset Purchase and Sale Agreement dated August
25, 1995, but effective as of July 1, 1995, by
and between the Company and PGP (without
exhibits) (filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K dated
September 19, 1995, and incorporated herein by
reference).
10.6.6 Assignment and Assumption Agreement, First
Amendment to Loan Agreement, and Confirmation
of Documents dated September 19, 1995 by and
between the Company, PGP and Joint Energy
Development Investments Limited Partnership
(without exhibits) (filed as Exhibit 10.2 to
the Company's Current Report on Form 8-K dated
September 19, 1995, and incorporated herein by
reference).
10.7.1 Operating Agreement dated February 25, 1994
between the Company, PGP and Petroglyph
Operating Company, Inc. related to a portion
of the Duchesne County Fields (filed as
Exhibit 10.21.1 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1993, and incorporated herein by
reference).
10.7.2 Operating Agreement dated February 25, 1994
between the Company, PGP and Petroglyph
Operating Company, Inc. related to the
remainder of the Duchesne County Fields (filed
as Exhibit 10.21.2 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1993, and incorporated
herein by reference).
10.8 Cooperative Agreement between IPC and the U.S.
Department of Energy, and related
correspondence (filed as Exhibit 10.22 to the
Company's Registration Statement on Form S-4,
7<PAGE>
Registration No. 33-80392, and incorporated
herein by reference).
10.9 Employment Agreement between IPC and Bill I.
Pennington effective May 1, 1993, which was
replaced by Exhibit 10.9.1 (filed as Exhibit
10.23 to the Company's Registration Statement
on Form S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.9.1 Employment Agreement between the Company and
Bill I. Pennington dated September 21, 1994
(filed as Exhibit 10.9.1 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and incorporated
herein by reference).
10.10 Employment Agreement between IPC and John D.
Lomax effective May 1, 1992 which was replaced
by Exhibit 10.10.1 (filed as Exhibit 10.24 to
the Company's Registration Statement on Form
S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.10.1 Employment Agreement between the Company and
John D. Lomax dated September 21, 1994 (filed
as Exhibit 10.10.1 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1994, and incorporated
herein by reference).
10.10.2 Deferred Compensation Agreement dated
effective July 1, 1995 between the Company and
John D. Lomax (filed as Exhibit 10.4 to the
Company's Quarterly Report on Form 10-QSB for
the fiscal quarter ended June 30, 1995, and
incorporated herein by reference).
*10.10.3 First Amendment to Deferred Compensation
Agreement dated effective December 1, 1995
between the Company, IPC and John D. Lomax.
10.11 Loan Agreement dated July 8, 1993 between IPC
and First Interstate Bank of Utah, N.A.
8<PAGE>
regarding $250,000 loan (filed as Exhibit
10.25 to the Company's Registration Statement
on Form S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.11.1 Floating Rate Promissory Note dated July 8,
1993 in the amount of $250,000 executed by IPC
and representing the loan described in Exhibit
10.11 (filed as Exhibit 10.25.1 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.11.2 Assignment of Monies Due and to Become Due
dated July 8, 1993 executed by IPC and
relating to Exhibit 10.11 (filed as Exhibit
10.25.2 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by reference).
10.11.3 Continuing Guaranty dated July 8, 1993
executed by John D. Lomax and Bill I.
Pennington in favor of First Interstate Bank
of Utah, N.A. (filed as Exhibit 10.25.3 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.11.4 Deed of Trust, Mortgage, Assignment, Security
Agreement, and Financing Statement executed by
IPC dated July 19, 1993 securing the
obligations described in Exhibit 10.11 (filed
as Exhibit 10.25.4 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.12 Loan Agreement dated June 1, 1994 between IPC
and John D. Lomax, Bill I. Pennington, Jack N.
Warren, Allan C. King and T Brooke Farnsworth
relating to $100,000 loan to IPC (filed as
Exhibit 10.26 to the Company's Registration
Statement on Form S-4, Registration No.
9<PAGE>
33-80392, and incorporated herein by reference).
10.12.1 Promissory Note dated June 1, 1994 payable by
IPC to the persons described in Exhibit 10.12
relating to the loan described in Exhibit
10.12 (filed as Exhibit 10.26.1 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.12.2 Deed of Trust, Mortgage, Assignment, Security
Agreement, and Financing Statement executed by
IPC and securing the loan described in Exhibit
10.12 (filed as Exhibit 10.26.2 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.12.3 Security Agreement executed by IPC and
securing the loan described in Exhibit 10.12
(filed as Exhibit 10.26.3 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.13 Subcontract Agreement between IPC and the
University of Utah dated September 25, 1992
(filed as Exhibit 10.27 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.14 Subcontract Agreement dated October 8, 1992
between IPC and the University of Utah
Research Institute (filed as Exhibit 10.28 to
the Company's Registration Statement on Form
S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.15 Chevron Crude Oil Purchase Contract No. 531144
dated October 25, 1988, as amended by
Amendment No. 1 dated November 27, 1989,
Amendment No. 2 dated September 12, 1990,
10<PAGE>
Amendment No. 3 dated July 15, 1991, Amendment
No. 4 dated January 22, 1992, Amendment No. 5
dated January 13, 1993, and the March 4, 1992
letter from Chevron U.S.A. Products Company to
all Chevron Products Company customers (filed
as Exhibit 10.29 to the Company's Registration
Statement on Form S-4, Registration No. 33-80392,
and incorporated herein by reference).
10.16 Lease dated March 30, 1993 between Marshall
Properties, Inc. and IPC (filed as Exhibit
10.30 to the Company's Registration Statement
on Form S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.17 Agreement between IPC and Bill I. Pennington
(filed as Exhibit 10.31 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.18 Subscription Agreement between the Company and
Smith Management Company dated May 12, 1994
(filed as Exhibit 10.34 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.18.1 Amendment to Subscription Agreement filed as
Exhibit 10.32, dated September 16, 1994 (filed
as Exhibit 10.18.1 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1994, and incorporated
herein by reference).
10.19 Registration Rights Agreement dated September
21, 1994 between the Company and Energy
Management Corporation, a wholly owned
subsidiary of Smith Management Company and the
assignee of Smith Management Company under the
Subscription Agreement filed as Exhibit 10.18
(filed as Exhibit 10.19 to the Company's
Annual Report on Form 10-KSB for the fiscal
11<PAGE>
year ended December 31, 1994, and incorporated
herein by reference).
10.19.1 Correspondence constituting an
amendment/clarification of the Registration
Rights Agreement filed as Exhibit 10.19
(filed as Exhibit 10.19.1 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and incorporated
herein by reference).
10.19.2 Registration Rights Agreement dated March 20,
1995 between the Company and Energy Management
Corporation (filed as Exhibit 10.19.2 to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994, and
incorporated herein by reference).
10.20 Swap Agreement dated August 4, 1994 between
the Company and Enron Risk Management Services
Corp.(filed as Exhibit 10.1 to the Company's
Quarterly Report on Form 10-QSB for the fiscal
quarter ended September 30, 1994, and
incorporated herein by reference).
10.21 Swap Agreement dated August 26, 1994 between
the Company and JEDI (filed as Exhibit 10.2 to
the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended September 30,
1994, and incorporated herein by reference).
10.22 Swap Agreement dated August 4, 1994 between
IPC and Enron Risk Management Services Corp.
(filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-QSB for the fiscal
quarter ended September 30, 1994, and
incorporated herein by reference).
10.23 Subscription Agreement between the Company and
Pengo Securities Corp. dated October 23, 1995,
without exhibits (filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K dated
12<PAGE>
November 6, 1995, and incorporated herein by
reference).
10.23.1 Registration Rights Agreement between the
Company and Pengo Securities Corp. dated
November 6, 1995 (filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K dated
November 6, 1995, and incorporated herein by
reference).
10.24 Combined Hydrocarbon Lease between IPC and the
U.S. Department of the Interior, Bureau of
Land Management ("Bureau") dated effective
October 18, 1995 relating to 677.36 acres
(filed as Exhibit 10.3 to the Company's
Current Report on Form 8-K dated November 6,
1995, and incorporated herein by reference).
10.25 Combined Hydrocarbon Lease between IPC and the
Bureau dated effective October 18, 1995
relating to 2,879.94 acres (filed as Exhibit
10.4 to the Company's Current Report on Form
8-K dated November 6, 1995, and incorporated
herein by reference).
10.26 Combined Hydrocarbon Lease between IPC and the
Bureau dated effective October 18, 1995
relating to 647.32 acres (filed as Exhibit
10.5 to the Company's Current Report on Form
8-K dated November 6, 1995, and incorporated
herein by reference).
10.27 Combined Hydrocarbon Lease between IPC and the
Bureau dated effective October 18, 1995
relating to 1,968.01 acres (filed as Exhibit
10.6 to the Company's Current Report on Form
8-K dated November 6, 1995, and incorporated
herein by reference).
10.28 Farmout Agreement between IPC, the Company and
Randall D. Smith, dated effective July 1, 1995
(filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 1995, and incorporated
13<PAGE>
herein by reference).
*10.29 Option Agreement dated November 22, 1995
between the Company, IPC and Randall D. Smith.
*10.29.1 Warrant Certificate dated November 22, 1995
granted by the Company to Randall D. Smith,
together with Exhibit "A", a Registration
Rights Agreement.
*10.30 Crude Oil Call/Put Option (Costless Collar)
between IPC and Koch Gas Services Company
dated November 20, 1995.
10.31 Swap Agreement dated November 22, 1994 between
the Company and Joint Energy Investments
Limited Partnership (filed as Exhibit 10.1 to
the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended June 30, 1995,
and incorporated herein by reference).
*10.31.1 Termination Agreement Revised dated January
18, 1996 between the Company and Enron Capital
& Trade Resources Corp. ("ECT") relating to
Exhibit 10.31.
10.32 Swap Agreement dated January 18, 1995 between
the Company and ECT (filed as Exhibit 10.2 to
the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended June 30, 1995,
and incorporated herein by reference).
