<PAGE> 1
FORM 10-KSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[XX] 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, 1999
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
(State or Other Jurisdiction of Incorporation of Organization)
75-1282449
(IRS Employer Identification No.)
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: $535,680.
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 30, 2000 was $654,850.
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 31, 2000 was 1,597,196.
Transitional Small Business Disclosure Format: Yes___ No X
Page 1 of 34 Pages
Index appears at Page 10
<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, the Greenwood-Waskom Field, and the Shreveport Field, all in Caddo
Parish, Louisiana. Petrol and its wholly owned subsidiaries currently employ
10 persons in the aggregate.
As of December 31, 1999, Petrol's leases contained 8 completed gas
wells, 18 completed wells producing oil and gas, and 326 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 225 wells producing oil or oil and gas are currently being operated. The
Company expects that if received oil prices justify the expenditure,
approximately 40 of its wells will be placed back in operation during the
course of 2000, 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.
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 1999, 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 29,769 barrels of oil and 4,888
MCF of gas, and production, net to Petrol, of 22,717 barrels of oil and
4,888 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 1999, the
average price received by Petrol for its oil (including wells owned by the
various partnerships) was $16.48 per barrel of oil and $1.87 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 1999 and 1998, approximately $105,033 and $102,608 were
expended on such maintenance.
<PAGE> 3
DRILLING PROGRAMS.
In 1979, 1983 and 1984 Petrol formed Louisiana partnerships in
commendams (limited partnerships) for the development of oil and gas wells on
its properties. In connection with such programs, Petrol contributed drilling
sites and hardware, and was responsible for drilling and completing the wells
on a "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 1999 or 1998.
MARKET FOR PETROL'S OIL AND GAS PRODUCTION.
The Company's oil and gas production is sold to major oil companies and
other purchasers that gather oil production by tank wagon in areas where
pipelines are not available. EOTT Energy Operating Limited Partnership,
formerly EOTT Energy ("EOTT") accounted for 90.4% of the Company's 1999 oil
sales. More than half 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 worldwide 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 that 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 22 to 25 and Schedules 3 and 4 at Pages 26 to
27, 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 1999.
d. PRODUCTION. For the years ended December 31, 1999 and 1998, the
average sales price (including transfers) per unit of oil produced was $16.48
and $12.03, respectively, and the average production cost (lifting cost) per
unit of production for oil was $13.47 and $13.27, respectively.
e. PRODUCTIVE WELLS AND ACREAGE. As of December 31, 1999, the Company
held the following productive wells and developed acres:
Oil Gas Oil & Gas
--- --- ---------
(i) Gross Productive Wells 326 8 18
(ii) Net Productive Wells 316 1.2 10.5
(iii) Gross Developed Acres 4,288 1,310 958
(iv) Net Developed Acres 2,436.3 66 179.5
f. UNDEVELOPED ACREAGE. As of December 31, 1999, the Company held the
following undeveloped acreage:
(i) Gross Acres 121
(ii) Net Acres 54
g. DRILLING ACTIVITY. No drilling activity occurred in 1999 or 1998.
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, 1998, 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
-------- -------
1998
1st Quarter 3/8 7/32
2nd Quarter 3/8 1/4
3rd Quarter 1/4 5/32
4th Quarter 9/32 1/8
1999
1st Quarter 1/8 1/8
2nd Quarter 1/8 1/16
3rd Quarter 3/16 1/16
4th Quarter 3/16 1/16
2000
1st Quarter thru March 30 29/64 1/16
On March 31, 2000, there were 3,669 holders of record of its common
stock.
No dividends were declared or paid during 1999 or 1998 and the Company
has no present intention to pay cash dividends in the foreseeable future.
<PAGE> 7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1999 COMPARED TO 1998
(a) RESULTS OF OPERATIONS. The Company continues to endeavor a decrease
in production for 1999, as overall production decreased 18.9% from 1998.
This decline in gross production is also accompanied by an increase in
received oil prices. The average price of an equivalent barrel of oil received
in 1999 was $16.48, up from $12.03 received on average for 1998.
