<PAGE> 1
FORM 10-KSB
U.S. SECURITIES AND EXCHANGE COMMISSION
(Mark One) Washington, D.C. 20549
[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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________________to __________________
Commission file number: 0-3912
PETROL INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 75-1282449
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation of Organization)
202 N. THOMAS, SUITE 4, SHREVEPORT, LOUISIANA 71107-6539
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (318) 424-6396
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
Check mark whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 is not contained herein, and will not 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. [ X ]
State the issuer's revenues for its most recent fiscal year: $956,541
The aggregate market value of the voting stock held by non-affiliates of
the registrant, computed by reference to the average of the closing bid and
asked price of the stock as of March 21, 1997 was $549,435.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares of common stock, $.10 par value, outstanding as of
March 21, 1997 was 1,597,196.
Transitional Small Business Disclosure Format: Yes: [ ] No: [ X ]
DOCUMENTS INCORPORATED BY REFERENCE:
None
Page 1 of 34 Pages
Index appears at Page 9
<PAGE> 2
PART I
ITEM 1. BUSINESS.
GENERAL DESCRIPTION.
Petrol Industries, Inc. ("Petrol" or the "Company") was organized under
the laws of the State of Nevada in 1968 as a wholly-owned subsidiary of
Sovereign Industries, Inc. In 1970, Sovereign Industries, Inc. distributed a
substantial portion of Petrol's common stock to its stockholders. Since the
dates of their respective organizations, Petrol and its wholly-owned
subsidiaries have been engaged in a single industry segment - drilling for and
producing oil and gas on leased property located in the Caddo Pine Island
Field, and the Shreveport Field, both in Caddo Parish, Louisiana. Petrol and
its wholly-owned subsidiaries currently employ 19 persons in the aggregate.
As of December 31, 1996, Petrol's leases contained 8 completed gas wells,
18 completed wells producing oil and gas, and 332 completed oil wells,
principally in the Annona Chalk zone. Petrol estimates that, on the average,
its wells have been producing for a period in excess of 25 years. An
aggregate of 290 wells producing oil or oil and gas are currently being
operated. The Company expects that if received oil prices justify the
expenditure, approximately 30 of its wells will be placed back in operation
during the course of 1997, as a result of its on-going rework program
discussed below, although even so, it is expected that approximately 20-25
wells will temporarily not be operating at any given time as maintenance is
required. Management is carefully examining whether to suspend production on
certain wells to conserve available capital and assets. During the course of
1996, the Company disposed of one of its leases which had become unprofitable
to operate.
Virtually all of the Company's oil production comes from property
characterized as stripper well property, meaning that the wells located
thereon produced an average of 10 barrels or less per day. In 1996, Petrol's
interests in oil wells and gas wells taken together with oil wells owned by
the limited partnerships organized in connection with its 1979, 1983 and 1984
drilling programs had a gross production of 44,969 barrels of oil and 3,441
MCF of gas, and production, net to Petrol, of 35,891 barrels of oil and 3,441
MCF of gas.
The prices obtained by Petrol for its oil are in direct proportion to its
gravity (a.p.i.); the higher the gravity, the higher the price. Approximately
51% of Petrol's oil production constitutes high gravity, light crude, having a
gravity of 40 a.p.i. or above; the balance of Petrol's production ranges from
18 to 39 a.p.i. During the calendar year 1996, the average price received by
Petrol for its oil (including wells owned by the various partnerships) was
$20.34 per barrel of oil and $1.73 per MCF of gas.
REWORK AND MAINTENANCE PROGRAMS.
Petrol maintains for itself and the limited partnerships it formed (see
below) an ongoing rework and maintenance program with respect to all its
wells. During 1996 and 1995, approximately $151,054 and $130,328 were
expended on such maintenance.
In 1979, 1983 and 1984 Petrol formed Louisiana partnerships in commendam
(limited partnerships) for the development of oil and gas wells on its
properties. In connection with such programs, Petrol contributed drilling
sites and hardware, was responsible for drilling and completing the wells on a
<PAGE> 3
"turnkey" basis, and presently operates the completed wells. Actual drilling
was done by one of several locally available subcontractors. The Company also
handles the administrative and bookkeeping arrangements for the partnerships.
Petrol was paid fees for drilling the partnerships' wells, receives additional
fees for operating the wells and is entitled to a share of the partnerships'
net income.
The Company receives 75% of net revenues from the 26 wells drilled for
the 1983 limited partnership and from the 17 wells drilled for the 1984
limited partnership.
There was no drilling activity in 1995 or 1996.
MARKET FOR PETROL'S OIL AND GAS PRODUCTION.
The Company's oil and gas production is sold to major oil companies and
other purchasers which gather oil production by tankwagon in areas where
pipelines are not available. Two companies, EOTT Energy Operating Limited
Partnership, formerly EOTT Energy ("EOTT") and Citgo Pipeline Company together
accounted for 91.7% of the Company's 1996 oil sales. More than a dozen other
customers account for the balance of the Company's sales. Petrol is not a
party to any long-term supply contracts for oil and gas.
In recent years, Petrol's production has been sold at the local open
market price, which is reflective of world-wide supply of and demand for crude
oil and local demand for natural gas. Management believes that the continuing
desire of domestic refiners and marketers of oil and gas to secure access to
domestic production will continue to create a strong market for Petrol's
products. Petrol anticipates, however, that the price which its products will
command will continue to closely match world oil prices, which in turn reflect
world economic and political conditions.
GOVERNMENTAL REGULATION.
