<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, 1997
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 March 31, 1997)
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<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $793,888 $682,043
Trade accounts receivable 172,428 260,553
Crude oil inventory 117,892 117,892
Prepaid expenses 65,072 94,573
Deferred income taxes 74,118 78,759
------------ ------------
TOTAL CURRENT ASSETS 1,223,398 1,233,820
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 10,003,265 9,734,780
Drilling and operating equipment 3,521,535 3,993,349
Land, buildings and improvements 917,461 890,603
Automotive, office and other
property and equipment 1,039,648 1,037,397
------------ ------------
15,481,909 15,656,129
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,024,492) (13,370,310)
------------ ------------
2,457,417 2,285,819
------------ ------------
$3,680,815 $3,519,639
============ ============
<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,
1997 1996
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $285,113 $106,652
Accrued professional fees 22,284 32,750
Accrued taxes, other than income taxes 29,236 29,236
Accrued payroll and related costs 38,603 32,898
Accrued royalties payable 75,942 85,066
Accrued insurance 16,865 35,202
Current maturities of long-term debt 39,337 49,570
------------ ------------
TOTAL CURRENT LIABILITIES 507,380 371,374
------------ ------------
LONG-TERM DEBT, net of current maturities 68,570 80,231
------------ ------------
DEFERRED INCOME AND OTHER TAXES 116,589 121,230
------------ ------------
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 1,916,666 1,875,194
------------ ------------
2,988,276 2,946,804
------------ ------------
$3,680,815 $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 March 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
REVENUES $473,190 $417,656
------------ ------------
COSTS AND EXPENSES:
Operating expenses 213,322 259,773
General and administrative 121,756 93,538
Taxes, other than income
and payroll taxes 17,338 19,289
Provision for depletion,
depreciation and amortization 107,633 101,520
Other costs and expenses 1,078 1,757
------------ ------------
461,127 475,877
------------ ------------
OPERATING INCOME (LOSS) 12,063 (58,221)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 6,919 6,043
Other income 23,934 5,050
Interest expense (1,444) (4,450)
------------ ------------
29,409 6,643
------------ ------------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION 41,472 (51,578)
Income tax provision -- 348
------------ ------------
NET INCOME (LOSS) $ 41,472 $(51,926)
============ ============
INCOME (LOSS) 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,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 41,472 $( 51,926)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Provision for depletion,
depreciation and amortization 107,633 101,520
Gain on sale of fixed assets (20,634) (2,500)
Changes in assets and liabilities:
(Increase) decrease in trade
accounts receivable 88,125 (34,428)
Decrease in prepaid expenses 29,501 10,956
Increase (decrease) in accounts
payable and accrued liabilities 146,239 (863)
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Net cash provided by operating activities 392,336 22,759
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (306,597) (25,072)
Proceeds from sale of property and equipment 48,000 2,500
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Net cash used in investing activities (258,597) (22,572)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit -- 15,000
Proceeds from new borrowing -- 15,650
Principal payments on long-term debt (21,894) (17,423)
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Net cash (used in) provided by
financing activities (21,894) 13,227
--------- ---------
Net increase in cash and cash equivalents 111,845 13,414
Cash and cash equivalents at beginning of period 682,043 452,348
--------- ---------
Cash and cash equivalents at end of period $793,888 $465,762
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months for interest $1,444 $4,450
========= =========
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 6 PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 1997 and the results of its operations and
its cash flows for the three month periods ended March 31, 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 three months ended March 31, 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 property. The price of oil on
this lease was approximately $17.40 per barrel at May 12, 1997.
Failure to drill the necessary well(s) in the future will result in the
potential relinquishment of any undrilled or unproved acreage on this lease.
Any relinquishment would not affect wells already drilled and producing on
this lease. The Company drilled and completed a well on this lease in the
second quarter of 1995 and in the first quarter of 1997. 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. The total costs of drilling and completing the well
drilled in 1997 have not been determined at this time.
