<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1994 Commission file number 1-8674
GLOBAL NATURAL RESOURCES INC.
(Exact name of Registrant as specified in its charter)
New Jersey 93-0835865
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5300 Memorial Drive 77007
Suite 800 (Zip Code)
Houston, Texas
(Address of principal
executive offices)
Registrant's telephone number, including area code: (713) 880-5464
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.
X YES NO
------- -------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of May 2, 1994, 30,069,373 shares of common stock were outstanding.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements. . . . . . . . . . . . . . . 1
Consolidated Balance Sheets - March 31, 1994 and December 31, 1993. . . . 1
Consolidated Statements of Operations for the Three Months Ended
March 31, 1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements. .. . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 9
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Defaults upon Senior Securities. . . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . 9
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
i
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share and Per Share Amounts)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 17,591 $ 16,045
Short-term liquid investments. . . . . . . . . . . . . . . . . 42,084 49,947
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 9,932 14,081
Current investments . . . . . . . . . . . . . . . . . . . . . 1,020 1,663
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 891
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . 71,328 82,627
-------- --------
Properties and equipment, at cost:
Oil and gas properties (successful efforts method) . . . . . . 95,896 91,036
Pipeline facilities. . . . . . . . . . . . . . . . . . . . . . 19,085 18,976
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,254 10,054
-------- --------
125,235 120,066
Less: accumulated depletion, depreciation and amortization . . (55,170) (54,156)
-------- --------
Net properties and equipment. . . . . . . . . . . . . . . 70,065 65,910
-------- --------
Investment in Russian joint venture. . . . . . . . . . . . . . . 11,644 8,783
Indonesian venture advances, net . . . . . . . . . . . . . . . . 2,728 3,099
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 284
-------- --------
$156,046 $160,703
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . $ 8,861 $ 14,319
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . 4,719 6,248
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 887 785
-------- --------
Total current liabilities. . . . . . . . . . . . . . . . . 14,467 21,352
-------- --------
Deferred credits and other . . . . . . . . . . . . . . . . . . . 721 600
Commitments and contingencies. . . . . . . . . . . . . . . . . . - -
Redeemable bearer shares . . . . . . . . . . . . . . . . . . . . 18,043 18,375
Shareholders' equity:
Common stock; authorized 100,000,000 shares at $1.00 par
value; issued and outstanding 33,251,287 in 1994 and
33,190,287 in 1993 . . . . . . . . . . . . . . . . . . . . . 33,251 33,190
Capital in excess of par value . . . . . . . . . . . . . . . . 137,941 137,648
Retained deficit . . . . . . . . . . . . . . . . . . . . . . . (33,849) (35,914)
-------- --------
137,343 134,924
Less: treasury stock; 3,181,924 shares in 1994
and 3,186,329 in 1993 . . . . . . . . . . . . . . . . . (14,528) (14,548)
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . 122,815 120,376
-------- --------
$156,046 $160,703
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1994 1993
----------- -----------
<S> <C> <C>
Revenues:
Oil and gas. . . . . . . . . . . . . . . . . . . . $ 8,266 $ 7,981
Pipeline . . . . . . . . . . . . . . . . . . . . . 4,893 6,582
Other. . . . . . . . . . . . . . . . . . . . . . . 250 195
----------- -----------
13,409 14,758
----------- -----------
Expenses:
Production . . . . . . . . . . . . . . . . . . . . 839 992
Exploration. . . . . . . . . . . . . . . . . . . . 1,582 1,748
Pipeline cost of sales . . . . . . . . . . . . . . 4,745 6,131
Depletion, depreciation and amortization . . . . . 1,457 1,993
Administrative . . . . . . . . . . . . . . . . . . 1,678 1,681
----------- -----------
10,301 12,545
----------- -----------
Income from operations . . . . . . . . . . . 3,108 2,213
Other income (expense):
Interest income. . . . . . . . . . . . . . . . . . 592 371
Interest expense . . . . . . . . . . . . . . . . . (21) (25)
Other, net . . . . . . . . . . . . . . . . . . . . 288 1,733
----------- -----------
859 2,079
----------- -----------
Income before income tax expense . . . . . . . . . 3,967 4,292
Income tax expense . . . . . . . . . . . . . . . . 1,902 2,062
----------- -----------
Net income . . . . . . . . . . . . . . . . . . . . $ 2,065 $ 2,230
=========== ===========
