SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-8157
THE RESERVE PETROLEUM COMPANY
(Exact name of small business issuer as specified in its charter)
Delaware 73-0237060
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6801 N. Broadway, Suite 300, Oklahoma City OK 73116-9092
(Address of principal executive offices)
(405) 848-7551
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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 ___
As of May 9, 1995, 169,684 shares of the Registrant's $.50 par value
common stock were outstanding.
Transitional Small Business Disclosure Format (check one) Yes___ No X
<PAGE>
<TABLE>
PART 1
FINANCIAL INFORMATION
THE RESERVE PETROLEUM COMPANY
BALANCE SHEETS
(Unaudited)
ASSETS
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 96,980 $ 112,564
Available for Sale Securities 2,645,278 2,715,502
Trading Securities 153,778 87,574
Receivables 137,762 163,729
Refundable Income Taxes 5,449 1,449
Prepayments and Other 11,356 6,042
---------- ----------
3,050,603 3,086,860
---------- ----------
Investments
Partnership and Limited
Liability Companies 456,369 459,251
Other 11,430 11,430
---------- ----------
467,799 470,681
---------- ----------
Property, Land & Equipment
Oil and Gas Properties,
at Cost Based on the Successful
Efforts Methods of Accounting
Unproved Properties 425,338 444,831
Proved Properties 4,633,470 4,977,386
---------- ----------
5,058,808 5,422,217
Less - Valuation Allowance and
Accumulated Depreciation, Depletion
& Amortization 3,169,813 3,580,350
---------- ----------
1,888,995 1,841,867
---------- ----------
Other Property & Equipment, at Cost 329,431 329,431
Less - Accumulated Depreciation,
Depletion & Amortization 175,864 172,634
---------- ----------
153,567 156,797
---------- ----------
2,042,562 1,998,664
---------- ----------
Other Assets 250,916 241,881
---------- ----------
$5,811,880 $5,798,086
========== ==========
(Continued)
<FN>
See Accompanying Notes
</TABLE>
<PAGE>
<TABLE>
THE RESERVE PETROLEUM COMPANY
BALANCE SHEETS
(Concluded)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
Current Liabilities:
Accounts Payable $ 47,469 $ 51,676
Other Current Liabilities
Gas Balancing Commitments 57,858 57,858
Dividends Payable, Current Portion 10,000 10,000
---------- ----------
Dividends Payable 112,822 115,066
---------- ----------
Deferred Federal Income Taxes 129,307 119,329
---------- ----------
Stockholders' Equity
Common Stock 92,368 92,368
Additional Paid-in Capital 65,000 65,000
Retained Earnings 5,444,474 5,430,847
---------- ----------
5,601,842 5,588,215
Less: Treasury Stock, at Cost 147,418 144,058
---------- ----------
5,454,424 5,444,157
---------- ----------
$5,811,880 $5,798,086
========== ==========
<FN>
See Accompanying Notes
</TABLE>
<PAGE>
<TABLE>
THE RESERVE PETROLEUM COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
MARCH 31,
1995 1994
<S> <C> <C>
Operating Revenues:
Oil & Gas Sales $ 252,362 $ 307,830
Lease Bonuses & Rentals ---- 80
Prospect Sales 18,000 ----
---------- ----------
270,362 307,910
---------- ----------
Operating Costs & Expenses:
Production 69,080 88,099
Exploration & Development 21,128 47,525
Depreciation, Depletion, Amortization
and Valuation Provisions 54,602 72,925
General, Administrative and Other 153,251 161,700
---------- ----------
298,061 370,249
---------- ----------
Income (Loss) from Operations (27,699) (62,339)
Other Income (Loss), Net 44,115 (22,496)
---------- ----------
Income (Loss) Before Income Taxes 16,416 (84,835)
Provision for (Benefit From) Income Taxes 2,789 (17,828)
----------- ----------
$ 13,627 $ (67,007)
=========== ==========
Per Share Data
Net Income (Loss) - $ .08 $(.39)
=========== ==========
Weighted Average Shares Outstanding 169,847 170,291
=========== ==========
<FN>
See Accompanying Notes
</TABLE>
<PAGE>
<TABLE>
THE RESERVE PETROLEUM COMPANY
STATEMENTS OF CASH FLOW
Increase (Decrease) in Cash and Cash Equivalents
