<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended 12/31/96 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________________ to ___________________
Commission file number 0-11378
TRANSGLOBE ENERGY CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
BRITISH COLUMBIA N/A
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
#808 - 1111 West Hastings Street, Vancouver, British Columbia Canada V6E 2J3
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(Address of Principal Executive Offices) (Zip Code)
(604) 683-2568
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(Registrant's Telephone Number, Including Area Code)
DUSTY MAC OIL & GAS LTD.
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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 No x
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. The number of outstanding
shares as of February 13, 1997 is 13,781,377 Common Shares.
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (EXPRESSED IN U.S. DOLLARS)
DECEMBER 31, 1996 AND SEPTEMBER 30, 1996
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
December 31 September 30
1996 1996
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,854,817 $ 588,664
Accounts receivable 800,798 394,776
Prepaid drilling costs - 5,396
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3,655,615 988,836
Computer equipment, net of
accumulated depreciation 11,892 12,847
Investment in IPC 750,000 750,000
Natural resource properties:
Mineral property 1,704,237 1,704,226
Oil and gas properties 11,849,979 10,771,483
Investment in Yemen Project 196,268 196,268
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13,750,484 12,671,977
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$18,167,991 $14,423,660
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 820,146 $ 437,661
Loan payable - 40,251
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820,146 477,912
Convertible debentures 1,597,742 -
Shareholders' equity:
Share capital 20,249,068 18,581,646
Share subscriptions 262,620 -
Deficit (4,761,585) (4,635,898)
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15,750,103 13,945,748
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$18,167,991 $14,423,660
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</TABLE>
<PAGE> 3
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(EXPRESSED IN U.S. DOLLARS)
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Revenue:
Oil and gas revenue $369,078 $201,608
Direct expenses:
Depletion 169,017 161,021
Operating expenses 45,486 42,807
Taxes 30,584 16,485
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245,087 220,313
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123,991 (18,705)
Expenses:
Capital tax - 3,571
Consulting 30,093 13,541
Depreciation 955 917
Filing fees 4,333 2,734
Interest and bank charges 1,922 2,960
Office 26,741 23,444
Professional fees 43,467 24,643
Promotion and advertising 12,162 23,374
Rent and secretarial services 7,314 8,930
Transfer fees 785 4,640
Travel 69,064 21,803
Wages, management fees and benefits 78,712 70,144
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275,548 200,701
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Loss before other items (151,557) (219,406)
Other income (loss):
Exchange gain (loss) 3,133 (1,997)
Interest 22,737 6,096
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25,870 4,099
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Loss (125,687) (215,307)
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Deficit, beginning of period (4,635,898) (3,865,802)
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Deficit, end of period $(4,761,585) $(4,081,109)
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</TABLE>
<PAGE> 4
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN U.S. DOLLARS)
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED - PREPARED BY MANAGEMENT)
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
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Cash provided by (used in):
Operating activities:
Loss $ (125,687) $(215,307)
Add (deduct):
Depletion and depreciation 169,972 161,938
Net changes in non-cash working capital items (18,141) (179,934)
26,144 (233,303)
Investing activities:
Computer equipment additions - (1,526)
Natural resource property expenditures (1,247,524) (383,486)
Investment in Yemen Project - (13,197)
(1,247,524) (398,209)
Financing activities:
Issuance of share capital 1,667,422 280,413
Share subscriptions 262,620 375,027
Increase in convertible debentures 1,597,742 -
Decrease in loan payable (40,251) (19,894)
3,487,533 635,546
Increase in cash during the period 2,266,153 4,034
Cash position, beginning of period 588,664 646,692
Cash position, end of period $2,854,817 $ 650,726
</TABLE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF OPERATIONS
During the fiscal quarter of October 1, 1996 to December 31, 1996 TransGlobe
underwent a number of changes that management believes will strengthen the
Company both financially and managerially. Management is of the opinion that
the Company now has adequate funds to carry out its planned 1997 exploration and
development program and has the staff to carry out the program. Mr. R.G.
Clarkson was appointed by the Board of Directors to the position of President
and Chief Executive Officer on December 4, 1996. Mr. E.L. Noyes was appointed
to the position of Vice President of Operations on November 8, 1996.
