UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 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 ______________________
Commission File Number: 001-9872
COLUMBUS ENERGY CORP.
(Exact name of registrant as specified in its charter)
Colorado 84-0891713
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
1660 Lincoln St., Denver, CO 80264
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 861-5252
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
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 period 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 latest practicable date.
Class Outstanding at July 10, 1998
- --------------------------- ----------------------------
Common stock, $.20 par value 4,209,794
<PAGE>
COLUMBUS ENERGY CORP.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
May 31, 1998 and
November 30, 1997 3
Consolidated Statements of Operations -
Three Months and Six Months
Ended May 31, 1998 and 1997 5
Consolidated Statement of
Stockholders' Equity -
Six Months Ended May 31, 1998 6
Consolidated Statements of Cash Flows -
Six Months Ended May 31, 1998
and 1997 7
Notes to the Financial Statements 9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 28
Items 2-3. Not Applicable
Item 4. Submission of Matters to a Vote
of Security Holders 28
Item 5. Not Applicable 28
Item 6. Exhibits and Reports
on Form 8-K 28
Signatures 29
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COLUMBUS ENERGY CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
May 31, November 30,
1998 1997
----------- ------------
(unaudited)
(in thousands)
Current assets:
Cash and cash equivalents $ 1,385 $ 1,857
Accounts receivable:
Joint interest partners 1,050 1,932
Oil and gas sales 1,440 2,054
Allowance for doubtful accounts (116) (116)
Inventory of oil field equipment,
at lower of average cost or market 117 102
Other 96 82
----------- ------------
Total current assets 3,972 5,911
----------- ------------
Deferred income taxes (Note 3) 118 -
Property and equipment:
Oil and gas assets, successful efforts
method (Note 2) 34,146 33,803
Other property and equipment 1,810 2,053
----------- ------------
35,956 35,856
Less: Accumulated depreciation,
depletion and amortization
and valuation allowance (17,264) (15,632)
----------- ------------
Net property and equipment 18,692 20,224
----------- ------------
$ 22,782 $ 26,135
=========== ============
(continued)
3
<PAGE>
COLUMBUS ENERGY CORP.
CONSOLIDATED BALANCE SHEETS - (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
May 31, November 30,
1998 1997
----------- ------------
(unaudited)
(in thousands)
Current liabilities:
Accounts payable $ 1,704 $ 3,023
Undistributed oil and gas
production receipts 266 393
Accrued production and property taxes 373 551
Prepayments from joint interest owners 351 565
Accrued expenses 366 377
Income taxes payable (Note 3) 18 42
Deferred income taxes (Note 3) 223 201
Other 39 37
----------- ------------
Total current liabilities 3,340 5,189
----------- ------------
Long-term bank debt (Note 2) 3,400 2,200
Deferred income taxes (Note 3) - 788
Commitments and contingent liabilities (Notes 4 and 5)
Stockholders' equity:
Preferred stock authorized 5,000,000
shares, no par value, none issued - -
Common stock authorized 20,000,000
shares of $.20 par value; shares issued
4,576,552 in 1998, and 4,492,068 in 1997
(outstanding 4,224,839 in 1998 and
3,883,557 in 1997) 915 898
Additional paid-in capital 19,068 18,124
Retained earnings (accumulated deficit) (1,515) 2,887
----------- ------------
18,468 21,909
Less: Treasury stock at cost
351,713 shares in 1998 and
608,519 shares in 1997 (2,426) (3,951)
----------- ------------
Total stockholders' equity 16,042 17,958
----------- ------------
$ 22,782 $ 26,135
=========== ============
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
COLUMBUS ENERGY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
May 31, May 31,
-------------------- --------------------
1998 1997 1998 1997
------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 5,618 $ 6,644 $ 2,781 $ 2,879
Operating and management
services 626 577 318 301
Interest and other income 77 72 35 35
------- ------- ------- -------
Total revenues 6,321 7,293 3,134 3,215
------- ------- ------- -------
Costs and expenses:
Lease operating expenses 1,217 951 657 433
Property and production taxes 541 625 281 304
Operating and management
services 496 388 225 191
General and administrative 898 867 611 529
Depreciation, depletion and
amortization 1,890 1,490 885 737
Impairments 2,816 - - -
Exploration expense 428 380 165 318
Litigation expense (Note 4) - 11 - 4
------- ------- ------- -------
Total costs and expenses 8,286 4,712 2,824 2,516
------- ------- ------- -------
Operating income (loss) (1,965) 2,581 310 699
------- ------- ------- -------
Other expenses (income):
Interest 114 65 71 30
Other 34 (6) 2 (9)
------- ------- ------- -------
148 59 73 21
------- ------- ------- -------
Earnings (loss) before
income taxes (2,113) 2,522 237 678
Provision (benefit) for income
taxes (Note 3) (803) 958 90 257
------- ------- ------- -------
Net earnings (loss) $(1,310) $ 1,564 $ 147 $ 421
======= ======= ======= =======
Earnings (loss) per share (Note 7):
Basic $ (.31) $ .36 $ .03 $ .10
======= ======= ======= =======
Diluted $ (.31) $ .36 $ .03 $ .10
======= ======= ======= =======
Average number of common shares
and common equivalent shares
outstanding:
Basic 4,244 4,325 4,230 4,291
======= ======= ======= =======
Diluted 4,244 4,401 4,294 4,339
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
COLUMBUS ENERGY CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Six Months Ended May 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Retained
Common Stock Additional Earnings Treasury Stock
----------------------- Paid-in (Accumulated -----------------------
Shares Amount Capital Deficit) Shares Amount
----------- --------- ------------ ------------ ---------- ----------