*10.33 Put Option dated January 18, 1996 between the
Company and ECT.
*10.34 Commodity Option dated January 18, 1996
between IPC and ECT.
*21.1 Subsidiaries of the Company.
**23.1 Consent of Coopers & Lybrand L.L.P.
*23.2 Consent of Ryder Scott Company Petroleum
Engineers.
14<PAGE>
*27.1 Financial Data Schedule required by Item 601 of
Regulation S-B.
________________________
* Filed with the original of the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1995,
filed with the Securities and Exchange Commission on April
1, 1996, and incorporated herein by reference.
** Filed herewith.
b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated
November 6, 1995 reporting information under the following
Form 8-K Items:
Item 1. Changes in Control of Registrant
Item 2. Acquisition or Disposition of Assets
Item 7. Financial Statements and Exhibits
No financial statements were included in the November 6,
1995 Form 8-K. No other reports on Form 8-K were filed during
the fourth quarter of 1995.
15<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934 (the "Act"), and Rule 12b-15 promulgated thereunder,
the Company has duly caused this Amendment No. One to its Annual
Report on Form 10-KSB to be signed on its behalf by the
undersigned, thereunto duly authorized.
INLAND RESOURCES INC.
April 12, 1996 By: /s/ Kyle R. Miller
Kyle R. Miller
Director, President
and Chief Executive
Officer (Principal
Executive Officer)
16<PAGE>
INLAND RESOURCES INC.
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Accountants F-2
Consolidated Balance Sheets, December 31, 1995 and 1994 F-3
Consolidated Statements of Operations for the years ended
December 31, 1995 and 1994 F-5
Consolidated Statements of Stockholders' Equity for the
years ended December 1995 and 1994 F-7
Consolidated Statements of Cash Flows for the years ended F-9
December 31, 1995 and 1994
Notes to Consolidated Financial Statements F-11
F - 1<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Inland Resources Inc.
We have audited the accompanying consolidated balance sheets
of Inland Resources Inc. as of December 31, 1995 and 1994, and
the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended December 31, 1995 and
1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Inland Resources Inc. as of December 31,
1995 and 1994, and the consolidated results of its operations and
its cash flows for the years ended December 31, 1995 and 1994 in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Denver, Colorado
March 20, 1996
F - 2
<PAGE>
<TABLE>
INLAND RESOURCES INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
<CAPTION>
December 31, December 31,
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,970,305 $ 1,691,156
Restricted cash 160,658
Accounts receivable and
accrued sales 671,203 902,959
Inventory 417,665 835,691
Department of Energy contract 30,753 650,147
Other current assets 19,338 379,622
----------- ------------
Total current assets 4,109,264 4,620,233
----------- ------------
Property and equipment, at cost:
Oil and gas properties (successful
efforts method) 17,251,885 11,887,825
Gas and water transportation
facilities 152,395 643,307
Accumulated depletion, depreciation
and amortization (585,590) (489,840)
------------ -----------
16,818,690 12,041,292
Other property and equipment, net 593,106 376,128
Debt issue costs 401,803
------------ ------------
Total assets $ 21,922,863 $17,037,653
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 2,859,775 $ 2,407,179
Current portion of long-term debt 48,021 1,965,157
Property reclamation costs,
short-term 200,000 300,000
F - 3<PAGE>
------------ -----------
Total current
liabilities 3,107,796 4,672,336
------------ -----------
Long-term debt 4,436,225 2,157,842
Property reclamation costs, long-term 399,433 283,670
Commitments (Notes 8, 16 and 17)
Stockholders' equity:
Preferred Class A stock, par value
$.001; 20,000,000 shares authorized,
106,850 shares of Series A issued
and outstanding; liquidation
preference of $5,342,500 107 107
Additional paid-in capital -
preferred stock 4,100,261 3,672,861
Common stock, par value $.001;
100,000,000 shares authorized;
issued and outstanding 40,927,999
and 28,927,999, respectively 40,928 28,928
Additional paid-in capital -
common stock 19,146,284 13,168,591
Accumulated deficit (9,308,171) (6,946,682)
------------- ------------
Total stockholders' equity 13,979,409 9,923,805
------------- ------------
Total liabilities and
stockholders' equity $ 21,922,863 $17,037,653
============= ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
F - 4<PAGE>
<TABLE>
INLAND RESOURCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1995 and 1994
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Revenues:
Sales of oil and gas $ 1,904,810 $1,063,458
Management fees 326,178
------------ ------------
Total revenues 2,230,988 1,063,458
------------ -----------
Operating expenses:
Lease operating expenses 1,010,050 915,063
Production taxes 132,417 90,222
Exploration and impairment 342,081 306,121
Depletion, depreciation and
amortization 857,570 330,110
General and administrative, net 1,335,263 1,004,891
------------ -----------
Total operating expenses 3,677,381 2,646,407
------------ -----------
Operating loss (1,446,393) (1,582,949)
Interest expense (749,307) (142,666)
Other income, net 127,537 54,581
Gain on sale of Duchesne County Fields 850,000
------------ -----------
Loss from continuing operations
before extraordinary loss (1,218,163) (1,671,034)
Loss on disposal of discontinued
operations (500,000) (100,000)
------------ ------------
Loss before extraordinary loss (1,718,163) (1,771,034)
Extraordinary loss on early
extinguishment of debt (215,926)
------------ ------------
Net loss $(1,934,089) $ (1,771,034)
============ =============
F - 5<PAGE>
Net loss per share:
Continuing operations $ (.04) $ (.09)
Discontinued operations (.01) (.00)
Extraordinary loss (.01) (.00)
------------ -------------
Total $ (.06) $ (.09)
============ =============
Weighted average common shares
outstanding 30,711,095 18,738,492
============ =============
Dividends per share NONE NONE
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements
F - 6<PAGE>
<TABLE>
INLAND RESOURCES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1995 and 1994
<CAPTION>
Additional
Preferred Stock Paid-in
Shares Amount Capital
----------- --------- ---------
<S> <C> <C> <C>
Balances, January 1, 1994
Issuance of common stock
Issuance of common stock
Issuance of common stock,
net of issuance costs of
$93,350
Issurance of preferred 107,546 $108 $3,696,785
stock
Conversion of preferred (696) (1) (23,924)
stock
Net loss
------------ --------- ----------
Balances, December 31, 1994 106,850 107 3,672,861
Issuance of common stock,
net of issuance costs of
$10,307
Preferred stock dividend 427,400
Net loss
------------ --------- -----------
Balances, December 31, 106,850 $107 $4,100,261
1995
============ ========= ===========
Additional
Common Stock Paid-in
Shares Amount Capital
----------- --------- ---------
<S> <C> <C> <C>
Balances, January 1, 1994 14,022,633 $14,023 $7,863,732
Issuance of common stock 1,142,858 1,142 398,858
Issuance of common stock 7,704,508 7,705 2,881,484
Issuance of common stock, 6,000,000 6,000 2,000,650
net of issuance costs of
$93,350
F - 7<PAGE>
Issurance of preferred
stock
Conversion of preferred 58,000 58 23,867
stock
Net loss
------------ --------- -----------
Balances, December 31,
1994 28,927,999 28,928 13,168,591
Issuance of common stock, 12,000,000 12,000 5,977,693
net of issuance costs of
$10,307
Preferred stock dividend
Net loss
------------ --------- -----------
Balances, December 31, 40,927,999 $40,928 $19,146,284
1995 ========== ======= ===========
Accumulated
Deficit
-------------
<S> <C>
Balances, January 1, 1994 $(5,175,648)
Issuance of common stock
Issuance of common stock
Issuance of common stock,
net of issuance costs of
$93,350
Issurance of preferred
stock
Conversion of preferred
stock
Net loss (1,771,034)
-------------
Balances, December 31, 1994 (6,946,682)
Issuance of common stock,
net of issuance costs of
$10,307
Preferred stock dividend (427,400)
Net loss (1,934,089)
-------------
Balances, December 31, $(9,308,171)
1995
=============
The accompanying notes are an integral part
of the consolidated financial statements
</TABLE> F - 8<PAGE>
<TABLE>
INLAND RESOURCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995 and 1994
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,934,089) $(1,771,034)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Net cash used by discontinued
operations (434,237) (450,484)
Loss on disposal of discontinued
operations 500,000 100,000
Depletion, depreciation and
amortization 857,570 330,110
(Gain) Loss on disposal of assets 3,942 (6,782)
Gain on sale of Duchesne County
Fields (850,000)
Impairment of properties 296,350
Loss on early extinguishment of
debt 215,926
Changes in assets and liabilities:
Accounts receivable and
accrued sales 740,961 (299,601)
Inventory 143,525 (274,337)
Other current assets 66,358 (320,534)
Accounts payable and accrued
expenses 695,437 382,868
------------ -----------
Net cash provided (used) by operating
activities 301,743 (2,309,794)
------------ -----------
Cash flows from investing activities:
F - 9<PAGE>
Acquisition of oil and gas
properties (7,449,000) (963,234)
Development expenditures and
equipment purchases (3,736,011) (1,676,190)
Proceeds from sale of Duchesne
County Fields 2,946,765
Proceeds from sale of assets 47,344 10,700
Change in restricted cash 160,658 (160,658)
Net cash acquired in purchase of
Inland Production Company 60,363
Net cash provided by sale of
discontinued operations 222,516
------------ ------------
Net cash used by investing activities (8,030,244) (2,506,503)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 7,600,000 3,936,358
Payments of long-term debt (4,180,240) (38,163)
Debt issue costs (401,803)
Payment of related party note payable (100,000)
Proceeds from issuance of
common stock 5,989,693 2,406,650
------------ ------------
Net cash provided by financing
activities 9,007,650 6,204,845
------------ ------------
Net increase in cash and cash
equivalents 1,279,149 1,388,548
Cash and cash equivalents at
beginning of period 1,691,156 302,608
------------ ------------
Cash and cash equivalents at
end of period $ 2,970,305 $ 1,691,156
============ ===========
The accompanying notes are an integral part
of the consolidated financial statements
</TABLE>
F - 10<PAGE>
INLAND RESOURCES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. COMPANY ORGANIZATION AND BUSINESS DESCRIPTION:
Inland Resources Inc. (the "Company") was incorporated
on August 12, 1985 in the State of Washington for the
purpose of acquiring, exploring and developing interests
in mining properties. In 1987 the Company developed a
leased property (the "Toiyabe Mine") and began
production of gold and silver. Operations at the Toiyabe
Mine have included open-pit mining, crushing,
agglomerations, heap leaching and gold and silver
recovery processes. Currently, the Company's mining
operations are limited to the final detoxification,
reclamation and closure of the Toiyabe Mine in
compliance with Nevada and federal laws.
