SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(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, 1996.
- - 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 No. 0-17267
MALLON RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO 84-1095959
(State or other jurisdiction (IRS Employer Identification No)
of incorporation or organization)
999 18th Street, Suite 1700
Denver, Colorado 80202
(Address of principal executive offices)
(303) 293-2333
(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 such shorter period of time 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 10, 1996:
8,077,722 shares of Registrant's Common Stock were outstanding;
1,100,918 shares of Registrant's Series A Preferred Stock
(convertible into 1,113,173 shares of Common Stock) were
outstanding; and
400,000 shares of Registrant's Series B Mandatorily Redeemable
Convertible Preferred Stock (convertible into 984,953 shares of
Common Stock) were outstanding
MALLON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,269,000 $ 712,000
Accounts receivable, with no
allowance for doubtful accounts:
Joint interest participants 376,000 219,000
Related parties 22,000 28,000
Oil and gas sales 1,065,000 1,101,000
Inventories 53,000 43,000
Other 143,000 152,000
Total current assets 2,928,000 2,255,000
Property and equipment:
Oil and gas properties,
under full cost method 43,751,000 43,959,000
Mining properties and equipment 6,248,000 6,686,000
Other equipment 508,000 523,000
50,507,000 51,168,000
Less accumulated depreciation,
depletion and amortization (22,085,000) (22,650,000)
28,422,000 28,518,000
Notes receivable, related parties 63,000 63,000
Other, net 222,000 102,000
Total Assets $ 31,635,000 $ 30,938,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease
obligation $ 23,000 $ 23,000
Trade accounts payable 2,309,000 1,529,000
Undistributed revenue 711,000 834,000
Drilling advances 271,000 213,000
Accrued taxes and expenses 90,000 123,000
Total current liabilities 3,404,000 2,722,000
Long-term debt 10,000,000 10,231,000
Capital lease obligation, net of
current portion 37,000 27,000
Drilling advances 315,000 315,000
Total non-current liabilities 10,352,000 10,573,000
Total liabilities 13,756,000 13,295,000
Commitments and contingencies -- --
Minority interest 2,275,000 2,275,000
Series B Mandatorily Redeemable
Convertible Preferred Stock,
$0.01 par value, 500,000 shares
authorized, 400,000 shares issued
and outstanding, liquidation
preference and mandatory redemption
of $4,000,000 3,844,000 3,854,000
Stockholders' equity:
Series A Preferred Stock, $0.01
par value, 1,467,890 shares
authorized, 1,100,918 shares
issued and outstanding, liqui-
dation preference $6,000,000 5,730,000 5,730,000
Common Stock, $0.01 par value,
25,000,000 shares authorized;
7,672,503 and 8,072,722 shares
issued and outstanding,
respectively 78,000 81,000
Additional paid-in capital 38,906,000 39,232,000
Accumulated deficit (32,954,000) (33,529,000)
Total stockholders' equity 11,760,000 11,514,000
Total Liabilities and Stockholders'
Equity $ 31,635,000 $ 30,938,000
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
MALLON RESOURCES CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1995 1996
<S> <C> <C>
Revenues:
Oil and gas sales $1,060,000 $1,357,000
Operating service revenue 47,000 42,000
Interest and other 14,000 12,000
1,121,000 1,411,000
Costs and expenses:
Oil and gas production 463,000 425,000
Mine operating expense 96,000 95,000
Depletion, depreciation and
amortization 574,000 578,000
General and administrative 544,000 506,000
Interest and other 19,000 212,000
1,696,000 1,816,000
Loss before extraordinary item (575,000) (405,000)
Extraordinary loss on early retirement
of debt -- (160,000)
Net loss (575,000) (565,000)
Dividends on preferred stock and accretion (89,000) (90,000)
Net loss available to common stockholders $(664,000) $ (655,000)
Per share:
Loss available to stockholders
before extraordinary item $ (0.09) $ (0.06)
Extraordinary loss -- (0.02)
Net loss available to common
stockholders $ (0.09) $ (0.08)
Weighted average shares outstanding 7,757,000 7,820,000
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
MALLON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (575,000) $ (565,000)
Adjustments to reconcile net loss