(Dollar Amounts In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances,
December 1, 1997 4,492,068 $ 898 $ 18,124 $ 2,887 608,511 $ (3,951)
Exercise Of Employee
Stock Options 80,548 16 437 - 27,193 (229)
Purchase Of Shares - - - - 138,750 (1,093)
Shares Issued For Stock
Purchase Plan 3,936 1 33 - (995) 7
10% Stock Dividend - - 492 (3,092) (386,494) 2,598
Shares Issued For
Incentive Bonus Plan
And Directors' Fees - - (57) - (35,252) 242
Tax Benefit Of Disqualifying
Disposition Of Incentive
Stock Options - - 39 - - -
Net Loss - - - (1,310) - -
----------- --------- ------------ ------------ ---------- ----------
Balances,
May 31, 1998 4,576,552 $ 915 $ 19,068 $ (1,515) 351,713 $ (2,426)
=========== ========= ============ ============ ========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE>
COLUMBUS ENERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended May 31,
----------------------------
1998 1997
-------- --------
(in thousands)
Net earnings (loss) $ (1,310) $ 1,564
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Depreciation, depletion, and
amortization 1,890 1,490
Impairments 2,816 -
Deferred income tax provision (benefit) (845) 857
Other 221 62
Net change in operating assets and
liabilities 948 160
-------- --------
Net cash provided by
operating activities 3,720 4,133
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (4,540) (2,913)
Additions to other assets (15) (67)
-------- --------
Net cash used in
investing activities (4,555) (2,980)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 1,800 500
Reduction in long-term debt (600) (1,200)
Proceeds from issuance of
common stock 258 143
Purchase of treasury stock (1,093) (806)
Other (2) -
-------- --------
Net cash provided by (used in)
financing activities 363 (1,363)
Net increase (decrease) in cash and
cash equivalents (472) (210)
Cash and cash equivalents at
beginning of period 1,857 1,396
-------- --------
Cash and cash equivalents at
end of period $ 1,385 $ 1,186
======== ========
(continued)
7
<PAGE>
COLUMBUS ENERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended May 31,
----------------------------
1998 1997
-------- --------
(in thousands)
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 111 $ 78
======== ========
Income taxes $ 66 $ 25
======== ========
Supplemental disclosoure of non-cash
investing and financing activities None None
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Columbus Energy Corp. ("Columbus") and its wholly-owned subsidiary, Columbus Gas
Services, Inc.("CGSI"). All significant intercompany balances have been
eliminated in consolidation. The term "Company" as used herein includes Columbus
and its subsidiary.
The consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles and require the use of
managements' estimates. The financial statements contain all adjustments
(consisting only of normal recurring accruals) which, in the opinion of
management, are necessary to present fairly the financial position of the
Company as of May 31, 1998 and November 30, 1997, and the results of its
operations and cash flows for the periods presented. The results of operations
for such interim periods are not necessarily indicative of results to be
expected for the full year.
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents. Hedging activities are included in cash flow from
operations in the cash flow statements.
When the Company uses crude oil and natural gas swaps to manage price
exposure, realized gains and losses on the swaps are recognized in oil and gas
sales as settlement occurs.
The Company adopted Financial Accounting Standards No. 128, "Earnings per
Share," ("SFAS No. 128") effective for the 1998 fiscal year. Prior period
earnings per share data presented has been restated to conform with the
provisions of SFAS No. 128. The purpose of SFAS No. 128 is to simplify the
computation of earnings per share. The new standard replaces the calculation of
"primary earnings per share" with a calculation called "basic earnings per
share" and redefines "diluted earnings per share".
Earnings per share are computed using the weighted average number of common
shares outstanding. Stock options are included as common stock equivalents, when
dilutive, using the treasury stock method. Common stock equivalents include
shares issuable upon assumed exercise of dilutive stock options using the
average price for diluted shares. Historical average number of shares
outstanding and earnings per share have been adjusted for the five-for-four
stock split distributed June 16, 1997 to shareholders of record as of May 27,
1997 and the 10% stock dividend distributed March 9, 1998 to shareholders of
record as of February 23, 1998.
9
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (continued)
(Unaudited)
Financial Instruments and Concentrations of Credit Risk
The Company maintains demand deposit accounts with separate banks in
Denver, Colorado. The Company also invests cash in the highest rated commercial
paper of large U.S. companies, with maturities not over 30 days, which have
minimal risk of loss. At May 31, 1998 and November 30, 1997 the Company had
investments in commercial paper of $1,200,000 and $900,000, respectively. The
carrying amount of long-term debt approximates fair value because the interest
rate on this instrument changes with market interest rates.
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash and cash equivalents
and accounts receivable. Columbus as operator of jointly owned oil and gas
properties, sells oil and gas production to relatively large U.S. oil and gas
purchasers and pays vendors for oil and gas services. The risk of non-payment by
the purchasers, counter parties to the crude oil and natural gas swap agreements
or joint owners is considered minimal. The Company does not obtain collateral
from its oil and gas purchasers for sales to them. Joint interest receivables
are subject to collection under the terms of operating agreements which provide
lien rights to the operator.