Effective March 1, 1993, the Company acquired an
undivided 50% interest in certain oil and gas leases and
other assets located in Duchesne County, Utah (the
"Duchesne County Fields"). Accordingly, the Company's
business emphasis changed from precious metals mining to
oil and gas development and production.
Effective September 21, 1994, the Company acquired all
the outstanding common and preferred stock of Lomax
Exploration Company, now known as Inland Production
Company ("IPC"). IPC is also engaged primarily in oil
and gas development and production activities in the
Uinta Basin area of Northeastern Utah, in the oil and
gas field known as the Monument Butte Field. The
acquisition was accounted for as a purchase, therefore,
the net assets and results of operations of IPC are
included in the Company's consolidated financial
statements from the acquisition date forward. IPC
operates as a wholly-owned subsidiary of the Company.
Effective July 1, 1995, the Company sold its undivided
interest in the Duchesne County Fields. As a result,
F - 11<PAGE>
the Company is now focused on the development of the
Monument Butte Field where the Company controls
operations for the majority of its holdings and has a
significant infrastructure in place to conduct water
flood operations. In November 1995, the Company further
increased its position in the Monument Butte Field by
entering into four oil and gas leases (the "Utah
Federal Leases") covering 6,200 gross acres (5,861 net
acres).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Consolidation:
The accompanying financial statements include the
accounts of the Company and its wholly-owned
subsidiary. All intercompany activity has been
eliminated in consolidation.
Use of Estimates in the Preparation of Financial
Statements:
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Cash and Cash Equivalents:
Cash and cash equivalents include cash on hand and
amounts due from banks and other investments with
original maturities of less than three months. The
Company regularly has cash in a single financial
institution which exceeds depository insurance limits.
The Company places such deposits with high credit
quality institutions and has not experienced any credit
losses.
F - 12<PAGE>
Substantially all of the Company's receivables are
within the oil and gas industry, primarily from the
purchasers of its oil and gas and joint interest
owners. Although diversified within many companies,
collectibility is dependent upon the general economic
conditions of the industry. To date, uncollectible
accounts experienced by the Company have been minimal.
Inventory:
At December 31, 1995 and 1994, inventory consisted
primarily of tubular goods valued at the lower of cost
or market.
Accounting for Oil and Gas Operations:
The Company uses the "successful efforts" method of
accounting for oil and gas operations. The use of this
method results in the capitalization of those costs
associated with the acquisition, exploration, and
development of properties that produce revenue or are
anticipated to produce future revenue. The Company does
not capitalize general and administrative expenses
directly identifiable with acquisition activities or
lease operating expenses associated with secondary
recovery startup projects. Costs of unsuccessful
exploration efforts are expensed in the period in which
it is determined that such costs are not recoverable
through future revenues. Geological and geophysical
costs are expensed as incurred. The cost of development
wells are capitalized whether productive or
nonproductive.
Upon sale of proved properties, the cost thereof and
the accumulated depreciation or depletion are removed
from the accounts and any gain or loss is charged to
income.
The provision for depletion, depreciation and
amortization of developed oil and gas properties is
based on the units of production method, based on
proved oil and gas reserves. Dismantlement,
restoration, and abandonment costs are offset by
F - 13<PAGE>
residual values of lease and well equipment. As a
result, no accrual for such costs has been recorded.
Effective for the fourth quarter beginning October 1,
1995, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". Under this Statement, a
calculation of the aggregate before-tax undiscounted
future net revenues (the "Ceiling") is performed for
each distinct property pool the Company owns. If the
net capitalized cost of each property pool exceeds the
applicable Ceiling calculation, the excess is recorded
as a charge to operations. The Company currently has
only one distinct property pool titled the Monument
Butte Field. There was no charge to the Consolidated
Statements of Operations as a result of adopting this
statement.
The Company periodically assesses undeveloped oil and
gas properties for impairment. Impairment represents
management's estimate of the decline in realizable
value experienced during the period.
Property and Equipment:
Property and equipment is recorded at cost.
Replacements and major improvements are capitalized
while maintenance and repairs are charged to expense as
incurred. Upon sale or retirement, the asset cost and
accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in
operations. Depreciation is provided using the
straight-line method over the estimated useful lives of
the related assets.
Income Taxes:
The Company uses the liability method of accounting for
income taxes. Under the liability method, income taxes
are recorded for future events at tax rates in effect
when the balances are expected to be paid.
F - 14<PAGE>
Revenue Recognition:
Sales of oil and gas are recorded upon delivery to
purchasers.
Accounting for Stock-Based Compensation:
The Financial Accounting Standards Board issued
Statement No. 123 on the "Accounting for Stock-Based
Compensation". This statement prescribes the
accounting and reporting standards for stock-based
employee compensation plans and is effective for the
Company's 1996 reporting year. The Company has not
decided if it will adopt the recognition criteria
within the standard or simply make pro forma
disclosures as an acceptable alternative provided by
the standard.
Net Loss Per Share:
Net loss per share is calculated based upon the
weighted average number of shares outstanding during
each period. Common stock equivalents have not been
included because their effect is anti-dilutive.
Joint Ventures:
The financial statements include the accounts of the
Company and its proportionate share of the accounts of
the unincorporated joint ventures in which it
participates.
Reclassification:
Certain prior year balances appearing on the
Consolidated Balance Sheet and Consolidated Statement
of Cash Flows have been reclassified to conform with
the current year financial statement presentation.
These reclassifications had no effect on the
accumulated deficit or net loss as previously reported.
3. FINANCIAL INSTRUMENTS:
F - 15<PAGE>
Periodically, the Company enters into commodity
contracts to hedge or otherwise reduce the impact of
oil price fluctuations and to help insure the repayment
of indebtedness. Changes in the market value of crude
oil commodity contracts are reported as an adjustment
to crude oil revenue in the period in which the related
oil is sold. The gain or loss on the Company's hedging
transactions is determined as the difference between
the contract floor price or contract ceiling price and
a reference price, generally the average price of NYMEX
Light Sweet Crude Oil Futures Contracts. Hedging
activities do not affect the actual sales price for the
Company's crude oil.
The Company has a hedge in place with Enron Capital and
Trade Resources Corp. (an affiliate of Enron Corp.)
(the "Enron Hedge") to hedge crude oil production over
a five year period beginning January 1, 1996 in monthly
amounts escalating from 8,500 Bbls in January 1996 to
14,000 Bbls in December 2000. The hedge is structured
as a cost free collar whereby if the average monthly
price (based on NYMEX Light Sweet Crude Oil Futures
Contracts) (the "Average Price") is between $18.00 and
$20.55 per barrel, no payment is due under the
contract. If the Average Price is less than $18.00, the
Company is paid the difference between $18.00 and the
Average Price, multiplied by the barrels of crude oil
hedged that month. Similarly, should the Average Price
exceed $20.55 per barrel, the Company is required to
pay the difference between $20.55 and the Average
Price, multiplied by the barrels of crude oil hedged
that month. The Company entered into a similarly
structured contract with Koch Gas Services Company on
November 20, 1995. This contract hedges crude oil
production over a thirteen month period beginning
December 1, 1995 and ending December 31, 1996. This
hedge is also structured as cost free collar with a
floor price of $16.00 and a ceiling of $18.20. Since
hedged quantities are based on expected future
development in the Monument Butte Field and because
hedging activities do not affect the actual sales price
for the Company's crude oil, there exists risk to the
Company's financial position and results of operations
F - 16<PAGE>
should the Average Price rise significantly above the
ceiling prices of $20.55 and $18.20, respectively, and
development activities not produce the expected results
or progress on a slower than expected timetable. The
Company is aware of and continually evaluates this
financial risk and has the ability to enter into
commodity contracts to mitigate potential financial
loss should risk factors begin to materialize. At
December 31, 1995, these two contracts had a combined
positive market value of $620,000. The market value
will change during the contract periods and is not
recognized in the accompanying consolidated financial
statements.
In order to further protect the price the Company
receives for crude oil production during 1996, on
January 18, 1996 the Company entered into three
additional contracts with Enron Capital and Trade
Resources Corp. The effect of two of the contracts was
to lower the floor under the Enron Hedge from $18.00 to
$16.50 during the eleven month period from February to
December 1996. The Company received $52,400 as a result
of this restructuring. Under the final contract, the
Company purchased for $149,000 a put option with a
strike price of $16.50, covering the period February
through December 1996, to put to the purchaser an
aggregate of 257,000 barrels of oil in monthly amounts
escalating from 10,000 barrels to 35,000 barrels during
the contract period. The effects of all hedging
contracts resulted in a loss of $15,500 and a gain of
$4,000 during 1995 and 1994, respectively.
4. DISCONTINUED OPERATIONS:
In February 1993, the Company's Board of Directors
approved the purchase of the Duchesne County Fields
which focused the Company's business emphasis on oil
and gas production and away from precious metals
mining. Since March 1994, the Company's only remaining
mining operation has been the Toiyabe Mine. Since July
1992, activities at the Toiyabe Mine have been limited
to detoxification and reclamation procedures in
F - 17<PAGE>
compliance with minimum standards established by
various governmental agencies.
