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 June 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 August 11, 2000: 7,093,150
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999*
------ ------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,698 $ 1,957
AFE cash calls 546
Accounts receivable-
Oil and gas sales 601 600
Well operations 382 230
------ ------
Total current assets 4,227 2,787
------ ------
Oil and gas properties (successful efforts), at cost:
Unproved properties 265 236
Proved properties 21,242 21,114
Less - accumulated depreciation
depletion, amortization and impairment (14,688) (14,247)
------ ------
6,819 7,103
------ ------
Oil and gas operator bonds 307 228
Investment in Catalytic Solutions 71 62
Other assets 62 132
------ ------
$11,486 $10,312
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 1,173 $ 1,036
Oil and gas sales payable 101 74
------ ------
Total current liabilities 1,274 1,110
------ ------
Bank debt 1,231 1,231
------ ------
Key employee bonus plan 261 234
------ ------
Minority interest 5,058 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 (14,470) (15,158)
------ ------
3,662 2,974
------ ------
$11,486 $10,312
----------------------------- ====== ======
*Derived from the Form 10-KSB.
</TABLE>
See accompanying note.
Consolidated Statement of Operations
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue:
Oil $3,158 $1,102 $1,529 $ 661
Gas 439 184 213 89
NGLs 188 91 95 47
Interest and other 71 45 47 15
Non-recurring water disposal fee, net 208
Gain on stock sales 216 141
Gain on prospect sale 120 120
----- ----- ----- -----
3,976 1,846 2,004 953
----- ----- ----- -----
Costs and expenses:
Lease operating 1,693 1,175 796 652
General and administrative 413 329 171 179
Exploration costs 306 266 244 174
Interest 62 84 34 30
Depreciation, depletion and
amortization 519 239 286 148
----- ----- ----- -----
2,993 2,093 1,531 1,183
----- ----- ----- -----
Income (loss) before minority interest 983 (247) 473 (230)
Minority interest (295) 74 (142) 69
----- ----- ----- -----
Net income (loss) $ 688 $ (173) $ 331 $ (161)
===== ===== ===== =====
Net income (loss) per share $ .10 $ (.02) $ .05 $ (.02)
===== ===== ===== =====
Weighted average shares outstanding 7,093 7,093 7,093 7,093
===== ===== ===== =====
</TABLE>
See accompanying note.
Consolidated Statement of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
2000 1999
------ ------
<S> <C> <C>
Net cash provided by operating activities $1,552 $ 99
----- -----
Cash flows from investing activities:
Marketable securities 471
Properties (835) (263)
Other assets (96) (82)
Prospect sales 120 175
----- -----
Net cash provided by (used in) investing activities (811) 301
----- -----
Cash flows from financing activities:
Repayments of debt (1,846)
Brokerage account 55
-----
Net cash used in financing activities (1,791)
-----
Net increase (decrease) in cash and cash equivalents 741 (1,391)
Cash and cash equivalents, beginning of period 1,957 3,073
----- -----
Cash and cash equivalents, end of period $2,698 $1,682
===== =====
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>
<TABLE>
<CAPTION>
2000 1999
Sales Volume Average Price Sales Volume Average Price
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Oil - barrels
South Cuyama field 120,140 $26.20 89,475 $12.20
Other 395 27.04 825 12.07
Gas - mcf
South Cuyama field 21,020 3.09 14,330 2.02
Northern California 70,710 2.68 56,290 1.86
South Texas 42,960 2.74
New Mexico 25,305 2.59 30,510 1.55
Other 755 2.37 1,675 1.57
NGLs - barrels
South Cuyama field 8,095 18.42 7,575 10.30
Other 2,330 16.82 1,980 6.73
</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 the first half of 1999, oil prices were so low that we kept operating
expenses to a bare minimum. During the first half of 2000, oil prices more than
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 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.
The SC Field's oil price on August 10, 2000 was $28.00/bbl. Gas prices in
Northern California are currently $4.24/mcf, San Juan is $3.50, South Texas is
$3.66, and SC Field is $3.75.
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 58,690 $25.98 45,605 $14.37
Other 150 29.87 380 14.86
Gas - mcf
South Cuyama field 10,810 3.48 9,350 2.11
Northern California 25,375 3.20 28,360 1.64
South Texas 18,160 3.04
New Mexico 11,805 3.23 14,145 1.49
Other 335 2.80 735 1.64
NGLs - barrels
South Cuyama field 4,495 16.68 3,905 10.11
Other 1,125 18.29 1,065 7.81
</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 August 7, 2000, we commenced deepening an existing shut-in oil well. Upon
completion we hope to discover an additional 20-40 barrels of oil per day well.
We are also testing a deeper zone, which if successful, could open up many new
drilling prospects.
Our arrangement with PG&E, the electric company, provides that when power
shortages occur in California, they can turn off the Field's electricity. Over
the last eight years, we were shut down about two times per year and each shut
down lasted three hours. So far this year, we have been shut down seven times
and PG&E advised us to expect eight more shut downs during the remainder of
August and September. We estimate each shut down costs us about $7,500 in
delayed production.
We are evaluating a ten-square mile 3-D project on prospective acreage east of
the Field and the estimated cost to shoot is $500,000. The shooting could start
in late August and we would hope to know the results by mid-November. If we
find drillable prospects, the permitting process in Santa Barbara County can be
costly and time consuming.
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 August 10, 2000 higher
prices of $28.00, and in spite of upward revisions to future operating costs,
we now estimate the PV-10 to be $23 million.
Davis Prospect
--------------
During the second quarter, we participated in the drilling of two exploratory
gas wells, both of which proved dry. Our dry hole costs were about $184,000.
South Texas
-----------
During June 2000, we participated in the drilling of one exploratory gas well
which was also proved dry. Our dry hole cost was about $24,000.
Another exploratory gas well is scheduled for mid-September. We estimate our
cost to be about $60,000.
San Juan Basin - New Mexico
---------------------------
Three development gas wells were drilled in early April 2000. Two are producing
and the third is near the productive stage. We receive about $10,000 in monthly
gas revenue from this field and are hoping these three wells will increase the
monthly gas revenue to $20,000.
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 the fourth
quarter 2000. 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.
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: August 11, 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.