Oil and Gas Properties
The Company follows the successful efforts method of account ing. Lease
acquisition and development costs (tangible and intangible) for expenditures
relating to proved oil and gas properties are capitalized. Delay and surface
rentals are charged to expense in the year incurred. Dry hole costs incurred on
exploratory operations are expensed. Dry hole costs associated with developing
proved fields are capitalized. Expenditures for additions, betterments and
renewals are capitalized. Exploratory geological and geophysical costs are
expensed when incurred.
Upon sale or retirement of proved properties, the cost thereof and the
accumulated depreciation or depletion are removed from the accounts and any gain
or loss is credited or charged to income if significant. Abandonment,
restoration, and dismantlement costs and salvage value are taken into account in
determining depletion rates. These costs are generally about equal to the
proceeds from equipment salvage upon abandonment of such properties. When
estimated abandonment costs exceed the salvage value, the excess cost is accrued
and expensed. Maintenance and repairs are charged to operating expenses.
10
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (continued)
(Unaudited)
Provision for depreciation and depletion of capitalized exploration and
development costs are computed on the unit-of-production method based on proved
developed reserves of oil and gas, as estimated by petroleum engineers, on a
property by property basis. Unproved properties are assessed periodically to
determine whether they are impaired. When impairment occurs, a loss is
recognized by providing a valuation allowance. When leases for unproved
properties expire, any remaining cost is expensed.
An impairment loss on oil and gas properties is reported as a component of
income from continuing operations. The Company recognizes an impairment loss
when the carrying value exceeds the expected undiscounted future net cash flows
of each property pool at which time the property pool is written down to the
fair value. Fair value is estimated to be a discounted present value of expected
future net cash flows with appropriate risk consideration.
The Company follows the entitlements method of accounting for gas balancing
of gas production. The Company's gas imbalances are immaterial at November 30,
1997 and May 31, 1998.
Other Property and Equipment
Other property and equipment consists of office and computer equipment.
Gains and losses from retirement or replacement of other properties and
equipment are included in income. Betterments and renewals are capitalized.
Maintenance and repairs are charged to operating expenses. Depreciation of other
assets is provided on the straight line method over their estimated useful
lives.
Accounting for Stock-Based Compensation
The Financial Accounting Standards Board issued Statement No. 123,
"Accounting for Stock-Based Compensation". This statement prescribes the
accounting and reporting standards for stock-based employee compensation plans
and was effective for the Company's 1997 fiscal year. The Company uses the
alternative pro forma annual disclosures as permitted in the Standard.
New Accounting Pronouncements
The Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," was issued in June 1997 and establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. This statement is effective for financial statements for periods
11
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (continued)
(Unaudited)
beginning after December 15, 1997. The adoption of this statement will not have
a material impact on the Company's financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
an Enterprise and Related Information," effective for fiscal years beginning
after December 15, 1997. The Company must apply this statement no later than its
fiscal year ending November 30, 1999. SFAS No. 131 requires disclosing segment
information using the "management approach" and replaces the "industry segment"
approach using Statement No. 14. The segment information previously presented is
not expected to materially change when SFAS No. 131 is adopted.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," effective for fiscal years beginning after
June 15, 1999. The Company must apply this statement no later than its fiscal
year ending November 30, 2000. SFAS No. 133 requires recording all derivative
instruments as assets or liabilities measured at fair value. This Statement is
not expected to materially affect the Company's financial statements.
(2) LONG-TERM DEBT
The Company has a credit agreement with Norwest Bank Denver, N.A. that was
amended and restated on October 23, 1996. The credit agreement is collateralized
by a first lien on oil and gas properties.
As requested by the Company, the borrowing base was increased to a limit of
$10,000,000 from $7,000,000 effective May 13, 1997, without regard to the
maximum allowable amount that would be set by the bank during its semi-annual
redetermination. A commitment fee of .25% is payable for any unused portion of
the amount which is the difference between the borrowing base and the
outstanding borrowings.
(3) INCOME TAXES
The Company files a consolidated income tax return with CGSI and has
executed a tax allocation agreement which provides for an allocation and payment
of income taxes based upon each company's separate tax liability calculation.
Consolidated income taxes are payable only when taxable income exceeds available
net operating loss carryforwards and other credits.
12
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Pursuant to provisions enacted as part of the Tax Reform Act of 1986,
utilization of these corporate tax carryforwards in any one taxable year is
limited if a corporation experiences a 50% change of ownership. Columbus
experienced such a change of ownership in October 1987 effectively limiting the
utilization of pre-change ownership net operating losses to approximately
$900,000 in each subsequent year.
The Company uses the asset and liability method to account for income
taxes. Under this method, deferred tax liabilities and assets are determined
based on the temporary differences between financial statement and tax basis of
assets and liabilities using enacted rates in effect for the year in which the
differences are expected to reverse. Tax assets (net of a valuation allowance)
primarily result from net operating loss carryforwards, percentage depletion and
certain accrued but unpaid employee benefits. Deferred tax liabilities result
from the recognition of depreciation, depletion and amortization in different
periods for financial reporting and tax purposes.
Because of the Company's previous 1987 quasi-reorganization, the Company is
required to report the effect of its net deferred tax asset arising prior to
December 1, 1987 as an increase in stockholders' equity rather than as an
increase to net earnings.