During 1995, the Company focused operations on the
detoxification of leach pad #2 (the Toiyabe Mine has
two leach pads) and certain land recontouring
activities, incurring $434,000 of costs. The
detoxification process generally involves lowering the
constituent levels in leachate solution to
concentrations considered acceptable by the Nevada
Department of Environmental Protection (the "NDEP").
The Company applied for a permit and received
preliminary approval to land apply solutions in a
controlled manner with levels of certain constituents
above state drinking water standards. In October 1995,
the NDEP denied the Company's formal Land Application
Discharge Permit citing new concerns over the
hydrogeology of the application area and certain other
test conclusions. As a result, the Company must now
achieve state drinking water standards for all
constituents in the draindown solution. The Company
estimates that after considering the extra labor,
materials and holding costs required to achieve this
level of purification, between $575,000 and $900,000
will be expended over the five years subsequent to
December 31, 1995, and has established a reserve for
mine reclamation of $600,000. Although the ultimate
future reclamation cost is dependent upon certain
events which cannot be precisely predicted, the Company
believes that based on factors presently known or
anticipated, the current reserve of $600,000 will be
adequate to fully reclaim the Toiyabe Mine in
compliance with Nevada and federal laws. However,
should unforeseen circumstances arise that cause
the closure timetable to be delayed or additional
labor, material and holding costs to be incurred,
future reclamation exposure could exceed $900,000.
Since the Company's business emphasis is no longer in
gold and silver mining, these operations have been
classified as discontinued operations in the
accompanying consolidated financial statements. Sales
of gold and silver during the years ended December 31,
F - 18<PAGE>
1995 and 1994 were $0 and $78,400, respectively. The
remaining assets and liabilities attributable to
discontinued operations in the accompanying
consolidated balance sheets consist of:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ -----------
<S> <C> <C>
Accounts payable and accrued
expenses $ (118,861) $(24,996)
Property reclamation costs,
short-term (200,000) (300,000)
----------- -----------
Net current liabilities related to
discontinued operations $ (318,861) $(324,996)
=========== ===========
Mining property and equipment,
net book value $ 0 $52,688
Property reclamation costs,
long-term (399,433) (283,670)
----------- -----------
Net long-term liabilities related
to discontinued operations $ (399,433) $(230,982)
============ ===========
</TABLE>
Big Blackfoot Property:
In October 1989, the Company purchased a 50% interest
in the Big Blackfoot property located near Lincoln,
Montana. Subsequently, the results of an environmental
impact study and other economic analysis showed that
the existing ore body could not be economically
produced. As a result of these analysis, the Company's
interest in the property was written down to its net
realizable value and held for sale. During the first
quarter of 1994, the Company sold its Big Blackfoot
holdings for approximately $222,500, which was equal to
the net carrying value of the properties sold.
F - 19<PAGE>
5. RESTRICTED CASH:
Under the terms of certain loan agreements which are no
longer outstanding at December 31, 1995, loan proceeds
and oil and gas revenue were required to be deposited
in segregated bank accounts. The segregated funds could
be used only to pay lease operating expenses,
production taxes, approved capital expenditures,
principal and interest payments and certain other
costs. The total amount in the segregated accounts at
December 31, 1994 is reflected as restricted cash on
the accompanying consolidated balance sheet.
6. DEPARTMENT OF ENERGY COOPERATIVE COST SHARING
AGREEMENT:
On October 21, 1992, IPC and the U.S. Department of
Energy ("DOE") signed a cooperative cost sharing
agreement to further develop oil production and
reserves in the State of Utah using secondary water
flood recovery techniques. Total expenditures under the
three year program were expected to be $4.4 million, of
which the DOE would reimburse approximately $1.8
million to the Company. As of December 31, 1995,
substantially all expenditures under this program were
incurred. The Company expects to receive its final
reimbursement of $30,753 from the DOE during 1996.
7. ACQUISITION OF INLAND PRODUCTION COMPANY:
Effective September 21, 1994, the Company acquired all
the outstanding common and preferred stock of IPC by
issuing 7,704,508 shares of common stock and 107,546
shares of Series A convertible preferred stock (the
"Purchase Consideration"). IPC is engaged primarily in
the development of the Monument Butte Field located in
the Uinta Basin area of Northeastern Utah. At the
purchase date, IPC owned working interests varying from
4% to 100% in 8,508 net acres of oil and gas leases in
the Monument Butte Field; and also owned oil and gas
properties in the states of Wyoming and Oklahoma. The
acquisition was accounted for as a purchase.
F - 20<PAGE>
The following unaudited condensed pro forma results of
operations is presented to illustrate the effect of the
merger with IPC on the Company's results of operations
as if the transaction had occurred at January 1, 1994.
<TABLE>
<CAPTION>
1994
-------------
<S> <C>
Revenues $ 1,547,000
=============
Costs and expenses $ 3,408,000
=============
Net loss from continuing
operations $ (2,016,000)
=============
Net loss $ (2,116,000)
=============
Loss per share from continuing
operations $ (.07)
=============
Loss per share $ (.08)
=============
</TABLE>
8. FARMOUT AGREEMENT:
Effective July 1, 1995, the Company entered into a
Farmout Agreement (the "Farmout") with a related party
(the "Farmee") covering the six month period through
December 31, 1995. Twenty-one wells totaling
approximately $6.8 million were drilled (of which 20
were completed and one was a dry hole) under the
Farmout in the Monument Butte Field. Under terms of the
Farmout, the interest in each drill site assigned to
the Farmee reverts to the Company after Payout. Payout
is defined on a lease basis as the point in time when
the Farmee has recovered through production proceeds,
net of production taxes, 100% of the cost to drill,
complete and operate the well or wells on the affected
lease plus a 22% annual rate of return. The Farmee is
also required to pay the Company a management fee of
$25,000 per well, proportionately reduced to the
F - 21<PAGE>
Farmee's working interest and net of COPAS drilling
overhead charges, as reimbursement to the Company for
land, geological, engineering and accounting services.
Management fees of $326,178 were recorded for the
twenty-one wells drilled under the Farmout in 1995. At
December 31, 1995, the Farmee owed the Company $43,000
related to the Farmout.
On November 22, 1995, the Company entered into an
Option Agreement with the Farmee which allows the
Company the right to purchase the Farmout interests on
March 10, 1997 by issuing Common Stock of the Company.
The value of the Farmout interests on March 10, 1997
(the "Farmout Value") is computed using the Payout
calculation as defined in the Farmout. The number of
shares of the Company's Common Stock to be issued is
calculated by dividing the Farmout Value by a value of
$0.50 cents per Common Share. In addition, the Company
issued the Farmee a Warrant Certificate dated November
22, 1995 whereby if the Company does not exercise its
rights under the Option Agreement on March 10, 1997,
the Farmee has three days to purchase for cash the
number of shares of the Company's Common Stock equal to
the Farmout Value divided by a value of $0.50 cents per
Common Share. The Company expects to exercise the
Option Agreement since it is a requirement under the
TCW Loan Agreement. Subject to changes in oil price,
operating costs, production rates and other factors,
the Company estimates the Farmout Value on March 10,
1997 to be between $3.75 and $4.25 million, which would
cause the issuance of 7.5 million to 8.5 million new
shares of the Company's Common Stock.
9. OTHER PROPERTY AND EQUIPMENT:
Other property and equipment at December 31, 1995 and
1994 consists of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ -----------
F - 22<PAGE>
<S> <C> <C>
Mining property and equipment $ 0 $ 238,514
Furniture and fixtures 287,773 187,696
Vehicles 179,680 136,598
Land and buildings 290,041 66,683
------------ -----------
757,494 629,491
Less accumulated depreciation (164,388) (253,363)
------------ -----------
$ 593,106 $ 376,128
============ ===========
</TABLE>
10. LONG-TERM DEBT:
On August 24, 1994, the Company entered into a Loan
Agreement with Joint Energy Development Investments
Limited Partnership ("JEDI"), an affiliate of Enron
Corp., to provide nonrecourse financing for the
development of the Duchesne County Fields (the "Inland
Loan Agreement"). The Company had drawn down $2.5
million under the facility through July 1, 1995, the
date the Company sold the Duchesne County Fields to
Petroglyph Gas Partners, L.P. ("PGP"). The purchase
price paid by PGP was (i) $3 million in cash (less
$53,000 in net closing adjustments between the parties)
(ii) the assumption by PGP of the Company's $2.5
million outstanding liability under the Inland Loan
Agreement and (iii) the assignment by PGP to the
Company of PGP's 38.23% working interest in 8,277 gross
acres of oil and gas leases in Duchesne County, Utah.
JEDI consented to the sale and assumption of the Inland
Loan Agreement by PGP, therefore, Inland has no further
liability or obligation under the Inland Loan
Agreement.
On September 21, 1994, the Company entered into a
separate Loan Agreement with JEDI to provide
nonrecourse financing for the development of the
Monument Butte Field (the "IPC Loan Agreement").