to net cash provided by operations:
Depletion, depreciation, and
amortization 574,000 578,000
Stock issued for compensation 12,000 64,000
Amortization of deferred revenue (561,000) --
Non-cash portion of extraordinary loss -- 160,000
Other -- (13,000)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (164,000) 115,000
Inventory and other assets (86,000) 11,000
Increase (decrease) in:
Accounts payable 806,000 (435,000)
Accrued taxes and expenses 62,000 156,000
Deferred revenues and drilling
advances (9,000) (58,000)
Net cash provided by (used in)
operating activities 59,000 13,000
Cash flows from investing activity -
Additions to property and equipment (1,119,000) (661,000)
Cash flows from financing activities:
Proceeds from long-term debt 1,375,000 231,000
Payment of loan origination fees -- (50,000)
Payment of capital lease obligation -- (10,000)
Payment of preferred dividends (79,000) (80,000)
Net cash provided by financing
activities 1,296,000 91,000
Net increase (decrease) in cash and
cash equivalents 236,000 (557,000)
Cash and cash equivalents, beginning
of period 88,000 1,269,000
Cash and cash equivalents, end of period $ 324,000 $ 712,000
Supplemental cash flow information:
Cash paid for interest $ 18,000 $ 150,000
Cash paid for income taxes $ - $ --
Non-cash transactions:
Issuance of common stock in exchange for:
Property and equipment $ 112,000 $ --
Loan origination fee $ 112,000 $ --
Consultants' accounts payable $ -- $ 345,000
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
MALLON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. GENERAL
Mallon Resources Corporation (the "Company") was
incorporated in Colorado in 1988, in connection with the
consolidation of Mallon Oil Company ("Mallon Oil"), Laguna Gold
Company ("Laguna Gold") and 19 limited partnerships that they
sponsored. Mallon Oil continues as a wholly owned subsidiary of
the Company. As of March 31, 1996, the Company owned an 80%
equity interest in Laguna Gold. All of the Company's business
activities are conducted through these two subsidiaries.
The accompanying interim consolidated financial statements
have been prepared in accordance with the instructions for Form
10-Q. The Company believes all adjustments (consisting of normal
recurring adjustments) necessary for a fair statement have been
included. These interim statements should be read in conjunction
with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
Note 2. NOTES PAYABLE AND LONG-TERM DEBT
On March 20, 1996, the Company replaced its existing line of
credit facility with a $35,000,000 revolving line of credit
facility from another bank (the "Facility"). The significant
terms of the Facility are as follows:
- - Initial borrowing base under the Facility is $10,500,000,
subject to redetermination every six months beginning June 30,
1996;
- - Interest rate on the Facility is LIBOR plus 2.5%;
- - The Facility requires a reduction in the commitment of
$130,000 per month beginning on June 30, 1996, subject to the
initial borrowing base redetermination;
- - The Facility provides for an additional $2,000,000 advance
line of credit to be used solely for a development drilling
program approved by the lender; this advance line is repayable
through 100% of the future net revenues generated by successful
wells under the drilling program. In addition, if borrowing base
levels increase under the Facility, such amounts must be borrowed
and used to prepay amounts outstanding under the advance line.
In any event, any advance line balance must be repaid by
September 30, 1997;
- - The Facility is collateralized by substantially all of the
Company's oil and gas properties;
- - The Company is obligated to maintain certain financial and
other covenants including a minimum current ratio of 1 to 1,
minimum net equity and a debt coverage ratio; and
- - The Facility expires on March 31, 1999.
The proceeds from the Facility were used to retire the
Company's existing line of credit and related accrued interest.
The remaining balance of unamortized loan origination fees
($160,000) on the original line of credit was written off and is
reflected as extraordinary loss on early debt retirement in the
consolidated statement of operations. As of March 31, 1996, the
total amount outstanding under the Facility was $10,231,000.
