<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, 1998
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, 1998)
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<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $568,600 $600,994
Trade accounts receivable 102,563 153,821
Crude oil inventory 61,194 61,194
Prepaid expenses 74,328 93,587
Deferred income taxes 75,982 79,853
------------ ------------
TOTAL CURRENT ASSETS 882,667 989,449
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 10,174,516 10,174,516
Drilling and operating equipment 3,177,722 3,177,722
Land, buildings and improvements 921,767 919,117
Automotive, office and other
property and equipment 1,025,169 1,036,073
------------ ------------
15,299,174 15,307,428
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,127,430) (13,035,692)
------------ ------------
2,171,744 2,271,736
------------ ------------
$3,054,411 $3,261,185
============ ============
<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,
1998 1997
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 40,984 $ 44,584
Accrued professional fees 23,823 33,500
Accrued taxes, other than income taxes 34,569 34,569
Accrued payroll and related costs 36,897 25,466
Accrued royalties payable 55,041 75,482
Accrued insurance 21,991 35,533
Current maturities of long-term debt 20,894 23,399
------------ ------------
TOTAL CURRENT LIABILITIES 234,199 272,533
------------ ------------
LONG-TERM DEBT, net of current maturities 38,989 45,447
------------ ------------
DEFERRED INCOME AND OTHER TAXES 118,453 122,324
------------ ------------
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 1,591,160 1,749,271
------------ ------------
2,662,770 2,820,881
------------ ------------
$3,054,411 $3,261,185
============ ============
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 4
PYRAMID OIL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
REVENUES $ 252,780 $473,190
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COSTS AND EXPENSES:
Operating expenses 217,282 213,322
General and administrative 87,160 121,756
Taxes, other than income
and payroll taxes 11,715 17,338
Provision for depletion,
depreciation and amortization 102,436 107,633
Other costs and expenses 1,473 1,078
------------ ------------
420,066 461,127
------------ ------------
OPERATING INCOME (LOSS) (167,286) 12,063
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 4,731 6,919
Other income 6,694 23,934
Interest expense (1,117) (1,444)
------------ ------------
10,308 29,409
------------ ------------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION (156,978) 41,472
Income tax provision 1,133 --
------------ ------------
NET INCOME (LOSS) $(158,111) $ 41,472
============ ============
BASIC INCOME (LOSS) PER COMMON SHARE ($0.06) $0.02
============ ============
DILUTED INCOME (LOSS)PER COMMON SHARE ($0.06) $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,
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(158,111) $ 41,472
Adjustments to reconcile net income
(loss) to net cash (used in)
provided by operating activities:
Provision for depletion,
depreciation and amortization 102,436 107,633
Gain on sale of fixed assets -- (20,634)
Changes in assets and liabilities:
Decrease in trade accounts receivable 51,258 88,125
Decrease in prepaid expenses 19,259 29,501
Increase (decrease) in accounts
payable and accrued liabilities (35,829) 146,239
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Net cash (used in) provided by
operating activities (20,987) 392,336
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,444) (306,597)
Proceeds from sale of property and equipment -- 48,000
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Net cash used in investing activities (2,444) (258,597)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt ( 8,963) (21,894)
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Net cash used in financing activities ( 8,963) (21,894)
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Net increase (decrease) in cash (32,394) 111,845
Cash at beginning of period 600,994 682,043
--------- ---------
Cash at end of period $568,600 $793,888
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months for interest $1,117 $1,444
========= =========
Cash paid during the three months for income taxes $1,133 $ --
========= =========
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 6 PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(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, 1997 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, 1997 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, 1998 and the results of its operations and
its cash flows for the three month periods ended March 31, 1998 and 1997. 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, 1998 and
1997.
(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 $11.75 per barrel at May 15, 1998.
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
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 1997 was approximately $256,000.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
IMPACT OF CHANGING PRICES
The Company's revenue is affected by crude oil prices paid by the major oil
companies. Crude oil prices plummeted during the first quarter of 1998.
Average crude oil prices for the first quarter of 1998 decreased by
approximately $8.00 per equivalent barrel when compared with the same period
for 1997. During the first quarter of 1998 the Company experienced nineteen
separate price changes. At the end of the first quarter of 1998, crude oil
prices decreased by approximately $2.00 per barrel when compared with crude
oil prices at December 31, 1997. The Company cannot predict the future course
of crude oil prices.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $32,394 for the three months ended
March 31, 1998. During the first quarter of 1998, operating activities
reduced cash flows by $20,987. Capital expenditures and principal payments on
long-term debt for the first quarter of 1998, further reduced cash by a
combined total of $11,407. 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.
FORWARD LOOKING INFORMATION
Crude oil prices have decreased by seventy-five cents per barrel since March
31, 1998 and by $2.75 per barrel since December 31, 1997. 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 1998, the Company is planning a major re-drill of
an existing well on one of the Company's properties in the Mountain View field
of Kern County, California. The Company has previously had success with re-
working and or re-drilling other wells in the Mountain View field. The
estimated cost of the re-drill is approximately $150,000.
<PAGE> 8
ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1998
COMPARED TO THE QUARTER ENDED MARCH 31, 1997
REVENUES
Oil and gas sales decreased by 47% for the three months ended March 31, 1998
when compared with the same period for 1997. Oil and gas sales decreased by
38% due to lower average crude oil prices for the first quarter of 1998. The
average price of the Company's oil and gas for the first quarter of 1998
decreased by approximately $8.00 per equivalent barrel compared to 1997.
Revenues deceased by 9% due to lower production of crude oil. The Company's
net revenue share of crude oil production decreased by approximately 25
barrels per day for the first three months of 1998.
OPERATING EXPENSES
Operating expenses increased by 2% for the first quarter of 1998. The cost
to produce an equivalent barrel of crude oil increased by approximately $1.00
per barrel or 11% overall for the first three months of 1998 when compared
with the first quarter of 1997. This was offset by lower costs of 9% due to
the decline in crude oil production.
GENERAL AND ADMINISTRATIVE
General and administrative expenses decreased by 28% for the first three
months of 1998 when compared with the same period for 1997. Professional fees
decreased by 22% for the first quarter of 1998 due to lower 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.
OTHER INCOME
In the first quarter of 1997, the Company sold four of it's well servicing
rigs for a gain of approximately $21,000. No well servicing rigs or other
fixed assets of the Company were sold during the first quarter of 1998.
<PAGE> 9
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, 1998.
<PAGE> 10
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 15, 1998 J. BEN HATHAWAY
---------------------
J. Ben Hathaway
President
Dated: May 15, 1998 JOHN H. ALEXANDER
---------------------
John H. Alexander
Vice President
<PAGE> 11
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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 568,600
<SECURITIES> 0
<RECEIVABLES> 106,563
<ALLOWANCES> (4,000)
<INVENTORY> 61,194
<CURRENT-ASSETS> 882,667
<PP&E> 15,299,174
<DEPRECIATION> (13,127,433)
<TOTAL-ASSETS> 3,054,411
<CURRENT-LIABILITIES> 234,199
<BONDS> 0
0
0
<COMMON> 1,071,610
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,054,411
<SALES> 252,780
<TOTAL-REVENUES> 264,205
<CGS> 319,718
<TOTAL-COSTS> 418,593
<OTHER-EXPENSES> 1,473
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,117
<INCOME-PRETAX> (156,978)
<INCOME-TAX> 1,133
<INCOME-CONTINUING> (158,111)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (158,111)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
