<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 June 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 June 30, 1995)
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<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31
1995 1994
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $352,277 $469,009
Trade accounts receivable 207,453 163,716
Crude oil inventory 83,000 83,000
Prepaid expenses 56,582 84,339
Deferred income taxes 79,554 88,785
----------- -----------
TOTAL CURRENT ASSETS 778,866 888,849
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 9,658,646 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 1,099,493 1,028,049
----------- -----------
15,628,929 15,331,302
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (12,928,475) (12,753,570)
----------- -----------
2,700,454 2,577,732
----------- -----------
OTHER ASSETS 4,715 4,715
----------- -----------
3,484,035 3,471,296
=========== ===========
<FN> See Accompanying Notes to Financial Statements
</TABLE>
<PAGE> 3
PYRAMID OIL COMPANY
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31
1995 1994
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $58,128 $153,807
Accrued professional fees 37,174 36,050
Accrued taxes, other than income taxes 0 25,754
Accrued payroll and related costs 27,958 29,283
Accrued royalties payable 69,133 63,734
Accrued insurance 29,839 29,343
Other accrued liabilities 10,555 10,555
Current maturities of long-term debt 67,868 55,885
Line of credit 50,000 0
----------- -----------
TOTAL CURRENT LIABILITIES 350,655 404,411
----------- -----------
LONG-TERM DEBT,
net of current maturities 140,792 150,195
----------- -----------
DEFERRED INCOME AND OTHER TAXES 122,025 131,698
----------- -----------
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 1,798,953 1,713,382
----------- -----------
2,870,563 2,784,992
----------- -----------
$3,484,035 $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 Six months ended
June 30, June 30,
-------------------- ------------------------
1995 1994 1995 1994
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Net crude oil and gas sales $399,706 $481,892 $798,384 $791,882
--------- --------- ----------- -----------
399,706 481,892 798,384 791,882
--------- --------- ----------- -----------
COSTS AND EXPENSES:
Operating expenses 177,883 206,658 374,628 395,076
General and administrative 92,284 130,720 167,689 270,371
Taxes, other than income
and payroll taxes 10,461 12,158 26,631 30,345
Provision for depletion,
depreciation and
amortization 88,126 127,743 174,905 265,677
Other costs and expenses 8,737 9,550 10,135 10,835
--------- --------- ----------- -----------
377,491 486,829 753,988 972,304
--------- --------- ----------- -----------
OPERATING INCOME (LOSS) 22,215 (4,937) 44,396 (180,422)
--------- --------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income 5,353 1,319 9,933 2,643
Other income 3,401 6,836 43,028 10,950
Interest expense (6,001) (5,878) (10,620) (11,423)
--------- --------- ----------- -----------
2,753 2,277 42,341 2,170
--------- --------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION 24,968 (2,660) 86,737 (178,252)
Income tax provision (1,166) (800) (1,166) (800)
--------- --------- ----------- -----------
NET INCOME (LOSS) $23,802 ($3,460) $85,571 ($179,052)
========= ========= =========== ===========
INCOME (LOSS) PER COMMON SHARE $0.01 ($0.00) $0.03 ($0.07)
========= ========= =========== ===========
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>
Six months ended June 30,
---------------------------
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $85,571 ($179,052)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Provision for depletion,
depreciation and amortization 174,905 265,677
Gain on sale of fixed assets (36,250) (2,850)
Changes in assets and liabilities:
Increase in trade accounts receivable (43,737) (113,946)
Decrease in prepaid expenses 27,757 31,730
(Decrease) Increase in accounts
payable and accrued liabilities (115,739) 40,571
Decrease in deferred taxes (442) 0
----------- -----------
Net cash provided by operating activities 92,065 42,130
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (421,377) (24)
Proceeds from sale of property and equipment 160,000 7,750
----------- -----------
Net cash (used in) provided by
by investing activities (261,377) 7,726
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 100,000 52,000
Principal payments on line of credit (50,000) (42,000)
Proceeds from issuance of long-term debt 30,978 0
Principal payments on long-term debt (28,398) (35,199)
----------- -----------
Net cash provided by (used in)
financing activities 52,580 (25,199)
----------- -----------
Net (decrease) increase in cash
and cash equivalents (116,732) 24,657
Cash and cash equivalents
at beginning of year 469,009 241,158
----------- -----------
Cash and cash equivalents at end of period $352,277 $265,815
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the six months for interest $10,620 $11,423
=========== ===========
<FN> See Accompanying Notes to Financial Statements
</TABLE>
<PAGE> 6
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 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 June 30, 1995 and the results of its
operations and its cash flows for the three and six months periods ended June
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 six months ended June 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 $15.55 per barrel at August 10, 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 and six months
periods ended June 30, 1995 increased by approximately $1.80 and $2.60 per
equivalent barrel, respectively, as compared with the same periods of 1994.