As of March 31, 1996, the Company was not in compliance with
all of the applicable loan covenants. Subsequent to March 31,
1996, the lender waived compliance with these covenants. The
Company and the bank are in the process of revising certain
covenants for future periods. The line of credit agreement
provides that a deviation from a covenant requirement does not
constitute an event of default if the deviation is waived by the
lender. Had the lender not waived compliance with this covenant
requirement, it would have had the right to declare the Company
in default of the agreement. Because the covenant waiver was
received and management believes that it will be able to meet the
covenant requirement at June 30, 1996, the line of credit has
been classified as a noncurrent liability.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
First Quarter 1996 -- Summary of Results
The Company's loss before extraordinary item for first
quarter 1996 improved by $170,000 or 30% over first quarter 1995.
This improvement is the result of increased oil sales at
increased prices, reduced oil and gas production expenses, and a
decrease in general and administrative expenses. However, lower
gas sales and an increase in interest expense offset these gains,
in part. Further, mining expenses continued to be high due to
Laguna Gold's increased activities.
Liquidity, Capital Resources and Capital Expenditures
At March 31, 1996, the Company's working capital deficit
improved to $371,000 compared to the working capital deficit of
$467,000 at December 31, 1995. The slight increase in working
capital was primarily the result of a reduction in accounts
payable of $780,000, including the issuance of 247,000 shares of
the Company's common stock in exchange for satisfaction of
accounts payable balances for certain consultants of
approximately $345,000. This decrease was offset by a decrease
in accounts receivable, inventory and other assets of $116,000
and an increase in accrued expenses, undistributed revenue and
drilling advances of $98,000. Additionally, cash decreased by
$557,000 primarily as a result of expenditures incurred in the
Company's mining activities.
On March 20, 1996, the Company closed on a $35,000,000 line
of credit (the Facility). By (i) lowering borrowing costs, (ii)
eliminating the Company's production payment delivery
obligations, (iii) providing a three-month period of "interest-
only" debt service obligations, and (iv) providing a $2 million
"over-advance" facility to be used specifically for an approved
drilling program, these financing transactions are expected to
enhance the Company's working capital, cash flows and overall
financial condition. The significant terms of the Facility are
as follows:
- - The initial borrowing base is $10,500,000, subject to
redetermination every six months, beginning June 30, 1996;
- - The interest rate is the London Interbank Offered Rate
(LIBOR), plus 2.5%;
- - The Facility requires a reduction in the commitment of
$130,000 per month beginning on June 30, 1996, subject to the
initial borrowing base redetermination;
- - The Facility provides for an additional $2,000,000 advance
line of credit to be used solely for a development drilling
program approved by the lender; this advance line is repayable
through 100% of the future net revenues generated by successful
wells under the drilling program. In addition, if borrowing base
levels increase under the Facility, such amounts must be borrowed
and used to prepay amounts outstanding under the advance line.
In any event, any advance line balance must be repaid by
September 30, 1997;
- - The Facility is collateralized by substantially all of the
Company's oil and gas properties;
- - The Company is obligated to maintain certain financial and
other covenants including a minimum current ratio of 1 to 1,
minimum net equity requirement, and a debt coverage ratio; and
- - The Facility expires on March 31, 1999.
As of March 31, 1996, the Company was not in compliance with
all of the applicable loan covenants. Subsequent to March 31,
1996, the lender waived compliance with these covenants. The
Company and the bank are in the process of revising certain
covenants for future periods. The line of credit agreement
provides that a deviation from a covenant requirement does not
constitute an event of default if the deviation is waived by the
lender. Had the lender not waived compliance with this covenant
requirement, it would have had the right to declare the Company
in default of the agreement. Because the covenant waiver was
received and management believes that it will be able to meet the
covenant requirement at June 30, 1996, the line of credit has
been classified as a noncurrent liability.