The decrease in production when associated with the increase in received
oil prices resulted in a net loss to the Company of $185,131, or $.12 per
share, on revenues of $535,680.
The net loss from operations (before other income/expense items) was
$150,495 for 1999 as compared to $353,475 for 1998, or a decrease in the loss
from operations of 57.4% over the prior year's operations. To restore
operating profitability, the Company will depend on significant increases in
overall production and this production must be aided by an increase in
received oil prices over the following twelve month period, understanding
that received oil prices are dependent on the results of world events outside
the Company's control.
(b) FINANCIAL CONDITION AND LIQUIDITY. The recurring losses from
operations continue to erode the cash and cash equivalents of the Company,
as the liquid assets are being used to fund current operations. Current
liabilities exceed current assets by $1,030,487 and stockholders' deficit
was $1,020,246 for the year ended December 31, 1999. Management has
continued to benefit from an above average price of an equivalent barrel of
oil during the first quarter of 2000.
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,
1999, 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.
<PAGE> 8
1998 COMPARED TO 1997
(a) RESULTS OF OPERATIONS. Production declined 13.9% from 1997. The
decline in production accompanied by a decrease in oil prices, resulted in a
net loss of $383,990, or $.24 per share, on revenues of $472,591. The
Company's operating loss of $353,475 increased from last year's operating
loss of $224,618.
The average price of an equivalent barrel of oil received in 1998 was
$12.03, down from $18.44 received on average in 1997.
(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 $835,115, the Company may lack sufficient capital reserves and liquid or
liquidatable assets to permit continued operations.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In February of 1998, the Financial Accounting Standards Board (FASB)
issued SFAS 132, EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER
POSTRETIREMENT BENEFITS, effective for financial statements both interim and
annual periods ending after December 15, 1997. SFAS 132 revises employers'
disclosures about pension and other postretirement benefit plans. It does
not change the measurement or recognition of those plans. It standardizes
the disclosure requirements for pensions and other postretirement benefits to
the extent practicable, requires additional information on changes in the
benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures that are no longer
useful as they were when FASB Statements No. 87, EMPLOYERS' ACCOUNTING FOR
PENSIONS, No. 88, EMPLOYERS' ACCOUNTING FOR SETTLEMENTS AND CURTAILMENTS OF
DEFINED BENEFIT PENSION PLAN AND FOR TERMINATION BENEFITS, and No. 106,
EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS,
were issued. This Statement suggests combined formats for presentation of
pension and other postretirement benefit disclosures. The Statement also
permits reduced disclosures for nonpublic entities.
<PAGE> 9
In June of 1998, the Financial Accounting Standards Board (FASB) issued
SFAS 133, ACCOUNTING FOR DERIVATIVE INSTRUMENT AND HEDGING ACTIVITIES,
effective for all fiscal quarters of all fiscal years beginning after
June 15, 1999. SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value. If certain conditions are met, a derivative
may be specifically designated as (a) a hedge of the exposure to changes in
the fair value of a recognized asset or liability or an unrecognized firm
commitment, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (c) a hedge of the foreign currency exposure of a
net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction.
<PAGE> 10
ITEM 7. INDEX TO FINANCIAL STATEMENTS.
Page
----
Independent Auditors' Report 11
Consolidated Balance Sheet 12
Consolidated Statements of Operations 13
Consolidated Statements of Stockholders' Deficit 14
Consolidated Statements of Cash Flows 15
Notes to Consolidated Financial Statements 16
<PAGE> 11
Independent Auditors' Report
The Board of Directors and Stockholders
Petrol Industries, Inc. and Subsidiaries
Shreveport, Louisiana
We have audited the consolidated balance sheet of Petrol Industries, Inc.
and Subsidiaries as of December 31, 1999, and the related consolidated
statements of operations, stockholders' deficit, and cash flows for the year
then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinon on
these consolidated financial statements based on our audit.
We conducted our audit 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 audit provides 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
Petrol Industries, Inc. and Subsidiaries at December 31, 1999, and the
results of their consolidated operations and their cash flows for the year
then ended, 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.
