<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 June 30, 1997
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
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, 1997)
<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $493,272 $682,043
Trade accounts receivable 165,738 260,553
Crude oil inventory 117,892 117,892
Prepaid expenses 36,651 94,573
Deferred income taxes 78,373 78,759
------------ ------------
TOTAL CURRENT ASSETS 891,926 1,233,820
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 10,160,442 9,734,780
Drilling and operating equipment 3,530,187 3,993,349
Land, buildings and improvements 919,117 890,603
Automotive, office and other
property and equipment 1,041,190 1,037,397
------------ ------------
15,650,936 15,656,129
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,131,918) (13,370,310)
------------ ------------
2,519,018 2,285,819
------------ ------------
$3,410,944 $3,519,639
============ ============
<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,
1997 1996
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 79,808 $106,652
Accrued professional fees 27,784 32,750
Accrued taxes, other than income taxes -- 29,236
Accrued payroll and related costs 36,978 32,898
Accrued royalties payable 69,467 85,066
Accrued insurance 5,863 35,202
Current maturities of long-term debt 30,216 49,570
Line of credit 25,000 --
------------ ------------
TOTAL CURRENT LIABILITIES 275,116 371,374
------------ ------------
LONG-TERM DEBT, net of current maturities 57,667 80,231
------------ ------------
DEFERRED INCOME AND OTHER TAXES 120,844 121,230
------------ ------------
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 1,885,707 1,875,194
------------ ------------
2,957,317 2,946,804
------------ ------------
$3,410,944 $3,519,639
============ ============
<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,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES $381,186 $485,048 $854,376 $902,704
--------- --------- --------- ---------
COSTS AND EXPENSES:
Operating expenses 207,668 249,887 420,990 509,660
General and administrative 90,865 97,013 212,621 190,551
Taxes, other than income
and payroll taxes 13,076 10,705 30,414 29,994
Provision for depletion,
depreciation and
amortization 107,426 105,463 215,059 206,983
Other costs and expenses 8,559 7,336 9,637 9,093
--------- --------- --------- ---------
427,594 470,404 888,721 946,281
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (46,408) 14,644 (34,345) (43,577)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income 5,634 5,739 12,553 11,782
Other income 12,900 7,350 36,834 12,400
Interest expense (1,937) (4,639) (3,381) (9,089)
--------- --------- --------- ---------
16,597 8,450 46,006 15,093
--------- --------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION (29,811) 23,094 11,661 (28,484)
Income tax provision 1,148 800 1,148 1,148
--------- --------- --------- ---------
NET INCOME (LOSS) $ (30,959) $ 22,294 $ 10,513 $ (29,632)
========= ========= ========= =========
INCOME (LOSS) PER COMMON SHARE ($0.01) $0.01 $0.00 ($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>
Six months ended June 30,
-------------------------
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 10,513 $ (29,632)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Provision for depletion,
depreciation and amortization 215,059 206,983
Gain on sale of fixed assets (20,634) (2,500)
Changes in assets and liabilities:
Decrease (increase) in
trade accounts receivable 94,815 (9,487)
Decrease in prepaid expenses 57,922 38,031
Decrease in accounts payable
and accrued liabilities (101,904) (54,262)
--------- ---------
Net cash provided by operating activities 255,771 149,133
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (475,624) (53,517)
Proceeds from sale of property and equipment 48,000 2,500
--------- ---------
Net cash used in investing activities (427,624) (51,017)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 25,000 31,000
Principal payments on line of credit -- (56,000)
Proceeds from new borrowing -- 15,650
Principal payments on long-term debt (41,918) (36,599)
--------- ---------
Net cash used in financing activities (16,918) (45,949)
--------- ---------
Net (decrease) increase in cash
and cash equivalents (188,771) 52,167
Cash and cash equivalents at beginning of period 682,043 452,348
--------- ---------
Cash and cash equivalents at end of period $493,272 $504,515
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the six months for interest $3,381 $9,089
========= =========
Cash paid during the six months for income taxes $1,148 $1,148
========= =========
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 6
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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, 1996 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, 1996 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 necessary to present fairly the Company's
financial position as of June 30, 1997 and the results of its operations and
its cash flows for the three and six months periods ended June 30, 1997 and
1996. 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, 1997 and
1996.
(3) COMMITMENTS
Pursuant to a specific oil and gas lease with respect to 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 $16.60 per barrel at August 12, 1997.
Failure to drill the necessary well(s) will result in the potential
relinquishment of any undrilled or unproven acreage on this specific lease.
Any relinquishment would not affect wells already drilled and producing on
this lease. The Company drilled and completed a well on this lease during
the
<PAGE> 7
first half of 1997. The cost of drilling and completing a well can vary
significantly. The Company's total costs of drilling and completing the one
well on this lease in 1997 were approximately $256,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
IMPACT OF CHANGING PRICES
The Company's revenue is directly influenced by crude oil prices posted by
major oil companies. Average crude oil prices for the second quarter of
1997 decreased by approximately $1.60 per equivalent barrel over second
quarter 1996 crude prices. Average crude oil prices for the first six months
of 1997 have increased by approximately sixty cents per equivalent barrel as
compared with the same period for 1996. Crude oil prices continue to be
volatile during the first half of 1997. During the first six months of
1997, the Company experienced twenty-eight separate price changes. For the
same period of 1996 the Company experienced twenty-six price changes. At the
end of the second quarter of 1997, crude oil prices had decreased by
approximately $6.75 since December 31, 1996. The Company cannot predict the
future course of crude oil prices.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $188,771 for the six months ended
June 30, 1997. During the first half of 1997 operating activities generated
cash flows of $255,771. This was offset by Capital spending for the first six
months of 1997 of $475,624 and principal payments on long-term debt of
$41,918. Capital expenditures for 1997 included the drilling of a new well
and significant remedial work on one of the Company's existing wells. See the
Statements of Cash Flows for additional detailed information.