The provision (benefit) for income taxes consists of the following (in
thousands):
Six Months Ended May 31,
------------------------
1998 1997
------ ------
Current:
Federal $ 4 $ 25
State 38 76
------ ------
42 101
------ ------
Deferred:
Federal (814) 524
Use of loss carryforwards 3 311
State (34) 22
------ ------
(845) 857
------ ------
Total income tax (benefit) expense $ (803) $ 958
====== ======
13
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (continued)
(Unaudited)
The total tax provision has resulted in effective tax rates which differ
from the statutory Federal income tax rates. The reasons for these differences
are:
Percent of Pretax Earnings
--------------------------
Six Months Ended May 31,
--------------------------
1998 1997
---- ----
U.S. Statutory rate (34)% 34 %
State income taxes - 3
Other (4) 1
---- ----
(38)% 38 %
==== ====
During the six months of fiscal 1998, certain tax assets (shown in the
table below) were utilized. The tax effect of significant temporary differences
representing deferred tax assets and liabilities and changes were estimated as
follows (in thousands):
<TABLE>
<CAPTION>
Current Year
----------------------------------------------
Stock-
Dec. 1, holders' May 31,
1997 Equity Operations 1998
-------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Deferred tax assets:
Pre-1987 loss carryforwards $ 1,053 $ - $ - $ 1,053
Post-1987 loss carryforwards 540 - - 540
Percentage depletion
carryforwards 1,304 - - 1,304
State income tax loss
carryforwards 105 - (3) 102
Other 327 - (16) 311
-------- -------- ---------- --------
Total 3,329 - (19) 3,310
Valuation allowance
(long-term) (1,443) - - (1,443)
-------- -------- ---------- --------
Deferred tax assets 1,886 - (19) 1,867
-------- -------- ---------- --------
Tax benefit of disqualifying
disposition of incentive
stock options - 39(a) (39) -
-------- -------- ---------- --------
Deferred tax liabilities-
Depreciation, depletion and
amortization and other (2,875) - 903 (1,972)
-------- -------- ---------- --------
Net tax asset (liability) $ (989) $ 39 $ 845 $ (105)
======== ======== ========== ========
</TABLE>
__________________
(a) Credited to additional paid-in capital.
14
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (continued)
(Unaudited)
The Company has net operating loss carryforwards (in thousands) available
at November 30, 1997 as follows:
Net
Expiration Year Operating Loss
--------------- --------------
1999 $ 1,808
2000 903
2001 387
2010 1,589
-------
$ 4,687
For Alternative Minimum Tax purposes the Company had net operating loss
carryforwards of approximately $6,056,000 as of November 30, 1997. The Company
also has percentage depletion carryforwards of $3,638,000 which do not expire.
State income tax operating loss carryforwards of $1,730,000 were available at
November 30, 1997.
(4) LITIGATION
Management is unaware of any asserted or unasserted claims or assessments
against the Company which would materially affect the Company's future financial
position or results of operations.
(5) COMMITMENTS AND CONTINGENT LIABILITIES
When the Company uses natural gas and crude oil swaps they are considered
financial instruments with off-balance sheet risk which are used in the normal
course of business to partially reduce its exposure to fluctuations in the price
of crude oil and natural gas. Those instruments involved, to varying degrees,
elements of market and credit risk in excess of the amount recognized in the
balance sheets. The Company had no natural gas or crude oil swaps outstanding as
of May 31, 1998.
The Company is not aware of any events of noncompliance in its operations
with any environmental laws and regulations nor of any material potential
contingencies related to environmental issues. The exact nature of environmental
control problems, if any, which the Company may encounter in the future cannot
be predicted, primarily because of the changing character of environmental
requirements that may be enacted with applicable jurisdictions.
15
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (continued)
(Unaudited)
(6) RELATED PARTY TRANSACTIONS
CEC Resources Ltd. ("Resources") was a wholly-owned subsidiary of Columbus
prior to its divestiture on February 24, 1995. Reimbursement is made by
Resources to Columbus for services provided by Columbus officers and employees
for managing Resources and reduces general and administrative expense. This
reimbursement totaled $123,000 and $131,000 for the six months of 1998 and 1997,
respectively.
16
<PAGE>
COLUMBUS ENERGY CORP.
NOTES TO THE FINANCIAL STATEMENTS - (continued)
(Unaudited)
(7) EARNINGS PER SHARE
The following table provides a reconciliation of basic and diluted earnings
per share (EPS):
<TABLE>
<CAPTION>
Six Months Three Months
Ended May 31, Ended May 31,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands,
except per share data)
<S> <C> <C> <C> <C>
Reconciliation of basic and diluted
EPS share computations:
Income (loss) available to common
shareholders - basic and
diluted ESP (numerator) $ (1,310) $ 1,564 $ 147 $ 421
======== ======== ======== ========
Shares (denominator):
Basic EPS 4,244 4,325 4,230 4,291
Effect of dilutive option
shares - 76 64 48
-------- -------- -------- --------
Diluted EPS 4,244 4,401 4,294 4,339
======== ======== ======== ========
Per share amount:
Basic EPS $ (.31) $ .36 $ .03 $ .10
======== ======== ======== ========
Diluted EPS $ (.31) $ .36 $ .03 $ .10
======== ======== ======== ========
Number of shares (in thousands)
not included in basic EPS that
would have been antidilutive
because exercise price of options
was greater than the average
market price of the common shares 138 55 138 78
======== ======== ======== ========
</TABLE>
Historical average number of shares outstanding and earnings per share have
been adjusted for the five-for-four stock split distributed June 16, 1997 to
shareholders of record as of May 27, 1997 and the 10% stock dividend distributed
March 9, 1998 to shareholders of record as of February 23, 1998.
