U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number 0-14731
HALLADOR PETROLEUM COMPANY
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1014610
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1660 Lincoln Street, Suite 2700, Denver, Colorado 80264
(Address of principal executive offices)
303-839-5504 FAX: 303-832-3013
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2)
has been subject to such filing requirements for the past 90 days. Yes [x]
No [ ]
As of May 14, 1997, 7,093,150 shares of the issuer's common stock were
outstanding.
This report contains 7 pages. There are no exhibits.
PART I. FINANCIAL INFORMATION:
HALLADOR PETROLEUM COMPANY
Consolidated Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996*
--------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,323 $ 2,898
Short-term investments 900 900
Accounts receivable-
Oil and gas sales 374 505
Well operations 330 365
------- -------
Total current assets 3,927 4,668
------- -------
Oil and gas properties (full cost
accounting), at cost:
Unproved properties 1,557 711
Evaluated properties 39,645 39,527
Less - accumulated depreciation,
depletion, amortization (32,825) (32,691)
------- -------
8,377 7,547
------- -------
Other assets 174 165
------- -------
$ 12,478 $ 12,380
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 483 $ 317
Oil and gas sales payable 126 169
Debt with recourse only to the
South Cuyama Field 360 590
------- -------
Total current liabilities 969 1,076
------- -------
Debt with recourse only to the
South Cuyama Field 5,080 5,231
------- -------
Deferred Bonus Plan 189 178
------- -------
Other 110 110
------- -------
Stockholders' equity:
Preferred stock, $.10 par value;
10,000,000 shares authorized;
no shares issued
Common stock, $.01 par value;
100,000,000 shares authorized;
7,093,150 shares issued 71 71
Additional paid-in capital 18,061 18,061
Accumulated deficit (12,002) (12,347)
------- -------
6,130 5,785
------- -------
$ 12,478 $ 12,380
======= =======
</TABLE>
*Derived from the Form 10-KSB.
See accompanying notes.
2
HALLADOR PETROLEUM COMPANY
Consolidated Statement of Income
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
1997 1996
------- -------
<S> <C> <C>
Revenue:
Oil $ 1,079 $ 970
Gas 93 80
NGLs 130 128
Interest 43 53
Other 35
------ ------
1,345 1,266
------ ------
Costs and expenses:
Lease operating 630 727
Depreciation, depletion
and amortization 134 141
General and administrative 107 89
Interest 129 157
------ ------
1,000 1,114
------ ------
Net income $ 345 $ 152
====== ======
Net income per share $ .05 $ .02
====== ======
Weighted average shares outstanding 7,093 7,098
====== ======
</TABLE>
See accompanying notes.
3
HALLADOR PETROLEUM COMPANY
Consolidated Statement of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
1997 1996
------- -------
<S> <C> <C>
Cash flows from operating activities $ 694 $ 544
------ ------
Cash flows used in investing activities:
Short-term investments (900)
Additions to oil and gas properties (124) (30)
Additions to unproved properties (764) (53)
------ ------
Net cash (used in) investing activities (888) (983)
------ ------
Cash flows used in financing activities:
Repayments of debt (381) (178)
------ ------
Net (decrease) in cash and cash equivalents (575) (617)
Cash and cash equivalents, beginning of period 2,898 3,459
------ ------
Cash and cash equivalents, end of period $ 2,323 $ 2,842
====== ======
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only
of normal recurring adjustments necessary for a fair statement of the
results for the interim periods. The financial statements included
herein have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principals have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included
herein are adequate to make the information presented not misleading.
The organization and business of the Company, accounting policies
followed by the Company and other information are contained in the notes
to the Company's financial statements filed as part of the Company's
December 31, 1996 Form 10-KSB. This quarterly report should be read in
conjunction with such annual report.
4
HALLADOR PETROLEUM COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Year-to-date Comparison
1997 1996
Sales Volume Average Price Sales Volume Average Price
------------ ------------- ------------ -------------
Oil - barrels 51,635 $20.90 55,696 $17.41
Gas - MCF 30,313 3.08 52,945 1.51
NGLs- barrels 7,388 17.60 9,549 13.35
Revenue increased due to a higher average prices. Higher prices more than
offset the decline in sales resulting from lower production levels.
Assuming no success from the current exploration activities, the Company
projects 1997 net income to be lower than 1996 reported net income due to
declining prices.