The key to the long-term resolution of the Company's working
capital situation is its oil and gas drilling activities. For
1996, the Company has budgeted the drilling of one gross well
(approximately .5 net) per month. Its first well in the 1996
program was spudded on May 9, 1996. The Company has permitted,
or is in the process of permitting, an additional 15 development
locations for drilling. It will then evaluate further drilling
based on the initial results it obtains. Drilling operations
inevitably have an initial negative impact on the cash and
working capital positions of the Company as up-front drilling
expenditures are incurred. On a longer term basis - as reserves
are produced - these drilling efforts are designed to have net
positive effects on cash flow and capital.
Management believes that the ultimate result of its drilling
activities, which are primarily aimed at oil production, will be
to increase cash flow, thereby reducing the Company's working
capital deficit and increasing liquidity. However, drilling
activities are subject to numerous risks, including the risk that
no commercially productive oil or gas reservoirs will be
encountered. Also, sales from successfully drilled wells are
affected by prevailing prices for oil and gas. Hydrocarbon
prices can be extremely volatile and can substantially affect the
Company's revenues, cash flows and working capital.
There can be no assurance that the proceeds from the line of
credit and drilling activities will eliminate the working capital
deficit. If they do not, the Company will take other measures to
improve its working capital position. While it has no current
intention to do so, management could reduce expenses through
staff layoffs and other means of expense reduction, sell non-core
properties, or obtain additional sources of capital, if
available.
Additional drilling, and any acquisitions, would require
additional capital. Beyond the Facility, the source of any such
capital is not yet known, nor are any acquisitions arranged. If
an acquisition is contracted, the Company would expect to finance
it with a combination of debt and equity capital, although the
details of such financing cannot be predicted at this time.
In addition to its drilling programs, the Company, from
time-to-time, farms out non-core properties or properties with a
higher risk profile than the Company is willing to accept. One
such farmout agreement in 1995 resulted in a significant gas
discovery which began production in August 1995. Another well
has been drilled and is being tested for completion as of
March 31, 1996.
The Company is also evaluating alternatives to realize the
value of its mining properties. During 1995, Laguna sold 25,000
shares of its Series A Convertible Preferred Stock (the "Laguna
Series A Stock"), representing a 20% equity stake in Laguna. The
proceeds from this offering are being used to fund the
development of Laguna, including additional core drilling in
Costa Rica in preparation of a pre-feasibility study to expand
mineable reserves on the Rio Chiquito anomaly located on Laguna's
Costa Rica concessions, and preparation of a pre-feasibility
study for commercial development of Rio Chiquito in anticipation
of making an initial public offering of Laguna stock. Proceeds
are also being used to fund day-to-day operations of Laguna.
Each share of Laguna Series A Stock includes 10 detachable
warrants; each warrant represents the right to purchase one share
of Mallon's common stock at $2.50 per share. The warrants expire
on February 15, 2000. Each share of Laguna Series A Stock can be
converted into 144 shares of Laguna common stock at the option of
the stockholder, or automatically in the event of an offering of
the common stock of Laguna that meets certain criteria.
On March 22, 1996, Laguna signed a letter of intent with a
Canadian underwriter relating to the sale of a minimum of
4,000,000 and a maximum of 5,000,000 units at a price of $1.00
per unit. Each unit will include one share of common stock and
one warrant to purchase one share of common stock, exercisable at
$1.50 per share for an 18-month period. Laguna also agreed to
grant the underwriter an option to purchase an additional 500,000
shares of common stock, exercisable at $1.00, also for an 18-
month period following the issuance of the common stock. That
transaction has not yet closed as of May 10, 1996.
The Company used net cash in operating activities of $37,000
in first quarter 1996 compared to generating $59,000 in first
quarter 1995. Included in these amounts are net losses of
$565,000 and $575,000, respectively. Non cash items included
depreciation, depletion and amortization of $578,000 and
$574,000, respectively. Amortization of deferred revenue of
$561,000 in 1995 reduced cash flow from operating activities.