During 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 to conserve
capital. In prior years, the Company shut-in or reduced operations on certain
other oil and gas properties that were uneconomic. During 1996 and continuing
into 1997, certain of these properties were returned to production due to
favorable crude oil prices during 1996 and the first quarter of 1997.
FORWARD LOOKING INFORMATION
Crude oil prices have increased by eighty cents per barrel since June 30,
1997. 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
During the second quarter of 1997, the Company completed a well that was
drilled in the first quarter of 1997. This well is currently producing
approximately fifteen barrels of crude oil per day. In March of 1997, one of
the Company's oil wells that was producing approximately 60 barrels of crude
oil per day was shut-in due to water entry into the well caused by a failure
of the well casing. The Company has done significant remedial work on this
well and returned the well to production in the second quarter of 1997.
ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1997
COMPARED TO THE QUARTER ENDED JUNE 30, 1996
REVENUES
Oil and gas sales decreased by 21.4% for the three months ended June 30, 1997
when compared with the same period for 1996. Oil and gas sales decreased by
7.7% due to lower average crude oil prices for the second quarter of 1997. The
average price of the Company's oil and gas for the second quarter of 1997
decreased by approximately $1.60 per equivalent barrel compared to the same
period for 1996. Oil and gas sales also decreased by 13.7% due to lower crude
oil production during the second quarter of 1997. The Company's net revenue
share of crude oil production decreased by approximately 40 barrels per day
during the second quarter of 1997. The decrease in production is primarily
the result of one of the Company's wells that was producing approximately 60
barrels per day being shut-in due to failure of the well casing, for most of
the second quarter of 1997.
OPERATING EXPENSES
Operating expenses decreased by 16.9% for the second quarter of 1997. The
average cost to produce an equivalent barrel of crude oil decreased by
approximately thirty-five cents per barrel for the second quarter of 1997
when
compared with the second quarter of 1996.
During the second quarter of 1997, the Company devoted a portion of its labor,
supplies and fuel resources to the drilling of one oil well and remedial work
on a second well. The costs which were associated with the drilling and
remedial well work were capitalized as Oil and Gas Properties and Equipment.
In 1996, the Company 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, second quarter 1997 operating costs decreased by 20.7% over the
second quarter of 1996.
<PAGE> 9
RESULTS OF OPERATIONS FOR THE SIX ENDED JUNE 30, 1997
COMPARED TO THE SIX ENDED JUNE 30, 1996
REVENUES
Oil and gas sales decreased by 5.4% for the six months ended June 30, 1997
when compared with the same period for 1996. Oil and gas sales increased by
3.2% due to higher average crude oil prices for the first half of 1997. The
average price of the Company's oil and gas for the first six months of 1997
increased by approximately sixty cents per equivalent compared with the same
period for 1996. This was offset by a 8.6% decline in revenues due to lower
production of crude oil. The Company's net revenue interest share of oil and
gas production decreased by approximately twenty-five barrels per day for the
six months ended June 30, 1997. The decrease in production is primarily the
result of one of the Company's wells that was producing approximately 60
barrels per day being shut-in due to failure of the well casing, for more than
three months during the first half of 1997. This was offset by production
from a new well that was drilled during the first half of 1997.
OPERATING EXPENSES
Operating expenses decreased by 17.4% for the six months ended June 30, 1997.
The cost to produce an equivalent barrel of crude oil decreased by
approximately $1.00 per barrel for the six months ended June 30, 1997.
During the first and second quarters of 1997, the Company devoted a portion of
its labor, supplies and fuel resources to the drilling of one oil well and
remedial work on a second well. The costs associated with the drilling and
remedial well work were capitalized as Oil and Gas Properties and Equipment.
In 1996, the Company 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 first and second
quarters of 1996. As a result, operating costs for the first six months of
1997 decreased by 15.8% over the first six months of 1996.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by 11.6% for the first six
months of 1997 when compared with the same period for 1996. Professional fees
increased by 11.2% for the six months ended June 30, 1997 due to higher costs
for legal services. The Company is a plaintiff in a continuing legal action,
that generated the increase in legal fees for 1997.
OTHER INCOME
The increase in other income is due primarily to a gain of $21,000 on the sale
of four of the Company's well servicing rigs in the first quarter of 1997.
<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 5, 1997, 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, John E. Turco 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 1997. Each
item is fully described in the Company's Proxy dated
April 30, 1997.
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, 1997.
<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 12, 1997 J. BEN HATHAWAY
---------------------
J. Ben Hathaway
President
Dated: August 12, 1997 JOHN H. ALEXANDER
---------------------
John H. Alexander
Vice President
<PAGE> 12
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 493,272
<SECURITIES> 0
<RECEIVABLES> 169,738
<ALLOWANCES> 4,000
<INVENTORY> 117,892
<CURRENT-ASSETS> 891,926
<PP&E> 15,650,936
<DEPRECIATION> (13,131,918)
<TOTAL-ASSETS> 3,410,944
<CURRENT-LIABILITIES> 275,116
<BONDS> 0
0
0
<COMMON> 1,071,610
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,410,944
<SALES> 854,376
<TOTAL-REVENUES> 903,763
<CGS> 636,049
<TOTAL-COSTS> 888,721
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,381
<INCOME-PRETAX> 11,661
<INCOME-TAX> 1,148
<INCOME-CONTINUING> 10,513
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,513
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