Through November 29, 1995, the Company had drawn down
$4 million under the facility. On November 29, 1995,
the Company entered into a Credit Agreement (the "TCW
F - 23<PAGE>
Loan Agreement") with Trust Company of the West and
affiliated entities (collectively "TCW"), which
provides a recourse loan facility to the Company of up
to $25 million for the development of the Monument
Butte Field. The Company drew down $5 million initially
and used the proceeds to repay $4,123,500 of principal
and interest in full satisfaction of amounts due under
the IPC Loan Agreement and to pay $400,000 of closing
costs associated with the TCW Loan Agreement, with the
balance of funds increasing working capital. The
remaining $20 million of loan availability will be used
to fund development drilling in the Monument Butte
Field during 1996. The TCW Loan Agreement provides that
the Company may borrow up to the additional $20 million
during the commitment period, which expires on
September 30, 1996, unless earlier terminated pursuant
to certain provisions. The TCW Loan Agreement bears
interest at 10% per annum. Interest is payable
quarterly beginning March 27, 1996 and minimum payments
of principal are required quarterly beginning March
1997. In addition to these payments the Company granted
TCW an equity yield enhancement in the form of an
initial 7% overriding royalty interest, proportionately
reduced to the Company's working interest in the oil
and gas properties, commencing November 29, 1995 and
continuing until the internal annual rate of return to
TCW equals 16%, at which time it reduces to 3% until
TCW's internal rate of return equals 22%. The TCW Loan
Agreement also subjects the Company to penalties if the
loan is prepaid prior to its second anniversary date of
November 29, 1997. The Company paid a $250,000
commitment fee at closing. The Company is also required
to meet certain minimum ratios, is subject to covenants
not to engage in various activities without TCW's
consent, and may not pay any dividends or make any
other distributions to stockholders without TCW's
consent. The TCW Loan Agreement also contains a
provision that if any material adverse change occurs in
the Company's financial condition that is not remedied
within 60 days, TCW has the right to declare the
Company in default. The TCW Loan Agreement is
collateralized by the Company's interest in
substantially all of its oil and gas and other
F - 24<PAGE>
properties. Based on the borrowing rates available to
the Company for debt with similar terms and maturities
at December 31, 1995, the fair market value of the TCW
Loan Agreement approximates its carrying value. At
December 31, 1995, the Company had borrowed $5 million
under the TCW Loan Agreement and had established an
$800,000 discount on the note associated with the
initial 7% override.
On May 1, 1995, the Company purchased surface land in
the Monument Butte Field by entering into a loan
agreement (the "Carman Loan Agreement"). The agreement
terms included a payment at closing of $14,493 plus
annual payments of principal and interest of $26,800
due May 1st of each year for the next fourteen years.
Interest accrues at 9.5% per annum and the agreement is
collateralized by the purchased land.
Long-term debt December 31, 1995 and 1994 consists of
the following:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ -----------
<S> <C> <C>
TCW Loan Agreement $5,000,000
Less discount on TCW Loan
Agreement (800,000)
------------
4,200,000
Carman Loan Agreement 202,907
Non-recourse notes with Ford
Motor Credit. The notes
bear interest at 8.5% to
10.25% and are due through
1998. The notes require
monthly payments of $4,680
including interest and are
collateralized by vehicles. 81,339 75,913
F - 25<PAGE>
Inland Loan Agreement 1,800,000
IPC Loan Agreement 2,100,000
Promissory notes with banks 147,086
---------- -----------
Total 4,484,246 4,122,999
Current portion 48,021 1,965,157
----------- -----------
Long-term portion $4,436,225 $2,157,842
=========== ===========
</TABLE>
As of December 31, 1995, the annual principal payments on
long-term debt for the next five years are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1996 $ 48,021
1997 1,133,000
1998 2,221,000
1999 1,712,000
2000 10,000
Thereafter 160,225
----------
Total $5,284,246
==========
</TABLE>
11. INCOME TAXES:
The Company accounts for income taxes under the
provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("SFAS
No. 109"). In 1995 and 1994, no income tax provision
or benefit was recognized due to net operating losses
incurred during the years and the recording of a full
valuation allowance.
Deferred income taxes reflect the impact of temporary
differences between amounts of assets and liabilities
for financial reporting purposes and such amounts as
F - 26<PAGE>
measured by tax laws. The tax effect of the temporary
differences and carryforwards giving rise to the
Company's deferred tax assets and liabilities at
December 31, 1995 is as follows:
<TABLE>
<CAPTION>
Deferred
December 31, Expense December 31,
1994 (Benefit) 1995
----------- --------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Amortization of
deferred exploration
and mining costs $ 135,700 $ 135,700
Net operating loss
carryforwards 5,554,400 165,600 5,720,000
Other 55,300 55,300
------------- --------- -----------
Total 5,690,100 220,900 5,911,000
Valuation allowance (2,941,000) (191,000) (3,132,000)
------------- --------- ------------
Deferred tax assets 2,749,100 29,900 2,779,000
------------- --------- ------------
Deferred tax liabilities:
Depletion, depreciation
and amortization of
property and
equipment (2,528,100) (240,900) (2,769,000)
Department of Energy
refund (221,000) 211,000 (10,000)
------------ --------- -----------
Deferred tax
liabilities (2,749,100) (29,900) (2,779,000)
------------ --------- -----------
Net deferred tax asset - - -
============ ========= ===========
</TABLE>
SFAS No. 109 requires that a valuation allowance be
F - 27<PAGE>
provided if it is more likely than not that some
portion or all of a deferred tax asset will not be
realized. The Company's ability to realize the benefit
of its tax assets will depend on the generation of
future taxable income through profitable operations and
expansion of the Company's oil and gas producing
properties. The market, capital, and environmental
risks associated with that growth requirement are
considerable resulting in the Company's conclusion that
a full valuation allowance be provided, except to the
extent that the benefit of operating loss carryforwards
can be used to offset future reversals of existing
deferred tax liabilities.
At December 31, 1995, the Company had tax basis net
operating loss carryforwards available to offset future
regular and alternative taxable income of $16,820,000
and $16,780,000, respectively, which expire from 1998
to 2010. The Company also has investment tax and new
jobs credit carryforwards of $175,000 and $6,000,
respectively, which expire from 1996 to 2001.
Utilization of the net operating loss carryforwards and
tax credit carryforwards are limited under the change
of ownership tax rules.
12. OVERHEAD FEES AND DIRECT CHARGES:
The Company charges working interest owners various
overhead and management fees on wells drilled and
operated under its supervision. As part of its working
interest, the Company incurs its proportionate share of
such fees as oil and gas lease operating expenses. The
total of overhead fees and other direct charges such as
labor and field charges which have been credited
against general and administrative expenses for the
year ended December 31, 1995 and 1994 are $1,105,000
and $240,880.
13. CAPITAL STOCK:
Common Stock:
F - 28<PAGE>
In connection with the merger with IPC, the Company
increased the number of authorized common shares from
30,000,000 to 100,000,000 shares.
On March 22, 1996, the Company's Board of Directors
approved a 1-for-10 reverse stock split of the
Company's common stock. The effect of the stock split
would be to reduce authorized common shares from
100,000,000 to 10,000,000 shares and reduce outstanding
common shares from 40,927,999 to 4,092,800 shares. The
Board further approved an increase in the number of
post-split authorized shares from 10,000,000 shares to
25,000,000 shares. Consummation of the reverse stock
split and increase in post-split authorized common
shares remains subject to adoption by the stockholders
of the Company at the annual meeting of stockholders to
be held on May 22, 1996.
Series A Convertible Preferred Stock:
In connection with the merger with IPC, the Company
issued 107,546 shares of newly created Series A
convertible preferred stock. The Series A preferred
stock has a $50.00 per share liquidation preference
plus accumulated and unpaid dividends. The Series A
preferred stock was initially redeemable by the Company
at $50.00 per share. On August 25, 1995, the
redemption price increased to $54.00 per share and the
Company has recognized a $427,400 preferred stock
dividend on the Consolidated Statements of
Stockholders' Equity. On August 29, 1996, the
redemption price will further increase to $58.32 per
share. Beginning August 29, 1997, each share will
accrue cumulative cash dividends of 8% per annum based
on the redemption price or $4.66 per share. Each
Series A preferred share is currently convertible at
the option of the holder into 93.995 shares of the
Company's common stock. Currently, the Series A
preferred stockholders have the right to elect three of
the seven members of the Company's Board of Directors.
The Series A preferred stockholders also have the right
to vote as a separate class to approve any merger in
which the Company does not survive, the sale of all or
F - 29<PAGE>
substantially all of the assets of the Company and the
issuance of any class of stock with rights equal or
senior to the Series A preferred stock.
14. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest during 1995 and 1994 was
$586,000 and $133,660, respectively.
The Company purchased land in the Monument Butte Field
by issuing debt for $202,907 in 1995.
The Company acquired all the outstanding capital stock
of IPC in 1994 by issuing the Purchase Consideration.
In conjunction with the acquisition, the following
liabilities were assumed:
<TABLE>
<CAPTION>
<S> <C>
Fair value of assets acquired $ 8,197,000
Fair value of Purchase
Consideration (6,840,000)
-----------
Liabilities assumed $ 1,357,000
===========
</TABLE>
15. RELATED PARTY TRANSACTIONS:
The chairman and chief financial officer of the Company
have participated as limited partners and/or working
interest owners of oil and gas properties in which the
Company has an interest. Effective October 1, 1994, as
required by the merger agreement, the Company purchased
these interests for an aggregate purchase price of
$86,870, which represented fair market value.
As of the effective date of the merger, a $100,000 Loan
Agreement existed between the Company and its chairman,
a director, its chief financial officer and others. On
September 30, 1994 the loan was fully repaid.
F - 30<PAGE>
Prior to their affiliation with the Company and prior
to the Company's purchase of the Duchesne County
Fields, the Company's President and Chief Operating
Officer were hired as consultants by Evertson Oil
Company ("Evertson") to coordinate geological
evaluations of the Duchesne County Fields and to assist
Evertson in finding a development partner for its oil
and gas properties. These individuals exercised their
options to acquire 25% of the capital stock of Evertson
for an aggregate purchase price of $834. In March 1993,
Evertson sold a 50% interest in the Duchesne County
Fields to the Company. In February 1994, Evertson sold
its remaining 50% interest in the Duchesne County
Fields to PGP. In conjunction with the PGP transaction,
Evertson redeemed all the capital stock of Evertson
held by the Company's President and Chief Operating
Officer for $1,000,000.
16. COMMITMENTS:
The Company leases approximately 9,500 square feet of
office space in Denver. The lease expires in June 2000
and provides for a rental rate of $10,354 per month.
Future minimum rental payments under this lease are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 120,000
1997 124,000
1998 124,000
1999 124,000
2000 62,000
----------
$ 554,000
==========
</TABLE>
Total rent expense during 1995 and 1994 was $52,435 and
$43,564, respectively.
