<PAGE> 1
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, 1996
OR
Transition report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
-------------------------
Commission File Number 0-5525
-------------------------
PYRAMID OIL COMPANY
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-0787340
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) 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, 1996)
<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $576,029 $452,348
Trade accounts receivable 216,177 185,662
Crude oil inventory 76,376 76,376
Prepaid expenses 72,122 80,612
Deferred income taxes 78,146 75,954
------------ ------------
TOTAL CURRENT ASSETS 1,018,850 870,952
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 9,711,639 9,678,168
Drilling and operating equipment 3,986,064 3,965,817
Land, buildings and improvements 923,714 923,714
Automotive, office and other
property and equipment 1,121,459 1,099,492
------------ ------------
15,742,876 15,667,191
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,469,575) (13,175,439)
------------ ------------
2,273,301 2,491,752
------------ ------------
OTHER ASSETS 4,715 4,715
------------ ------------
$3,296,866 $3,367,419
============ ============
<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,
1996 1995
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 44,155 $ 53,925
Accrued professional fees 33,500 28,000
Accrued taxes, other than income taxes 55,425 30,115
Accrued payroll and related costs 24,069 29,684
Accrued royalties payable 66,517 66,658
Accrued insurance 3,045 23,804
Current maturities of long-term debt 53,304 61,615
Line of credit -- 25,000
------------ ------------
TOTAL CURRENT LIABILITIES 280,015 318,801
------------ ------------
LONG-TERM DEBT, net of current maturities 92,865 113,535
------------ ------------
DEFERRED INCOME AND OTHER TAXES 120,617 118,425
------------ ------------
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 1,731,759 1,745,048
------------ ------------
2,803,369 2,816,658
------------ ------------
$3,296,866 $3,367,419
============ ============
<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,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES $464,289 $417,430 $1,366,993 $1,215,814
--------- --------- --------- ---------
COSTS AND EXPENSES:
Operating expenses 246,501 290,717 756,161 665,345
General and administrative 84,448 83,183 274,999 250,872
Taxes, other than income
and payroll taxes 17,054 16,162 47,048 42,793
Provision for depletion,
depreciation and
amortization 109,923 87,874 316,906 262,779
Other costs and expenses 1,518 789 10,611 10,924
--------- --------- --------- ---------
459,444 478,725 1,405,725 1,232,713
--------- --------- --------- ---------
OPERATING INCOME (LOSS) 4,845 (61,295) (38,732) (16,899)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income 6,096 4,590 17,878 14,523
Other income 8,990 2,800 21,390 45,828
Interest expense (3,588) (5,200) (12,677) (15,820)
--------- --------- --------- ---------
11,498 2,190 26,591 44,531
--------- --------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION 16,343 (59,105) (12,141) 27,632
Income tax provision 0 0 1,148 1,166
--------- --------- --------- ---------
NET INCOME (LOSS) $ 16,343 $ (59,105) $ (13,289) $ 26,466
========= ========= ========= =========
INCOME (LOSS) PER COMMON SHARE $0.01 ($0.02) ($0.01) $0.01
========= ========= ========= =========
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,
------------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $( 13,289) $ 26,466
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Provision for depletion,
depreciation and amortization 316,906 262,779
Gain on sale of fixed assets (2,250) (36,250)
Changes in assets and liabilities:
Increase in trade accounts receivable (30,515) (30,291)
Decrease in prepaid expenses 8,490 49,575
Decrease in accounts payable
and accrued liabilities (5,475) (110,264)
Decrease in deferred taxes -- (442)
--------- ---------
Net cash provided by operating activities 273,867 161,573
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (99,305) (442,640)
Proceeds from sale of property and equipment 3,100 160,000
--------- ---------
Net cash used in investing activities (96,205) (282,640)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 31,000 100,000
Principal payments on line of credit (56,000) (80,000)
Proceeds from new borrowing 28,650 30,978
Principal payments on long-term debt (57,631) (45,049)
--------- ---------
Net cash (used in) provided by financing activities (53,981) 5,929
--------- ---------
Net increase (decrease) in cash and cash equivalents 123,681 (115,138)
Cash and cash equivalents at beginning of period 452,348 469,009
--------- ---------
Cash and cash equivalents at end of period $576,029 $353,871
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the nine months for interest $12,677 $15,820
========= =========
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 6
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements include the accounts of Pyramid Oil Company (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, 1995 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, 1995 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, 1996 and the results of
its operations and its cash flows for the three and nine months periods ended
September 30, 1996 and 1995. 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, 1996
and 1995.
(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 $20.40 per barrel at November 12, 1996. 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 the costs of drilling and
completing the one well on this lease in 1995 was approximately $312,000.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
IMPACT OF CHANGING PRICES
The Company's revenue is connected directly to crude oil prices posted by
the major oil companies. Average crude oil prices for the third quarter of
1996 increased by approximately $3.00 per equivalent barrel over third quarter
1995 crude prices. Average crude oil prices for the first nine months of 1996
have increased by approximately $2.30 per equivalent barrel as compared with
the same period of 1995. Crude oil prices have been very volatile during the
first nine months of 1996. During the first nine months of 1996, the Company
experienced 32 separate price changes. For the same period of 1995 the
Company experienced 14 price changes. At the end of the third quarter of
1996, crude oil prices had increased by approximately $5.00 over December 31,
1995 price levels. The Company cannot predict the future course of crude oil
prices for the foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $123,681 for the nine months ended
September 30, 1996. Capital spending for the first nine months of 1996
decreased cash by $96,205. Net cash provided by operating activities was
$273,867 for the nine months ended September 30, 1996. The Company has
reduced its long-term debt by $53,981 during the nine months ended September
30, 1996. See the Statements of Cash Flows for additional detailed
information.