17
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following summarizes the Company's financial condition and results of
operations and should be read in conjunction with the consolidated financial
statements and related notes.
Liquidity and Capital Resources
Second quarter results continued to suffer from the lowest average crude
oil prices in the last ten years. Average natural gas prices however were higher
than second quarter 1997's prices while natural gas production also improved
over last year's quarter. Second quarter cash flow suffered significantly from
the very weak crude oil prices and was therefore well below 1997's. As a result,
only small net earnings of $147,000, or $0.03 per share, were recorded versus
last year's net earnings of $421,000, or $0.10 per share, when oil prices were
high enough to negate lower natural gas prices.
Because of the first quarter impairments, shareholders' equity as of the
end of the second quarter 1998 had actually decreased to $16,042,000 from
$17,958,000 at November 30, 1997. Nevertheless, a positive working capital
position of $632,000 was available as of May 31, 1998 which, when combined with
the expected reduction in annual cash flow, should still produce a sufficient
source of funds to meet the proposed 1998 capital program. A total budget of
$6,800,000 includes developing undeveloped reserves and funding for an increased
exploratory program which emphasizes natural gas reserve prospects along the
Gulf Coast of Texas.
A significant portion of the costs incurred for the wells drilled in late
1997 were actually paid for in 1998 and therefore appear as additions to
properties in the consolidated Statements of Cash Flows in this report. This
necessitated a short term draw from the Company's bank credit facility during
first quarter pending repayment from expected additional monthly cash flow
generated as a result of those expenditures. Nevertheless, the $10,000,000
credit facility continues to be primarily targeted for use by management for
acquisitions of oil and gas properties, but can be used for any legal corporate
purpose and is always available for expanded operational expenditures.
Generally accepted accounting principles ("GAAP") require cash flows from
operating activities to be determined after giving effect to working capital
changes. Accordingly, GAAP's net cash provided from operating activities was
$3,720,000 for the first six months of 1998 and compares with $4,133,000 last
year. This cash flow (as defined) coupled with temporary utilization of the
Company's credit facility has provided sufficient liquidity to finance capital
expenditures thus far in 1998 as well as fund treasury stock repurchases.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
However, there exists an important alternative measure of computing a
company's cash flow (not GAAP but one commonly used in the industry) upon which
management places greater reliance. This is one determined before consideration
of either working capital changes or deduction of exploration expenses and is
generally known by industry as Discretionary Cash Flow ("DCF"). Since
exploration expenses can be increased or decreased at management's discretion,
DCF is often used by successful efforts' companies when making comparisons with
the cash flow results of a majority of other independent energy companies who
use the full cost accounting method wherein all exploration costs are
capitalized and do not adversely affect either operating cash flow or net
earnings. Columbus' DCF for the first six months of 1998 was $3,200,000 down 26%
from 1997's similar period which reported a record $4,353,000. This is directly
attributable to lower crude oil and natural gas prices because natural gas
production was increased over last year. DCF is calculated without debt
retirement requirements being considered but in Columbus' case it does not
matter. Outstanding bank debt requires no principal payments before August 1,
1999 and interest expense on the outstanding debt has been relatively
insignificant and is always deducted before arriving at DCF.
Management continues to note in all public filings and reports its strong
exception to the Statement of Financial Accounting Standards No. 95 which
directs that operating cash flow must only be determined after consideration of
working capital changes. This is based on our belief such a requirement by GAAP
ignores entirely the significant impact on working capital that the timing of
income received for, and expenses incurred on behalf of, third party owners in
several properties in which Columbus owns a small working interest but is the
operator.
However, neither DCF nor operating cash flow before working capital changes
may be substituted for net income or cash available from operations as defined
by GAAP. Furthermore, currently reported cash flows however defined are not
necessarily indicative that there will be sufficient funds for future cash
requirements.
At the present time the Company has no hedges of either crude oil or
natural gas prices in place similar to those swaps it negotiated in prior years.
As a result the Company's current oil and gas revenues are fully exposed to risk
of declining prices such as have occurred during fiscal 1998 to date. However,
it will be able to fully benefit from price increases which may occur during the
balance of 1998.
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
Columbus had outstanding borrowings of $3,400,000 as of May 31, 1998
against its $10,000,000 line of credit with Norwest Bank Denver, N.A. which is
collateralized by oil and gas properties. At the end of the second quarter 1998,
the ratio of bank debt to shareholders' equity was 0.21 and to total assets was
0.15 and outstanding debt used a LIBOR option with an average interest rate of
7.1%. The net increase or decrease of long-term debt directly affects cash flows
from financing activities as do the purchase of treasury shares and proceeds
from the exercise of stock options.
Working capital at May 31, 1998 declined slightly to $632,000 from $722,000
at November 30, 1997 due to 1998's capital expendit ures of $3,160,000 for
additions to oil and gas properties along with $1,093,000 for purchase of
138,750 treasury shares. These capital expenditures differ from the amount shown
in the consolidated Statement of Cash Flows which also includes payments made
during 1998 for 1997 expenditures which had been incurred but not yet paid as of
1997's year end.
The Company has been authorized during the last several years by the Board
of Directors to repurchase its common shares from the market subject to maximum
price limitations. During the first six months of 1998, 138,750 shares were
repurchased (143,715 shares inclusive of the 10% stock dividend) at a restated
average price of $7.54 per share.
As of May 31, 1998, another 200,000 shares has been authorized for
repurchase at prices not to exceed $8.25 per share. This is an addition to a
smaller number of shares which remain to be purchased from prior authorizations.