Net income per share based on weighted average
shares outstanding:
Net income primary . . . . . . . . . . . . . . . . $ .07 $ .09
=========== ===========
Net income assuming full dilution . . . . . . . . $ .07 $ .08
=========== ===========
Weighted average common shares outstanding:
Primary. . . . . . . . . . . . . . . . . . . . . . 30,036,670 23,657,738
=========== ===========
Assuming full dilution . . . . . . . . . . . . . . 30,036,670 29,828,515
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1994 1993
------- --------
<S> <C> <C>
Cash Flow from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,065 $ 2,230
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion, depreciation and amortization. . . . . . . . . . . . . 1,457 1,993
Leasehold impairments and dry hole expense . . . . . . . . . . . 867 1,258
Unrealized loss on short-term liquid investments. . . . . . . . . 218 -
Gain on asset sales . . . . . . . . . . . . . . . . . . . . . . . (465) (2,147)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2
Changes in:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . 4,149 606
Other current assets . . . . . . . . . . . . . . . . . . . . . . 833 1,148
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . (5,458) (1,116)
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . (1,529) 340
Short-term liquid investments . . . . . . . . . . . . . . . . . . 7,645 -
Deferred credits . . . . . . . . . . . . . . . . . . . . . . . . 121 (14)
------- --------
Net cash provided by operating activities. . . . . . . . . . . . . . 9,903 4,300
------- --------
Cash Flows from Investing Activities:
Additions to oil and gas properties. . . . . . . . . . . . . . . . . (6,140) (3,097)
Additions to pipeline facilities and other properties
and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . (330) (199)
Decrease (increase) in other assets. . . . . . . . . . . . . . . . . - 46
Purchases of short-term liquid investments . . . . . . . . . . . . . - (139,141)
Proceeds from sales of short-term liquid investments . . . . . . . . - 143,980
Proceeds from sales of assets. . . . . . . . . . . . . . . . . . . . 481 2,803
Investment in Russian joint venture. . . . . . . . . . . . . . . . . (2,862) (652)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 (40)
------- --------
Net cash provided (used) in investment activities. . . . . . . . . . (8,503) 3,700
------- --------
Cash Flows from Financing Activities:
Proceeds from common stock issuance. . . . . . . . . . . . . . . . . 354 260
Redemptions of bearer shares . . . . . . . . . . . . . . . . . . . . (332) -
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 (34)
------- --------
Net cash provided by financing activities. . . . . . . . . . . . . . 146 226
------- --------
Net increase (decrease) in cash and cash equivalents . . . . . . . . 1,546 8,226
Cash and cash equivalents at beginning of period . . . . . . . . . . 16,045 19,486
------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . $17,591 $ 27,712
======= ========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4 $ 4
======= ========
Income taxes:
U. S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,836 1,866
------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,836 $ 1,866
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Supplemental disclosure of non-cash investing and financing activities:
In connection with the Company's Employees 401k Savings Plan, the Company
contributed 4,405 treasury shares on March 31, 1994 with a market value of
approximately $30,000 to the plan.
In connection with the Hambros agreement referred to in Note 3, approximately
$64,000 was transferred into capital in excess of par value and approximately
$11,000 into common stock as a result of the reduction in common stock subject
to put during the three months ended March 31, 1993. During the same period in
1994, no such transactions were made.
As referred to in Note 4, in March 1993, Prudential converted its Preferred
Stock into 6,311,537 shares of the Company's common stock. These shares are
not registered and Prudential will be unable to sell the shares in the public
market without registration with the SEC or an exemption from such
registration.
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
GLOBAL NATURAL RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
(1) Basis for Preparation of Financial Statements
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to
such rules and regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading. It is suggested
that these consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
In the opinion of Management of the Company, the accompanying unaudited
consolidated financial statements contain all necessary adjustments to present
fairly the financial position, the results of operations and cash flows for the
periods reported. All adjustments are of a normal recurring nature.