OUTLOOK FOR REMAINDER OF 1997
Prospect Development and Exploration Activity
The following discussion updates the "Management's Discussion and Analysis
or Plan of Operation" contained under Item 6 of the 1996 Form 10-KSB and
should be read in conjunction therewith.
Through March 31, 1997 and May 14, 1997, the Company has invested $1,557,000
and $1,807,000, respectively, in these activities. These costs, most of
which represent high-risk, high-reward investments may or may not prove
successful.
Sacramento Basin - California
The first well is expected to spud May 14, 1997. The well will test the
Forbes formation at a depth of 6,000 feet and will take six days to drill.
Notwithstanding the results of the first well, two additional wells are
planned to spud during the next thirty days. Dry-hole cost and completion
cost for each well is expected to be $200,000, respectively. The Company
has a 60% working interest in each well.
Williston Basin, North Dakota and Montana
The Company entered into a joint venture (JV) which obtained five-year leases
covering 30,000 net acres in North Dakota. The Company has invested
approximately $500,000 for a 55% interest in the JV; the other party
contributed seismic and geological studies for its 45% interest. The
Company is entitled to recoup its investment before the other joint venture
partner shares in any profits. The Company plans to sell the acreage and
retain an overriding royalty interest or carried working interest.
5
Liquidity and Capital Resources
Cash, short-term investments and cash from operations is expected to enable
the Company to meet its obligations as they come due during the next several
years.
California Oil Prices
As of May 14, 1997, the Company was receiving $18.00 for its California oil
production which is $3 below the average price received for the first quarter
of 1997 and about $1.50 below the average price received during the calendar
year 1996. Furthermore, on May 1, 1997, KOCH, the Company's purchaser,
advised that it no longer plans to pay the $.30 premium over postings which
has been the arrangement for the last three years. The new lower pricing
goes into effect November 1, 1997. The Company will attempt to find a new
purchaser who will pay a higher price than that being proposed by KOCH.
Environmental
The Company is moving forward with its plan to install electric submersible
pumps in the South Cuyama Field (the "Field"). This entails replacing rod
pumps, which are powered by natural gas, with submersible pumps which are
powered by electricity. These pumps cost about $45,000 each. Management is
studying a PG&E program (PG&E provides electricity to the Field) whereby the
Company could be reimbursed by PG&E for half the cost of each pump.
Currently four pumps have been placed in service on a trial basis by the pump
vendor. Pending the results of the trial period and the discussions with
PG&E, 13 to 20 pumps may be placed in service; these 20 wells account for 65%
of the Field's production. Some of the benefits of using electrical pumps
are (i) an increase in natural gas revenue since gas is sold as opposed to
being consumed in the Field, (ii) lower repair and maintenance expense, (iii)
increased oil production because more water is being moved, and (iv) less
emissions, which results in less environmental regulation and costs. The
downside is the capital cost and the higher electricity bills; the advantages
more than offset the disadvantages.
Financing
The Company is negotiating with Dillon, Read & Co. Inc. with regards to an
additional cash investment. Once an agreement is reached, disclosure will
be made in a Form 8-K.
New Accounting Rules for EPS
In February 1997, FAS 128 dealing with earnings per share calculations was
issued which will be effective for the 1997 Form 10-KSB. The adoption of
this standard will not have a material effect on the Company's earnings per
share calculation.
6
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Ex-27 -- Financial Data Schedule; EDGAR filing only.
(b) No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1997.
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
HALLADOR PETROLEUM COMPANY
Date: May 14, 1997 By:/s/Victor P. Stabio
Victor P. Statio
Chief Executive Officer and
Chief Financial Officer
Signing on behalf of the
registrant and as principal
financial and accounting officer.
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and the Company's Statement of Income found in the
Company's Form 10-QSB for the year-to-date, and is qualified in its entirety
by referenced to such financial statement.
</LEGEND>
<CIK> 0000788965
<NAME> HALLADOR PETROLEUM COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 2,323
<SECURITIES> 900
<RECEIVABLES> 704
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,927
<PP&E> 41,202
<DEPRECIATION> 32,825
<TOTAL-ASSETS> 12,478
<CURRENT-LIABILITIES> 969
<BONDS> 5,440
0
0
<COMMON> 71
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,478
<SALES> 1,302
<TOTAL-REVENUES> 1,345
<CGS> 0
<TOTAL-COSTS> 764
<OTHER-EXPENSES> 107
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 345
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 345
<EPS-PRIMARY> .05
<EPS-DILUTED> 0
</TABLE>