Since June 30, 1995, crude oil prices have decreased by fifty cents per
barrel. The Company is unable to predict the future course of crude oil
prices for the remaining six months of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $116,732 for the six months ended June
30, 1995. The primary components of this decrease were capital spending of
$421,377, offset by proceeds of $160,000 from the sale of land. Net cash
provided by operating activities was $92,065 for the six months ended June 30,
1995. Additional funds of $52,580 were provided from financing activities,
primarily from the Company's line of credit. See the Statements of Cash Flows
for additional detailed information.
As a consequence 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 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 barrels per day for the six
months ended June 30, 1995 and approximately 100 barrels per day for the
second quarter of 1995 when compared with the same periods of 1994. The
Company's management is currently working to restore its daily production to
1994 levels. The Company drilled a well in the second quarter that is
currently producing approximately 40 gross barrels per day (30 barrels net
revenue share). The Company is also increasing the level of its routine 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 JUNE 30, 1995 COMPARED TO QUARTER ENDED JUNE 30, 1994
REVENUES
Revenues for oil and gas operations decreased by 17% for the three months
ended June 30, 1995, as contrasted with the same period of 1994. Crude oil
sales increased by 9% due to higher crude prices for the second quarter of
1995. The average equivalent crude oil price for the second quarter of 1995
increased by approximately $1.80 per equivalent barrel as compared with the
same period in 1994. This was offset by reduced revenues of 26% due to
declines in crude oil production for 1995. The Company's net revenue share of
crude oil production decreased by approximately one hundred (100) barrels per
day during the second quarter of 1995. Approximately 90 barrels per day of
the decrease in production are 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
decreased by 14% for the second quarter of 1995 as compared with the same
period of 1994. Operating expenses decreased by 26% due to lower crude oil
production, as noted above. The average cost to produce a barrel of crude oil
increased by approximately one dollar per equivalent barrel for the first
quarter of 1995. This represents a 12% increase in total costs for the second
quarter of 1995. The total decrease in operating expenses of $28,775 is the
result of many factors, with both positive and negative impacts. In 1994, the
Company abandoned two wells for a total cost incurred of approximately $17,000
during the second quarter. The Company did not abandon any wells during the
second quarter of 1995.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by 29% for the second quarter of
1995 when compared with the second 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 second 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
SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED JUNE 30, 1994
REVENUES
Revenues for oil and gas operations increased by less than 1 percent for the
six months ended June 30, 1995 as compared with the same period of 1994.
Crude oil sales increased by 16.6% due to higher crude prices for the first
six months of 1995. The average equivalent crude oil price for the first half
of 1995 increased by approximately $2.60 per equivalent barrel as compared
with the same period in 1994. This was offset by reduced revenues of 15.7% 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.
The decline in production is attributable to the second quarter and is the
result of normal field depletion.
OPERATING EXPENSES
Operating expenses for crude oil and natural gas producing activities
decreased by 5.2% for the first half of 1995 as compared with the same period
of 1994. Operating expenses decreased by 15.7% due to lower crude oil
production, as noted above. The average cost to produce a barrel of crude oil
increased by approximately eighty cents per equivalent barrel for the first
half of 1995. This represents a 10.5% increase in total costs for the first
half of 1995. The total decrease in operating expenses of $20,448 is the
result of many factors, with both positive and negative impacts. In 1994, the
Company abandoned two wells for a total cost of approximately $19,000 through
June 30, 1994. The Company did not abandon any wells during the first six
months of 1995.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by 38% over 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
34% for the first half of 1995 when compared with the same period of 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.
OTHER INCOME
Other income has increased by approximately $40,000 for the first six 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. Net
interest income is higher by approximately $7,000 due to higher interest rates
and higher cash balances for the first six 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
On June 1, 1995, the Company held its Annual Meeting
of Shareholders in Bakersfield, California. Two items
were voted on during the meeting; election of
Directors and approval of Auditors. The shareholders
elected J. Ben Hathaway, John H. Alexander, Otto
Hackel, H. Tom Hunnewell and Jack W. Wood to serve as
the Company's Directors until the next scheduled
Annual Meeting. The shareholders also, approved the
selection of Arthur Andersen LLP as auditors for 1995.
Each item is fully described in the Company's Proxy
dated April 21, 1995.
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 June 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: August 10, 1995 J. BEN HATHAWAY
--------------------
J. Ben Hathaway
President
Dated: August 10, 1995 JOHN H. ALEXANDER
--------------------
John H. Alexander
Vice President
<PAGE> 12
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 three and six months ended June 30, 1995
and is qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 352,277
<SECURITIES> 0
<RECEIVABLES> 211,453
<ALLOWANCES> 4,000
<INVENTORY> 83,000
<CURRENT-ASSETS> 778,866
<PP&E> 15,628,929
<DEPRECIATION> 12,928,475
<TOTAL-ASSETS> 3,484,035
<CURRENT-LIABILITIES> 350,655
<BONDS> 0
<COMMON> 1,071,610
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,484,035
<SALES> 798,384
<TOTAL-REVENUES> 851,345
<CGS> 374,628
<TOTAL-COSTS> 374,628
<OTHER-EXPENSES> 379,360
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,620
<INCOME-PRETAX> 86,737
<INCOME-TAX> 1,166
<INCOME-CONTINUING> 85,571
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,571
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