Crude oil prices during the first nine months of 1996 and continuing into the
fourth quarter of 1996 continue to be favorable. However, over the
last ten years, crude oil prices have fluctuated dramatically, thus 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. In prior years, the
Company shut-in or reduced operations on certain other 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
The Company has experienced four price changes since September 30, 1996. The
net effect of these price changes has been to decrease crude oil prices by
approximately one dollar per barrel. 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.
<PAGE> 8
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1996 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1995
REVENUES
Revenues for oil and gas operations increased by 11.2% for the three months
ended September 30, 1996 as contrasted with the same period of 1995. Crude
oil sales increased by 18.9% due to higher crude prices for the third quarter
of 1996. The average equivalent crude oil price for the third quarter of 1996
increased by approximately $3.00 per equivalent barrel as compared with the
same period in 1995. This was offset by a 7.7% decrease in revenues due to a
decline in crude oil production during the third quarter of 1996. The
Company's net revenue share of crude oil production decreased by approximately
24 barrels per day during the third quarter of 1996.
OPERATING EXPENSES
Operating expenses for crude oil and natural gas producing activities
decreased by 15.2% for the third quarter of 1996 as compared with the same
period of 1995. The average cost to produce an equivalent barrel of crude oil
decreased by approximately eighty cents per barrel for the third quarter of
1996 as compared with the third quarter of 1995. The favorable variance is
due to lower costs in the third quarter of 1996 for well workovers. Well
workover activity increased costs by 12.3% during the third quarter of 1995.
The well workover activity for the third quarter of 1996 was reduced
significantly as compared with third quarter of 1995.
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization has increased by
25% for the third quarter of 1996 due primarily to higher depletion rates for
1996. This was caused by the change in the Company's oil and gas reserves at
December 31, 1995 and the resulting increase in its depletion rates.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO
NINE MONTHS ENDED SEPTEMBER 30, 1995
REVENUES
Revenues increased by 12.4% for the nine months ended September 30, 1996 as
compared with the same period in 1995. Revenues increased by 14.7% due to an
increase in the average price per barrel. The average equivalent crude oil
price increased by approximately $2.30 per barrel for the nine months ended
September 30, 1996. This was offset by a decrease in revenues of 2.2% due to
a decline in oil and gas production. The Company's net revenue interest share
of oil and gas production decreased by approximately 1,800 barrels for the
nine months ended September 30, 1996.
<PAGE> 9
OPERATING EXPENSES
Operating expenses increased by 13.6% for the nine months ended September 30,
1996. The cost to produce an equivalent barrel of crude oil increased by
approximately $1.30 per barrel for the nine months ended September 30, 1996.
During the first and second quarter of 1995, the Company devoted a portion of
its labor, supplies and fuel resources to the drilling of two oil wells.
Those costs which were associated with the drilling were capitalized as Oil
and Gas Properties and Equipment. In 1996, the Company has, thus far, devoted
all of its resources to the ongoing maintenance and operation of its producing
wells. All costs associated with the ongoing maintenance and operation of
these wells are expensed in the current period. As a result, operating costs
for the first nine months of 1996 increased by 10% over the first nine months
of 1995. The remaining increase in operating costs is due to the overall
increased level of activity for the first nine months of 1996. Certain oil
and gas properties that had been shut-in during most of the first six months
of 1995 were back in full operation during the first nine months of 1996, due
primarily to the increase in crude oil prices.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by approximately 10% for the
first nine months of 1996 when compared with the same period in 1995. During
the first quarter of 1995, the Company's general and administrative expenses
were offset by a recovery of certain accounts receivable balances that had
been fully reserved for in prior periods. This contributed to a 5% decrease
in general and administrative expenses for the first nine months of 1995 when
compared with the same period in 1996.
OTHER INCOME
Other income has decreased by approximately $24,000 for the first nine months
of 1996 as compared with the same period of 1995. 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.
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization has increased by
21% for the first nine months of 1996 due primarily to higher depletion rates
for 1996. This was caused by the change in the Company's oil and gas reserves
at December 31, 1995 and the resulting increase in its depletion rates.
<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 nine months
ended September 30, 1996.
<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 12, 1996 J. BEN HATHAWAY
---------------------
J. Ben Hathaway
President
Dated: November 12, 1996 JOHN H. ALEXANDER
---------------------
John H. Alexander
Vice President
<PAGE> 12
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
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, 1996 and
is qualified in its entirety by reference to such financial statments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 576,029
<SECURITIES> 0
<RECEIVABLES> 220,177
<ALLOWANCES> 4,000
<INVENTORY> 76,376
<CURRENT-ASSETS> 1,018,850
<PP&E> 15,742,876
<DEPRECIATION> (13,469,575)
<TOTAL-ASSETS> 3,296,866
<CURRENT-LIABILITIES> 280,015
<BONDS> 0
0
0
<COMMON> 1,071,610
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,296,866
<SALES> 1,366,993
<TOTAL-REVENUES> 1,406,261
<CGS> 756,161
<TOTAL-COSTS> 1,405,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,677
<INCOME-PRETAX> (12,141)
<INCOME-TAX> 1,148
<INCOME-CONTINUING> (13,289)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,289)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