Subsequently, during June and so far in July 1998, 42,000 shares were acquired
at an average price of $7.36 per share.
Impact of the Year 2000 issue. The Year 2000 issue is the result of
computer programs being written using two digits rather than four, or other
methods, to define the applicable year. Computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
The Company upgraded its major system computer software in 1997 to a new
release of a major software vendor that is compliant with the year 2000. The
Company will review other less significant systems along with its significant
suppliers, purchasers, and transporters of oil and gas to determine the extent
to which the Company might be vulnerable to other failures and thereafter will
assess the impact on the operations of the Company, if any.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
RESULTS OF OPERATIONS
During 1998's second quarter, the Company's gross revenues decreased by 3%
while operating income declined to $310,000 which compares with $699,000 in
1997. Other comparisons for the 1998 quarter versus 1997 related to prices,
production and oil and gas sales are covered later in this section.
Thus far during 1998, the Company postponed all Williston Basin oil
drilling and accelerated its exploration efforts by acquiring acreage and 3-D
seismic for approximately $700,000 in three new onshore prospects between
Houston and Corpus Christi including the two discoveries discussed below. All
three prospects present the possibility of selecting well sites which could
produce from several different zones in the same well bore. These prospects
possess the potential to significantly expand the Company's production which
would equal or surpass that of the more fully developed areas of Laredo and
Sralla Road fields combined.
During 1998's second quarter, four gross wells (1.73 net WI) were drilled
which included one (.04 net WI) successful development gas well and one (.50
net) development dry hole in the Laredo area plus two discovery gas wells (1.19
net) in the aforementioned Gulf Coast area of Texas. One of the exploratory
successes was a 10,500 foot Frio wildcat adjacent to the old Bay City field but
in a separate fault block. The Moore Unit #1 (.575 net WI) in Matagorda County
commenced production in early June and has produced on a 14/64ths inch choke at
a daily rate of approximately 1,450 Mcf of natural gas during most of June. The
second wildcat was a Vicksburg sand gas discovery drilled to a depth of about
5800 feet which had excellent gas shows in the three objective sands but only
the uppermost sand was water free. The two other sands should be productive
higher on structure. Located in Jim Wells County, Texas, the Bernsen #1 (.615
net WI) was tested on an 8/64ths inch choke at a daily rate of 400 Mcf and is
awaiting hookup to a nearby transmission line. A second well will be drilled in
July on this project at a location projected to be higher by 40 feet. It is
expected to have three productive gas zones in the Vicksburg formation and
hopefully will be dual zone completion.
The third well of the new exploratory ventures is to be commenced shortly
in Bee County, Texas and is located in an area of numerous prolific, multi-zone
oil and natural gas fields. A 50% participation has been acquired in an acreage
block of 4,024 acres all of which has 3-D seismic coverage. An initial test well
will be drilled to about 10,500 feet to test the Slick and Luling sands of the
Wilcox formation. The entire block is highly faulted with numerous seismic
indications of various levels of separate fault block traps. Eventually most of
these will need to be drilled through several well bores to test various Wilcox
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
sand levels with some wells reaching depths below 15,000 feet in the high
pressure Reagan sand. This prospect will require a several year effort to
properly evaluate, regardless of the outcome of the first test well.
Oil and Gas Revenues and Operating Costs
The following table shows comparative crude oil and natural gas revenues,
sales volumes, average prices and percentage changes between periods for the
second quarters of 1998 and 1997 and the second quarter of 1998 versus the first
quarter of 1997.
<TABLE>
<CAPTION>
Second Quarter
--------------------- % First Qtr. %
1998 1997 Change 1998 Change
------ ------ ------ ----------- ------
<S> <C> <C> <C> <C> <C>
Natural gas revenues M$ $2,017 $1,672 21 % $ 1,916 5 %
Oil revenue M$ $ 764 $1,207 (37)% $ 921 (17)%
Natural gas sales volumes:
Millions of cubic feet 856 809 6 % 861 (1)%
MCF/day 9,303 8,792 9,572
Oil sales volumes:
Barrels 57,570 61,792 (7)% 59,669 (4)%
Barrels/day 626 672 663
Average price received:
Natural gas - $/MCF $ 2.36 $ 2.07 14 % $ 2.22 6 %
Oil - $/BBL $13.27 $19.53 (32)% $15.44 (14)%
</TABLE>
Natural gas revenues increased 21% in the second quarter of 1998 when
compared to 1997's quarter as a result of increased prices and volumes. Sales
volumes improved by 6% over 1997's second quarter as a result of numerous gas
wells being completed and connected during the intervening months while average
prices were up 14% commensurate with increased demand and lower excess capacity
above that needed for storage refill. The latest quarter compared to the first
quarter of 1998 showed comparable sales volumes since added production from new
wells occurred after close of the quarter. However, the 6% increase in average
prices occurred because the relatively warm winter had reduced prices during
1998's first quarter. Natural gas revenues increased 5% during second quarter
over the first quarter.
Oil revenues for 1998's second quarter were down significantly when
compared to the similar 1997 quarter due to a substantial 32% decrease in the
average price and a lower sales volume of 7%. Crude oil production declined
because few new wells were drilled. Only limited exploration or development of
crude oil can really be justified in this current price environment and during
June, production has been temporarily halted at several marginal oil wells
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
and/or sales deferred pending a price improvement. Oil revenues for last year's
second quarter had benefitted by $19,370 ($.31 per barrel) from crude oil swap
participation but unfortunately no such crude oil swaps were in place this year
to offer protection from this price debacle.
