UNITED STATES
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 September 30, 2000
[ ] 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 of incorporation) (IRS Employer 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 numbers)
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 [ ]
Shares outstanding as of November 13, 2000: 7,093,150
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999*
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,844 $ 1,957
Accounts receivable-
Oil and gas sales 676 600
Well operations 513 230
------ ------
Total current assets 3,033 2,787
------ ------
Oil and gas properties (successful efforts), at cost:
Unproved properties 280 236
Proved properties 21,477 21,114
Less - accumulated depreciation,
depletion, amortization and impairment (14,895) (14,247)
------ ------
6,862 7,103
------ ------
Oil and gas operator bonds 307 228
Investment in Catalytic Solutions 175 62
Other assets 52 132
------ ------
$10,429 $10,312
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 332 $ 1,036
Oil and gas sales payable 442 74
------ ------
Total current liabilities 774 1,110
------ ------
Bank debt 231 1,231
------ ------
Key employee bonus plan 278 234
------ ------
Minority interest 5,186 4,763
------ ------
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 (14,172) (15,158)
------ ------
3,960 2,974
------ ------
$10,429 $10,312
====== ======
------------------------------
*Derived from the Form 10-KSB.
</TABLE>
See accompanying note.
Consolidated Statement of Operations
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue:
Oil $4,818 $2,024 $1,660 $ 922
Gas 669 296 230 112
NGLs 301 149 113 58
Interest and other 120 66 49 21
Non-recurring water disposal fee, net 208
Gain on stock sales 358 142
Gain on prospect sale 120
----- ----- ----- -----
6,028 3,101 2,052 1,255
----- ----- ----- -----
Costs and expenses:
Lease operating 2,613 1,835 920 660
General and administrative 581 516 168 187
Exploration costs 610 268 304 2
Interest 80 113 18 29
Depreciation, depletion and amortization 735 384 216 145
----- ----- ----- -----
4,619 3,116 1,626 1,023
----- ----- ----- -----
Income (loss) before minority interest 1,409 (15) 426 232
Minority interest (423) 4 (128) (70)
----- ----- ----- -----
Net income (loss) $ 986 $ (11) $ 298 $ 162
===== ===== ===== =====
Net income (loss) per share $ .14 (1) $ .04 $ .02
===== ===== =====
Weighted average shares outstanding 7,093 7,093 7,093 7,093
===== ===== ===== =====
----------------------
(1) Per share amount less that $.01.
</TABLE>
See accompanying note.
Consolidated Statement of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
2000 1999
------ ------
<S> <C> <C>
Net cash provided by operating activities $1,635 $ 71
----- -----
Cash flows from investing activities:
Marketable securities 1,260
Properties (1,085) (1,095)
Other assets (199) (82)
Prospect sales 120 175
----- -----
Net cash (used in) provided by investing activities (1,164) 258
----- -----
Cash flows from financing activities:
Repayments of debt (1,000) (1,846)
Brokerage account (66)
Oil and gas sales payable 416
----- -----
Net cash used in financing activities (584) (1,921)
----- -----
Net decrease in cash and cash equivalents (113) (1,583)
Cash and cash equivalents, beginning of period 1,957 3,073
----- -----
Cash and cash equivalents, end of period $1,844 $1,490
===== =====
</TABLE>
See accompanying note.
Note to Financial Statements
1. The interim financial data is unaudited; however, in our opinion, it
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 pursuant to the
SEC's rules and regulations. Certain information and footnote disclosures
normally included in GAAP financial statements have been condensed or
omitted pursuant to the SEC's rules and regulations.
Our organization and business, the accounting policies we follow and other
information are contained in the notes to our financial statements filed as
part of our 1999 Form 10-KSB. This quarterly report should be read in
conjunction with such annual report.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
YEAR-TO-DATE COMPARISON
-----------------------
The table below provides sales data and average prices for the period.
<TABLE>
<CAPTION>
2000 1999
Sales Volume Average Price Sales Volume Average Price
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Oil - barrels
South Cuyama field 175,800 $27.29 138,080 $14.55
Other 700 28.24 1,090 13.35
Gas - mcf
South Cuyama field 31,450 3.43 24,700 2.28
Northern California 90,660 3.07 75,295 1.95
South Texas 53,185 3.00 5,400 2.03
New Mexico 39,900 3.03 46,620 1.64
Other 1,290 2.77 2,230 2.37
NGLs - barrels
South Cuyama field 12,365 18.92 11,470 10.80
Other 3,840 17.35 3,160 8.21
</TABLE>
Significantly higher oil prices and production caused the increase in oil
revenue. Gas revenue increased primarily because of higher production from the
new wells in Northern California and South Texas.
During 1999, oil prices were so low that we kept operating expenses to a bare
minimum. During 2000, oil prices almost doubled, and consequently, we
substantially increased the SC Field's activity, which resulted in higher LOE.