Petrol, in the operation of its existing oil and gas wells and in the
drilling of new wells, is subject to a number of federal, state and other laws
and regulations concerning requirements relating to permits to drill wells,
the spacing of wells, the prevention of waste of oil and gas, and the manner
of drilling and completing wells. Management believes that Petrol is in
compliance with all federal, state and local statutes and regulations
regulating the discharge of materials into the environment or otherwise
relating to the protection of the environment. Although compliance with such
statutes and regulations has a material effect on the Company's capital
expenditures and earnings, such compliance does not adversely affect its
competitive position in its industry, as all other producers in its market are
subject to the same statutes and regulations. Should such regulations be
strengthened, however, the Company would likely not have the capital or liquid
asset reserves to ensure compliance, given the cash flow generated from oil
sales at current oil prices.
<PAGE> 4
ITEM 2. PROPERTIES.
a. LOCATION AND CHARACTER OF THE COMPANY'S PROPERTIES: Petrol, in
connection with its oil and gas production, currently leases approximately 110
parcels of property, located in the Caddo Pine Island Field and the Shreveport
Field, both located in Caddo Parish, Louisiana. Most of its wells are shallow
oil wells, completed in the Annona Chalk Zone, at depths ranging from 1,400
feet to 1,600 feet. In general, the leases held by Petrol provide that they
shall remain in force so long as producing wells are being operated thereon or
so long as Petrol is actively engaged in rework thereon. If Petrol does not
produce any oil from a particular lease and is not engaged in any rework on
such lease for a period of three consecutive months, such lease may at the
option of the lessor, be deemed abandoned. Because of the Company's shortage
of capital and liquid assets, Management is examining the possibility of
suspending production on many of its leases. If such a strategy is
implemented, Management will seek to minimize the adverse effect which
suspension of production could have on the Company's lease holdings.
b. RESERVES: See Supplemental Information regarding Oil and Gas
Producing Activities at Pages 21 to 24 and Schedules 3 and 4 at Pages 25 to
26, for estimates of net quantities of proved oil and gas reserves, and for
standardized measure of discounted future net cash flow relating thereto.
c. RESERVES REPORTED TO OTHER AGENCIES: The Company did not file any
estimates of oil and gas reserves with any federal authority or agency during
1996.
d. PRODUCTION: For the years ended December 31, 1995 and 1996, the
average sales price (including transfers) per unit of oil produced was $16.59
and $20.34, respectively, and the average production cost (lifting cost) per
unit of production for oil was $12.71 and $15.36, respectively.
e. PRODUCTIVE WELLS AND ACREAGE: As of December 31, 1996, the Company
held the following productive wells and developed acres:
OIL GAS OIL & GAS
--- --- ---------
(i) Gross Productive Wells 332 8 18
(ii) Net Productive Wells 321 1.2 10.5
(iii) Gross Developed Acres 4,348 1,310 958
(iv) Net Developed Acres 2,484.8 66 179.5
f. UNDEVELOPED ACREAGE: As of December 31, 1996, the Company held the
following undeveloped acreage:
(i) Gross Acres 121
(ii) Net Acres 54
g. DRILLING ACTIVITY: No drilling activity occurred in 1996 or 1995.
h. PRESENT ACTIVITIES: See Item 1.
i. DELIVERY COMMITMENTS: The Company is not, and for more than three
years, had not been required to provide any fixed or determinable quantity of
oil or gas under any contracts or agreements.
<PAGE> 5
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
<PAGE> 6
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
Until June 8, 1992, trading in the Company's common stock was reported in
the National Association of Securities Dealers' Automated Quotation system.
Since June 9, 1992, the Company's common stock has been traded
over-the-counter. Following are the high and low bids of its common stock as
of January 1, 1995, on a quarterly basis. Prices are reported by the National
Quotation Bureau, Inc. which may reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
HIGH BID LOW BID
-------- -------
1995
----
1st Quarter 1/4 1/4
2nd Quarter 1/4 9/50
3rd Quarter 1/4 9/50
4th Quarter 1/4 4/25
1996
----
1st Quarter 3/16 5/32
2nd Quarter 7/16 3/16
3rd Quarter 3/8 1/8
4th Quarter 9/16 1/8
1997
----
1st Quarter thru March 14 5/16 5/32
On March 18, 1997, there were 3,804 holders of record of its common
stock.
No dividends were declared or paid during 1995 or 1996 and the Company
has no present intention to pay cash dividends in the foreseeable future.
During the course of 1996, Joseph M. Rodano, President and Treasurer of
Petrol, as well as a member of its Board of Directors, purchased a total of
27,500 shares Common Stock, $.10 par value per share, of Petrol Industries,
Inc. During the course of 1995, Mr. Rodano purchased a total of 65,100
shares. Each purchase was, in each case, in an open market transaction. All
of the shares purchased by Mr. Rodano were purchased with his personal funds.
<PAGE> 7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
1996 COMPARED TO 1995
(a) RESULTS OF OPERATIONS: Production declined 10.5% from 1995. The
decline in production offset the increase in received oil prices, resulting in
a net loss of $133,243, or $.08 per share, on revenues of $956,541. The
Company's operating loss of $138,457 declined from last year's operating loss
of $171,218.
The average price of an equivalent barrel of oil received in 1996 was
$20.34, up from $16.59 received on average in 1995. A restoration of
operating profitability will depend almost completely on an increase in
production. Oil prices are, of course, the result of world events outside the
Company's control.