F - 31<PAGE>
17. INCENTIVE STOCK OPTIONS, WARRANTS AND 401(K) PLAN:
On August 25, 1988, the Company's Board of Directors
adopted an incentive stock option plan (the "Plan") for
key employees and directors of the Company. During
1994, the number of authorized, but unissued shares of
common stock reserved for issuance under the Plan was
increased from 1,000,000 to 2,128,000. All options
under the Plan are granted at or above fair market
value, are exercisable 90 days after grant and expire
10 years from the date of grant. All options were
exercisable at December 31, 1995.
<TABLE>
<CAPTION>
Number of
Options Option Price
----------------------
<S> <C> <C>
Balance, December 31, 1993 730,500 $.25 - $1.15
Granted 292,000 $.31 - $ .44
Canceled (74,900) $.53 - $1.15
----------
Balance, December 31, 1994 947,600 $.25 - $1.15
Granted 557,000 $ .31 - $ .53
----------
Balance, December 31, 1995 1,504,600 $.25 - $1.15
==========
</TABLE>
Effective February 23, 1993, the Company entered into a
three-year employment agreement with the President and
Chief Executive Officer of the Company for an annual
base salary of $180,000. In addition, the Company
granted the President a five-year warrant to acquire
469,632 shares of the Company's common stock at an
exercise price of $0.4375 per share, and agreed for as
long as he is an executive officer of the Company to
grant him additional five-year warrants equal to 5% of
the number of shares issued by the Company in future
transactions with an exercise price equal to the price
at which such additional shares are issued. The
F - 32<PAGE>
employment agreement is renewable for successive one
year terms, unless either party gives written notice of
such party's intention not to renew at least ninety
days prior to the termination of the current term;
provided, however, it is also subject to termination at
any time by either party by giving at least one year
prior written notice. No notice was given by either
party and, consequently, the employment agreement
automatically renewed for a one-year period expiring
February 23, 1997. If the agreement is terminated by
the Company without cause, the President is entitled to
one years' salary and bonus. Pursuant to this
agreement, the President has received the following
warrants:
<TABLE>
<CAPTION>
Exercise
Date Price Warrants
- ------------------------- ---------- ------------
<S> <C> <C>
October 15, 1993 $0.33 31,500
November 16, 1993 $0.50 15,000
March 3, 1994 $0.35 57,143
September 21, 1994 $0.35 300,000
September 21, 1994 $0.31 385,225
September 21, 1994 $0.60 448,108
February 1, 1995 $0.65 12,500
November 6, 1995 $0.50 300,000
</TABLE>
The Chief Financial Officer of the Company ("CFO")
entered into an employment agreement with the Company
at the closing of the merger with IPC providing for a
two year term, at a salary of $137,500. The employment
agreement also provides for medical and disability
benefits and certain other benefits. As part of his
employment agreement with the Company, the CFO was
granted an option for 200,000 shares of common stock
exercisable at $.3125, the closing "bid" price per
share at the closing IPC merger, and which expires 10
years after the date of grant. The CFO's employment
agreement is renewable for successive one year terms,
unless either party gives written notice of such
F - 33<PAGE>
party's intention not to renew at least 90 days prior
to the termination of the current term; provided,
however, it is also subject to termination at any time
by either party by giving at least one year prior
written notice. If the CFO's agreement is terminated by
the Company without cause, he is entitled to one years'
salary and bonus.
The Chairman of the Board of the Company (the
"Chairman") entered into an employment agreement with
the Company at the closing of the merger with IPC
providing for a two year term, at a salary of $115,000.
The employment agreement also provided for medical and
disability benefits and certain other benefits. As part
of his employment agreement, the Chairman was entitled
to certain life insurance benefits and received an
overriding royalty interest in any oil, gas and mineral
lease previously acquired by IPC or which in the future
may be acquired by the Company, equal to 1% of the
lease interest acquired if such lease acquired relates
to a project developed by the Chairman. The agreement
provided that if the Chairman was terminated by the
Company without cause, he would be entitled to one
years' salary and bonus. Effective July 1, 1995, the
Company and the Chairman mutually agreed to terminate
his employment agreement and entered into a two year
Deferred Compensation Agreement providing for payment
of $70,000 per year to the Chairman, and which
continued his entitlement to health and life insurance
benefits until July 1, 1996 and his entitlement to the
overriding royalty interests earned prior to July 1,
1995.
On December 15, 1993, the Company entered into an
agreement with a consultant to provide services to the
Company in exchange for a retainer of $1,750 per month
plus the grant of an option to purchase 300,000 shares
of Common Stock at $0.50 per share. The option is
exercisable at the rate of 25,000 shares per quarter
commencing December 31, 1993 and must be fully
exercised before October 31, 1998, although if the
consultant's services are terminated, the portion of
the option not yet exercisable becomes permanently
F - 34<PAGE>
unexercisable. In addition, if the average monthly
closing price of the Company's Common Stock exceeds
$2.00 per share, then the entire option is exercisable
immediately.
On March 15, 1995, the Company issued a different
consultant a warrant to purchase 250,000 shares of
common stock at $0.65 per share. The warrant is
exercisable immediately and expires February 1, 1998.
Effective February 1, 1995, the Company adopted a
qualified contributory retirement plan (the "Plan"),
under Section 401(k) of the Internal Revenue Code which
covers all full-time employees who meet certain
eligibility requirements. Voluntary contributions are
made to the Plan by participants. In addition, the
Company matches, at its discretion, a portion of the
participant's voluntary contribution. Matching
contributions of $14,300 were made by the Company in
1995.
18. OIL AND GAS PRODUCING ACTIVITIES:
<TABLE>
Major Customers
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
Purchaser A $385,000 $520,000
Purchaser B 1,387,000 221,000
Purchaser C 277,000
</TABLE>
Costs Incurred in Oil and Gas Producing Activities
Costs incurred in oil and gas producing activities are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
F - 35<PAGE>
<S> <C> <C>
Unproved property
acquisition cost $ 7,238,000 $ 428,000
Proved property
acquisition cost 211,000 505,000
Development cost 2,050,000 2,500,000
Exploration cost 1,381,000 306,000
----------- -----------
Total $10,880,000 $ 3,739,000
=========== ===========
</TABLE>
Net Capitalized Costs
Net capitalized costs related to the Company's oil and
gas producing activities are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Unproved properties $ 8,508,421 $ 1,334,490
Proved properties 8,743,464 10,553,335
Gas and water
transportation
facilities 152,395 643,307
------------ ------------
Total 17,404,280 12,531,132
Accumulated depletion,
depreciation and
amortization (585,590) (489,840)
------------ ------------
Total $ 16,818,690 $ 12,041,292
============ ============
Oil and Gas Reserve Quantities (Unaudited):
The reserve information presented below is based upon
reports prepared by the independent petroleum
engineering firm of Ryder Scott Company. The Company
emphasizes that reserve estimates are inherently
imprecise and that estimates of new discoveries are
F - 36<PAGE>
more imprecise than those of producing oil and gas
properties. As a result, revisions to previous
estimates are expected to occur as modifications are
made to development drilling criteria, additional
production data becomes available or economic factors
change.
Proved oil and gas reserves are the estimated
quantities of crude oil, natural gas, and natural gas
liquids which geological and engineering data
demonstrate with reasonable certainty to be recoverable
in future years from known reservoirs under existing
economic and operating conditions. Proved developed oil
and gas reserves are those expected to be recovered
through existing wells with existing equipment and
operating methods.
Presented below is a summary of the changes in
estimated reserves of the Company, all of which are
located in the United States, for the years ended
December 31, 1995 and 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
-------------------- ---------------------
Oil (Bbl) Gas (Mmcf) Oil (Bbl) Gas (MMcf)
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Proved reserves,
beginning of year 1,502,878 3,726 350,631 2,587
Purchase of reserves
in place 956,046 1,625
Extensions and
discoveries 2,422,129 5,033 100,135 88
Production (104,564) (109) (46,089) (171)
Revisions of previous
estimates (260,777) (891) 142,155 (403)
Sales of reserves in
place (543,687) (2,096)
---------- --------- --------- ---------
Proved reserves, end
of year 3,015,979 5,663 1,502,878 3,726
F - 37<PAGE>
========== ========= ========= =========
Proved developed
reserves, beginning of
year 839,978 1,987 226,719 1,789
========== ========= ========= =========
Proved developed
reserves, end of
year 1,226,696 1,223 839,978 1,987
=========== ========= ========= =========
</TABLE>
Standardized Measure of Discounted Future Net Cash
Flows (Unaudited):
Statement of Financial Accounting Standards No. 69
prescribes guidelines for computing a standardized
measure of future net cash flow and changes therein
relating to estimated proved reserves. The Company has
followed these guidelines which are briefly discussed
below.
Future cash inflows and future production and
development costs are determined by applying year-end
prices and costs to the estimated quantities of oil and
gas to be produced. Estimated future income taxes are
computed using current statutory income tax rates
including consideration for estimated future statutory
depletion. The resulting future net cash flows are
reduced to present value amounts by applying a 10%
annual discount factor.
The assumptions used to compute the standardized
measure are those prescribed by the Financial
Accounting Standards Board and, as such, do not
necessarily reflect the Company's expectations of
actual revenues to be derived from those reserves nor
their present worth. The limitations inherent in the
reserve quantity estimation process, as discussed
previously, are equally applicable to the standardized
measure computations since these estimates are the
basis for the valuation process.
The following summary sets forth the Company's future
net cash flows relating to proved oil and gas reserves
F - 38<PAGE>
based on the standardized measure prescribed in
Statement of Financial Accounting Standards No. 69.