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 ("Statement 115"), "Accounting for Certain
Investments in Debt and Equity Securities." The cumulative effect of this
accounting change as of January 1, 1994 had no material impact upon the
financial statements of the Company.
Certain reclassifications have been made to the 1993 financial statements to
conform to the presentation used in 1994.
The results of operations for the above periods are not necessarily
indicative of the results to be expected for the full year.
(2) Investments
The Company adopted the provisions of Statement 115 at January 1, 1994.
Under Statement 115, the Company classifies its debt and marketable equity
securities in one of three categories: trading, available-for-sale, or
held-to-maturity. Trading securities are bought and held principally for the
purpose of selling them in the near term. Held-to-maturity securities are
those securities in which the Company has the ability and intent to hold the
security until maturity. Any other securities not included in trading or
held-to-maturity are classified as available-for-sale.
The Company has no held-to-maturity or available for sale securities.
Trading securities are recorded at fair value. Unrealized holding gains and
losses on trading securities are included in earnings. Dividend and interest
income are recognized when earned.
Marketable investment securities at December 31, 1993 and March 31, 1994
consist of certificates of deposit and U.S. government and corporate debt
securities (included in short-term liquid investments), and equity securities
(included in current investments). During the three month period ending March
31, 1994, the Company recorded $218,000 of unrealized losses resulting from
changes in the differences between cost and market value of short-term liquid
investments.
Short-term liquid investments at December 31, 1993 are carried at cost which
approximates fair value. Current investments at December 31, 1993 are carried
at the lower of aggregate cost ($1.7 million) or market value ($1.9 million).
Investment in Russian joint venture
In 1990, the company formed Texneft Inc. ("Texneft") to participate in a
joint venture in Russia with Tatneft, a Russian oil production amalgamation
which operates the oil fields of Tatarstan, Russia. Texneft, an 80% owned
subsidiary, has a 50% interest in the joint venture, Tatex. An agreement
between the minority shareholders of Texneft and the Company requires the
Company to advance to Texneft sufficient cash to fund its administrative
expenses and its contributions to Tatex. In turn, Texneft will make no
distributions to its shareholders until the Company has been repaid a sum equal
to the total
5
<PAGE> 8
of its advances to Texneft. As of December 31, 1993 and March 31, 1994, the
Company's outstanding advances totaled $11.7 million and $14.5 million,
respectively.
The impact that the Russian joint venture has had on the Company's financial
statements for the three month period ending March 31, 1993 and 1994 is
summarized in thousands in the following table. The revenue and expense
information presented is the Company's pro-rata share (80%) of Texneft's
consolidated financial statements which includes 50% of Tatex activities.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1994 1993
------- ------
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . $ 2,116 $ 459
------- ------
Expenses
Operating and administrative . . . . . . . . . . . 1,298 729
Export taxes . . . . . . . . . . . . . . . . . . . 777 144
------- ------
Total expenses . . . . . . . . . . . . . . . 2,075 873
------- ------
Income (loss) before U. S. income tax. . . . . . . . . 41 (414)
Advances from Company, net . . . . . . . . . . . . . . 2,820 1,067
------- ------
Net increase in equity investment. . . . . . . . . . . 2,861 653
Investment at beginning of period. . . . . . . . . . . 8,783 6,319
------- ------
Investment at end of period. . . . . . . . . . . . . . $11,644 $6,972
======= ======
</TABLE>
(3) Redeemable Bearer Shares
In August 1993, the Company received $19.2 million, the cash held by the
Hambros Channel Islands Trust Corporation Limited ("Trust"), in the form of an
interest-free loan. The loan is repayable on demand only to the extent
necessary to redeem bearer share warrants presented for exchange until July
2008. Each bearer share warrant presented during this period will be redeemed
for $6.66. As of March 31, 1994, there were 2,776,872 outstanding bearer share
warrants. The loan is secured by a letter of credit from a bank. The letter
of credit is secured by certain of the Company's short-term liquid investments.