(b) FINANCIAL CONDITION AND LIQUIDITY: Due to the Company's recurring
losses from operations, significant operating and administrative expenses,
current liabilities in excess of current assets, and a stockholders' deficit
of $214,929, the Company will lack sufficient capital reserves and liquid or
liquidatable assets to permit a full year of operations.
Management is examining available financing alternatives to enable it to
remain in operation. These alternatives range from seeking outside equity
capital to permit continued or expanded operations, with the hope of lowering
average direct lifting costs, to shutting down all but minimal operations
utilizing only a skeleton staff, putting the Company in a suspended state for
as long as assets permit. Management is also examining the possibility of
realizing value for the Company's remaining assets, including, if necessary,
dissolution.
(c) ENVIRONMENTAL: The Company's operations are subject to numerous
laws and regulations designed to protect the environment and/or impose
remedial obligations. The Company operates certain oil fields for which known
or potential obligations for environmental remediation exist.
Although the Company is not aware of any environmental matters that might
have a material effect on the Company's financial condition at December 31,
1996, there is the possibility that expenditures could be required, or revised
regulatory requirements could necessitate expenditures at certain sites. Such
expenditures could have a material impact on the results of operations in a
future period.
1995 COMPARED TO 1994
(a) RESULTS OF OPERATIONS: Production declined 11.3% from 1994.
Cost-control measures succeeded in lowering both lifting costs and general and
administrative expenses; however, the decline in production offset the
increase in received oil prices and lower operating costs, resulting in a net
loss of $171,620, or $.11 per share, on revenues of $849,750. The Company's
operating loss of $171,218 declined from last year's operating loss of
$194,333.
The average price of an equivalent barrel of oil received in 1995 was
$16.59, up from $15.33 received on average in 1994.
<PAGE> 8
(b) FINANCIAL CONDITION AND LIQUIDITY: The Company continued to consume
liquid assets to fund operations, with cash and equivalents declining 42.0%
from December 31, 1994, to December 31, 1995. Total assets declined by 23.0%
and, due to the net loss of $171,620, there is a stockholders' deficit of
$81,682.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS.
This Annual Report on Form 10-KSB includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act") and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). All statements other than statements of
historical facts included in this Annual Report on Form 10-KSB regarding
reserve estimates, planned capital expenditures, future oil and gas production
and prices, future drilling activity, the Company's financial position,
business strategy and other plans and objectives for future operations, are
forward-looking statements. Although the Company believes that the
expectations reflected in such forward- looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct. There
are numerous uncertainties inherent in estimating quantities of proved oil and
natural gas reserves and in projecting future rates of production and timing
of development expenditures, including many factors beyond the control of the
Company. Reserve engineering is a subjective process of estimating
underground accumulations of oil and natural gas that cannot be measured in an
exact way, and the accuracy of any reserve estimate is a function of the
quality of available data and of engineering and geological interpretation and
judgment. As a result, estimates made by different engineers often vary from
one another. In addition, results of drilling, testing and production
subsequent to the date of an estimate may justify revisions of such estimate
and such revisions, if significant, would change the schedule of any further
production and development drilling. Accordingly, reserve estimates are
generally different from the quantities of oil and natural gas that are
ultimately recovered. Additional important factors that could cause actual
results to differ materially from the Company's expectations include changes
in oil and gas prices, changes in regulatory or environmental policies,
production difficulties, transportation difficulties and future drilling
results. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by such factors.
<PAGE> 9
ITEM 7. INDEX TO FINANCIAL STATEMENTS.
PAGE
----
Independent Auditors' Report of KPMG Peat Marwick LLP 10
Consolidated Balance Sheet - December 31, 1996 11
Consolidated Statements of Operations-Years ended
December 31, 1996 and 1995 12
Consolidated Statements of Changes in Stockholders'
Deficit - Years ended December 31, 1996 and 1995 13
Consolidated Statements of Cash Flows - Years ended
December 31, 1996 and 1995 14
Notes to Consolidated Financial Statements 15
<PAGE> 10
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Petrol Industries, Inc.