Other non-cash items were $211,000 and $12,000, in 1996 and 1995,
respectively. Changes in operating assets and liabilities
reduced cash flows used in operating activities for 1996 by
$261,000, primarily due to the reduction in accounts payable and
accrued taxes and expenses of $279,000. In 1995, changes in
operating assets and liabilities increased cash flows provided by
operating activities by $609,000, primarily as a result of an
increase in accounts payable and accrued taxes and expenses of
$868,000, less an increase in accounts receivable of $164,000.
Cash flows used in investing activities related to property
and equipment additions were $661,000 and $1,119,000 in 1996 and
1995, respectively. In 1996, the additions were primarily
related to the Company's mining property and equipment while in
1995, the additions were due primarily to oil and gas drilling
operations.
Financing activities netted cash flows of $141,000 in 1996,
compared to $1,296,000 in 1995. Borrowings of $231,000 and
$1,375,000 under the lines of credit were the significant
financing activities during first quarter 1996 and 1995,
respectively. Dividends on the Series B Mandatorily Redeemable
Convertible Preferred Stock ("Series B Stock") totaled
approximately $80,000 in both years. Mandatory redemption of
this stock begins on April 1, 1997, when 20% of the total
outstanding shares will be redeemed. An additional 20% per year
will be redeemed on each April 1 thereafter until all $4,000,000
of the Series B Stock has been redeemed.
The above factors led to a decrease in available cash of
$557,000 in 1996 compared to an increase of $236,000 in 1995.
Results of Operations
The following table summarizes the results of operations
from oil and gas activities for the quarters ended March 31:
<TABLE>
<CAPTION>
1995* 1996
<S> <S> <S>
Gas revenues $467,000 $590,000
Gas production (mcf) 360,000 322,000
Average price per mcf $1.30 $ 1.83
Oil revenues $593,000 $767,000
Oil production (bbl) 37,000 45,000
Average price per bbl $ 16.03 $17.04
Production and operating
costs per BOE $ 4.77 $ 4.29
Depreciation, depletion and
amortization per BOE $ 5.91 $5.84
</TABLE>
* Does include 218,000 mcf and 10,000 bbls delivered to
Enron pursuant to the terms of the volumetric production payment
agreement, which was retired in August 1995.
Three Months Ended March 31, 1996 Compared to March 31, 1995
Oil and gas sales increased to $1,357,000 from $1,060,000 in
1995, representing a $297,000 (or 28%) increase. Oil production
increased by 8,000 barrels (or 22%) due to the Company's
successful drilling operations in 1995. In 1995, 10,000 barrels
were delivered pursuant to the terms of the Company's volumetric
production payment agreement which was terminated in August 1995.
Average oil prices also increased from $16.03 per barrel in 1995
to $17.04 per barrel 1996, a $1.01 (or 6%) increase.
Gas production decreased by 38,000 mcf (or 11%) in first
quarter 1996 as compared to first quarter 1995. Natural gas
production delivered to meet the demand of the volumetric
production payment was 218,000 mcf in 1995, thereby limiting the
amount of cash sales available to the Company. Average gas
prices increased in 1996 by $.53 per mcf (or 41%). The increase
in gas prices improves the Company's potential to generate cash
flows.
Lease operating expense per equivalent barrel averaged $4.29
in 1996, compared to $4.77 in 1995. The decrease of $.48 (or
10%) is due primarily to operational efficiencies employed by the
Company's field personnel.
There were no sales of gold and silver in 1996 or 1995, and
no sales are expected in the immediate future. Direct costs
related to the mining operation were $95,000 in 1996 and $96,000
in 1995.
Depreciation, depletion and amortization decreased to $5.84
per barrel of oil equivalent for 1996, down slightly from $5.91
in 1995, a $0.07 (or 1%) decrease.
Interest and other expense of $212,000 was up significantly
in 1996. The increase is due to the Company's lines of credit,
which incurred interest at approximately 8.5%.
Total general and administrative costs were $506,000 in
1996, a decrease of $38,000 (or 7%) over the $544,000 for 1995
because of reductions in legal expenses.