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Future cash inflows $ 60,336,000 $ 31,607,000
Future production
costs (21,292,000) (12,308,000)
Future development
costs (15,819,000) (5,551,000)
Future income tax
provision (4,220,000) (1,006,000)
------------ ------------
Future net cash flows 19,005,000 12,742,000
Less effect of 10%
discount factor (9,574,000) (5,799,000)
------------ ------------
Standardized measure of
discounted future net
cash flows $ 9,431,000 $ 6,943,000
============ ============
</TABLE>
The principal sources of changes in the standardized
measure of discounted future net cash flows are as
follows for the years ended December 31, 1995 and 1994.
1995 1994
------------ ------------
Standardized measure,
beginning of year $ 6,943,000 $ 2,356,000
Purchase of reserves
in place 4,430,000
Sales of reserves in
place (3,187,000)
Sales of oil and gas
produced, net of
production costs (762,000) (58,000)
F - 39<PAGE>
Net change in prices
and production costs 2,043,000 (600,000)
Extensions, discoveries
and improved recovery,
net 33,150,000 1,188,000
Revisions of previous
quantity estimates (6,240,000) 1,085,000
Change in future
development costs (13,064,000) (1,648,000)
Net change in income
taxes (3,738,000) 511,000
Accretion of discount (5,714,000) (321,000)
------------- ------------
Standardized measure,
end of year $ 9,431,000 $ 6,943,000
============= ============
F-40<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
Number Description of Exhibits Numbered
Page
2.1 Agreement and Plan of Merger between the
Company, IRI Acquisition Corp. and Lomax
Exploration Company ("IPC") (exclusive of
all exhibits) (Filed as exhibit 2.1 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by this reference).
3.1 Articles of Incorporation, as amended
through May 5, 1993 (filed as Exhibit 3.1 to
the Company's Registration Statement on Form
S-18, Registration No. 33-11870-F, and
incorporated herein by reference).
3.1.1 Articles of Amendment to Articles of
Incorporation dated May 6, 1993 (filed as
Exhibit 3.1.1 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1993, and incorporated herein
by reference).
3.1.2 Articles of Amendment to Articles of
Incorporation dated August 16, 1994
designating a series of stock (filed as
Exhibit 3.1.2 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein
by reference).
3.1.3 Articles of Amendment to Articles of
Incorporation filed with Secretary of State
of Washington on August 30, 1994 (filed as
Exhibit 3.1.3 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein
by reference).
i<PAGE>
3.1.4 Articles of Correction to Articles of
Amendment dated August 31, 1994 (filed as
Exhibit 3.1.4 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein
by reference).
3.2 By-Laws of the Company (filed as Exhibit 3.2
to the Company's Registration Statement on
Form S-18, Registration No. 33-11870-F, and
incorporated herein by reference).
3.2.1 Amendment to Article IV, Section 1 of the
Bylaws of the Company adopted February 23,
1993 (filed as Exhibit 3.2.1 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, and
incorporated herein by reference).
3.2.2 Amendment to the Bylaws of the Company
adopted April 8, 1994 (filed as Exhibit
3.2.2 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by
reference).
3.2.3 Amendment to the Bylaws of the Company
adopted April 27, 1994 (filed as Exhibit
3.2.3 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by
reference).
*4.1 Credit Agreement between the Company, IPC
and Trust Company of the West and various
affiliated entities (collectively, "TCW")
dated November 29, 1995 (exclusive of all
exhibits and schedules).
*4.1.2 Royalty Agreement dated November 29, 1995,
between IPC, TCW DR IV Royalty Partnership,
L.P. and TCW (exclusive of all exhibits and
schedules).
ii<PAGE>
*4.1.3 Conveyance of Adjustable Overriding Royalty
Interest dated November 29, 1995 between IPC
and TCW DR IV Royalty Partnership, L.P.
(exclusive of all exhibits and schedules).
*4.1.4 Deed of Trust, Mortgage, Line of Credit
Mortgage, Assignment, Security Agreement,
Fixture Filing and Financing Statement dated
November 29, 1995 between IPC, First
American Title Company of Utah, Trustee, and
TCW Asset Management Company, Collateral
Agent (exclusive of all exhibits and
schedules).
*4.1.5 Guaranty dated November 29, 1995, executed
by Inland Resources Inc. in favor of TCW and
other named parties.
10.1 1988 Option Plan of Inland Gold and Silver
Corp. (filed as Exhibit 10(15) to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988, and
incorporated herein by reference).
10.1.1 Amended 1988 Option Plan of Inland Gold and
Silver Corp. (filed as Exhibit 10.10.1 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, and
incorporated herein by reference).
10.1.2 Amended 1988 Option Plan of the Company, as
amended through August 29, 1994 (including
amendments increasing the number of shares
to 2,128,000 and changing "formula award")
(filed as Exhibit 10.1.2 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and
incorporated herein by reference).
10.2 Warrant Agreement and Warrant Certificate
between Kyle R. Miller and the Company dated
February 23, 1993 (filed as Exhibit 10.2 to
the Company's Current Report on Form 8-K
iii<PAGE>
dated February 23, 1993, and incorporated
herein by reference).
10.2.1 Warrant Certificate between Kyle R. Miller
and the Company dated October 15, 1993
representing 31,500 shares (filed as Exhibit
10.2.1 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein
by reference).
10.2.2 Warrant Certificate between Kyle R. Miller
and the Company dated March 22, 1994
representing 57,142 shares (filed as Exhibit
10.2.2 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein
by reference).
10.2.3 Warrant Certificate between Kyle R. Miller
and the Company dated September 21, 1994
representing 448,108 shares (filed as
Exhibit 10.2.3 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1994, and incorporated
herein by reference).
10.2.4 Warrant Certificate between Kyle R. Miller
and the Company dated September 21, 1994
representing 385,225 shares (filed as
Exhibit 10.2.4 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1994, and incorporated
herein by reference).
10.2.5 Warrant Certificate between Kyle R. Miller
and the Company dated September 21, 1994
representing 300,000 shares (filed as
Exhibit 10.2.5 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1994, and incorporated
herein by reference).
iv<PAGE>
10.2.6 Amendment to Warrant Certificates filed as
Exhibits 10.2, 10.2.1 and 10.2.2 (filed as
Exhibit 10.2.6 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1994, and incorporated
herein by reference).
*10.2.7 Warrant Certificate between Kyle R. Miller
and the Company dated November 16, 1993
representing 15,000 shares.
*10.2.8 Warrant Certificate between Kyle R. Miller
and the Company dated March 15, 1995
representing 12,500 shares.
*10.2.9 Warrant Certificate between Kyle R. Miller
and the Company dated November 6, 1995
representing 300,000 shares.
10.2.10 First Amendment to Warrant Agreement between
the Company and Kyle R. Miller dated October
19, 1995 (filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended September 30,
1995, and incorporated herein by reference).
10.3 Employment Agreement between Kyle R. Miller
and the Company dated February 23, 1993
(filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K dated February
23, 1993, and incorporated herein by
reference).
10.4 Lease Agreement - Commercial Premises (short
form) dated August 12, 1988 by and between
Broadway Management Company and the Company,
together with Addendums to Lease dated
October 2, 1989, November 6, 1991 and March
8, 1993 (filed as Exhibit 10.18 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, and
incorporated herein by reference).
v<PAGE>
10.5 Purchase and Sale Agreement between the
Company and Evertson Oil Company, Inc. dated
March 15, 1993 (filed as Exhibit 10.19 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, and
incorporated herein by reference).
10.6.1 Wrap Around Agreement between Petroglyph Gas
Partners, L.P. ("PGP") and the Company dated
January 31, 1994 (filed as Exhibit 10.20.1
to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31,
1993, and incorporated herein by reference).
10.6.2 Assignment of Purchase and Sale Agreement
from the Company to PGP (filed as Exhibit
10.20.2 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended
December 31, 1993, and incorporated herein
by reference).
10.6.3 Ratification of Purchase and Sale Agreement
between Evertson Oil Company, Inc. and the
Company dated January 31, 1994 (filed as
Exhibit 10.20.3 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1993, and incorporated
herein by reference).
10.6.4 Letter from PGP to the Company dated January
28, 1994 (filed as Exhibit 10.20.4 to the
Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1993, and
incorporated herein by reference).
10.6.5 Asset Purchase and Sale Agreement dated
August 25, 1995, but effective as of July 1,
1995, by and between the Company and PGP
(without exhibits) (filed as Exhibit 10.1 to
the Company's Current Report on Form 8-K
dated September 19, 1995, and incorporated
herein by reference).
vi<PAGE>
10.6.6 Assignment and Assumption Agreement, First
Amendment to Loan Agreement, and
Confirmation of Documents dated September
19, 1995 by and between the Company, PGP and
Joint Energy Development Investments Limited
Partnership (without exhibits) (filed as
Exhibit 10.2 to the Company's Current Report
on Form 8-K dated September 19, 1995, and
incorporated herein by reference).
10.7.1 Operating Agreement dated February 25, 1994
between the Company, PGP and Petroglyph
Operating Company, Inc. related to a portion
of the Duchesne County Fields (filed as
Exhibit 10.21.1 to the Company's Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1993, and incorporated
herein by reference).
10.7.2 Operating Agreement dated February 25, 1994
between the Company, PGP and Petroglyph
Operating Company, Inc. related to the
remainder of the Duchesne County Fields
(filed as Exhibit 10.21.2 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1993, and
incorporated herein by reference).
10.8 Cooperative Agreement between IPC and the
U.S. Department of Energy, and related
correspondence (filed as Exhibit 10.22 to
the Company's Registration Statement on Form
S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.9 Employment Agreement between IPC and Bill I.
Pennington effective May 1, 1993, which was
replaced by Exhibit 10.9.1 (filed as Exhibit
10.23 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by
reference).
vii<PAGE>
10.9.1 Employment Agreement between the Company and
Bill I. Pennington dated September 21, 1994
(filed as Exhibit 10.9.1 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and
incorporated herein by reference).
10.10 Employment Agreement between IPC and John D.
Lomax effective May 1, 1992 which was
replaced by Exhibit 10.10.1 (filed as
Exhibit 10.24 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by
reference).