The increase in G&A is due primarily to bonuses and the addition of one extra
person.
The increase in exploration costs was due to the seismic shoot on acreage
east of the SC Field.
The increase in DD&A is due to an increase of $2 million in costs being
amortized, because of the new wells that were drilled during the last 12 months
and a downward revision in reserve estimates.
During May, we sold some spec acreage in Wyoming that cost us $5,000 for
$125,000 and retained a 4% ORRI.
The SC Field's oil price on November 10, 2000 was $31.50/bbl. Gas prices in
Northern California are currently $4.50/mcf, San Juan is $4.40, South Texas is
$4.37, and SC Field is $4.25.
QUARTER-TO-DATE COMPARISON
--------------------------
The table below provides sales data and average prices for the period.
<TABLE>
<CAPTION>
2000 1999
Sales Volume Average Price Sales Volume Average Price
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Oil - barrels
South Cuyama field 55,660 $29.66 48,600 $18.87
Other 309 29.42 260 17.67
Gas - mcf
South Cuyama field 10,430 4.13 10,380 2.65
Northern California 19,950 4.44 19,000 2.21
South Texas 10,180 4.07 5,400 2.03
New Mexico 14,675 3.76 16,100 1.90
Other 535 3.36 550 1.88
NGLs - barrels
South Cuyama field 4,270 19.87 3,900 11.74
Other 1,508 18.18 1,180 10.69
</TABLE>
The explanations above for the year-to-date comparisons also apply to the
quarter-to-date comparisons.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash and cash to be provided from operations are expected to enable us to meet
our obligations as they become due during the next several years. On July 25,
2000, we paid $1,000,000 of our bank debt leaving a balance due of $231,000.
We have a $4,000,000 line of credit which we can draw down at any time.
THE FOLLOWING DISCUSSION UPDATES THE MD&A CONTAINED IN ITEM 6 OF THE 1999
FORM 10-KSB AND THE TWO DISCUSSIONS SHOULD BE READ TOGETHER.
PROSPECT DEVELOPMENT AND EXPLORATION ACTIVITY
---------------------------------------------
South Cuyama Field
------------------
On October 5th, we completed the test well in the Black Sand. Currently, the
well is producing 12 barrels of oil per day. Additional drilling to the Black
Sand depends on the performance of this well.
We completed the 3-D project on acreage east of the Field on October 3rd. We
are currently evaluating the results of the shoot which should be known by mid-
January. If we find drillable prospects, the permitting process in Santa
Barbara County can be costly and time consuming. We have a 80% WI in this 3-D
project. Total cost of this project was $360,000.
At December 31, 1999, our pre-tax PV-10 for the SC Field was $20 million based
on year-end oil prices of $23.45 per barrel. Based on November 10, 2000 higher
prices of $31.50, and in spite of upward revisions to future operating costs,
we now estimate the PV-10 to be in the $23 million range.
Davis Prospect
--------------
During May 2000, we participated in the drilling of two exploratory gas wells,
both of which proved dry. Our final dry hole costs were about $226,000.
South Texas
-----------
An exploratory gas well is scheduled before the end of the year. We
estimate our cost to be about $40,000.
San Juan Basin
--------------
Three development gas wells were drilled in early April 2000 and are currently
producing. With the addition of these wells we receive about $20,000 in
monthly gas revenue from this field.
Paradox Basin-Utah
------------------
During June 1998, we leased about 6,000 acres in the Paradox Basin, Utah (about
25 miles from the Four Corners area). Geological and geophysical studies are
underway in support of a future 3-D seismic survey. We have invested $200,000
in this area to date. We are evaluating the sale of this prospect acreage or
possibly shooting the 3-D survey ourselves.
East Texas
----------
This is a new prospect for us located about 80 miles southeast of Dallas. We
plan to participate in an exploratory gas well to be drilled during December.
Hallwood Energy is the operator. We have a 25% WI (20% NRI). This well will
be drilled vertically to about 7,000 feet and then drilled laterally at two
different depths extending each lateral between 5,000 and 9,000 feet. These
type wells are very expensive to drill and our investment in this prospect
will be about $425,000. This will be a high-risk, high-reward prospect. The
targeted reserves range from three to five BCF.
CATALYTIC SOLUTIONS INVESTMENT
------------------------------
In September, we exercised our warrant for $100,000 which gave us an additional
half-percent in CSI, resulting in a total ownership of about 1%.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule; EDGAR filing only
(b) No reports on Form 8-K were filed during the quarter.
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: November 13, 2000 By: /s/VICTOR P. STABIO
Victor P. Stabio
Chief Executive Officer and
Chief Financial Officer
Signing on behalf of the registrant
and as principal financial officer.
