UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q SB
[X] Quarterly Report Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1997
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 0-14788
TATUM PETROLEUM CORPORATION
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0117736
- ------------------------------ ---------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization
667-E Lakeview Plaza Boulevard, Worthington, OH 43085
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (614) 888-3637
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (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
At March 12, 1997, 10,418,855 shares of common stock, $.01 par value were
outstanding.
Page 1 of 10 pages.
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TATUM PETROLEUM CORPORATION
INDEX TO FORM 10-Q SB
JUNE 30, 1997
PAGE NO.
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PART I
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FINANCIAL STATEMENTS
a. BALANCE SHEETS - March 31, 1997 and
June 30, 1997 (Unaudited) 3
b. STATEMENTS OF OPERATIONS - For the Three Months
Ended June 30, 1997 (Unaudited) 4
c. STATEMENTS OF CASH FLOWS - For the Three Months
Ended June 30, 1997 and 1996 (Unaudited) 5
d. NOTES TO THE FINANCIAL STATEMENTS 6
MANAGEMENT'S DISCUSSION AND ANALYSIS 7
PART II
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a. OTHER INFORMATION 9
b. SIGNATURES 10
<PAGE>
TATUM PETROLEUM CORPORATION
BALANCE SHEETS
MARCH 31, JUNE 30,
1997 1997
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(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash $ 227,000 $ 126,000
Receivables:
Oil and gas 326,000 406,000
Joint interest owners 48,000 87,000
Related party 124,000 112,000
Inventory 66,000 8,000
---------- ----------
Total current assets 791,000 739,000
PROPERTY AND EQUIPMENT, at cost:
Oil and gas producing properties
(using the successful efforts
method of accounting):
Proved 7,111,000 7,501,000
Unproved 546,000 309,000
Other equipment 168,000 168,000
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7,825,000 7,978,000
Less accumulated depreciation,
depletion, amortization and
impairment (5,436,000) (5,447,000)
---------- ----------
Total property and equipment 2,389,000 2,531,000
OTHER ASSETS 17,000 2,000
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TOTAL ASSETS $3,197,000 $3,272,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Note payable $ 230,000 $ 385,000
Accounts payable 193,000 378,000
Revenue and ad valorem taxes payable 389,000 337,000
Advances from working interest owners 127,000 73,000
Accrued liabilities 88,000 117,000
Income tax payable 30,000 8,000
Accrued legal settlement - current 336,000 336,000
---------- ----------
Total current liabilities 1,393,000 1,634,000
DEFERRED TAX LIABILITY - -
LONG TERM LIABILITIES - LEGAL SETTLEMENT 230,000 142,000
COMMITMENT AND CONTINGENCIES (Note 2)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
authorized 15,000,000 shares,
10,418,855 shares issued and
outstanding 104,000 104,000
Additional paid-in capital 4,877,000 4,877,000
Accumulated deficit (3,407,000) (3,485,000)
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Total stockholders' equity 1,574,000 1,504,000
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,197,000 $3,272,000
========== ==========
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
3
<PAGE>
TATUM PETROLEUM CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE
MONTHS ENDED
JUNE 30,
---------------
1997 1996
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NET REVENUES
Oil and gas sales $ 637,662 $ 700,988
Drilling arrangement income 54,154 7,029
Operating fees 40,388 32,890
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732,204 740,908
COSTS AND EXPENSES:
Oil and gas production costs 142,930 107,388
General and administrative expenses 173,197 183,637
Depreciation, depletion and
amortization 110,222 109,044
Exploration costs 202,023 259,609
Dry hole costs 70,459 (16,527)
Legal settlements, net - -
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698,831 643,151
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OTHER INCOME (EXPENSE) (103,906) 2,550
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INCOME BEFORE INCOME TAXES (70,533) 100,306
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INCOME TAX EXPENSE:
Current (7,500) -
Deferred - (32,000)
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(7,500) (32,000)
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NET INCOME $ (78,033) $ 68,306
========== ==========
NET INCOME PER SHARE $ (.01) $ .01
========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 10,418,855 10,418,855
========== ==========
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
4
<PAGE>
TATUM PETROLEUM CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE
MONTHS ENDED
JUNE 30,
---------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ($ 78,000) $ 100,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 11,000 109,000