HEARD McELROY & VESTAL LLP
Shreveport, Louisiana
March 31, 2000
<PAGE> 12
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1999
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 34,138
Accounts receivable:
Trade 67,542
Other 9,663
----------
77,205
Inventory 40,406
Prepaid expenses 6,073
----------
Total current assets 157,822
----------
Property and equipment, at cost:
Land 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 4,141,705
Trucks and other operating equipment 367,984
Furniture and fixtures 46,720
4,563,409
Less accumulated depreciation, depletion and ----------
Amortization 4,504,275
----------
59,134
----------
Other assets 1,107
----------
$ 218,063
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 44,667
Payable to interest owners 321,106
Payable to officer, net 722,194
Note payble 50,000
Accrued expenses 100,342
----------
Total current liabilities 1,238,309
----------
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 1,597,196
shares in 1999 and 1998 159,720
Accumulated deficit (1,179,966)
----------
Total stockholders' deficit (1,020,246
----------
$ 218,063
==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 13
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1999 and 1998
<TABLE>
1999 1998
<S> <C> <C>
Revenues:
Oil and gas sales $ 495,995 447,491
Other operating income 39,685 25,100
---------- ---------
535,680 472,591
---------- ---------
Expenses:
Lease operating expense 400,913 487,806
Severance taxes 12,784 8,112
General and administrative 261,394 317,163
Depreciation, depletion
and amortization 11,084 11,084
amortization ---------- ----------
686,175 826,066
---------- ----------
Operating Loss (150,495) (353,475)
Other income and (expense):
Gain (loss) on sale of assets 2,500 (408)
Interest and dividend income 859 6,315
Interest expense (37,995) (36,422)
--------- ---------
(34,636) (30,515)
--------- ---------
Loss before
provision
for income taxes (185,131) (383,990)
--------- ---------
Income tax --- ---
Net loss $ (185,131) (383,990)
========= =========
Net loss per share $ (0.12) (0.24)
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 14
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Years ended December 31, 1999 and 1998
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Preferred Stock $ --- ---
Common stock:
Balance at beginning of year 159,720 159,720
Retirement of stock --- ---
---------- ---------
Balance at end of year 159,720 159,720
---------- ---------
Accumulated deficit
Balance at beginning of year (944,835) (610,845)
Net loss (185,131) (383,990)
---------- ---------
Balance at end of year (1,179,966) (994,835)
---------- ---------
Total stockholder's deficit $ (1,020,246) (835,115)
========== =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 15
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1999 and 1998
<TABLE>
1999 1998
<S>
Operating activities: <C> <C>
Net loss $ (185,131) (383,990)
Adjustments to reconcile net loss to cash
Used by operating activities:
Depreciation, depletion and 11,084 12,985
amortization
(Gain) loss on sale of assets (2,500) 408
Decrease in cash surrender value of
life insurance --- 56,746
(Increase) decrease in accounts receivable (39,020) 28,131
(Increase) decrease in inventory (23,721) 26,958
Increase in prepaid expenses (2,269) (1,336)
Increase (decrease) in accounts payable and
accrued expenses 997 (16,590)
Increase in payable to officer, net 159,512 170,981
Increase in payable to interest owners 7,938 9,476
-------- --------
Net cash used by operating activities (73,110) (96,231)
-------- --------
Investing activities:
Capital expenditures (1,981) (21,884)
Proceeds from sale of property and
equipment 2,500 35
Net cash provided (used) by investing -------- --------
activities 519 (21,849)
-------- --------
Financing activities:
Purchase and retirement of common stock --- ---
Proceeds from gross borrowings 50,000 ---
-------- --------
Net cash provided by financing activities 50,000 ---
-------- --------
(Decrease) in cash and cash equivalents (22,591) (118,080)
Cash and cash equivalents at beginning of year 56,729 174,809
-------- --------
Cash and cash equivalents at end of year $ 34,138 56,729
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 16
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(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 inter-
company 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 that 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.
