<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 March 31, 1996
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 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 March 31, 1996)
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<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $465,762 $452,348
Trade accounts receivable 220,090 185,662
Crude oil inventory 76,376 76,376
Prepaid expenses 69,656 80,612
Deferred income taxes 72,612 75,954
------------ ------------
TOTAL CURRENT ASSETS 904,496 870,952
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 9,682,568 9,678,168
Drilling and operating equipment 3,965,817 3,965,817
Land, buildings and improvements 923,714 923,714
Automotive, office and other
property and equipment 1,105,044 1,099,492
------------ ------------
15,677,143 15,667,191
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,261,839) (13,175,439)
------------ ------------
2,415,304 2,491,752
------------ ------------
OTHER ASSETS 4,715 4,715
------------ ------------
$3,324,515 $3,367,419
============ ============
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 3
PYRAMID OIL COMPANY
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31 December 31,
1996 1995
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 55,786 $ 53,925
Accrued professional fees 20,465 28,000
Accrued taxes, other than income taxes 30,115 30,115
Accrued payroll and related costs 28,551 29,684
Accrued royalties payable 72,290 66,658
Accrued insurance 24,116 23,804
Current maturities of long-term debt 61,883 61,615
Line of credit 40,000 25,000
------------ ------------
TOTAL CURRENT LIABILITIES 333,206 318,801
------------ ------------
LONG-TERM DEBT, net of current maturities 111,494 113,535
------------ ------------
DEFERRED INCOME AND OTHER TAXES 115,083 118,425
------------ ------------
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 1,693,122 1,745,048
------------ ------------
2,764,732 2,816,658
------------ ------------
$3,324,515 $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 March 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
REVENUES $417,656 $398,678
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COSTS AND EXPENSES:
Operating expenses 259,773 196,745
General and administrative 93,538 75,405
Taxes, other than income
and payroll taxes 19,289 16,170
Provision for depletion,
depreciation and amortization 101,520 86,779
Other costs and expenses 1,757 1,398
------------ ------------
475,877 376,497
------------ ------------
OPERATING (LOSS) INCOME (58,221) 22,181
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 6,043 4,580
Other income 5,050 39,627
Interest expense (4,450) (4,619)
------------ ------------
6,643 39,588
------------ ------------
(LOSS)INCOME BEFORE
INCOME TAX PROVISION (51,578) 61,769
Income tax provision 348 0
------------ ------------
NET (LOSS) INCOME $(51,926) $ 61,769
============ ============
(LOSS) INCOME PER COMMON SHARE ($0.02) $0.02
============ ============
Weighted average number of
common shares outstanding 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>
Three months ended March 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $( 51,926) $ 61,769
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Provision for depletion,
depreciation and amortization 101,520 86,779
(Gain) on sale of fixed assets (2,500) (36,250)
Changes in assets and liabilities:
Increase in trade accounts
receivable (34,428) (5,151)
Decrease in prepaid expenses 10,956 14,255
Decrease in accounts payable
and accrued liabilities (863) (92,118)
Decrease in deferred taxes -- (442)
------------ ------------
Net cash provided by
operating activities 22,759 28,842
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (25,072) (56,206)
Proceeds from sale of property
and equipment 2,500 160,000
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Net cash (used in) provided by
investing activities (22,572) 103,794
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 15,000 --
Proceeds from new borrowings 15,650 --
Principal payments on long-term debt (17,423) (13,670)
------------ ------------
Net cash provided by (used in)
financing activities 13,227 (13,670)
------------ ------------
Net increase in cash
and cash equivalents 13,414 118,966
Cash and cash equivalents
at beginning of period 452,348 469,009
------------ ------------
Cash and cash equivalents
at end of period $465,762 $587,975
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months
for interest $4,450 $4,619
============ ============
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 6
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 1996 and the results of its
operations and its cash flows for the three month periods ended March 31, 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 three months ended March 31, 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 $19.20 per barrel at May 13, 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
major oil companies. Average crude oil prices for the first quarter of 1996
increased by approximately $1.65 per equivalent barrel over first quarter
1995 crude prices. Crude oil prices have been very volatile during the first
quarter of 1996. During the first quarter of 1996, the Company experienced
twelve separate price changes. For the same period of 1995 the Company had
three price changes. At the end of the first quarter of 1996, crude oil
prices had increased by approximately $3.80 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 $13,414 for the three months ended
March 31, 1996. Capital spending for the first quarter of 1995 decreased cash
by $25,072. Net cash provided by operating activities was $22,759 for the
three months ended March 31, 1996. A net in long-term debt of $13,227 provided
additional funds for capital expenditures during the three months ended March
31, 1996. See the Statements of Cash Flows for additional detailed
information.
