<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB
/X/ Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1995
OR
/ / Transition report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number 0-5525
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PYRAMID OIL COMPANY
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-0787340
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2008 - 21st. STREET,
BAKERSFIELD, CALIFORNIA 93301
(Address of principal executive offices) (Zip Code)
(805) 325-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods 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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this report.
COMMON STOCK WITHOUT PAR VALUE 2,494,430
(Class) (Outstanding at September 30, 1995)
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<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $353,871 $469,009
Trade accounts receivable 194,007 163,716
Crude oil inventory 83,000 83,000
Prepaid expenses 34,764 84,339
Deferred income taxes 79,754 88,785
----------- -----------
TOTAL CURRENT ASSETS 745,396 888,849
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 9,668,522 9,308,713
Well servicing and drilling equipment 3,947,076 3,947,076
Land, buildings and improvements 923,714 1,047,464
Automotive, office and other
property and equipment 1,110,880 1,028,049
----------- -----------
15,650,192 15,331,302
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,016,349) (12,753,570)
----------- -----------
2,633,843 2,577,732
----------- -----------
OTHER ASSETS 4,715 4,715
----------- -----------
3,383,954 3,471,296
=========== ===========
<FN> See Accompanying Notes to Financial Statements
</TABLE>
<PAGE> 3
PYRAMID OIL COMPANY
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $82,368 $153,807
Accrued professional fees 37,500 36,050
Accrued taxes, other than income taxes 14,279 25,754
Accrued payroll and related costs 22,774 29,283
Accrued royalties payable 65,991 63,734
Accrued insurance 4,795 29,343
Other accrued liabilities 10,555 10,555
Current maturities of long-term debt 68,725 55,885
Line of credit 20,000 0
----------- -----------
TOTAL CURRENT LIABILITIES 326,987 404,411
----------- -----------
LONG-TERM DEBT,
net of current maturities 123,284 150,195
----------- -----------
DEFERRED INCOME AND OTHER TAXES 122,225 131,698
----------- -----------
COMMITMENTS (note 3)
STOCKHOLDERS' EQUITY:
Common stock-no par value;
10,000,000 authorized shares;
2,494,430 shares issued and
outstanding 1,071,610 1,071,610
Retained earnings 1,739,848 1,713,382
----------- -----------
2,811,458 2,784,992
----------- -----------
$3,383,954 $3,471,296
=========== ===========
<FN> See Accompanying Notes to Financial Statements
</TABLE>
<PAGE> 4
PYRAMID OIL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------- ------------------------
1995 1994 1995 1994
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Net crude oil and gas sales $417,430 $527,453 $1,215,814 $1,319,335
--------- --------- ----------- -----------
417,430 527,453 1,215,814 1,319,335
--------- --------- ----------- -----------
COSTS AND EXPENSES:
Operating expenses 290,717 220,869 665,345 615,945
General and administrative 83,183 90,818 250,872 361,189
Taxes, other than income
and payroll taxes 16,162 17,916 42,793 48,261
Provision for depletion,
depreciation and
amortization 87,874 127,827 262,779 393,504
Other costs and expenses 789 2,045 10,924 12,880
--------- --------- ----------- -----------
478,725 459,475 1,232,713 1,431,779
--------- --------- ----------- -----------
OPERATING INCOME (LOSS) (61,295) 67,978 (16,899) (112,444)
--------- --------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income 4,590 1,550 14,523 4,193
Other income 2,800 4,762 45,828 15,712
Interest expense (5,200) (5,800) (15,820) (17,223)
--------- --------- ----------- -----------
2,190 512 44,531 2,682
--------- --------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION (59,105) 68,490 27,632 (109,762)
Income tax provision 0 0 (1,166) (800)
--------- --------- ----------- -----------
NET INCOME (LOSS) ($59,105) $68,490 $26,466 ($110,562)
========= ========= =========== ===========
INCOME (LOSS) PER COMMON SHARE ($0.02) $0.03 $0.01 ($0.04)
========= ========= =========== ===========
Weighted average number of
common shares outstanding 2,494,430 2,494,430 2,494,430 2,494,430
========= ========= =========== ===========
<FN> See Accompanying Notes to Financial Statements
</TABLE>
<PAGE> 5
PYRAMID OIL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $26,466 ($110,562)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Provision for depletion,
depreciation and amortization 262,779 393,504
Gain on sale of fixed assets (36,250) (4,312)
Changes in assets and liabilities:
Increase in trade accounts receivable (30,291) (89,010)
Decrease in prepaid expenses 49,575 35,460
(Decrease) Increase in accounts payable
and accrued liabilities (110,264) 676
Decrease in deferred taxes (442) 0
----------- -----------
Net cash provided by operating activities 161,573 225,756
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (442,640) (5,860)
Proceeds from sale of property and equipment 160,000 9,250
----------- -----------
Net cash (used in) provided by
investing activities (282,640) 3,390
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 100,000 52,000
Principal payments on line of credit (80,000) (52,000)
Proceeds from issuance of long-term debt 30,978 0
Principal payments on long-term debt (45,049) (45,584)
----------- -----------
Net cash provided by (used in)
financing activities 5,929 (45,584)
----------- -----------
Net (decrease) increase in cash
and cash equivalents (115,138) 183,562
Cash and cash equivalents at beginning of year 469,009 241,158
----------- -----------
Cash and cash equivalents at end of period $353,871 $424,720
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the nine months for interest $15,820 $17,223
=========== ===========
<FN> See Accompanying Notes to Financial Statements
</TABLE>
<PAGE 6>
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements include the accounts of Pyramid Oil Company and its
divisions (the Company). Such financial statements included herein have been
prepared by the Company, without an audit, 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 principles have been condensed
or omitted pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the information presented
not misleading.