We have audited the consolidated financial statements of Petrol Industries,
Inc. and Subsidiaries as listed in the accompanying index. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 misstatements. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Petrol
Industries, Inc. and Subsidiaries at December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
two-year period ended December 31, 1996, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that Petrol
Industries, Inc. and Subsidiaries will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company has suffered
recurring losses from operations and has a net capital deficiency that raises
substantial doubt about the entity's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
KPMG PEAT MARWICK LLP
Shreveport, Louisiana
February 14, 1997
<PAGE> 11
<TABLE>
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1996
ASSETS
------
<S> <C>
Current assets:
Cash and cash equivalents $ 218,355
Accounts receivable:
Trade 83,287
Other 9,497
---------
92,784
Inventory 47,647
Prepaid expenses 5,325
---------
Total current assets 364,111
---------
Property and equipment, at cost:
Land 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 4,262,884
Trucks and other operating equipment 336,098
Furniture and fixtures 37,902
---------
4,643,884
Less accumulated depreciation, depletion and
amortization 4,587,912
---------
55,972
---------
Cash surrender value of life insurance, net 50,476
Other assets 1,107
---------
$ 471,666
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 51,064
Payable to interest owners 278,556
Payable to officer, net 241,255
Accrued expenses 115,720
---------
Total current liabilities 686,595
---------
Stockholders' deficit:
Preferred stock-no par value. Authorized 1,000,000
shares; no shares issued or outstanding ---
Common stock-$.10 par value. Authorized 10,000,000
shares; issued and outstanding 1,597,223 and
1,597,241 shares in 1996 and 1995 159,720
Accumulated deficit (374,649)
---------
Total stockholders' deficit (214,929)
Contingencies ___
---------
$ 471,666
=========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 12
<TABLE>
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1996 and 1995
1996 1995
---- ----
<S> <C> <C>
Revenues:
Oil and gas sales $ 938,911 834,968
Other operating income 17,630 14,782
--------- ---------
956,541 849,750
--------- ---------
Expenses:
Lease operating expense 726,554 661,729
General and administrative 359,375 347,593
Depreciation, depletion and
amortization 9,069 11,646
--------- ---------
1,094,998 1,020,968
--------- ---------
Operating loss (138,457) (171,218)
Other income and (expense):
Gain on sale of assets 19,473 4,212
Interest and dividend income 10,709 12,526
Interest expense (24,968) (17,140)
--------- ---------
5,214 (402)
--------- ---------
Loss before provision
for income taxes (133,243) (171,620)
Income Tax --- ---
--------- ---------
Net loss $ (133,243) (171,620)
========= =========
Net loss per share $ (.08) (.11)
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 13
<TABLE>
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Years ended December 31, 1996 and 1995
1996 1995
---- ----
<S> <C> <C>
Preferred stock $ --- ---
Common stock:
Balance at beginning of year 159,724 159,724
Retirement of stock (18 shares in 1996) (4) ---
--------- ---------
Balance at end of year 159,720 159,724
--------- ---------
Accumulated deficit:
Balance at beginning of year (241,406) (69,786)
Net loss (133,243) (171,620)
--------- ---------
Balance at end of year (374,649) (241,406)
--------- ---------
Total stockholders' deficit $ (214,929) (81,682)
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 14
<TABLE>
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996 and 1995
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net loss $ (133,243) (171,620)
Adjustments to reconcile net loss to
cash used by operating activities:
Depreciation, depletion and 9,069 11,646
amortization
Gain on sale of assets (19,473) (4,212)
Losses on retirements of property
and equipment included in lease
operating expenses 20,767 17,643
Increase in cash surrender value
of life insurance (11,100) (11,100)
Increase in accounts receivable (1,796) (924)
Increase in inventory (17,657) (7,438)
Decrease in prepaid expenses 9,883 431
Increase in accounts payable and
accrued expenses 42,210 447
Increase in payable to officer, net 130,547 22,926
Increase in payable to interest owners 34,478 29,097
-------- --------
Net cash provided (used) by
operating activities 63,685 (113,104)
-------- --------
Investing activities:
Capital expenditures (35,338) (22,229)
Proceeds from sale of property and
equipment 20,000 12,550
-------- --------
Net cash used by investing
activities (15,338) (9,679)
-------- --------
Financing activities:
Purchase and retirement of common stock (4) ---
-------- --------
Net cash used by financing activities (4) ---
-------- --------
Increase (decrease) in cash and cash
equivalents 48,343 (122,783)
Cash and cash equivalents at beginning
of year 170,012 292,795
-------- --------
Cash and cash equivalents at end of year $ 218,355 170,012
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 15
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of Petrol Industries, Inc. and its Subsidiaries (the
"Company"), all of which are wholly owned. All significant intercompany
transactions have been eliminated.
CASH AND CASH EQUIVALENTS -- For purposes of reporting cash flows, cash
and cash equivalents include cash on hand, demand deposits with banks or
other financial institutions, and short-term, highly liquid investments
with original maturities of three months or less.
INVENTORY -- Inventory consists of crude oil accumulated in the Company's
own storage tanks and is valued at the posted market price at the end of
the year.
PROPERTY AND EQUIPMENT -- The Company's oil and gas producing activities
are accounted for using the successful efforts method of accounting in
accordance with Statement of Financial Accounting Standards No. 19. The
costs incurred to acquire property (proved and unproved) and all
development costs and exploratory costs which find proved oil and gas
reserves are capitalized. The costs of exploratory wells drilled are
capitalized until determination is made as to whether such wells have
found proved oil and gas reserves. Upon final determination, such costs
are charged to operations if no reserves are found or are capitalized as
producing oil and gas properties. Total cost capitalized for oil and gas
producing activities that exceed the estimated discounted future net cash
flows related to oil and gas reserve quantities are charged to expense on
a quarterly basis.
During 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. Management, after a
review of relevant facts and circumstances, makes a determination whether
an indication of impairment exists with respect to any asset or group of
assets of the Company. If impairment indicators are present, management
assesses whether fair value or, if fair value is not determinable, the
present value of the expected future cash flows from the operation of
assets, including any proceeds from their eventual disposition, are at
least equal to their carrying value. Should future cash flows be less
than the assets' carrying value, an impairment loss is recognized through
a charge to operations and a reduction of the carrying value of the
assets. The impairment loss is based upon a determination of fair value
or, if fair value is not determinable, the present value of the expected
future cash flows from the operation of assets.
DEPRECIATION, DEPLETION AND AMORTIZATION -- Depreciation, depletion and
amortization of producing oil and gas properties are provided under the
unit-of-production method, comparing production to estimated proved
developed oil and gas reserves.
(Continued)
<PAGE> 16
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Other property and equipment are depreciated on a straight-line basis
over their estimated useful lives.
INCOME TAXES -- The Company follows the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), ACCOUNTING FOR INCOME
TAXES, which requires the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between the financial statement carrying
amounts and the tax bases of existing assets and liabilities and are
measured using the enacted tax rates that are assumed will still be in
effect when the differences are expected to reverse. The effect on
deferred taxes of a change in a tax rate is recognized in the statement
of income for the period covering the enactment date.