When compared with the 1998 first quarter results, second quarter oil
revenues were 17% lower because of a 14% decrease in average price per barrel
received while production declined 4% due to workovers and required downhole
equipment replacement which contributed to the downtime in several oil wells.
Columbus' 1998 second quarter average sales volumes of natural gas of 9,303
Mcfd and oil and liquids production of 633 barrels per day equates to an average
daily production of 2,184 barrels of oil equivalent (BOE) compared to 2,137 BOE
during 1997's second quarter. A sale of a gas well lease in the Berry R. Cox
field and normal decline plus the aforementioned downtime in several oil wells
essentially offset most of the increases generated by new wells completed in the
intervening period.
Lease operating expenses for the 1998 second quarter were higher than 1997
because this year's quarter had several expensive workovers performed and
downhole and surface equipment replaced or repaired on a few older wells. Lease
operating costs on a BOE basis were $3.27 in 1998 compared to $2.19 in 1997.
Operating costs as a percentage of revenues was up to 24% in the 1998 second
quarter as a result of lower sales versus only 15% in 1997's comparable quarter
when extraordinary prices helped to generate record revenues in every fiscal
quarter.
Production and property taxes approximated 10% of revenues in 1998 and 9%
in 1997. These may vary based on Texas' percentage share of the total production
where oil tax rates are lower than gas tax rates. The relationship of taxes and
revenue is not always directly proportional since several of the local
jurisdiction's property taxes are based upon reserve evaluations as opposed to
revenues received or production rates for a given tax period.
Operating and Management Services
This segment of the Company's business is comprised of opera tions and
services conducted on behalf of third parties including compressor rentals and
salt water disposal facilities.
Operating and management services profit was $130,000 during first six
months 1998 compared to a $189,000 profit during the equivalent period in 1997.
There was only a $37,000 profit during first quarter 1998 which had unusually
high expenses related to cleaning out sand from a well bore of a salt water
disposal well. Revenues had previously improved as the number of operated wells
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
and drilling activity increased but began to decrease in April 1998 as drilling
activity was reduced. Effective June 1, 1998 the Company has increased its
interest from 50% to 100% in four compressors operating in South Texas which
should be reflected by increased management services revenue and profits in
future periods.
Interest Income
Interest income is earned primarily from short-term invest ments whose
rates fluctuate with changes in the commercial paper rates and the prime rate.
Interest income was $35,000 in both 1998 and 1997's second quarter.
General and Administrative Expenses
General and administrative expenses are considered to be those which relate
to the direct costs of the Company which do not originate from operation of
properties or providing of services. Corporate expense represents a major part
of this category although other nonbillable expenses are also included.
The Company's general and administrative expenses for the second quarter of
1998 were 16% higher than last year due to increased incentive bonuses, which
are discretionary and directly related to Company's performance during the prior
year. These totaled $273,000 ($153,000 non-cash) in May, 1998 compared to
$220,000 ($70,000 non-cash) in May, 1997. Also, some cost increases in 1998
resulted from salary adjustments granted effective December 1, 1997 for
non-officer employees and May 1, 1998 for officers. Higher medical claims under
the Company's self-insured plan increased 1998 second quarter costs.
Reimbursement for services provided by Columbus officers and employees for
managing Resources is expected to decrease. This assumes that the new President
and Chief Executive Officer who has purchased a 4.5% equity position in
Resources as of June 30, 1998 will be making acquisitions of companies and
properties and adding staff to handle those assets over the next several months.
Notice of termination of the services contract by Resources requires only 30
days but requires a 90 day notice for EGY to completely withdraw personnel
services. When such notice is received, it is expected that Columbus' general
and administrative expense will rise commensurately since no EGY staff
reductions are presently contemplated. Reimbursement of $64,000 was equal to
that received during the second quarter of 1997 for providing those services to
Resources as more hours were required of most of Columbus' personnel during the
search for a business combination partner even though routine services provided
decreased.
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization of oil and gas assets are
calculated based upon the units of production for the period compared to proved
reserves of each successful efforts property pool. This expense is not only
directly related to the level of production, but also is dependent upon past
costs to find, develop, and recover related reserves in each of the cost pools
or fields. Depreciation and amortization of office equipment and computer
software is also included in the total charge.
Total charges for this expense item increased over 1997 and were the result
of increased production and added development expenditures in the intervening
period along with lower reserves in several of the cost pools brought on by
lower crude oil prices. The 1998 second quarter depletion rate of $4.28 per BOE
compares with the $3.75 per BOE for the like period of fiscal 1997 and $3.91 per
BOE for all of 1997. The 1998 rate is directly affected by those lower
quarter-end crude oil prices and added development although performance of some
wells did contribute to reserve quantities being reduced. The impairment of
carrying values at the end of the first quarter of several different pools
lowered the depletable basis and reduced the per barrel depletion rate in the
second quarter from the $4.91 per BOE rate of the first quarter.