10.10.1 Employment Agreement between the Company and
John D. Lomax dated September 21, 1994
(filed as Exhibit 10.10.1 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and
incorporated herein by reference).
10.10.2 Deferred Compensation Agreement dated
effective July 1, 1995 between the Company
and John D. Lomax (filed as Exhibit 10.4 to
the Company's Quarterly Report on Form 10-QSB for the
fiscal quarter ended June 30,
1995, and incorporated herein by reference).
*10.10.3 First Amendment to Deferred Compensation
Agreement dated effective December 1, 1995
between the Company, IPC and John D. Lomax.
10.11 Loan Agreement dated July 8, 1993 between
IPC and First Interstate Bank of Utah, N.A.
regarding $250,000 loan (filed as Exhibit
10.25 to the Company's Registration
Statement on Form S-4, Registration No. 33-80392,
and incorporated herein by reference).
10.11.1 Floating Rate Promissory Note dated July 8,
1993 in the amount of $250,000 executed by
IPC and representing the loan described in
Exhibit 10.11 (filed as Exhibit 10.25.1 to
viii
<PAGE>
the Company's Registration Statement on Form
S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.11.2 Assignment of Monies Due and to Become Due
dated July 8, 1993 executed by IPC and
relating to Exhibit 10.11 (filed as Exhibit
10.25.2 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by
reference).
10.11.3 Continuing Guaranty dated July 8, 1993
executed by John D. Lomax and Bill I.
Pennington in favor of First Interstate Bank
of Utah, N.A. (filed as Exhibit 10.25.3 to
the Company's Registration Statement on Form
S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.11.4 Deed of Trust, Mortgage, Assignment,
Security Agreement, and Financing Statement
executed by IPC dated July 19, 1993 securing
the obligations described in Exhibit 10.11
(filed as Exhibit 10.25.4 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.12 Loan Agreement dated June 1, 1994 between
IPC and John D. Lomax, Bill I. Pennington,
Jack N. Warren, Allan C. King and T Brooke
Farnsworth relating to $100,000 loan to IPC
(filed as Exhibit 10.26 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.12.1 Promissory Note dated June 1, 1994 payable
by IPC to the persons described in Exhibit
10.12 relating to the loan described in
Exhibit 10.12 (filed as Exhibit 10.26.1 to
the Company's Registration Statement on Form
ix<PAGE>
S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.12.2 Deed of Trust, Mortgage, Assignment,
Security Agreement, and Financing Statement
executed by IPC and securing the loan
described in Exhibit 10.12 (filed as Exhibit
10.26.2 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by
reference).
10.12.3 Security Agreement executed by IPC and
securing the loan described in Exhibit 10.12
(filed as Exhibit 10.26.3 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.13 Subcontract Agreement between IPC and the
University of Utah dated September 25, 1992
(filed as Exhibit 10.27 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.14 Subcontract Agreement dated October 8, 1992
between IPC and the University of Utah
Research Institute (filed as Exhibit 10.28
to the Company's Registration Statement on
Form S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.15 Chevron Crude Oil Purchase Contract No.
531144 dated October 25, 1988, as amended by
Amendment No. 1 dated November 27, 1989,
Amendment No. 2 dated September 12, 1990,
Amendment No. 3 dated July 15, 1991,
Amendment No. 4 dated January 22, 1992,
Amendment No. 5 dated January 13, 1993, and
the March 4, 1992 letter from Chevron U.S.A.
Products Company to all Chevron Products
Company customers (filed as Exhibit 10.29 to
the Company's Registration Statement on Form
xi<PAGE>
S-4, Registration No. 33-80392, and
incorporated herein by reference).
10.16 Lease dated March 30, 1993 between Marshall
Properties, Inc. and IPC (filed as Exhibit
10.30 to the Company's Registration
Statement on Form S-4, Registration No.
33-80392, and incorporated herein by
reference).
10.17 Agreement between IPC and Bill I. Pennington
(filed as Exhibit 10.31 to the Company's
Registration Statement on Form S-4,
Registration No. 33-80392, and incorporated
herein by reference).
10.18 Subscription Agreement between the Company
and Smith Management Company dated May 12,
1994 (filed as Exhibit 10.34 to the
Company's Registration Statement on Form S-4,
Registration No. 33-80392, and
incorporated herein by reference).
10.18.1 Amendment to Subscription Agreement filed as
Exhibit 10.32, dated September 16, 1994
(filed as Exhibit 10.18.1 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and
incorporated herein by reference).
10.19 Registration Rights Agreement dated
September 21, 1994 between the Company and
Energy Management Corporation, a wholly
owned subsidiary of Smith Management Company
and the assignee of Smith Management Company
under the Subscription Agreement filed as
Exhibit 10.18 (filed as Exhibit 10.19 to the
Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1994, and
incorporated herein by reference).
10.19.1 Correspondence constituting an
amendment/clarification of the Registration
Rights Agreement filed as Exhibit 10.19
xii<PAGE>
(filed as Exhibit 10.19.1 to the Company's
Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, and
incorporated herein by reference).
10.19.2 Registration Rights Agreement dated March
20, 1995 between the Company and Energy
Management Corporation (filed as Exhibit
10.19.2 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended
December 31, 1994, and incorporated herein
by reference).
10.20 Swap Agreement dated August 4, 1994 between
the Company and Enron Risk Management
Services Corp.(filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended September 30,
1994, and incorporated herein by reference).
10.21 Swap Agreement dated August 26, 1994 between
the Company and JEDI (filed as Exhibit 10.2
to the Company's Quarterly Report on Form
10-QSB for the fiscal quarter ended
September 30, 1994, and incorporated herein
by reference).
10.22 Swap Agreement dated August 4, 1994 between
IPC and Enron Risk Management Services Corp.
(filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-QSB for the
fiscal quarter ended September 30, 1994, and
incorporated herein by reference).
10.23 Subscription Agreement between the Company
and Pengo Securities Corp. dated October 23,
1995, without exhibits (filed as Exhibit
10.1 to the Company's Current Report on Form
8-K dated November 6, 1995, and incorporated
herein by reference).
10.23.1 Registration Rights Agreement between the
Company and Pengo Securities Corp. dated
November 6, 1995 (filed as Exhibit 10.2 to
xiii<PAGE>
the Company's Current Report on Form 8-K
dated November 6, 1995, and incorporated
herein by reference).
10.24 Combined Hydrocarbon Lease between IPC and
the U.S. Department of the Interior, Bureau
of Land Management ("Bureau") dated
effective October 18, 1995 relating to
677.36 acres (filed as Exhibit 10.3 to the
Company's Current Report on Form 8-K dated
November 6, 1995, and incorporated herein by
reference).
10.25 Combined Hydrocarbon Lease between IPC and
the Bureau dated effective October 18, 1995
relating to 2,879.94 acres (filed as Exhibit
10.4 to the Company's Current Report on Form
8-K dated November 6, 1995, and incorporated
herein by reference).
10.26 Combined Hydrocarbon Lease between IPC and
the Bureau dated effective October 18, 1995
relating to 647.32 acres (filed as Exhibit
10.5 to the Company's Current Report on Form
8-K dated November 6, 1995, and incorporated
herein by reference).
10.27 Combined Hydrocarbon Lease between IPC and
the Bureau dated effective October 18, 1995
relating to 1,968.01 acres (filed as Exhibit
10.6 to the Company's Current Report on Form
8-K dated November 6, 1995, and incorporated
herein by reference).
10.28 Farmout Agreement between IPC, the Company
and Randall D. Smith, dated effective July
1, 1995 (filed as Exhibit 10.3 to the
Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended June 30, 1995,
and incorporated herein by reference).
*10.29 Option Agreement dated November 22, 1995
between the Company, IPC and Randall D.
Smith.
xv<PAGE>
*10.29.1 Warrant Certificate dated November 22, 1995
granted by the Company to Randall D. Smith,
together with Exhibit "A", a Registration
Rights Agreement.
*10.30 Crude Oil Call/Put Option (Costless Collar)
between IPC and Koch Gas Services Company
dated November 20, 1995.
10.31 Swap Agreement dated November 22, 1994
between the Company and Joint Energy
Investments Limited Partnership (filed as
Exhibit 10.1 to the Company's Quarterly
Report on Form 10-QSB for the fiscal quarter
ended June 30, 1995, and incorporated herein
by reference).
*10.31.1 Termination Agreement Revised dated January
18, 1996 between the Company and Enron
Capital & Trade Resources Corp. ("ECT")
relating to Exhibit 10.31.
10.32 Swap Agreement dated January 18, 1995
between the Company and ECT (filed as
Exhibit 10.2 to the Company's Quarterly
Report on Form 10-QSB for the fiscal quarter
ended June 30, 1995, and incorporated herein
by reference).
*10.33 Put Option dated January 18, 1996 between
the Company and ECT.
*10.34 Commodity Option dated January 18, 1996
between IPC and ECT.
*21.1 Subsidiaries of the Company.
**23.1 Consent of Coopers & Lybrand L.L.P.
*23.2 Consent of Ryder Scott Company Petroleum Engineers.
*27.1 Financial Data Schedule required by Item 601 of
Regulation S-B.
xvi<PAGE>
________________________
* Filed with the original of the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1995,
filed with the Securities and Exchange Commission on April
1, 1996, and incorporated herein by reference.
** Filed herewith.
xvii<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statements of Inland Resources Inc. on Form S-8
(File No. 33-41662), Form S-8 (File No. 33-84640), Form S-3 (File
No. 33-84766) and Form S-3 (File No. 33-80392) of our report
dated March 20, 1996, on our audits of the consolidated financial
statements of Inland Resource Inc. as of December 31, 1995 and
1994 and for the years then ended, which report is included in
this Annual Report on Form 10-KSB as amended by Form 10-KSB/A
(Amendment No. One).
Coopers & Lybrand L.L.P.
Denver, Colorado
April 15, 1996
<PAGE>