(Continued)
<PAGE> 17
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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.
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 $1,020,246, the Company could
lack sufficient capital reserves and liquid or
liquidatable assets to permit a full year of operations.
(Continued)
<PAGE> 18
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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.
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 were paid on the
principal as of December 31, 1997; however, interest
payments of $6,293 were made in 1997 and 1996. The
stated rate of interest is 8%. There were no terms for
repayment of the principal. The outstanding loan amount
was netted against the cash surrender value of the
policy, which totaled $135,412 at December 31, 1997.
As of October 15, 1998, the Company canceled the life
insurance policy described above, and obtained a net
cash surrender value of $53,055. The transaction was
accounted for on the Company's books as receiving a
gross cash surrender value of $137,490 which was offset
by the amount borrowed against the policy of $84,435,
represented by principal of $78,666 and the related
accrued interest of $5,769.
(4) INCOME TAXES
There was no income tax expense (benefit) reported for
the years ended December 31, 1999 and 1998.
The following table presents a reconciliation of the
expected tax expense (benefit) using the statutory
federal tax rates of 34% in 1999 and 1998, and the
Company's actual tax benefit:
1999 1998
---- ----
Tax (benefit) at the statutory
federal rate $ (62,945) (130,557)
Current year losses which
Provided no tax benefit 57,616 52,326
Other, net 5,329 78,231
-------- --------
$ --- ---
======== ========
(Continued)
<PAGE> 19
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The tax effects of temporary differences that give rise
to significant portions of the deferred tax assets and
deferred tax liabilities at December 31, 1999 and 1998
are presented below.
1999 1998
---- ----
Deferred tax assets:
Net property and equipment,
Principally due to
differences in depreciation $ 22,000 29,000
Accounts payable and accrued
expenses 52,000 50,953
Tax net operating loss
carryforward 633,004 617,331
Capital loss carryforward --- ---
Statutory depletion
carryforward 343,000 320,000
--------- ---------
Total gross deferred tax
assets 1,050,004 1,017,287
Less valuation allowance (1,050,004)(1,017,284)
--------- ---------
Net deferred tax assets $ --- ---
========= ==========
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 $1,050,004 at December 31, 1999, has
increased approximately $32,720 (the same as the
decrease in certain deferred tax assets) from the amount
determined at January 1, 1999. 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 $1,548,000, 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 $1,020,000, which has no expiration date.
There were no taxes paid in 1999 and 1998.
(5) PAYABLE TO INTEREST OWNERS
The Company has recorded as a payable totaling $321,106
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.
(Continued)
<PAGE> 20
PETROL INDUSTRIES, INC.
Notes to Consolidated Financial Statements
(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,
Greenwood Waskom Field, and the Shreveport Field, all in
Caddo Parish, Louisiana.
The Company is primarily involved in the production of
oil, which is sold to approximately ten oil companies.
The Company had sales to two major customers in 1999 and
1998 as follows:
1999 1998
---- ----
Customer 1 $ 28,000 23,000
Customer 2 457,000 386,000
------- -------
$ 485,000 740,000
======= =======
(7) NET LOSS PER SHARE
Net loss per share of common stock was computed on the
weighted average number of shares outstanding of
1,597,196 for 1999 and 1998, 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 $33,474 at
December 31, 1999, and is included in accounts payable.
(9) OTHER OPERATING INCOME
Other operating income for the years ended December 31,
1999 and 1998, consists of the following:
1998 1999
---- ----
Affiliated partnerships'
Operations and
Administration fee $ 9,392 9,484
Other 30,293 15,616
------- -------
$ 39,385 25,100
======= =======
(Continued)
<PAGE> 21
PETROL INDUSTRIES, INC.
Notes to Consolidated Financial Statements
(10) RELATED PARTY TRANSACTIONS.