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Net Cash Provided by Operating Activities $ 16,172 $ 77,899
---------- ----------
Cash Flows from Investing Activities:
Sale of Available for Sale Securities 200,617 343,819
Purchase of Available for Sale Securities (130,392) (27,670)
Property Dispositions 10,057 27,559
Property Additions (106,434) (278,438)
Contributions to Limited Partnership ---- (19,800)
---------- ----------
Net Cash Applied to Investing Activities (26,152) 45,470
---------- ----------
Cash Flows from Financing Activities:
Decrease in Dividends Payable (2,244) (388)
Purchase of Treasury Stock (3,360) (473)
---------- ----------
Cash Applied to Financing Activities (5,604) (861)
---------- ----------
Net Change in Cash and Cash Equivalents (15,584) 122,508
Cash and Cash Equivalents, Beginning of Period 112,564 98,553
---------- ----------
Cash and Cash Equivalents, End of Period $ 96,980 $ 221,061
========== ==========
Supplemental Disclosures of Cash Flow
Information,Cash Paid During the Periods for:
Interest $ 3,752 $ 28 28
Income Taxes $ 4,000 $ ---
<FN>
See Accompanying Notes
</TABLE>
<PAGE>
THE RESERVE PETROLEUM COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 1995
(Unaudited)
Note 1 - ADJUSTMENTS
In the opinion of Management, the accompanying financial statements
reflect all adjustments which are necessary for a fair statement of
the results of the interim periods presented.
Note 2 -MATERIAL CONTINGENCY
In August 1993, the Company filed an action in the District Court of
Leon County, Texas to quiet title to its 12/32nd interest in
approximately 245 mineral acres associated with two producing oil and
gas wells completed in 1988. The Company claims title through deeds
recorded in 1932; the defendants claim title under a deed nine years
prior to the Company's deeds, but not recorded until seven years
after the Company's deeds were recorded. Approximately $800,000 of
proceeds from oil and gas sales were held in suspense by the unit
operator at March 31, 1995, and have not been recorded as revenue by
the Company. The Company has expended $415,000 in drilling,
completion and operating costs for these wells, of which $242,000 was
included in the Company's net investment in oil and gas properties at
March 31, 1995. If the Company is successful in quieting title to
its mineral interests in this litigation and recovers the suspended
oil and gas proceeds, management believes the outcome will have a
material favorable effect on the Company and its financial condition.
If the Company is unsuccessful in this litigation, management
believes that such outcome will not have a material adverse effect on
the Company's financial condition.
<PAGE>
THE RESERVE PETROLEUM COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1995
This discussion and analysis of financial condition and results of
operations should be read with reference to a similar discussion in
the Company's December 31, 1994, Form 10-K filed with the Securities
and Exchange Commission, as well as the condensed financial statements
included in this Form 10-QSB.
1. Liquidity and Capital Resources
The Company's net working capital at March 31, 1995, was $3,050,603
an amount which, along with the cash flow from operations, is more
than adequate to fund all currently budgeted investing and financing
activities. Management is unaware of any material trends, demands,
commitments, events or uncertainties which would impact liquidity and
capital resources to the extent that the discussion presented in Form
10-K for December 31, 1994, would not be representative of the
Company's current position.
2. Material Changes in Results of Operations Quarter Ended March 31, 1995,
Compared with Quarter Ended March 31, 1994
Operating Revenues. A $55,468 decrease in oil and gas sales was
partially offset by an increase in prospect sales of $18,000 resulting
in a decrease in operating revenues of $37,548 (12%). Oil and gas
sales declined 18% to $252,362 in 1995 from $307,830 in 1994.