USE OF ESTIMATES -- Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ
from those estimates.
FINANCIAL INSTRUMENTS -- Statement of Financial Accounting Standards No.
107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires that
the Company disclose estimated fair values for its financial instruments.
Fair value estimates set forth below for the Company's financial
instruments:
Accounts receivable, accounts payable, payable to interest owners
and accrued expense -- The carrying amounts approximate fair value
because of the short maturity of these instruments.
The fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instruments. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly
affect the estimates.
(2) LIQUIDITY AND FINANCIAL CONDITION
Due to the Company's recurring losses from operations, significant
operating and administrative expenses, current liabilities in excess of
current assets, and a stockholders' deficit of $214,929, the Company will
lack sufficient capital reserves and liquid or liquidatable assets to
permit a full year of operations.
Management is examining available financing alternatives to enable it to
remain in operation. These alternatives range from seeking outside
equity capital to permit continued or expanded operations, with the hope
of lowering average direct lifting costs, to shutting down all but
minimal operations utilizing only a skeleton staff, putting the Company
in a suspended state for as long as assets permit. Management
(Continued)
<PAGE> 17
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
is also examining the possibility of realizing value for the Company's
remaining assets, including, if necessary, dissolution. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
(3) CASH SURRENDER VALUE LIFE INSURANCE
In 1993, the Company borrowed $78,666 against a life insurance policy.
No payments have been paid on the principal as of December 31, 1996,
however, interest payments of $6,293 and $6,014 were made in 1996 and
1995. The stated rate of interest is 8%. There are no terms for
repayment of the principal. The outstanding loan amount has been netted
against the cash surrender value of the policy which totaled $124,649 at
December 31, 1996.
(4) INCOME TAXES
There was no income tax expense (benefit) reported for the years ended
December 31, 1996 and 1995.
The following table presents reconciliations of the expected tax expense
(benefit) using the statutory federal tax rates of 34% in 1996 and 1995,
and the Company's actual tax benefit:
1996 1995
---- ----
Tax (benefit) at the statutory
federal rate $ (45,303) (58,351)
Current year losses which provided
no tax benefit 38,825 47,577
Other, net 6,478 10,774
-------- --------
$ ___ ___
======== ========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1996 and 1995, are presented below.
1996 1995
---- ----
Deferred tax assets:
Net property and equipment, principally
due to differences in depreciation $ 60,142 57,401
Accounts payable and accrued expenses 48,851 ---
Tax net operating loss carryforward 401,340 418,762
Capital loss carryforward --- 97,223
Statutory depletion carryforward 282,131 275,671
--------- ---------
Total gross deferred tax assets 792,464 849,057
Less valuation allowance (792,464) (849,057)
--------- ---------
Net deferred tax assets $ ___ ___
========= =========
(Continued)
<PAGE> 18
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Due to the Company's history of net operating losses and the
uncertainties that affect the ultimate realization of the above deferred
tax amounts, the Company has recorded a 100% valuation allowance
applicable to these deferred tax assets. The Company will periodically
review the realizability of these assets and adjust the related valuation
allowance as needed.
The valuation allowance for deferred tax assets of approximately $792,000
at December 31, 1996, has decreased approximately $57,000 (the same as
the decrease in certain deferred tax assets) from the amount determined
at January 1, 1996. Any subsequently recognized tax benefits relating to
the valuation allowance would be reported as a reduction of income tax
expense in the consolidated statement of operations.
The Company has federal tax net operating loss carryforwards of
approximately $1,180,000 which expire between 2003 and 2011, which could
be used to offset future federal taxable income. The Company has a
statutory oil and gas depletion carryforward of approximately $829,000,
which has no expiration date.
There were no taxes paid in 1996 and 1995.
(5) PAYABLE TO INTEREST OWNERS
The Company has recorded as a payable totaling $278,556 to approximately
100 individual owners of royalty, working interests, and/or overriding
royalty interest as a result of proceeds it received in settling a
dispute in a property, plus the undistributed net revenues since the
settlement date in 1992. The Company intends to distribute the funds
when more accurate information is available regarding the amounts due to
individual interest owners.
(6) BUSINESS AND CREDIT CONCENTRATIONS
The Company has been engaged in a single industry segment - drilling for
and producing oil and gas on leased property located in the Caddo Pine
Island Field and the Shreveport Field, both in Caddo Parish, Louisiana.
The Company is primarily involved in the production of oil which is sold
to approximately nineteen oil companies. The Company had sales to two
major customers in 1996 and 1995 as follows:
1996 1995
---- ----
Customer 1 $ 242,000 223,000
Customer 2 619,000 549,000
------- -------
$ 861,000 772,000
======= =======
(Continued)
<PAGE> 19
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) NET LOSS PER SHARE
Net loss per share of common stock was computed on the weighted average
number of shares outstanding of 1,597,223 and 1,597,241 for 1996 and
1995, respectively.
(8) AFFILIATED PARTNERSHIPS
The Company serves as general partner in several limited partnerships
engaged in exploration and production activities. The Company is
compensated for providing management and accounting services to the
partnerships (see Note 9). The Company also serves as operator on
partnership wells and in connection therewith receives and disburses
partnership funds.
Indebtedness to partnerships for their portion of undistributed net
revenue was approximately $16,650 at December 31, 1996, and is included
in accounts payable.