Payable to officer, net, consists of the following:
1999 1998
---- ----
Accrued salary plus interest $ 722,194 562,682
Note payable to Company plus
interest --- ---
Advances --- ---
-------- -------
$ 722,194 562,682
======== ========
Interest at a bank's prime rate is accruing on all
accrued salary and unpaid interest thereon. Interest
cost included in expense during 1999 and 1998 were
$34,508 and $31,225, respectively. The note payable
represented a $35,000 note payable issued to the Company
during 1995, repayable on demand; the loan bared
interest at an annual rate of one-quarter of a percent
in excess of prime rate of Citibank, N.A. Interest
expense charged to operations was $2,536 during 1998.
Advances are non-interest bearing. At December 31,
1998, the Company netted the note payable to the Company
from the officer and the advances from the officer
against the amount, which the Company owed the officer
in accrued salary and interest.
(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.
(12) Note Payable
The Company has obtained a note payable from an
individual for an amount not to exceed $100,000,
currently $50,000 as of December 31, 1999. The note
bears interest at 10.75% and is due and payable
including any unpaid interest and principal, on May 1,
2001. The note is secured by a multiple obligations
mortgage on mineral rights either currently owned or
hereinafter acquired by the Company.
* * * * *
<PAGE> 22
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.
<PAGE> 23
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Supplemental Oil and Gas Information
(unaudited)
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 $22.25 per barrel for oil at December
31, 1999) to estimated quantities of proved developed
reserves as of each year end. Oil prices have increased
slightly in early 2000 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 1999 and 1998.
<PAGE> 24
Schedule 1
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Capital Costs Relating to Oil and Gas
Producing Activities
December 31, 1999 and 1998
(unaudited)
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Proved properties $ 4,141,705 4,179,433
Other 367,984 367,984
--------- ---------
4,509,689 4,547,417
Accumulated depreciation, depletion
and amortization 4,460,959 4,489,071
--------- ---------
Net capitalized costs $ 48,730 58,346
========= =========
</TABLE>
Note: Included in capitalized costs at December 31, 1999 and
1998, is $746,941, representing contributions of capital
costs made by the Company to affiliated limited partnerships
pursuant to various partnership agreements.
<PAGE> 25
Schedule 2
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Costs Incurred in Oil and Gas Property Acquisition,
Exploration, and Development Activities
Years ended December 31, 1999 and 1998
(unaudited)
1999 1998
Developmental costs $ 8,892 3,990
====== ======
<PAGE> 26
Schedule 3
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Estimated Net Quantities of
Proved Developed Oil and Gas Reserves
Years ended December 31, 1999 and 1998
(unaudited)
<TABLE>
1999 1998
Barrels Barrels
of Oil of Oil
------- -------
<S> <C> <C>
Proved developed reserves:
Beginning of year 206,825 243,565
Production (29,769) (36,740)
Sales of minerals in place --- ---
Revisions, extensions and discoveries --- ---
-------- --------
End of year 177,056 206,825
======== ========
</TABLE>
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.
<PAGE> 27
Schedule 4
PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Standardized Measure of Discounted Future Net Cash
Flows Relating to Proved Oil and Gas Quantities
Years ended December 31, 1999 and 1998
(unaudited)
<TABLE>
1999 1998
(in thousands)
<S> <C> <C>
Future cash inflows $ 4,007 1,940
Future production and development
cost (2,385) (2,745)
Future income tax (expense)
benefit --- ---
------ ------
Future net cash flows (deficit) 1,622 (805)
10% annual discount for estimated
timing of cash flows (deficit) 444 221
------ ------
Standardized measure of discounted
future net cash flows (deficit) $ 1,178 (584)
====== ======
Principal sources of change in the standardized measure of
discounted future net cash flows for the years shown:
1999 1998
(in thousands)
Net changes in prices and production
cost, including excise taxes $ 2,020 (5)
Sales and transfers of oil and gas
produced, net of production costs (95) 40
Net change due to revisions,
extensions, and discoveries --- ---
Net change due to purchase (sales) of
minerals-in-place --- ---
Development cost incurred during the
period 9 4
Accretion of discount (58) (7)
Change in production rates (timing)
and other (114) (548)
----- -----
$ 1,762 (516)
===== =====
</TABLE>
Note: The proved and proved developed reserves are located
within the United States.