Deferred income taxes - -
(Gain) loss on disposal of
equipment and settlements - -
Changes in operating assets
and liabilities:
Receivables (106,000) 211,000
Inventory 58,000 1,000
Prepaid expenses and other 15,000 18,000
Payables 57,000 218,000
Accrued liabilities (60,000) (52,000)
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Net cash provided by
operating activities ($ 103,000) 605,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (153,000) (666,000)
Proceeds from sale of property
and equipment - -
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Net cash used in investing
activities (153,000) (666,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line-of-credit 685,000 520,000
Repayments on line-of-credit (530,000) (545,000)
---------- ----------
Net cash provided by financing
activities 155,000 (25,000)
NET INCREASE (DECREASE) IN CASH (101,000) (86,000)
CASH, beginning of period 227,000 416,000
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CASH, end of period $ 126,000 $ 330,000
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 20,000 $ 7,000
========== ==========
Cash paid for income taxes $ 4,000 $ 5,000
========== ==========
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
5
<PAGE>
TATUM PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. General:
-------
Pursuant to rules and regulations of the Securities and Exchange
Commission, the Company has elected to omit substantially all the
disclosures normally included in financial statements prepared under
generally accepted accounting principles. Readers of these financial
statements should refer to the Company's Form 10-SB filed for the year
ended March 31, 1997, for additional disclosures.
The Company's balance sheet as of June 30, 1997, and the statement of
operations for the three months then ended are taken from the Company's
books and records without audit. Management believes, however, that such
information includes all accruals, which are considered recurring in
nature, required for the fair presentation of the Company's financial
position and results of their operations as of and for the periods then
ended. The results of operations for the interim periods presented are not
necessarily indicative of results expected for the full year.
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management
to make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ
from those estimates.
2. Contingencies:
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None.
6
<PAGE>
TATUM PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATIONS
----------------------------------------------------------
THIS REGISTRATION STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933. SUCH FORWARD-LOOKING
STATEMENTS MAY BE FOUND IN THIS SECTION AND UNDER "DESCRIPTION OF
BUSINESS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATIONS" AND
"PROPERTIES." ACTUAL EVENTS OR RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.
THREE MONTH PERIODS ENDED JUNE 30, 1997 VS. JUNE 30, 1996
- ---------------------------------------------------------
RESULTS OF OPERATIONS - The Company had a net loss for the three month
period ended June 30, 1997 of ($78,033) compared to net income of $68,306
for the three month period ended June 30, 1996. This decrease in net
income was primarily a result of increased production costs and dry hole
costs along with the sale of two marginal Clinton wells which had a
combined book value of $50,000.
REVENUES - Oil and gas sales for the three month period ended June 30, 1997
totaled $637,662 compared to approximated revenues of $700,988 for the
three month period ended June 30, 1996. Oil production decreased from
8,522 barrels to 7,440 barrels for a net decrease of 1,082 barrels or 12.6%
for the three months ended June 30, 1997. Gas production decreased from
263,901 MCFs to 197,487 MCFs for a net decrease of 66,414 MCFs or 25.2% for
the three months ended June 30, 1997. These changes in revenue and
fluctuations in production have resulted in a total decrease in revenue of
9.0%. The dramatic decrease in gas production is a result of the decline
of the one exceptional well which has been in production approximately 18
months and was expected to have a short production life.
Drilling arrangement income increased from $7,029 for the three and month
period ended June 30, 1996, to $54,154 for the three month period ended
June 30, 1997, an increase of 670.4%. The Company drilled new wells on
acreage which was farmed-in from another producer. This farm-in agreement
obligated the Company to allow third party participation which resulted in
the increase to drilling arrangement income.
Management fee income increased from $32,890 for the three month period
ended June 30, 1996, to $40,388 for the three month period ended June 30,
1997. The increase in revenue is a result of the Company managing
additional wells that were brought into production during the current
period.
