<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, 2000
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)
(661) 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, 2000)
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<PAGE> 2
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $426,164 $309,775
Trade accounts receivable 219,142 184,867
Crude oil inventory 35,153 35,153
Prepaid expenses 53,228 67,449
Deferred income taxes 72,040 75,650
------------ ------------
TOTAL CURRENT ASSETS 805,727 672,894
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 10,367,907 10,367,907
Drilling and operating equipment 3,110,077 3,179,652
Land, buildings and improvements 921,767 921,767
Automotive, office and other
property and equipment 1,101,074 1,055,857
------------ ------------
15,500,825 15,525,183
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,843,240) (13,872,078)
------------ ------------
1,657,585 1,653,105
------------ ------------
$2,463,312 $2,325,999
============ ============
<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,
2000 1999
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $69,339 $44,621
Accrued professional fees 15,875 24,000
Accrued taxes, other than income taxes 21,367 20,567
Accrued payroll and related costs 38,393 30,985
Accrued royalties payable 79,748 74,082
Accrued insurance 15,932 21,613
Current maturities of long-term debt 26,376 17,604
------------ ------------
TOTAL CURRENT LIABILITIES 267,030 233,472
------------ ------------
LONG-TERM DEBT, net of current maturities 26,834 4,272
------------ ------------
DEFERRED INCOME AND OTHER TAXES 114,511 118,121
------------ ------------
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 983,327 898,524
------------ ------------
2,054,937 1,970,134
------------ ------------
$2,463,312 $2,325,999
============ ============
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 4
PYRAMID OIL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES $455,058 $213,349
------------ ------------
COSTS AND EXPENSES:
Operating expenses 222,999 167,429
General and administrative 106,678 63,147
Taxes, other than income
and payroll taxes 11,283 11,540
Provision for depletion,
depreciation and amortization 53,459 70,810
Other costs and expenses 874 786
------------ ------------
395,293 313,712
------------ ------------
OPERATING INCOME (LOSS) 59,765 (100,363)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 3,322 2,641
Other income 23,250 7,500
Interest expense (1,309) (1,534)
------------ ------------
25,263 8,607
------------ ------------
INCOME (LOSS) BEFORE INCOME
TAX PROVISION 85,028 (91,756)
Income tax provision 225 325
------------ ------------
NET INCOME (LOSS) $84,803 $(92,081)
============ ============
BASIC INCOME (LOSS) PER COMMON SHARE $0.03 ($0.04)
============ ============
DILUTED INCOME (LOSS) PER COMMON SHARE $0.03 ($0.04)
============ ============
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,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $84,803 $(92,081)
Adjustments to reconcile net income
(loss)to cash provided by (used in)
operating activities:
Provision for depletion,
depreciation and amortization 53,459 70,810
Gain on sales of fixed assets (15,750) --
Changes in assets and liabilities:
Increase in trade accounts receivable (34,275) (28,347)
Decrease in prepaid expenses 14,221 20,502
Increase in accounts
payable and accrued liabilities 24,786 4,805
--------- ---------
Net cash provided by
(used in) operating activities 127,244 (24,311)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (57,939) (2,281)
Proceeds from sales of fixed assets 15,750 --
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Net cash used in investing activities (42,189) (2,281)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on line of credit -- (100,000)
Proceeds from line of credit -- 20,000
Principal payments on long-term debt (8,666) (5,043)
Proceeds from issuance of long-term debt 40,000 --
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Net cash provided by
(used in) financing activities 31,334 (85,043)
--------- ---------
Net increase (decrease) in cash 116,389 (111,635)
Cash at beginning of period 309,775 318,317
--------- ---------
Cash at end of period $426,164 $206,682
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months for interest $1,309 $1,534
========= =========
Cash paid during the three months for income taxes $ 225 $ 325
========= =========
<FN> See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE> 6 PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(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, 1999 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, 1999 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, 2000 and the results of its operations and
its cash flows for the three month periods ended March 31, 2000 and 1999. 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, 2000 and
1999.
(3) COMMITMENTS
During 1998, the Company entered into a joint venture project, with several
other oil and gas companies, to explore for and develop potential natural gas
reserves in the Solano County area of California. This project is employing
3-D seismic technology and exploratory drilling, in hopes of finding and
developing natural gas reserves on approximately 3,200 acres of leased ground.
The Company's position is that of a non-operator.
Drilling operations on the first well began early in the first quarter of
2000. This well encountered substantial mechanical problems prior to reaching
its intended depth and was abandoned, due to these problems. Although the
first well was unsuccessful, this disappointing factor does not diminish the
Company's overall view of this project, at this time. The Company expects that
the Operator will propose a second exploration well during the year 2000. At
this time, the Company has no way of accurately estimating the Company's
potential future costs associated with a second well.
<PAGE> 7
The Company expended approximately $18,000 for its share of costs in this
project during 1999. The Company is projecting to spend an additional $15,000
on this project in the first half of 2000.
Late in the fourth quarter of 1998, the Company was notified by the United
States Environmental Protection Agency (EPA) that the Company was identified
as a "de minimis" contributor to the Casmalia Disposal Site in Santa Barbara
County, California. The EPA claimed that all parties who contributed to the
disposal site were potentially liable for a share of the clean up costs.