(9) OTHER OPERATING INCOME AND LEASE OPERATING EXPENSE
Other operating income for the years ended December 31, 1996 and 1995,
consists of the following:
1996 1995
---- ----
Affiliated partnerships - operations
and administration fee $ 12,406 12,667
Other 5,224 2,115
------ ------
$ 17,630 14,782
====== ======
Lease operating expense includes severance tax of $31,649 and $20,027,
for the years ended December 31, 1996 and 1995, respectively.
(10) RELATED PARTY TRANSACTIONS
Payable to officer, net, consists of the following:
Accrued salary plus interest $ 356,327
Note payable to Company plus interest (40,570)
Advances (74,502)
--------
$ 241,255
========
Interest at a bank's prime rate is accruing on all accrued salary and
unpaid interest thereon. Interest cost included in expense during 1996
and 1995 were $12,201 and $10,847, respectively. The note payable
represents a $35,000 note payable issued to the Company during 1995,
repayable on demand; the loan bears interest at an annual rate of
one-quarter of a percent in excess of prime rate of a bank. Interest
included in income was $3,246 and $2,324 during 1996 and 1995,
respectively. Advances are non-interest bearing.
(Continued)
<PAGE> 20
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) CONTINGENCIES
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Company's consolidated financial position, results of
operations or liquidity.
* * * * *
<PAGE> 21
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Supplemental Oil and Gas Information
(unaudited)
OIL AND GAS PRODUCING ACTIVITIES
Information shown in Schedules 1 through 4 are presented in accordance with
Statement of Financial Accounting Standards No. 69, DISCLOSURES ABOUT OIL AND
GAS PRODUCING ACTIVITIES.
CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES-Schedule 1
This schedule presents the capitalized costs of proved oil and gas properties
along with the applicable accumulated depreciation, depletion, and
amortization.
COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION, AND
DEVELOPMENT ACTIVITIES-Schedule 2
This schedule presents costs incurred in oil and gas producing activities by
type of expenditure.
ESTIMATED NET QUANTITIES OF PROVED OIL AND GAS RESERVES-Schedule 3
All of the Company's oil and gas reserves are located in one geographic area
within the continental United States. Reserves cannot be measured exactly
since reserve estimates involve many subjective judgments and must be reviewed
periodically and adjusted to reflect additional information gained from
reservoir performance, new geological and geophysical data, and economic
changes.
Proved reserves are those quantities of oil and gas that appear with
reasonable certainty to be recoverable in the future from known reservoirs
under existing economic and operating conditions at that time. As additional
information becomes available or conditions change, estimates must be revised.
Significant declines in the price of crude oil or significant technological
changes may render these reserves to be uneconomical to develop. The last
analysis of geological and engineering data performed by the Company to
estimated proved reserves was performed in 1974. As a result of the financial
condition of the Company and the significant length of time that has expired
since the last engineering analysis, proved undeveloped reserves have been
omitted from Schedule 3.
Proved developed reserves are those quantities of proved oil and gas reserves
that are recoverable through existing wells within existing equipment and
operating methods. The last analysis of geological and engineering data
performed by the Company to estimated proved developed reserves was performed
as of January 1, 1989. Since 1989, changes in proved developed reserves have
been made for the results of annual production volumes.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED
OIL AND GAS RESERVE QUANTITIES-Schedule 4
Estimated future net cash flows were determined by summing yearly future cash
inflows computed by applying year-end prices (approximately $23.83 per barrel
for oil at December 31, 1996) to estimated quantities of proved
<PAGE> 22
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Supplemental Oil and Gas Information
(unaudited)
developed reserves as of each year end. Oil prices have declined in early
1997 from year end levels. The estimated future production costs were
deducted based on the assumed continuation of the cost levels and economic
conditions existing at the respective year end. Income taxes are not included
due to the Company not being in a tax paying position. The future net cash
flows were then discounted at 10%.
The Company cautions readers that the standardized measure information, which
places a value on proved reserves, is not indicative of either fair market
value or present value of future cash flows. Other logical assumptions could
have been used for this computation which would likely have resulted in
significantly different amounts. This information is disclosed in accordance
with Statement No. 69 solely to provide readers with a common base for use in
preparing their own estimates of future cash flows and for comparing reserves
among companies. Management of the Company does not rely on the computations
in Schedule 4 when making investment and operating decisions.
Schedule 4 also presents a summary of the principal sources of change in the
standardized measure of discounted future net cash flows for the years 1996
and 1995.
<PAGE> 23
<TABLE>
Schedule 1
----------
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Capital Costs Relating to Oil and Gas
Producing Activities
December 31, 1996
(unaudited)
1996
----
<S> <C>
Proved properties $ 4,262,884
Other 336,098
---------
4,598,982
Accumulated depreciation, depletion
and amortization 4,552,235
---------
Net capitalized costs $ 46,747
=========
Note: Included in capitalized Costs at December 31, 1996, is $746,941,
representing contributions of capital costs made by the Company to
affiliated limited partnerships pursuant to various partnership
agreements.