During 1994 and 1993 there were no drawings under the letter of credit. In
July 2008, the obligation of the Company to holders of bearer share warrants
will cease, the interest-free loan will terminate, and any remaining cash will
revert to the Company and will be accounted for as an increase to capital in
excess of par value.
(4) Shareholders' Equity
In 1987, the Company sold to Prudential Insurance Company of America
("Prudential") $50 million of convertible subordinated notes ("Notes"). In
1991, Prudential converted the Notes into Series A Preferred Stock. In March
1993, Prudential converted its Preferred Stock into 6,311,537 shares of the
Company's common stock. These shares are not registered and Prudential will be
unable to sell these shares in the public market without registration with the
SEC or an exemption from such registration.
(5) Earnings per Share
Earnings per share is computed based upon the weighted average common shares
outstanding, determined on a monthly basis. Unexercised stock options do not
have a dilutive effect on the reported earnings per common share. Fully
diluted earnings per share for the three months ended March 31, 1993 was
calculated assuming conversion of Prudential's preferred stock into Company
common stock effective January 1, 1993.
6
<PAGE> 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Introduction
The Company recorded net income of $2.1 million ($.07 per share) for the
first three months of 1994, as compared to net income of $2.2 million ($.09 per
share) for the same period in 1993. The 1993 results include a gain of $2.1
million ($.09 per share) on asset sales, while 1994 results include a gain of
$.5 million ($.02 per share) on similar transactions.
Results of Operations - Three Months Ended March 31, 1994 and 1993
Oil and Gas Revenues are summarized for the three months ended March 31, 1994
and 1993 in the following table:
<TABLE>
<CAPTION>
1994 1993
------- -------
(thousands of dollars)
<S> <C> <C>
United States
Oil . . . . . . . . . . . . $ 673 $1,414
Gas . . . . . . . . . . . . 4,314 3,192
Indonesia
Oil . . . . . . . . . . . . $ 154 $ 186
Gas . . . . . . . . . . . . 3,125 3,092
Argentina
Oil . . . . . . . . . . . . $ - $ 97
</TABLE>
United States oil sales volumes were 52,153 barrels for the three months
ended March 31, 1994, as compared to 77,038 barrels for the same period in
1993. This decrease of 24,885 barrels (32%) is principally due to the
disposition of certain domestic producing properties during 1993. The average
oil price decreased to $12.90 per barrel in 1994 as compared to $18.35 per
barrel in 1993.
United States gas sales volumes were 2.0 Bcf for the three months ended
March 31, 1994 as compared to 1.7 Bcf for the same period in 1993. This
increase of .3 Bcf (18%) is primarily due to increased production from the
Company's Taylor Lake field. The average gas price increased from $1.90 per
Mcf in 1993 to $2.12 per Mcf in 1994.
Indonesian liquid natural gas (LNG) liftings for the three months ended March
31, 1994 totalled 118 as compared to 104 for the same period in 1993. The
Company does not have direct access to information with respect to oil and gas
operations in Indonesia and has not been advised as to changes in any
additional factors (i.e. prices or oil and gas production) which would affect
oil and gas revenues.
The Company sold, pending formal Argentinean governmental approval, its
working interest in its Argentinean properties during 1993.
Pipeline Operations contributed $4.9 million to consolidated revenues and
incurred $4.7 million in pipeline operating expenses, exclusive of depreciation
for the three months ended March 31, 1994 as compared to $6.6 million in
revenues and $6.1 million in expenses for the same period in 1993. The
primary reason for the decrease in revenues and expenditures in 1994 as
compared to 1993 was a decrease in marketing activities for working interest
partners at the Taylor Lake field. The pipeline segment generated net income
from operations before taxes of approximately $10,000 for the three months
ended March 31, 1993 as compared to losses of $.2 million for the same period
in 1994.
Expenses decreased to $10.3 million for the three months ended March 31, 1994
as compared to $12.5 million for the same period in 1993. This 18% decrease
is primarily due to decreases in exploration, pipeline and depletion expenses
of $.2 million, $1.4 million and $.5 million, respectively. The decrease in
depletion expense during 1994 is primarily the result of additions to the
Company's oil and gas reserve base during the last half of 1993 which results
in lower depletion rates for subsequent periods.