Crude oil prices during the first quarter of 1996 and continuing into the
second 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
Since the end of the first quarter of 1996, crude oil prices have continued to
be volatile. The Company has experienced nine separate price changes since
March 31, 1996. The net effect of the price changes has been to reduce crude
oil prices by approximately one dollar per barrel since March 31, 1996.
However, crude oil prices continue to be at levels that have not been
experienced since the Gulf war in 1990. This is an encouraging sign for the
second quarter, however, 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.
In April of 1996, the Company acquired a new oil producing property with one
well that is presently producing approximately twenty barrels per day. The
Company estimates that its investment in this property will payout in
approximately six months at current prices.
<PAGE> 8
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995
REVENUES
Revenues for oil and gas operations increased by 4.8% for the three months
ended March 31, 1996 as contrasted with the same period of 1995. Crude oil
sales increased by 10.4 % due to higher crude prices for the first quarter of
1996. The average equivalent crude oil price for the first quarter of 1996
increased by approximately $1.65 per equivalent barrel as compared with the
same period in 1995. This was offset by a 5.7% reduction in crude oil
production, approximately 1,500 barrels, during the first quarter of 1996.
OPERATING EXPENSES
Operating expenses for crude oil and natural gas producing activities
increased by 32% for the first quarter of 1996 as compared with the same
period of 1995. The average cost to produce a barrel of crude oil increased by
approximately $3.00 per equivalent barrel for the first three months of 1996
as compared with the first quarter of 1995. Labor costs, operating supplies,
chemicals and insurance costs increased by a combined total of approximately
24% for the fist quarter of 1996.
During the first quarter of 1995, the Company capitalized certain costs,
primarily labor charges, related to the drilling of two oil wells. No such
costs were capitalized during the first quarter of 1996. This resulted in a
9% increase in operating costs for the first quarter of 1996. Also, during
the first quarter of 1995, the Company received a refund of premiums paid in
prior years for workers' compensation insurance. No refunds of workers'
compensation insurance premiums were received in the first quarter of 1996,
which resulted in a 5% increase in insurance costs for 1996. The refund of
workers' compensation insurance premiums was due primarily to favorable claims
experience.
Chemicals and operating supplies increased by 5% each, for a total of 10% for
the first quarter of 1996. The remaining increase in operating costs of 8% is
due to the overall increased level of activity for the first quarter of 1996.
Certain oil and gas properties that had been shut-in during most of the first
quarter of 1995 were back in full operation during the first quarter of 1996,
due primarily to the increase in crude oil prices. Chemicals have increased
due to the use of more and different types of chemicals in an attempt to
enhance production on certain of the Company's oil and gas properties.
Operating supplies are higher due to increased levels of activity and timing
of expenditures.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by 24% for the first three
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 14% decrease in general
and administrative expenses for the first quarter of 1995 when compared with
the first quarter of 1996. Legal and professional fee increased by 4% for the
first quarter of 1996.
<PAGE> 9
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization has increased by
17% for the first 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.
OTHER INCOME
Other income has decreased by approximately $33,000 for the first quarter 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.
<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 March 31, 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: May 13, 1996 J. BEN HATHAWAY
---------------------
J. Ben Hathaway
President
Dated: May 13, 1996 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
unaudited financial statements at March 31, 1996 and for the three months ended
March 31, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 465,762
<SECURITIES> 0
<RECEIVABLES> 224,090
<ALLOWANCES> 4,000
<INVENTORY> 76,376
<CURRENT-ASSETS> 904,496
<PP&E> 15,677,143
<DEPRECIATION> 13,261,839
<TOTAL-ASSETS> 3,324,515
<CURRENT-LIABILITIES> 333,206
<BONDS> 0
0
0
<COMMON> 1,071,610
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,324,515
<SALES> 417,656
<TOTAL-REVENUES> 428,749
<CGS> 259,773
<TOTAL-COSTS> 475,877
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,450
<INCOME-PRETAX> (51,578)
<INCOME-TAX> 348
<INCOME-CONTINUING> (51,926)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (51,926)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
