SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of The Securities
Act of 1934
Date of Report (date of earliest event reported): March 16, 1998
Mallon Resources Corporation
(exact name of registrant as specified in its charter)
Colorado 0-17267 84-1095959
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
999 18th Street, Suite 1700, Denver, Colorado 80202
(address of principal executive offices) (zip code)
Registrant's telephone number including area code: (303) 293-2333
not applicable
(former name or former address, if changed since last report)
Item 5. Other Events
Mallon Resources Corporation (the "Company") issued the following
press release, dated March 16, 1998, the text of which follows:
Denver, Colorado -- Mallon Resources Corporation (Nasdaq:
"MLRC") today reported that in 1997 it achieved record levels of
oil and gas reserves, production, revenues and cash flow.
Average daily production for all of 1997 was 1,611 BOE, a 52%
increase over 1996's average daily production of 1,060 BOE. At
the end of 1997, Mallon was producing approximately 3,000 BOE per
day, up from the approximately 1,000 BOE per day it was producing
at the start of the year. Mallon's average daily production is
currently approximately 3,800 BOE per day. During 1997, Mallon
drilled 26 wells and recompleted 22 wells, compared to a total of
four drilled and recompleted wells during 1996. Mallon's oil and
gas reserves at December 31, 1997, were 9.7 million barrels of
oil equivalent (mmboe), a 52% increase over the 6.4 mmboe
reported at year-end 1996. Natural gas accounted for 86% of year
end reserves. For 1998, Mallon has a $24.7 million capital
budget, compared to $15.5 million of actual capital expenditures
in 1997. Mallon plans to drill and recomplete more than 60 wells
during 1998. At the date of this News Release, Mallon has
drilled or recompleted 18 wells during first quarter 1998, and
currently has two drill rigs in operation.
Mallon's financial results were again unfavorably impacted
by its interest in Laguna Gold Company. Mallon previously held
approximately 56% of the common stock of Laguna, a junior gold
mining company in the pre-production stage. In fourth quarter
1997, Mallon contributed shares of its Laguna common stock to
induce a new management team to join Laguna, and Mallon now owns
approximately 49% of Laguna's common stock. Also in 1997, Mallon
reduced the carrying value of its investment in Laguna to zero,
due primarily to Laguna's impairment of its mining assets because
of continued depressed gold prices. As a result of this write-
down, after 1997, Laguna's results will no longer negatively
impact Mallon's financial results.
Including $3,634,000 of Laguna related losses, Mallon
reported a net loss for 1997 of $3,704,000 on revenues of
$8,651,000, compared to a net loss for 1996 of $1,837,000 on
revenues of $6,366,000. The net loss attributable to common
shareholders for 1997 was $4,292,000 ($0.92 per share) compared
to net income attributable to common shareholders for 1996 of
$1,530,000 (loss of $0.88 per share - see Note B). Total
revenues for 1997 were up by $2,285,000 (36%) over 1996. Mallon
also reported a net loss for fourth quarter 1997 of $2,987,000 on
revenues of $2,798,000, compared to a net loss for fourth quarter
1996 of $519,000 on revenues of $1,837,000. The net loss
attributable to common shareholders for fourth quarter 1997 was
$3,017,000 ($0.60 per share) compared to net income attributable
to common shareholders for fourth quarter 1996 of $3,128,000
(loss of $0.16 per share - see Note B). Operating cash flow for
1997 was $2,802,000 ($0.60 per share) compared to $460,000 ($0.18
per share) for 1996.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands, except per unit data)
<TABLE>
<CAPTION>
For the Three For the
Months Ended Year Ended
___December 31,__ December 31,___
1997 1996 1997 1996
<C> <S> <S> <S> <S>
Selected Results
Revenues $ 2,798 $1,837 $ 8,651 $ 6,366
Costs and expenses 3,017 2,529 9,111 8,309
Net loss (2,987)(A) (519) (3,704)(A) (1,837)
Net income (loss) attributable to
common shareholders (3,017)(A) 3,128 (B) (4,292)(A) 1,530 (B)
Net loss per share attributable to
common shareholders $ (0.60)(A) $(0.16)(B) $ (0.92)(A) $ (0.88)(B)
EBITDA (C) (1,433)(A) 311 56 (A) 1,520
EBITDA per share $ (0.29)(A) $ 0.08 $ 0.01 (A) $ 0.61
Cash flow (D) 1,070 45 2,802 460
Cash flow per share $ 0.21 $ 0.01 $ 0.60 $ 0.18
Weighted average shares outstanding 4,995 3,945 4,682 2,512
Other Operating Data
Net Production:
Oil (Mbbls) 65 39 196 174
Gas (Mmcf) 797 352 2,350 1,286
MBOE 198 98 588 388
Average realized sales price
Oil ($/Bbl) $17.60 $20.82 $19.31 $18.05
Gas ($/Mcf) $2.05 $2.68 $2.04 $2.11
BOE ($/BOE) $14.02 $17.92 $14.60 $15.09
</TABLE>
(A) At December 31, 1997, Mallon reduced the carrying value of
its investment in Laguna Gold Company to zero, due primarily to
Laguna's write-down of its mining assets because of continued
depressed gold prices. After 1997, Laguna's financial results
will no longer negatively impact Mallon's financial results. The
effect of all Laguna-related transactions on Mallon's earnings
and EBITDA for 1997 is as follows:
<TABLE>
<CAPTION>
For the Three
Months Ended For the Year Ended
December 31, 1997 December 31, 1997
Earnings EBITDA Earnings EBITDA
<C> <S> <S> <S> <S>
Total Laguna-related loss $(3,158) $(2,808) $(3,634) $(3,284)
Total Laguna-related loss
per common share $ (0.63) $ (0.56) $ (0.78) $ (0.70)
</TABLE>
(B) In fourth quarter 1996, Mallon recognized a gain on the
redemption of its Series A Convertible Preferred Stock (the
"Series A Stock") resulting in additional net income attributable
to common shareholders of $3,743,000. The Series A Stock, which
was a common stock equivalent, was included in the 1996 per share
calculation as if converted. However, because the Series A Stock
was reflected as if converted, the gain on redemption was
deducted from net income attributable to common shareholders for
purposes of calculating per share data, resulting in a net loss
attributable to common shareholders for fourth quarter 1996 of
$615,000, or $0.16 per share, and a net loss attributable to
common shareholders for the year ended December 31, 1996 of
$2,213,000, or $0.88 per share.
(C) EBITDA is income before income taxes, interest expense,
depreciation, depletion and amortization, impairment, and
extraordinary loss.
(D) Cash flow from operating activities before working capital
adjustments.
Mallon Resources Corporation is a Denver, Colorado based oil and
gas exploration and production company operating primarily in the
San Juan and Delaware Basins of New Mexico. Mallon's common
stock is quoted on Nasdaq under the symbol "MLRC".
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 hereunto duly authorized.
Mallon Resources Corporation
March 23, 1998 By: __/s/ Roy K. Ross____________________
Roy K. Ross, Executive Vice President