After extensive examination of the EPA's documentation, upon which the EPA
based their claims, the Company determined that all of the materials sent to
the Casmalia disposal site, by the Company, between 1980 and 1983 were found
to be non-toxic, non-hazardous materials, specifically exempt under Federal
EPA statutes (RCRA Subtitle C Regulations and CERCLA, Section 101(14), 42
U.S.C. Sec 9601(14)). EPA manifests identified over 97% of the materials sent
by the Company to this site as being oil field waste water.
In December 1999, the Company formally responded to the EPA, by denying all of
the allegations and providing factual evidence in support of the Company's
position. Currently, the EPA's position is that it does not consider parties
which only sent petroleum wastes to the site liable. Therefore, management
does not believe that the Company is, or will be, liable for any clean up
costs associated with the EPA's remediation of the Casmalia Disposal Site.
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. Average crude oil prices for the first quarter of 2000 increased
by approximately $15.40 per equivalent barrel when compared with the same
period for 1999. During the first quarter of 2000 the Company experienced 23
separate price changes compared with 11 price changes during the same period
for 1999. The Company cannot predict the future course of crude oil prices.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $116,389 for the three months ended
March 31, 2000. During the first quarter of 2000, operating activities
increased cash flows by $127,244. Capital expenditures and principal payments
on long-term debt for the first quarter of 2000, reduced cash by a combined
total of $66,605. This was offset by proceeds from sale of fixed assets of
$15,750 and proceeds from issuance of long-term debt of $40,000. See the
Statements of Cash Flows for additional detailed information.
<PAGE> 8
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
The Company's average price crude oil price has increased by $1.75 per barrel
since March 31, 2000. Although crude oil prices continue to fluctuate and
remain unpredictable, management is concentrating on returning some of the
Company's previously shut in wells to production to take advantage of the
improved oil prices. Except for participation in a Joint Venture well
mentioned above, the majority of all developmental and capital expenditures
are being directed at enhancement of existing assets.
ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2000
COMPARED TO THE QUARTER ENDED MARCH 31, 1999
REVENUES
Oil and gas sales increased by 113% for the three months ended March 31, 2000
when compared with the same period for 1999. Oil and gas sales increased by
133% due to higher average crude oil prices for the first quarter of 2000.
The average price of the Company's oil and gas for the first quarter of 2000
increased by approximately $15.40 per equivalent barrel when compared to the
same period of 1999. Revenues decreased by 20% due to lower production of
crude oil. The Company's net revenue share of crude oil production decreased
by approximately fifty barrels per day for the first three months of 2000.
The decline in crude oil production is primarily attributable to one oil and
gas lease that had no crude oil production during the first quarter of 2000.
This lease produced approximately forty barrels of crude oil per day during
the first quarter of 1999.
OPERATING EXPENSES
Operating expenses increased by 33% for the first quarter of 2000. The cost
to produce an equivalent barrel of crude oil increased by approximately $4.80
per barrel when compared with the first quarter of 1999. Operating expenses
increased due to the return to production of certain oil and gas properties
that were formerly shut-in because they were uneconomic at the price levels
that were experienced for most of 1998 and 1999. One of these uneconomic
<PAGE> 9
properties accounted for 12% of the total increase in operating expenses. As
a result of the higher oil and gas sales prices, more well maintenance work
was performed in an effort to return wells to production and to try to
increase production on other producing properties, thereby increasing
operating expenses.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased by 69% for the first three
months of 2000 when compared with the same period for 1999. Legal fees
increased by 58% for the first quarter of 2000 due to the continuing
activities related to a lawsuit that was filed by the Company in 1995. The
Company received a favorable judgement in 1997 which was appealed by the
defendant. The legal costs for the first quarter of 2000 were all related to
the efforts directed at the appeal process. Legal fees related to this matter
were nominal during the first quarter of 1999.
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization decreased by 25%
for the first quarter of 2000,when compared with the same period for 1999.
The decrease is due primarily to the decline in the depletion rate for the oil
and gas properties. As a result of the write-down of certain oil and gas
properties in 1998, the depletable base of the oil and gas properties has
decreased.
OTHER INCOME
Other income increased due primarily to the gain on the sales of fixed assets
during the first quarter of 2000. The Company sold a well servicing rig for a
gain of $15,000 in the first quarter of 2000. No fixed assets were sold
during the first quarter of 1999.
<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, 2000.
<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 12, 2000 J. BEN HATHAWAY
---------------------
J. Ben Hathaway
President
Dated: May 12, 2000 JOHN H. ALEXANDER
---------------------
John H. Alexander
Vice President
<PAGE> 12
EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-END] MAR-31-2000
[CASH] 426,164
[SECURITIES] 0
[RECEIVABLES] 223,142
[ALLOWANCES] 4,000
[INVENTORY] 35,153
[CURRENT-ASSETS] 805,727
[PP&E] 15,500,825
[DEPRECIATION] 13,843,240
[TOTAL-ASSETS] 2,463,312
[CURRENT-LIABILITIES] 267,030
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 1,071,610
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 2,463,312
[SALES] 455,058
[TOTAL-REVENUES] 481,630
[CGS] 276,458
[TOTAL-COSTS] 394,419
[OTHER-EXPENSES] 874
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 1,309
[INCOME-PRETAX] 85,028
[INCOME-TAX] 225
[INCOME-CONTINUING] 84,803
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 84,803
[EPS-BASIC] 0.03
[EPS-DILUTED] 0.03
</TABLE>