Exploration Expense
In general, the exploration expense category includes the cost of
Company-wide efforts to acquire and explore new prospective areas. The
successful efforts method of accounting for oil and gas properties requires
expensing the costs of unsuccessful exploratory wells. Other exploratory charges
such as seismic and geologic costs must also be immediately expensed regardless
of whether a prospect is ultimately proved to be successful. Exploration charges
of $165,000 for 1998's second quarter were down from 1997's $318,000 and
included $122,000 of 3-D seismic costs incurred in the Froid area in Montana
while 1997's quarter included $235,000 of similar 3-D costs for adjacent
acreage. No wells are planned for any of the structures mapped on this acreage
until crude oil prices improve later this year or next. These exploration
charges not only decrease net earnings but also reduce reported GAAP cash flow
from operations even though they are discretionary expenses; however, such
charges are added back for purposes of determining DCF which is why it more
nearly tracks cash flow reported by full cost accounting companies.
Approximately $300,000 of 3-D seismic costs were originally budgeted for 1998 in
the Hay Creek area of Richland County, Montana but with crude oil prices in
disarray, this program has been deferred indefinitely. Such a postponement was
not possible in the Froid area because of lease expirations.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
Impairments
No impairment loss was necessary during second quarter 1998 even though
crude oil prices further declined from the end of the first quarter.
The non-cash impairment loss of $2,816,000 thus far in 1998 was recognized
during the first quarter with the crude oil price debacle being a major
contributor. Well performance also contributed to a reduction in reserve
quantities as well as the remaining carrying value of several successful efforts
pools when such costs suddenly exceeded the newly calculated undiscounted future
net cash flows. Certain property pools were written down to a fair value based
on an assumption that the average future crude oil price would be $18.75 per
barrel during the remaining life. A portion of these crude oil reserves is
expected to be restored when crude oil prices improve but the impairment charges
of $2,360,000 are not reversible. An additional $400,000 of impairments were
also provided for probable loss in value of undeveloped acreage holdings
(unproved properties) located primarily in Louisiana plus $56,000 expensed for
an expired lease.
Interest Expense
Interest expense varies in direct proportion to the amount of bank debt and
the level of bank interest rates. The average amount of bank debt outstanding
has been higher during 1998's second quarter than in 1997. The average bank
interest rate paid this latest quarter was 7.2% which compares to 7.1% in 1997.
Income Taxes
During the first six months of 1998, the net deferred tax liability
decreased to only $105,000 as a result of the large financial statement
impairment write-off which substantially reduced the book versus tax temporary
differences. The net liability is comprised of $223,000 current portion and
$118,000 long-term asset. A tax deduction of $39,000 from the benefit of
disqualifying disposition of incentive stock options has been added to
additional paid-in capital during 1998. The estimated increase in deferred tax
assets was $845,000 during the six months. The valuation allowance has remained
unchanged thus far in 1998. The effective tax rate for 1998 is 38%. See also
Note 3 to the consolidated financial statements for further explanation of
income taxes.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
Statement Pursuant to Safe Harbor Provision of the Private
Securities Litigation Reform Act of 1995
This report may contain certain "forward-looking statements" that have been
based on imprecise assumptions with regard to production levels, price
realizations, and expenditures for exploration and development and anticipated
results therefrom. Such statements are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed herein or
implied by such statements.
27
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Management is unaware of any asserted or unasserted claims or assessments
against the Company which would materially affect the Company's future financial
position or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Annual meeting held May 7, 1998 in Denver, Colorado for the purpose of
electing members of the board of directors. Proxies for the meeting were
solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and
there was no solicitation in opposition to management's solicitations.
All of management's nominees for three Class I directors as listed in the
proxy statement were elected with the following vote:
Shares
Shares Abstaining
Nominee Shares For Against or Withheld
------- ---------- ------- -----------
Harry A. Trueblood, Jr. 3,854,110 1,570 49,593
William H. Blount, Jr. 3,854,982 698 49,493
Donald W. Ringsby 3,854,982 698 49,593
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial data schedule
(b) Reports on Form 8-K
None
28
<PAGE>
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.
COLUMBUS ENERGY CORP.
---------------------------
(Registrant)
DATE: July 13, 1998 /s/ Harry A. Trueblood, Jr.
---------------------------------------- ---------------------------
Harry A. Trueblood, Jr.
Chairman, President and
Chief Executive Officer
(a duly authorized officer)
DATE: July 13, 1998 /s/ Ronald H. Beck
---------------------------------------- ---------------------------
Ronald H. Beck
Vice President
(Chief Accounting Officer)
29
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE CONSOLIDATED BALANCE SHEET AS OF MAY 31, 1998 AND THE CONSOLIDATED STATEMENT
OF INCOME FOR THE SIX MONTHS ENDED MAY 31, 1998.
</LEGEND>
<CIK> 0000823975
<NAME> COLUMBUS ENERGY CORP.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> MAY-31-1998
<EXCHANGE-RATE> 1
<CASH> 1385
<SECURITIES> 0
<RECEIVABLES> 2490
<ALLOWANCES> 116
<INVENTORY> 117
<CURRENT-ASSETS> 3972
<PP&E> 35956
<DEPRECIATION> 17264
<TOTAL-ASSETS> 22782
<CURRENT-LIABILITIES> 3340
<BONDS> 0
0
0
<COMMON> 915
<OTHER-SE> 15127
<TOTAL-LIABILITY-AND-EQUITY> 22782
<SALES> 5618
<TOTAL-REVENUES> 6321
<CGS> 1758
<TOTAL-COSTS> 8286
<OTHER-EXPENSES> 34
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> (2113)
<INCOME-TAX> (803)
<INCOME-CONTINUING> (1310)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1310)
<EPS-PRIMARY> (0.31)
<EPS-DILUTED> (0.31)
</TABLE>