</TABLE>
<PAGE> 24
<TABLE>
Schedule 2
----------
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Costs Incurred in Oil and Gas Property Acquisition,
Exploration, and Development Activities
Years ended December 31, 1996 and 1995
(unaudited)
1996 1995
---- ----
<S> <C> <C>
Developmental costs $ 24,686 18,935
======= =======
</TABLE>
<PAGE> 25
<TABLE>
Schedule 3
----------
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Estimated Net Quantities of
Proved Developed Oil and Gas Reserves
Years ended December 31, 1996 and 1995
(unaudited)
1996 1995
---- ----
Barrels Barrels
of Oil of Oil
------- -------
<S> <C> <C>
Proved developed reserves:
Beginning of year 356,454 411,373
Production (44,969) (50,854)
Sales of minerals in place (18,192) (4,065)
Revisions, extensions and discoveries --- ---
-------- --------
End of year 293,293 356,454
======== ========
Note-The proved developed reserves are all located within the United States.
Proved developed reserves have been included since they are economically
the most appropriate estimate of reserves to include in the schedule.
1995 amounts were restated to conform to the 1996 presentation.
</TABLE>
<PAGE> 26
<TABLE>
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Standardized Measure of Discounted Future Net Cash
Flows Relating to Proved Oil and Gas Quantities
Years ended December 31, 1996 and 1995
(unaudited)
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Future cash inflows $ 6,975 6,428
Future production and development
cost (4,496) (4,582)
Future income tax (expense)
benefit --- ---
------- -------
Future net cash flows (deficit) 2,479 1,846
10% annual discount for estimated
timing of cash flows (deficit) (826) (664)
------ ------
Standardized measure of discounted
future net cash flows (deficit) $ 1,653 1,182
====== ======
</TABLE>
Principal sources of change in the standardized measure of discounted future
net cash flows for the years shown:
<TABLE>
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Net changes in prices and production
cost, including excise taxes $ 738 386
Sales and transfers of oil and gas
produced, net of production costs (212) (184)
Net change due to revisions,
extensions, and discoveries --- ---
Net change due to purchase (sales) of
minerals-in-place (370) (69)
Development cost incurred during the
period 25 19
Accretion of discount 118 87
Change in production rates (timing)
and other 173 71
----- -----
$ 472 310
===== =====
Note-The proved and proved developed reserves are located within the United
States.
</TABLE>
<PAGE> 27
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
<PAGE> 28
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) The Directors of Petrol are as follows:
Position with the Company
and Business Experience Director
Name Age During Past Five Years Since
- ---- --- ------------------------- --------
Joseph M. Rodano 60 Chairman of the Board of 1972
Directors, President
and Chief Executive Officer
of Petrol since 1972;
Treasurer of Petrol since
1980; Assistant Secretary
since March, 1996.
Robert M. Bontempi 65 Director, Retired; Bond 1972
Salesman, Thomson McKinnon
Securities, 1983-1988.
Arlys C. Milan 42 Vice President of Petrol 1994
since 1990; Office Manager
for more than 4 years
prior thereto; elected to
Board of Directors in
August, 1994; Secretary
since March, 1996.
All Directors serve until the next annual meeting of stockholders and
until their successors are duly elected and qualify.
(b) The chief executive officers and four most highly compensated
executive officers of the Company are as follows:
Position with the Company and Business
Name Age Experience During Past Five Years
- ---- --- --------------------------------------
Joseph M. Rodano 60 See "Directors" above.
Howard E. Chase 60 Secretary of Petrol since November, 1982;
is still associated with the law firm of
Morrison Cohen Singer & Weinstein, LLP;
President and Chief Executive Officer of
DeTomaso Industries, Inc. since September,
1995. Mr. Chase resigned his position as
Secretary effective February 21, 1996.
Arlys C. Milan 42 See "Directors" above.
Jimmy S. Foster 53 Vice President of Petrol since April,
1990; Field Supervisor for more than five
years prior thereto.
All Officers serve at the pleasure of the Board of Directors.
<PAGE> 29
(c) Significant Employees.
None.
(d) Family Relationships.
None.
(e) Business Experiences.
See (a) and (b) above.
(f) Involvement in Legal Proceedings.
Not applicable to any person listed in (a) or (b) above.
The Company has no standing audit, nominating or compensation committees,
or committees performing similar functions. The Board of Directors met once
in 1996.
ITEM 10. EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the two most recently ended fiscal years
ended December 31, the cash compensation paid or accrued for those years to
the Chief Executive Officer of the Company who is the only one among the four
most highly compensated executive officers of the Company whose aggregate
annual salary and bonus paid in compensation for services rendered in all the
capacities in which he served exceeded $100,000 for the Company's last fiscal
year:
<TABLE>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
----------------------------------- --------------------------------
Name and Restricted All Other
Principal Other Annual Stock Options/ LTIP Compensation
Position Year Salary($) Bonus($) Compensation($) Awards($) SARs(#) Payouts($) ($)
- --------- ---- --------- -------- --------------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph M. Rodano, 1995 125,000 - - - - - -
President, Chief 1996 125,000 - - - - - -
Executive Officer,
and Chairman of the
Board
</TABLE>
STOCK OPTION GRANTS
There were no grants of stock options/SARs made during the fiscal year
ended December 31, 1996 and 1995 to Mr. Rodano.
<PAGE> 30
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------
Individual Grants
- ------------------------------------------------------------
Percent of Potential Realizable Value
Total at Assumed Annual Rates of (Alternative to
Options/ Stock Price Appreciation Potential Realizable
SARs For Option Term Realizable Value)
Options/ Granted to -------------------------- --------------------
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration Grant Date
Name (#) Year ($/Sh) Date 5%($) 10%($) Present Value $
- ---- ------- ---------- ----------- ---------- ----- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Not Applicable
</TABLE>
STOCK OPTION EXERCISES
Mr. Rodano did not exercise any stock options during the fiscal year
ended December 31, 1996 or 1995 and did not have any unexercised options at
the fiscal year-end.
