PETROMINERALS CORPORATION
FORM 10-QSB
FOR THE SIX MONTHS ENDED
JUNE 30, 1997
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to.
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Commission File No. 1-6336
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Petrominerals Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
95-2573652
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(I.R.S. Employer Identification No.)
915 South Westminster Avenue, Alhambra, California 91803
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(Address of Principal executive offices)
(818) 284-8842
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(Registrant's telephone number, including area code)
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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.
[ ] [X]
No Yes
The number of shares of Registrant's common stock outstanding at August 4,
1997 was 8,475,336.
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PETROMINERALS CORPORATION
INDEX
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Page
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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the three months and
six months ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION 10
SIGNATURES 11
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See accompanying notes to consolidated financial statements.
PART I - FINANCIAL INFORMATION
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See accompanying notes to consolidated financial statements.
Item 1. Consolidated Financial Statements
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PETROMINERALS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value data)
ASSETS
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December 31,
June 30, 1997 1996
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(Unaudited) (Audited)
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Current Assets
Cash and cash equivalents $ 220 $ 614
Accounts receivable, net 154 183
Inventories 65 61
Prepaid expenses 32 16
Other current assets - 20
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Total Current Assets 471 894
Restricted Cash 40 40
Property and Equipment, net (including
oil and gas properties accounted for
on the successful efforts method) 2,196 2,062
Notes Receivable and Other Assets 478 461
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Total Assets $ 3,185 $ 3,457
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LIABILITIES AND STOCKHOLDERS' EQUITY
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December 31,
June 30, 1997 1996
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(Unaudited) (Audited)
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Current Liabilities
Accounts payable $ 142 $ 464
Current portion of long-term debt 8 8
Accrued liabilities 102 87
Royalties payable 34 42
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Total Current Liabilities 286 601
Long-Term Debt, net of current portion 7 7
Prepetition liabilities 516 521
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Total Liabilities 809 1,129
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Stockholders' Equity
Preferred stock:
$.10 par value, 5,000,000 shares
authorized; no shares issued
and outstanding - -
Common stock:
$.10 par value, 20,000,000 shares
authorized; 8,475,336 shares
issued and outstanding at June 30,
1997 and December 31, 1996, respectively 848 848
Capital in Excess of Par Value 563 563
Retained Earnings 965 917
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Total Stockholders' Equity 2,376 2,328
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Total Liabilities and Stockholders' Equity $ 3,185 $ 3,457
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See accompanying notes to consolidated financial statements.
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PETROMINERALS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands, except per share amounts)
(Unaudited)
For the three For the six
months ended months ended
June 30, June 30,
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1997 1996 1997 1996
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REVENUES
Oilfield services $ 31 $ 6 $ 43 $ 8
Oil and gas 264 299 589 551
Gain on sale of assets - 1 - 3
Other income 42 16 73 32
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Total Revenues 337 322 705 594
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COSTS AND EXPENSES
Oilfield services 44 127 79 127
Oil and gas 146 147 276 340
Depreciation, depletion and amortization 28 31 56 59
General and administrative 120 41 230 183
Interest - 1 1 2
Other expense 8 15 15 15
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Total Costs and Expenses 346 362 657 726
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Net Income (Loss) Before Reorganization Item (9) (40) 48 (132
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Reorganization Item
Gain on debt forgiven - 599 - 599
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Net income (loss) $ (9) $ 559 $ 48 $ 467
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Net income (loss) per share $ .00 $ .07 $ .01 .06
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Weighted Average Common Shares
Outstanding 8,475 8,472 8,475 8,466
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See accompanying notes to consolidated financial statements.
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PETROMINERALS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands)
(Unaudited)
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1997 1996
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Cash Flows from Operating Activities
Net income (loss) $ 47 $ 467
Adjustments to reconcile net loss to net cash
provided from operating activities:
Depreciation, depletion and amortization 56 59
Changes in operating working capital:
Accounts receivable 29 (40)
Prepaid (16) (20)
Inventory (4) 135
Other assets 20 12
Accounts payable (322) (74)
Royalties payable (8) 11
Accrued liabilities 15 (37)
Prepetition liabilities (5) (555)
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Net Cash Provided (Used) by Operating Activities (188) (42)
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Cash Flows from Investing Activities
Capital expenditures (189) (17)
Collection of note receivable (17) -
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Net Cash Provided (Used) by Investing Activities (206) (17)
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Cash Flows from Financing Activities
Principal payment of debt - (18)
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Net Decrease in Cash and Cash Equivalents (394) (77)
Cash and Cash Equivalents at beginning of period 654 409
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Cash and Cash Equivalents at end of period $ 260 $ 332
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PETROMINERALS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
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The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods. The results of operations for
the three month and six month periods ended June 30, 1997 are not necessarily
indicative of the results to be expected for the full year.