A summary of the Company's significant accounting policies is contained in its
December 31, 1994 Form 10-KSB which is incorporated herein by reference. The
financial data presented herein should be read in conjunction with the
Company's December 31, 1994 financial statements and notes thereto, contained
in the Company's Form 10-KSB.
In the opinion of the Company, the unaudited financial statements, contained
herein, include all adjustments (consisting of normal recurring accruals and
the elimination of inter-division transactions) necessary to present fairly
the Company's financial position as of September 30, 1995 and the results of
its operations and its cash flows for the three and nine months periods ended
September 30, 1995 and 1994. The results of operations for an interim period
are not necessarily indicative of the results to be expected for a full year.
(2) DIVIDENDS
No cash dividends were paid during the nine months ended September 30, 1995
and 1994.
(3) COMMITMENTS
Pursuant to a specific oil and gas lease in the Carneros Creek field, the
Company is obligated to drill at least one well per year on this lease. If
the price of oil reaches $20 per barrel or above and continues for a period of
60 consecutive days, the Company will thereafter be obligated to drill at
least one well per quarter on this lease. The price of oil on this lease was
approximately $15.25 per barrel at November 8, 1995. Failure to drill the
necessary well(s) will result in relinquishment of future drilling acreage on
this specific lease. The Company drilled and completed a well on this lease in
the second quarter of 1995. The cost of drilling and completing a well can
vary significantly. The Company's total share of drilling and completing the
one well on this lease in 1995 was approximately $300,000.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
IMPACT OF CHANGING PRICES
The Company's revenue is directly connected to crude oil prices posted by the
major oil companies. Average crude oil prices for the three months ended
September 30, 1995 decreased by approximately twenty cents per equivalent
barrel as compared with the same period of 1994. Average crude oil prices for
the nine months ended September 30, 1995 increased by approximately $1.20 per
equivalent barrel over the same period for 1994. Since September 30, 1995,
crude oil prices have decreased by twenty-five cents per barrel. The Company
is unable to predict the future course of crude oil prices for the remainder
of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $115,138 for the nine months ended
September 30, 1995. The primary components of this decrease were capital
spending of $442,640, offset by proceeds of $160,000 from the sale of land.
Net cash provided by operating activities was $161,573 for the nine months
ended September 30, 1995. See the Statements of Cash Flows for additional
detailed information.
As a result of persistent low crude oil prices, the Company has continued
with its approach of focusing on its most profitable properties to optimize
the Company's resources. Cost reductions and consolidations in all areas of
operations have been maintained in an effort to offset the decline in revenues
and conserve capital. The Company has shut-in or reduced operations in prior
years on certain oil and gas properties that were uneconomic. Many of these
properties continue to be shut-in. Despite the factors described above and
the economic conditions existing in the oil and gas industry since 1986, the
Company has been able to maintain its oil and gas reserves.
FORWARD LOOKING INFORMATION
As noted above, crude oil prices continue to remain unstable and
unpredictable. With the continuing crude oil market instability, management
feels that it must continue to reduce costs. Except for a specific commitment
mentioned in the Notes to Financial Statements above, the majority of all
developmental and capital expenditures are being deferred at this time. The
Company's net revenue share of crude oil production has decreased by
approximately fifty (50) barrels per day for the nine months ended
September 30, 1995 and approximately eighty (80) barrels per day for the
third quarter of 1995 when compared with the same periods of 1994.
The Company's management has continued working to restore its daily
production to 1994 levels. The Company drilled a well in the second quarter
that has produced approximately twenty-five (25) gross barrels per day (20
barrels net revenue share). During the third quarter of 1995, the Company
increased the level of its remedial well maintenance to enhance production
levels. However, the Company cannot guarantee that it will be fully
successful in its efforts. If it is not successful in increasing production,
revenues for future periods and year-end oil and gas reserves could be
unfavorably impacted. Effective June 1, 1993, operations of the Company's
well servicing segment were suspended. Management believes the related assets
are stated at a realizable value.