Other Income and Expense decreased approximately $1.2 million for the three
months ended March 31, 1994 compared to the same period in 1993. This decrease
is primarily the result of the decrease in gains on asset sales mentioned
above.
7
<PAGE> 10
Liquidity and Capital Resources
Cash and cash equivalents increased by $1.5 million during the first quarter
of 1994. This increase was primarily due to the $9.9 million net cash flow
provided by operations and the $8.5 million net cash flow used in investment
activities during this period.
Cash provided from operations for the three months ended March 31, 1994 was
$9.9 million compared to $4.3 million for the same period in 1993. This
increase was primarily due to the adoption on January 1, 1994 of Statement 115
which increased cash provided from operations by the net change in short-term
liquid investments of $7.6 million. This increase was partially offset by
among other changes a $1.5 million decrease in accrued liabilities. The
Company expended approximately $6.5 million for additions to properties and
equipment in the first three months of 1994 compared to $3.3 million for the
same period in 1993. Working capital for the first three months of 1994
decreased by $4.4 million.
Traditionally, the Company has budgeted its exploration and development
expenditures for each year based on cash to be provided from operating
activities. In 1994, The Company intends to direct its internally generated
cash toward growing the Company's domestic asset base while directing a portion
of its balance sheet cash (cash and cash equivalents and short-term liquid
investments) toward international opportunities.
The Russian and the Ivory Coast joint ventures are currently the primary
focus of the Company's international operations. As of March 31, 1994, the
Company's total cash investments in the Russian and the Ivory Coast joint
ventures were approximately $14.5 million and $5.5 million, respectively.
The Russian joint venture activities currently include three projects in
various stages of operation: 1) vapor recovery, 2) the drilling, development
and operation of the Onbysk field, and 3) a well stimulation program in and
adjacent to the sizable Romashkino field. A fourth project, the development of
undeveloped reserves underlying urban areas within the Romashkino field, has
been agreed to in principle. The execution of final documents has been
deferred pending further analysis of the effect of the export tax.
In May 1993, the Company acquired an interest in 335,320 gross acres in the
CI-11 contract area approximately eight miles offshore of the Ivory Coast, West
Africa. The Company acquired a 10% working interest in an area referred to as
the "Special Area" and an 18% working interest in an area referred to as the
"Remaining Area."
During 1993, the Panthere #1 well was drilled in the Remaining Area to a
total depth of 10,575 feet and tested gas and condensate at the rate of 34.8
Mmcf per day plus 675 Bbls per day on a 56/65 inch choke with a flowing tubing
pressure of 1,909 pounds per square inch from 66 feet of perforations between
9,316 and 9,382 feet. The well was drilled in 264 feet of water and a
production caisson was set over the well. Negotiations are currently underway
with the government of the Ivory Coast for approval of a gas development
project for this discovery.
During the first quarter of 1994, the Lion #1 well was drilled to test a
separate structure in the Special Area. This well was directionally drilled to
a total depth of 11,270 feet and encountered seven separate intervals totaling
approximately 205 feet of net hydrocarbon pay. In total, the well flowed a
combined 23,696 barrels of oil and condensate and 65 mmcf of gas per day.
Further plans include setting a production caisson over the Lion #1 well,
re-entry of the B1-8X well and the drilling of additional wells on this
structure. The B1-8X well, in the Special Area, tested significant oil
production from two of the intervals found in the Lion #1 before being
abandoned by the previous operator.
8
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS:
None.
Item 2. CHANGES IN SECURITIES:
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES:
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
Item 5. OTHER INFORMATION:
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
a) Exhibits
None.
b) Reports on Form 8-K
None.
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLOBAL NATURAL RESOURCES INC.
(Registrant)
Date: May 11, 1994 /s/ ERIC LYNN HILL
-------------------------------------
Eric Lynn Hill
Vice President-Finance and
Secretary
10