<PAGE> 7
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 first quarter of 1997
increased by approximately $2.90 per equivalent barrel when compared with the
same period for 1996. During the first quarters of 1997 and 1996, the Company
experienced twelve separate price changes. At the end of the first quarter of
1997, crude oil prices decreased by approximately $2.90 per barrel when
compared with crude oil prices at December 31, 1996. The Company cannot
predict the future course of crude oil prices.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $111,845 for the three months ended
March 31, 1997. During the first quarter of 1997, operating activities
generated cash flows of $392,336. This was offset by capital expenditures for
the first quarter of 1997 of $306,597 and principal payments on long-term debt
of $21,894. Capital expenditures for the first quarter of 1997 included the
drilling of a new well and significant remedial well 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
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 in 1996 and for the first quarter of 1997.
FORWARD LOOKING INFORMATION
Crude oil prices have decreased by $2.90 per barrel since March 31, 1997 and
by $5.50 per barrel since December 31, 1996. Crude oil prices continue to
remain unstable and unpredictable. With the continuing crude oil market
uncertainty, 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.
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 down 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 is planning to complete this work in the second quarter of 1997.
<PAGE> 8
ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1997
COMPARED TO THE QUARTER ENDED MARCH 31, 1996
REVENUES
Oil and gas sales increased by 13% for the three months ended March 31, 1997
when compared with the same period for 1996. Oil and gas sales increased by
17% due to higher average crude oil prices for the first quarter of 1997. The
average price of the Company's oil and gas for the first quarter of 1997
increased by approximately $2.90 per equivalent barrel compared to 1996. This
was offset by a 4% decline in revenues due to lower production of crude oil.
The Company's net revenue share of crude oil production decreased by
approximately 900 barrels for the first three months of 1996.
OPERATING EXPENSES
Operating expenses decreased by 18% for the first quarter of 1997. The cost
to produce an equivalent barrel of crude oil decreased by approximately $1.50
per barrel for the first three months of 1997 when compared with the first
quarter of 1996.
During the first quarter of 1997, the Company devoted a portion of its labor,
supplies and fuel resources to the drilling of one oil well and remedial well
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 were expensed in the first quarter of
1996. As a result operating expenses for 1997 decreased by 11% when compared
with the same period for 1996. The remaining decrease in operating costs of
7% is due to the reduced level of activity for the first quarter of 1996.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased by 30% for the first three
months of 1997 when compared with the same period for 1996. Professional fees
increased by 27% for the first quarter of 1997 due to higher costs for legal
services. The Company is a plaintiff in a continuing legal action, that
generated the majority of the increase in legal fees for the first quarter of
1997.
<PAGE> 9
OTHER INCOME
The primary reason for the increase in other income is due to the gain on the
sale of certain of the Company's fixed assets. The Company sold four of its
well servicing rigs in the first quarter of 1997 for a gain of approximately
$21,000.
<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, 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: May 9, 1997 J. BEN HATHAWAY
---------------------
J. Ben Hathaway
President
Dated: May 9, 1997 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
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 793,888
<SECURITIES> 0
<RECEIVABLES> 176,428
<ALLOWANCES> 4,000
<INVENTORY> 117,892
<CURRENT-ASSETS> 1,223,398
<PP&E> 15,481,909
<DEPRECIATION> 13,024,492
<TOTAL-ASSETS> 3,680,815
<CURRENT-LIABILITIES> 507,380
<BONDS> 0
0
0
<COMMON> 1,071,610
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,680,815
<SALES> 473,190
<TOTAL-REVENUES> 504,043
<CGS> 320,955
<TOTAL-COSTS> 460,049
<OTHER-EXPENSES> 1,078
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,444
<INCOME-PRETAX> 41,472
<INCOME-TAX> 0
<INCOME-CONTINUING> 41,472
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,472
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