The factors discussed above combined to result in a net loss
before extraordinary items of $405,000 for 1996, compared to a
net loss of $575,000 for 1995. This represents a $170,000 (or
30%) increase in the Company's profitability.
Miscellaneous
The Company's oil and gas operations are significantly
affected by certain provisions of the Code applicable to the oil
and gas industry. Current law permits the Company to deduct
currently, rather than capitalize, intangible drilling and
development costs incurred or borne by it. The Company, as an
independent producer, is also entitled to a deduction for
percentage depletion with respect to the first 1,000 barrels per
day of domestic crude oil (and/or equivalent units of domestic
natural gas) produced (if such percentage depletion exceeds cost
depletion). Generally, this deduction is 15% of gross income
from an oil and gas property, without reference to the taxpayer's
basis in the property. The percentage depletion deduction may
not exceed 100% of the taxable income from a given property.
Further, percentage depletion is limited in the aggregate to 65%
of the Company's taxable income. Any depletion disallowed under
the 65% limitation, however, may be carried over indefinitely.
At December 31, 1995, the Company had a NOL carryforward of
approximately $13,400,000, which will begin to expire in 2005.
The amount and availability of an NOL carryforward is subject to
a variety of interpretations and restrictions. Under a provision
of the Code, a corporation's ability to utilize an NOL
carryforward to offset income following an "ownership change" is
limited. If an ownership change occurs, the ability of the
Company to use its NOL carryforward will be limited so that a
portion of the Company's NOL carryforward will not be available
to offset the Company's taxable income in a particular year.
Management is not aware of any such ownership change.
The Company has in the past and may in the future engage in
hedging transactions (transactions in which a portion of the
Company's future oil and/or gas production is sold into the
futures market) when management believes it is in the Company's
interest to do so. Such transactions "lock in" prices, thus
protecting against future price downturns, but they also limit
the Company's ability to benefit from future price increases.
Inflation has not historically had a material impact on the
Company's financial statements, and management does not believe
that the Company will be materially more or less sensitive to the
effects of inflation than other companies in the oil and gas
business.
When evaluating the Company, its operations, or its
expectations, the reader should bear in mind that the Company and
its operations are subject to numerous risks and uncertainties.
Among these are risks related to the oil and gas and the mining
businesses (including operating risks and hazards and the
plethora of regulations imposed thereon), risks and uncertainties
related to the volatility of the prices of oil and gas and
minerals, uncertainties related to the estimation of reserves of
oil and gas and minerals and the value of such reserves, the
effects of competition and extensive environmental regulation,
the uncertainties related to foreign operations, and many other
factors, many of which are necessarily beyond the Company's
control.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
During first quarter 1996, the Company filed a Periodic
Report of Form 8-K dated March 20, 1996. The Report related to
an "Item 5. Other Events" matter.
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.
REGISTRANT:
MALLON RESOURCES CORPORATION
Date: May 13, 1996 By: /s/ Roy K. Ross
Roy K. Ross
Executive Vice President
Date: May 13, 1996 By: /s/ Duane C. Knight, Jr.
Duane C. Knight, Jr.
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 712
<SECURITIES> 0
<RECEIVABLES> 1,348
<ALLOWANCES> 0
<INVENTORY> 43
<CURRENT-ASSETS> 2,255
<PP&E> 51,168
<DEPRECIATION> 22,650
<TOTAL-ASSETS> 30,938
<CURRENT-LIABILITIES> 2,722
<BONDS> 10,573
<COMMON> 81
3,854
5,730
<OTHER-SE> 5,703
<TOTAL-LIABILITY-AND-EQUITY> 30,938
<SALES> 1,357
<TOTAL-REVENUES> 1,411
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,604
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212
<INCOME-PRETAX> (405)
<INCOME-TAX> 0
<INCOME-CONTINUING> (405)
<DISCONTINUED> 0
<EXTRAORDINARY> (160)
<CHANGES> 0
<NET-INCOME> (565)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