Revenue from oil sales was $108,172 in 1995, a reduction of $13,026
(11%) from $121,198 in 1994. An increase in the average price per
barrel of $2.75 to $15.79 was more than offset by a reduction in
volume to 6,851 barrels in 1995 from 9,291 barrels in 1994, a decline
of 26%. For the most part, the volume decline was the result of
decreased production from two wells in their initial flush production
phase in the first quarter of 1994.
Revenue from gas sales was $135,996 in 1995, a $49,604 (27%) decrease
from $185,600 in 1994. The decrease was the result of a decline in
both price and volume. The average price per thousand cubic feet
(MCF) was $1.62 in 1995 as compared to $2.00 in 1994, a decrease of
$.38 per MCF. The Company sold 84,107 MCF of gas in 1995 as compared
to 92,982 MCF in 1994, a decrease of 8,875 MCF, or 9.5%. A
significant factor contributing to the decrease in both the price and
volume of gas sales was the expiration in November, 1994, of a gas
contract with a price in excess of $4.00 per MCF. To replace the
expired contract the Company entered into a tailgate gas contract with
another buyer at a price substantially below the old contract price.
Also, the new buyer did not start taking the gas until late in the
first quarter of 1995.
Prospect sales are not expected to be a significant revenue producer
for the Company.
Operating Costs and Expenses. Production cost declined $19,019 (22%)
to $69,080. A major cause was reduced lease operating expense of
$15,650, a 24% reduction to $50,080 in 1995. A significant factor in
reducing lease operating expense was the April, 1994 sale of marginal
producing leaseholds with high operating costs. Also, gross
production tax declined $3,840 (20%) to $15,083 as a result of reduced
revenue from oil and gas sales.
Depreciation, depletion, amortization and valuation provisions
totaled $54,602 in 1995, a decrease of $18,323 (25%) from 1994. For
the most part, the decrease was the result of unit of production
depreciation of oil and gas lease and well equipment and intangible
development costs. Such depreciation was $35,800 in 1995 as compared
to $53,905 in 1994, a decrease of $18,105 or 34%. A major contributor
to the decrease was the 1994 rapid depreciation of wells with initial
flush production and marginal wells which were fully reserved in 1994.
Other Income (Loss) net. This line item increased $66,611 to net
income of $44,115 in 1995 from a net loss of $22,496 in 1994. Gain on
asset sales increased $25,120 to income of $9,532 in 1995 from a loss
of $15,588 in 1994, mostly because of the sale of a wrecked vehicle in
1994 for a loss of $18,600. Also, gain from trading securities
transactions increased $25,881 and interest income increased $12,852.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27. Financial Data Schedule.
(b) No reports on Form 8-K were required to be filed by the
Registrant for the three months ended March 31, 1995.
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 thereto duly authorized.
THE RESERVE PETROLEUM COMPANY
(Registrant)
DATE: MAY 12, 1995 MASON MCLAIN
Mason McLain,
President
DATE: MAY 12, 1995 JERRY L. CROW
Jerry L. Crow
Principal Financial and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM FORM 10-QSB FOR THE QUARTERLY PERIOD
ENDING MARCH 31,1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<PERIOD-TYPE> 3-MOS
<CASH> 96
<SECURITIES> 2,799
<RECEIVABLES> 137
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,050
<PP&E> 5,388
<DEPRECIATION> 3,345
<TOTAL-ASSETS> 5,811
<CURRENT-LIABILITIES> 115
<BONDS> 0
<COMMON> 92
0
0
<OTHER-SE> 5,362
<TOTAL-LIABILITY-AND-EQUITY> 5,811
<SALES> 252
<TOTAL-REVENUES> 270
<CGS> 0
<TOTAL-COSTS> 69
<OTHER-EXPENSES> 75
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16
<INCOME-TAX> 2
<INCOME-CONTINUING> 13
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