Madera Gas Field, Lea County, New Mexico
The Company continued to produce the Madera gas field during the fiscal
quarter, generating a net revenue of US$316,595 for the period. The gas
production averaged a net 1,046 Mcfd and 43 barrels of condensate per day
during this period. The 25-1 well is suspended, awaiting recompletion. The
recompletion program for the 25-1 was finalized and is expected to take place
during the first quarter of 1997.
East Grieve Prospect, Natrona County, Wyoming
The Company drilled a second well, the 32-2 on the East Grieve prospect during
September/October of 1996. The well encountered the Shannon sands 300 feet
structurally higher than the discovery well, the
29-1. The Company was unable to test the 32-3 well prior to the Bureau of Land
Management winter access restrictions
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period. The Company intends to test this well during the second quarter
of 1997, pending the lifting of winter access restrictions. A recompletion to
attempt to shut off a water zone on the 29-1 well has met with some success. A
longer term will be conducted in the second quarter of 1997 to determine the
productivity of the well.
East Meridian Block "B", Richland County, Montana
The analysis of the 3-D seismic data acquired during mid 1996 was completed in
October 1996. The results have indicated nineteen Red River prospects, six
Tyler prospects and several Lodgepole and Interlake leads. Management is very
encouraged by the large number of prospects identified and have committed to
the second phase of 3-D seismic on the Block "A" area to the west of Block "B".
The cost of the Block "A" seismic is expected to be $2.6 million ($1.3 million
net to the Company). The first four drilling locations on Block "B" were
selected at a technical meeting with the partners, Meridian and Collins and
Ware. It is expected that the drilling program will commence in early 1997.
Yemen Negotiations
The Company is continuing with negotiations with the Ministry of Oil and
Mineral Resources for a Production Sharing Agreement on an open Exploration
Block in the Republic of Yemen. In addition the Company evaluated a farm-in
opportunity on another Block in the Republic of Yemen. An agreement to farm in
Clyde Expro PLC and Oranje Nassau interests in Block 32 was reached during
January 1997. The Company has the right to earn a 26.5% interest in Block 32
in return for funding 53% of the costs of drilling three wells during the next
eighteen months
Analysis of Financial Condition
The Company raised a net US$3,261,847 through the sale of Convertible
Debentures during October/November of 1996. The cash will be used to fund the
1997 exploration and development program in the United States, primary in the
East Meridian project in Montana. The Debentures were all converted into
Common Shares on or before January 16, 1997 at an average price of US$0.89. A
total of 4,587,055 shares were issued as a result of the conversion of the
Debentures.
The revenues from the Madera field production have remained stable at
US$319,595 for the fiscal quarter as compared to US$274,188 for the same period
in the last fiscal quarter of 1995. During the fiscal quarter management made
several staffing and organizational changes intended to result in lowered
operating expenses in the future.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Mr. Richard Coglon was employed as the President and Chief Executive Officer of
the Company from August, 1995 to November, 1996. Mr. Coglon's employment was
ended on November 8, 1996, and the Company took the position that the
termination was for cause.
On February 10, 1997, the Company was served with a lawsuit issued by Mr.
Coglon in the Supreme Court of British Columbia. He claims an unquantified
amount of damages for wrongful termination, breach of contract and breach of
privacy. Mr. Coglon also seeks certain equitable relief.
The Company has not yet filed a Statement of Defense, but its lawyers will be
doing so in the near future. The Company considers Mr. Coglon's claims to be
without merit, and intends to defend against them. The Company is also
considering advancing counterclaims against Mr. Coglon.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
There were no Form 8K's filed during the September 30, 1996 to December 31,
1996 fiscal quarter.
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.
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TransGlobe Energy Corporation
/s/ R.G. Clarkson
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(R.G. Clarkson, President and CEO)
Date February 14, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONSOLIDATED FINANCIAL STATEMENTS OF TRANSGLOBE ENERGY CORPORATION FOR THE
FISCAL QUARTER ENDING DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,854,817
<SECURITIES> 0
<RECEIVABLES> 800,798
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,655,615
<PP&E> 18,156,099
<DEPRECIATION> 11,892
<TOTAL-ASSETS> 18,167,991
<CURRENT-LIABILITIES> 820,146
<BONDS> 0
<COMMON> 15,750,103
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,167,991
<SALES> 369,078
<TOTAL-REVENUES> 369,078
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 275,548
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 125,687
<INCOME-TAX> 0
<INCOME-CONTINUING> 125,687
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,687
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
