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): May 14, 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 releases; the text of each follows:
Denver, Colorado - May 14, 1998 -- Mallon Resources Corporation
(Nasdaq: "MLRC") today reported that in first quarter 1998 its
production, revenues and cash flow were all at all-time highs.
Average daily production for first quarter 1998 was 2,767 BOE, a
29% increase over fourth quarter 1997's average daily production of
2,152 BOE and a 136% increase over first quarter 1997's average
daily production of 1,172 BOE. During first quarter 1998, Mallon
drilled and completed 15 wells and recompleted 6 wells, compared to
a total during first quarter 1997 of 7 wells drilled and 4 wells
recompleted. Mallon currently has a $25.3 million capital budget
for 1998, and plans to drill and recomplete more than 60 wells
during the year.
Mallon reported net income for first quarter 1998 of $44,000 on
revenues of $3,069,000, compared to a net loss for first quarter
1997 of $230,000 on revenues of $1,997,000. The net income
attributable to common shareholders for first quarter 1998 was
$14,000 ($0.00 per diluted share) compared to a net loss
attributable to common shareholders for first quarter 1997 of
$325,000 (loss of $0.07 per diluted share). Total revenues for
first quarter 1998 were up by $293,000 (11%) over fourth quarter
1997 and by $1,097,000 (56%) over first quarter 1997. The average
oil price realized per barrel for first quarter 1998 was $14.26, a
19% decrease from the fourth quarter 1997 average of $17.60, and a
37% decrease from the first quarter 1997 average of $22.59. The
average gas price realized per Mcf for first quarter 1998 was
$1.93, a 6% decrease from the fourth quarter 1997 average of $2.05,
and a 30% decrease from the first quarter 1997 average of $2.76.
Operating cash flow for first quarter 1998 was $1,318,000, up 23%
from $1,070,000 for fourth quarter 1997, and up 122% from $593,000
for first quarter 1997.
George Mallon, Chairman, said, "While we are very pleased by
these record results, we had hoped to do even better. At our East
Blanco Gas Project, wells are either shut-in or on restricted
production, awaiting the expansion of our gas plant, which is
expected to be completed toward the end of the second quarter.
First quarter earnings and cash flow were adversely affected by
higher than budgeted operating costs due to approximately $170,000
of waste water treatment and hauling expenditures. In late April,
we completed a water disposal injection well. Earnings and cash
flow were also reduced by the depressed oil and gas prices that
prevailed during the quarter."
The preceding information contains forward-looking statements,
the realization of which cannot be assured. Actual results may
differ significantly from those forecast. The Company and its
operations are subject to numerous risks and uncertainties. Among
these are risks related to the oil and gas business generally
(including operating risks and hazards and the regulations imposed
thereon), risks and uncertainties related to the volatility of the
prices of oil and gas, uncertainties related to the estimation of
reserves of oil and gas and the value of such reserves,
uncertainties relating to geologic models and evaluations, the
effects of competition and extensive environmental regulation, and
other factors, many of which are necessarily beyond the Company's
control. These and other risk factors that affect the Company's
business are discussed in the Company's 1997 Annual Report.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands, except per unit data)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
(Unaudited)
<S> <C> <C>
Selected Results
Revenues $3,125 $1,997
Costs and expenses 3,081 2,060
Net income (loss) 44 (230)
Net income (loss) attributable to
common shareholders 14 (325)
Basic net income (loss) per share
attributable to common shareholders 0.00 (0.07)
Diluted net income (loss) per share
attributable to common shareholders 0.00 (0.07)
EBITDA (A) 1,306 495
EBITDA per basic share 0.19 0.11
EBITDA per diluted share 0.18 0.11
Cash flow (B) 1,318 593
Cash flow per basic share 0.19 0.14
Cash flow per diluted share 0.19 0.14
Basic weighted average shares outstanding 6,996 4,386
Diluted weighted average shares outstanding 7,088 4,386
Other Operating Data
Net Production:
Oil (MBbls) 68 37
Gas (MMcf) 1,086 411
MBOE 249 106
Mmcfe 1,494 633
Average realized sales price
Oil ($/Bbl) $14.26 $22.59
Gas ($/Mcf) 1.93 2.76
BOE ($/BOE) 12.33 18.60
Mcfe ($/Mcfe) 2.05 3.12
</TABLE>
(A) EBITDA is earnings before income taxes, interest expense,
depreciation, depletion and amortization, impairment, and
extraordinary loss.
(B) 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".
AND
Denver, Colorado - May 20, 1998 -- Mallon Resources Corporation
(Nasdaq: "MLRC") today announced that it has entered into a
Minerals Development Agreement with the Jicarilla Apache Tribe
covering 39,360 acres of Tribal land in New Mexico. The land,
which is contiguous to Mallon's East Blanco Gas Field in Rio Arriba
County, approximately triples the Company's net acreage holdings in
the East Blanco area. Mallon's geologic staff believes the new
acreage covers an estimated 12-mile extension of the Ojo Alamo gas
sands that are productive in East Blanco. The new acreage, when
coupled with Mallon's original acreage, covers the entire known and
projected reservoir.
Under the Minerals Development Agreement, Mallon is designated
as operator of the acreage and owns 100% of the working interest.
The Jicarilla Tribe retains a 20% royalty until payout.
Thereafter, the Tribe's royalty will increase to 22.5%. As a part
of the Agreement, Mallon will pay a signing bonus of $590,400.
Since August 1997, the Company has placed on production or
tested 36 Ojo Alamo wells at East Blanco. A typical Ojo Alamo well
costs approximately $300,000 to drill and complete, has an initial
production rate of approximately 1.4 million cubic feet per day,
and has estimated gross recoverable reserves of approximately 2.1
Bcf. The gas is slightly sour and contains an average of
approximately 1,100 mmbtu per mcf. Mallon's East Blanco gas
sweetening plant has a capacity of 14.5 million cubic feet per day.
A plant expansion under construction will increase the Company's
total gas processing capacity at East Blanco to 50 million cubic
feet per day by the end of June 1998. This expansion will allow
wells that are currently shut-in or restricted to be placed on
production and will justify acceleration of the Company's
development drilling program. Mallon has in excess of 50
prospective Ojo Alamo locations on its original acreage that have
yet to be drilled, and expects the new acreage to substantially
increase its inventory of drill sites. George Mallon, Chairman of
the Company, commented, "If our geologic assumptions prove correct,
this additional acreage could fuel our development drilling program
well into the next century."
Kevin Fitzgerald, President of Mallon Oil Company, said, "The
signing of this Agreement is exciting, as it covers acreage that
directly offsets our best Ojo Alamo well. In order to test the
projected Ojo Alamo extension, we intend to drill 8 test wells on
the new acreage within the next 12 months." Mr. Fitzgerald noted
that all wells will be drilled deep enough to allow for future
production testing of the Pictured Cliffs and Fruitland Coal
Formations, which are productive in the area.
The foregoing information contains forward-looking statements
and forecasts, the realization of which cannot be assured. Actual
results may differ significantly from those forecast. Inaccurate
geologic interpretations, the volatility of commodity prices,
unbudgeted cost increases, unforeseen delays in operations, and
operations that prove less successful than anticipated are risks
that can significantly effect the Company's operations. These and
other risk factors that effect the Company's business are discussed
in the Company's Annual Report.
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 22, 1998 By: _/s/ Roy K. Ross_________________
Roy K. Ross, Executive Vice President