<PAGE> 8
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1995
COMPARED TO QUARTER ENDED SEPTEMBER 30, 1994
REVENUES
Revenues for oil and gas operations decreased by 20.9% for the three months
ended September 30, 1995, as contrasted with the same period of 1994. Crude
oil sales decreased by 1.2% due to lower crude prices for the third quarter of
1995. The average equivalent crude oil price for the third quarter of 1995
decreased by approximately twenty cents per equivalent barrel as compared with
the same period in 1994. Revenues decreased by 19.6% due to declines in crude
oil production for 1995. The Company's net revenue share of crude oil
production decreased by approximately eighty (80) barrels per day during the
third quarter of 1995. The decline in production is attributable to one
lease. The decrease in production on this lease is the result of normal field
depletion.
OPERATING EXPENSES
Operating expenses for crude oil and natural gas producing activities
increased by 31.6% for the second quarter of 1995 as compared with the same
period of 1994. Operating expenses decreased by 19.6% due to lower crude oil
production, as noted above. The average cost to produce a barrel of crude oil
increased by approximately $4.00 per equivalent barrel for the third quarter
of 1995. The primary reason for the higher operating costs is due to remedial
well work on five of the Company's oil and gas leases during the third quarter
of 1995.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by 8.4% for the third quarter of
1995 when compared with the third quarter of 1994. This is primarily the
result of lower professional fees for 1995.
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization has decreased by
31% for the third quarter of 1995 as compared with the same period in 1994,
due primarily to lower depletion rates for 1995. This was caused by the
increase in the Company's oil and gas reserves at December 31, 1994.
<PAGE> 9
NINE MONTHS ENDED SEPTEMBER 30, 1995
COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1994
REVENUES
Revenues for oil and gas operations decreased by 7.8 percent for the nine
months ended September 30, 1995 as compared with the same period of 1994.
Crude oil sales increased by 7.2% due to higher crude prices for the first
nine months of 1995. The average equivalent crude oil price for the first
nine months of 1995 increased by approximately $1.20 per equivalent barrel as
compared with the same period in 1994. This was offset by reduced revenues of
15% due to declines in crude oil production for 1995. The Company's net
revenue share of crude oil production decreased by approximately fifty (50)
barrels per day for the nine months ended September 30, 1995 when compared
with the same period of 1994. The decline in production is due to normal
field depletion.
OPERATING EXPENSES
Operating expenses for crude oil and natural gas producing activities
increased by 8% for the nine months ended September 30, 1995 as compared with
the same period of 1994. Operating expenses decreased by 15% due to lower
crude oil production, as noted above. This was offset by a 23.1% escalation
in costs for the first nine months of 1995. The average cost to produce a
barrel of crude oil increased by approximately $1.75 per equivalent barrel for
the first nine months of 1995. The increase in operating expenses for the
nine months ended September 30, 1995 is primarily the result of operating
activities during the third quarter of 1995. The Company conducted remedial
well work on five of it's oil and gas leases during the third quarter of 1995.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the nine months ended September 30,
1995, decreased by 30.5% over the same period in 1994. This is primarily the
result of lower professional fees for 1995.
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization has decreased by
33.2% for the first nine months of 1995 when compared with the same period of
1994, which is due primarily to lower depletion rates for 1995. This was
caused by the increase in the Company's oil and gas reserves at December 31,
1994.
OTHER INCOME (EXPENSE)
Other income has increased by approximately $42,000 for the first nine months
of 1995 as compared with the same period of 1994. In the first quarter of
1995, the Company sold certain real property it owned in Taft, Kern County,
California and realized a gain on the sale of approximately $33,000. Interest
income is higher by approximately $10,000 due to higher interest rates and
higher cash balances for the first nine months of 1995.
<PAGE> 10
PYRAMID OIL COMPANY
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
None
Item 2. - Changes in Securities
None
Item 3. - Defaults Upon Senior Securities
None
Item 4. - Submission of Matters to a Vote of Security Holders
None
Item 5. - Other Information -
None
Item 6. - Exhibits and Reports on Form 8-K -
No Form 8-K's were filed during the three months
ended September 30, 1995.
<PAGE> 11
SIGNATURES
Pursuant to the requirements 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.
PYRAMID OIL COMPANY
(registrant)
Dated: November 8, 1995 J. BEN HATHAWAY
---------------
J. Ben Hathaway
President
Dated: November 8, 1995 JOHN H. ALEXANDER
-----------------
John H. Alexander
Vice President
<PAGE> 11
EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Financial Statements for the Nine Months Ended September 30, 1995
(Unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 353,871
<SECURITIES> 0
<RECEIVABLES> 194,007
<ALLOWANCES> 4,000
<INVENTORY> 83,000
<CURRENT-ASSETS> 745,396
<PP&E> 15,650,192
<DEPRECIATION> 13,016,349
<TOTAL-ASSETS> 3,383,954
<CURRENT-LIABILITIES> 326,987
<BONDS> 0
<COMMON> 1,071,610
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,383,954
<SALES> 1,215,814
<TOTAL-REVENUES> 1,276,165
<CGS> 665,345
<TOTAL-COSTS> 1,232,713
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,820
<INCOME-PRETAX> 27,632
<INCOME-TAX> 26,466
<INCOME-CONTINUING> 26,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,466
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