<TABLE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Value of Unexercised
Number of Unexercised In-the-Money
Shares Option/SARs at Option/SARs at
Acquired FY-End(#) FY-End ($)
on Value --------------------------- ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Not Applicable
</TABLE>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
There were no awards made in the fiscal year ended December 31, 1996 and
1995 to Mr. Rodano under any form of Company LTIP (w/incentives spanning more
than one fiscal year).
<TABLE>
LONG-TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------
Estimated Future Payouts Under Non-Stock
Number of Shares, Price-Based Plans
Units or Other Performance or Other ________________________________________
Rights Period Until Maturation Threshold Target Maximum
Name (#) or Payout ($ or #) ($ or #) ($ or #)
- ---- ----------------- ----------------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Not Applicable
</TABLE>
Howard Chase, Secretary of Petrol, is associated with the firm of
Morrison Cohen Singer & Weinstein, LLP. He resigned his position as Corporate
Secretary effective February 2, 1996.
<PAGE> 31
Except as described above, no annuity, pension or retirement benefits,
plans for cash or non-cash compensation or other existing plans or
arrangements for remunerating officers and directors, other than salary, are
presently in effect. The Company does not have any stock option, stock
appreciation or other form of incentive plan or arrangement for its management
or employees.
Non-management directors were paid an annual fee of $800 in 1995, with
the remainder of the fees being accrued. No fees were paid in 1996.
There are no retirement, resignation or termination arrangements with
executive officers due to change in control of the Company, or for any other
reason.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) The following table sets forth, as of March 19, 1997, information
concerning the beneficial ownership of Petrol's Common Stock by each person
who is known by management to own beneficially more than 5% of such
securities:
<TABLE>
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- --------
<S> <C> <C>
Joseph M. Rodano 447,325 (direct) 28.0%
</TABLE>
(b) The following table sets forth, as of March 19, 1997, information
concerning the beneficial ownership of voting securities of the Company by all
current directors individually, by the Chief Executive Officer and the two
next most highly compensated officers, and by all directors and officers as a
group:
<TABLE>
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- --------
<S> <C> <C>
Joseph M. Rodano 447,325 (direct) 28.0%
Robert M. Bontempi 0 0.0%
Arlys C. Milan 0 0.0%
Jimmy S. Foster 0 0.0%
</TABLE>
(c) CHANGES IN CONTROL. There are no arrangements known to the Company,
including any pledge by any person of securities of the Company, the operation
of which may at a subsequent date result in a change in control thereof.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) TRANSACTIONS WITH MANAGEMENT AND OTHERS. In April, 1995, the
Company loaned its president the principal sum of $35,000, repayable on
demand; the loan bears interest at an annual rate of one-quarter of a percent
in excess of the prime rate.
<PAGE> 32
(b) CERTAIN BUSINESS RELATIONSHIPS OF DIRECTORS.
Not applicable.
(c) INDEBTEDNESS OF MANAGEMENT IN EXCESS OF $60,000.
Not applicable.
(d) TRANSACTIONS WITH PROMOTERS.
Not applicable.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
1. Exhibits:
3(a) Certificate of Incorporation of the Company, and
amendments thereto (Filed as Exhibit 3(a) to the
Company's 1981 Annual Report on Form 10-K and
incorporated herein by reference).
3(b) By-laws of the Company (Filed as Exhibit 3(b) to the
Company's 1981 Annual Report on Form 10-K and
incorporated herein by reference).
10(a) Compromise Agreement between Petrol Industries, Inc. and
Enron Oil Trading & Transportation Company dated as of
November 30, 1992 (contained in the Company's 1992 Annual
Report on Form 10-K).
10(b) Compromise Agreement between and among Petrol Industries,
Inc., Oryx Energy Company and Enron Oil Trading &
Transportation Company dated as of November 30, 1992
(contained in the Company's 1992 Annual Report on Form
10-K).
22 Subsidiaries of the Company (Filed as Exhibit 22 to
Registrant's 1981 Annual Report on Form 10-K and
incorporated herein by reference).
(b) Reports on Form 8-K
None filed during the last quarter of 1996.
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 of 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.
PETROL INDUSTRIES, INC.
March 27, 1997 By: Joseph M. Rodano
----------------------------------
Joseph M. Rodano
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
March 27, 1997 Joseph M. Rodano
-------------------------------------
Joseph M. Rodano - Director
March 27, 1997 Robert Bontempi
-------------------------------------
Robert Bontempi - Director
March 27, 1997 Arlys C. Milan
-------------------------------------
Arlys C. Milan - Director
<PAGE> 34
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 218,355
<SECURITIES> 0
<RECEIVABLES> 83,287
<ALLOWANCES> 0
<INVENTORY> 47,647
<CURRENT-ASSETS> 364,111
<PP&E> 4,643,884
<DEPRECIATION> 4,587,912
<TOTAL-ASSETS> 471,666
<CURRENT-LIABILITIES> 686,595
<BONDS> 0
0
0
<COMMON> 159,270
<OTHER-SE> (374,649)
<TOTAL-LIABILITY-AND-EQUITY> 471,666
<SALES> 938,911
<TOTAL-REVENUES> 956,541
<CGS> 726,554
<TOTAL-COSTS> 726,554
<OTHER-EXPENSES> 368,444
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,968
<INCOME-PRETAX> (133,243)
<INCOME-TAX> 0
<INCOME-CONTINUING> (133,243)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (133,243)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