The accompanying consolidated financial statements do not include footnotes
and certain financial presentations normally required under generally accepted
accounting principles; and, therefore, should be read in conjunction with the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1996.
NOTE 2 - PER SHARE COMPUTATIONS
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Per share computations are based upon the weighted average number of common
shares outstanding during each year. Common stock equivalents are not included
in the computations since their effect would be anti-dilutive.
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ITEM 2 - Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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Financial Condition
The Company had a negative cash flow of approximately $394,000 for the six
months ended June 30, 1997. This decrease in cash was primarily the result of
paying off accrued liabilities associated with the Petrominerals 96-1 turnkey
drilling contract in the first quarter of 1997. As a result, accounts payable
decreased by approximately $322,000 during this same period of time. The
Company does not currently have any plans to drill additional wells.
Six months ended June 30, 1997 as compared with the six months ended June 30,
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1996.
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The Company had income from continuing operations of approximately $47,000 for
the six months ended June 30, 1997, as compared to a loss of approximately
$132,000 for the six months ended June 30, 1996. The net profit in 1997 was
primarily the result of increased oil sales due to the Company's new well that
began production in January 1997.
Business Review
Oil and Gas Segment
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The Company continues to realize the benefit of remedial work that was
performed in the previous year. As a result of this remedial work and the
new well that was drilled by Petrominerals 96-1, the Company's oil and gas
revenues have increased by 7% as compared to the six months ended June 30,
1996. This increase is less than the 29% increase noted at March 31, 1997, due
to less favorable oil prices. Expenses relating to the production of oil and
gas have decreased by 19% during the same period as the Company continuously
improves efficiency. The increase in other income of approximately $41,000 was
due to increased operator fees and equipment leasing fees associated with the
new well. Management feels that the profits during the first two quarters of
1997 will be representative of the second half of this year.
Management is also continuing to pursue negotiations with a developer that has
entered into an agreement that provides an option to purchase the Company's
undeveloped land. If the Company is successful in these negotiations and the
land is sold or leased, future cash flows could increase significantly.
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ITEM 2 - Management's Discussion and Analysis of Financial Condition and
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Results of Operations (Continued)
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Business Review (Continued)
Oilfield Services Segment
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The Company continues to operate its wholly owned subsidiary, Hydro-Test
International, Inc. (HTI), with existing equipment at the remaining facility
near Waller, Texas. There are no current or future plans to expand these
operations. Oilfield service revenues from HTI's operations increased by
$35,000 during the first six months of 1997, as compared to the same period in
1996, due to more favorable oil prices. Oilfield service expenses decreased by
$48,000 during the same period due to the decline in administrative expenses
associated with the bankruptcy proceedings. This resulted in a net loss of
$36,000 for the six months ended June 30, 1997, as opposed to a net loss of
$119,000 for the same period in 1996. It is difficult to determine if these
losses will continue, however, HTI is in the process of expanding their client
base in hopes of increasing future revenues.
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PART II - OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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The Company is not a party to nor is its property the subject of any material
legal proceedings other than ordinary routine litigation incidental to its
business, or which is covered by insurance, except as previously disclosed in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
1996.
ITEM 2. CHANGES IN SECURITIES
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None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
ITEM 5. OTHER INFORMATION
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None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits - None.
(b) Reports on Form 8-K - None.
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SIGNATURES
Pursuant to the requirement 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.
PETROMINERALS CORPORATION
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(Registrant)
Paul L. Howard
President, CEO & Chief Financial Officer
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 220,000
<SECURITIES> 0
<RECEIVABLES> 154,000
<ALLOWANCES> 0
<INVENTORY> 65,000
<CURRENT-ASSETS> 471,000
<PP&E> 2,196,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,185,000
<CURRENT-LIABILITIES> 286,000
<BONDS> 0
0
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<COMMON> 848,000
<OTHER-SE> 1,528,000
<TOTAL-LIABILITY-AND-EQUITY> 3,185,000
<SALES> 632,000
<TOTAL-REVENUES> 705,000
<CGS> 355,000
<TOTAL-COSTS> 355,000
<OTHER-EXPENSES> 15,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,000
<INCOME-PRETAX> 48,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,000
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
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