<PAGE> 28
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
<PAGE> 29
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 63 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 68 Director, Retired; Bond 1972
Salesman, Thomson McKinnon
Securities, 1983-1988.
Arlys C. Milan 45 Vice President of Petrol since 1994
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. See "Directors" above.
Rodano 63
Arlys C. Milan 45 See "Directors" above.
Jimmy S. Foster 56 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.
(c) Significant Employees.
None.
(d) Family Relationships.
None.
(e) Business Experiences.
See (a) and (b) above.
<PAGE> 30
(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 1999.
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 $100,000 for the Company's last fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
Long-Term Compensation
Annual Compensation Awards Payouts
------------------------------------------ -------------------------------
Name and Restricted All Other
Principal Other Annual Stock Options/ LTIP Compensation Other
Position Year Salary($) Bonus($) Compensation($) Awards($) SARs(#) Payouts ($)
- --------- --- --------- -------- --------------- --------- -------- ------- ------------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
Joseph M. Rodano, 1998 125,000 - - - - - -
President, Chief 1999 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, 1999 and 1998 to Mr.
Rodano.
<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 $
- ---- ------- ---------- ----------- ---------- ----- ------ ---------------
<C> <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, 1999 or 1998 and did not
have any unexercised options at the fiscal year-end.
<PAGE> 31
<TABLE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Value of Unexercised
Number of Exercised In-the-Money
Shares Option/SARs at Option/SARs at
Acquired FY-End(#) FY-End($)
On Value --------------------------- ---------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<C> <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, 1999
and 1998 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 Maximum
Name (#) or Payout ($ or#) ($ or #) ($ or #)
- ---- ----------------- ----------------------- --------- -------- --------
<C> <C> <C> <C> <C> <C>
Not Applicable
</TABLE>
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. Fees were accrued in 1996, but none
were accrued in 1997, 1998, or 1999.
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 31, 2000, 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:
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
--------------- ----------------------- --------
Joseph M. Rodano 554,325 (direct) 35.0%
(b) The following table sets forth, as of March 24,
2000, 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:
<PAGE> 32
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
- --------------- ----------------------- --------
Joseph M. Rodano 554,325 (direct) 35.0%
Robert M. Bontempi 0 0.0%
Arlys C. Milan 0 0.0%
Jimmy S. Foster 0 0.0%
(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.
Not applicable.
(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.
<PAGE> 33
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
1999.
<PAGE> 34
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.
s/Joseph M. Rodano
March 31 , 2000 By: ____________________________
Joseph M. Rodano
President and Treasurer
Pursuant to the requirements of the Securities Exchange
Act of 1934, the following persons on behalf of the
Registrant and in the capacities and on the dates indicated
have signed this report below.
s/Joseph M. Rodano
March 31 , 2000 ___________________________
Joseph M. Rodano - Director
s/Robert Bontempi
March 31 , 2000 ___________________________
Robert Bontempi - Director
s/Arlys C. Milan
March 31 , 2000 ____________________________
Arlys C. Milan - Director
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> DEC-31-2000
<CASH> 34,138
<SECURITIES> 0
<RECEIVABLES> 77,205
<ALLOWANCES> 0
<INVENTORY> 40,406
<CURRENT-ASSETS> 157,822
<PP&E> 4,563,409
<DEPRECIATION> 4,504,275
<TOTAL-ASSETS> 218,063
<CURRENT-LIABILITIES> 1,238,309
<BONDS> 0
0
0
<COMMON> 159,720
<OTHER-SE> (1,179,966)
<TOTAL-LIABILITY-AND-EQUITY> 218,063
<SALES> 535,680
<TOTAL-REVENUES> 535,680
<CGS> 675,091
<TOTAL-COSTS> 675,091
<OTHER-EXPENSES> 11,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,995
<INCOME-PRETAX> (185,131)
<INCOME-TAX> 0
<INCOME-CONTINUING> (185,131)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (185,131)
<EPS-BASIC> (.12)
<EPS-DILUTED> (.12)
</TABLE>