COSTS AND EXPENSES
- ------------------
Oil and gas production costs for the three month period ended June 30, 1997
totaled $142,930 in comparison with the three month period ended June 30,
1996 costs of $107,388. The increased costs were primarily a result of
additional wells that were brought into production during the current
period.
General and administrative expenses totaled $173,197 for the three month
period ended June 30, 1997 as compared to $183,637 for the three month
period ended June 30, 1996 for a total decrease of 6.0%. This decrease was
primarily due to the reduction of legal fees incurred in connection with
the Company's lawsuit with Columbia Gas.
7
<PAGE>
TATUM PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
Depreciation, depletion and amortization costs for the current three month
period totaled $110,222 for an increase of $1,178 over the three month
period ended June 30, 1996 costs of $109,044. There was virtually no
change in the two periods compared.
Exploration costs and dry hole costs increased a total of 12.1% from
$243,082 for the three month period ended June 30, 1996 to $272,482 for the
three month period ended June 30, 1997. The Company's approach to
exploration has not changed significantly from the prior period. However,
one additional dry hole was drilled in the current period compared to last
year.
OTHER INCOME (LOSS)
- -------------------
Other income (loss) for the three month period ended June 30, 1997, was a
loss of $103,906, a decrease of $106,454 from the three month period ended
June 30, 1996 revenues of $2,550. This decrease was due to the sale of
two marginal Clinton wells which had a combined book value of $50,000 and
the plugging of an unimpaired marginal Beekmantown well.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the three month period ended June 30, 1997, the Company experienced
an increase in working capital deficiency from $(602,000) at March 31, 1997
to $(887,000) in the current period. This decrease in working capital of
$285,000 was essentially due to the increased use of the Company's
line-of-credit. Cash as of June 30, 1997 was $126,000, a $101,000 decrease
from March 31, 1997, while cash provided by operations at June 30, 1997
reflected a 61.8% decrease from the $330,000 at June 30, 1996. These
changes in cash were a direct result of the initial three monthly payments
of the Company's settlement agreement with Columbia Gas.
The Company used it's line-of-credit along with advances from industry
investors to facilitate the drilling of 5 wells during the three months
ended June 30, 1997. One of these wells was a dry hole. Of the four
commercial wells, the Company retained an average of 46.6% working
interest.
The Company anticipates continuing the sale of working interest to industry
related investors and bank borrowings to facilitate its working capital
needs and its drilling activities for the remainder of the fiscal year.
8
<PAGE>
TATUM PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
PART II - OTHER INFORMATION
ITEM NO. 1 - LEGAL PROCEEDINGS
-----------------
None.
ITEM NO. 2 - CHANGES IN SECURITIES
---------------------
None
ITEM NO. 3 - DEFAULTS UPON SENIOR SECURITIES
-------------------------------
None
ITEM NO. 4 - SUBMISSION OF MATTER TO A VOTE OF SECURITIES HOLDERS
----------------------------------------------------
None
ITEM NO. 5 - OTHER INFORMATION
-----------------
None
ITEM NO. 6 - EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
None
9
<PAGE>
Signatures
----------
Pursuant to the requirements of Section 13 and 15(d) 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.
TATUM PETROLEUM CORPORATION
/s/ ZACHARY T. TATUM
- ---------------------------------------
Zachary T. Tatum, President,
Chief Executive Officer, Principal
Financial and Accounting Officer
/s/ LORI POWELL
- ---------------------------------------
Lori Powell, Controller and Treasurer
Date: September 8, 1997
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 126
<SECURITIES> 0
<RECEIVABLES> 605
<ALLOWANCES> 0
<INVENTORY> 8
<CURRENT-ASSETS> 739
<PP&E> 2,531
<DEPRECIATION> 5,447
<TOTAL-ASSETS> 3,272
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0
0
<COMMON> 104
<OTHER-SE> 1,504
<TOTAL-LIABILITY-AND-EQUITY> 3,272
<SALES> 741
<TOTAL-REVENUES> 741
<CGS> 643
<TOTAL-COSTS> 643
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<INCOME-PRETAX> 100
<INCOME-TAX> 32
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
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