<PAGE>
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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
[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
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Commission File No. 33-26936-D
EXCEL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of
incorporation or organization)
87-0460769
(I.R.S. Employer Identification No.)
1111 Bagby Suite 2400, Houston, Texas 77002
(Address of principal executive offices) (zip code)
(713) 659-5556
(Registrant's telephone number, including area code)
12,023,956 shares of Common Stock outstanding as of March 31,
1996
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.
(1) Yes X No (2) X Yes No
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Part I
FINANCIAL INFORMATION
Item 1 - Financial Statements
EXCEL RESOURCES. INC.
Consolidated Balance Sheet
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited) (Audited)
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 300 $ 3,889
Trade accounts receivable, net of allowance of
$0 in 1995 and $65,000 in 1994 476,812 262,081
Other 0 0
Total current assets 477,112 265,970
Transmission equipment 163,675 163,675
Office furniture and equipment 105,507 141,507
Transportation equipment 0 6,452
Leasehold improvements 6,452 311,634
Accumulated depreciation (148,676) (164,676)
Total equipment 126,958 146,958
NET OIL AND GAS PROPERTIES,
full cost method 3,861,771 4,383,207
Long-term accounts receivable 313,961 491,287
Miscellaneous 15,621 15,621
Total other assets 329,582 506,908
TOTAL ASSETS $ 4,795,423 $ 5,303,043
</TABLE>
See accompanying notes to financial statements.
EXCEL RESOURCES. INC.
Consolidated Balance Sheet
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $ 7,953,475 $ 7,919,987
Notes and production payables - current portion 0 0
Long-term debt - current portion 3,572,026 4,057,361
Accrued expenses 484,006 455,430
Total current liabilities 12,009,507 12,432,778
LONG-TERM LIABILITIES
Notes and production payables 0 0
Deferred revenue 146,849 146,849
Total long-term liabilities 146,849 146,849
Total liabilities 12,156,356 12,579,627
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, 5,000,000 shares
authorized, none issued or outstanding
Common stock, $.001 par value, 100,000,000 shares
authorized, 12,023,956 and 12,023,956 shares issued
and outstanding 12,024 12,024
Additional paid-in capital 5,466,210 5,466,210
Retained earnings (deficit) (12,403,056) (12,251,241)
(6,924,822) (6,773,007)
Note receivable from stockholder (436,111) (503,577)
Total stockholders' equity (7,360,933) (7,276,584)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 4,795,423 $ 5,303,043
</TABLE>
See accompanying notes to financial statements.
EXCEL RESOURCES, INC.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the three Months
ended March 31,
1996 1995
<S> <C> <C>
SALES $ 1,679,700 $ 1,005,749
Cost of sales 1,234,602 659,795
GROSS PROFIT (LOSS) 445,098 345,954
GENERAL AND
ADMINISTRATIVE EXPENSES
287,278 990,933
INCOME (LOSS)
FROM OPERATIONS 157,820 (644,979)
OTHER INCOME (EXPENSE)
Interest income (expense) (299,635) (396,880)
Factoring fee 0 0
(Loss)gain on sale of marketable securities
0 0
(Loss) gain on sale of equipment (10,000) 40,000
Miscellaneous 0 0
Total other income (expense) (309,635) (356,880)
INCOME (LOSS) BEFORE INCOME TAXES
(151,815) (1,001,859)
Income Tax (Expense) Benefit 0 0
NET GAIN (LOSS) $ (151,815) $(1,001,859)
EARNINGS PER SHARE
NET INCOME (LOSS) $ (0.01) $ (0.11)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
12,023,956 9,283,000
</TABLE>
See accompanying notes to financial statements.
EXCEL RESOURCES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
For the Three Months For the Three Months
ended March 31, ended March 31,
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $ (151,815) $ (1,001,859)
Adjustments to reconcile net income to net cash provided (used
in) operating activities:
Depreciation, depletion
and amortization
521,436 488,744
Deferred revenue 0 194,787
Net loss (gain) on sale
of equipment
10,000 (40,000)
Changes in assets
and liabilities:
Trade accounts receivable (214,731) 37,462
Federal income tax receivable 0 0
Other current assets 0 (18,002)
Long-term receivable 177,326 (19,816)
Miscellaneous 0 1,279
Trade accounts payable
and current portion
long term debt
(451,847) 144,752
Accrued expenses 28,576 (301,306)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (81,055) (513,959)
</TABLE>
See accompanying notes to financial statements.
EXCEL RESOURCES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Three Months For the Three Months
ended March 31, ended March 31,
1996 1995
<S> <C> <C>
CASH FLOWS USE IN
INVESTING ACTIVITIES:
Capital expenditures 0 0
Proceeds from sale of equipment 10,000 350,000
Proceeds from sale of securities 0 0
Note receivable from stockholder 67,466 0
Purchase of oil and gas leases 0 0
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 77,466 350,000
CASH FLOWS FROM
FINANCING ACTIVITIES:
Repayment of long-term debt 0 (642,028)
Proceeds from equity investors 0 798,825
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 0 156,797
Net increase (decrease) in cash
and cash equivalents (3,589) (7,162)
Cash and cash equivalents at
beginning of period 3,889 16,499
Cash and cash equivalents at
end of period $ 300 $ 9,337
</TABLE>
See accompanying notes to financial statements.
EXCEL RESOURCES, INC.
NOTE 1 - Basis of Presentation, Organization and Summary of
Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with the instructions and requirements of
Form 10-QSB, and therefore do not include all information and
footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity
with generally accepted accounting principles. In the opinion of
management, such financial statements reflect all adjustments
necessary for a fair statement of the results of operations and
financial position for the interim periods presented. Operating
results for the interim periods are not necessarily indicative of
the results that may be expected for the full years. It is
suggested that these consolidated financial statements be read in
conjunction with the Company's consolidated financial statements
and notes thereto included in the Company's annual report on Form
10-KSB for the year ended December 31, 1995.
Organization and Business
Excel Resources, Inc., ("the Company"), formerly Dover
Capital Corporation, was incorporated in the state of Nevada on
December 31, 1988. The Company's primary business activity is the
production, gathering, marketing and transportation of natural
gas and related products.
Basis of Consolidation
The consolidated financial statements include the accounts
of the Company, its whollyowned subsidiary, Excel Resources,
Inc., a Texas Corporation, ("Excel Texas"), Excel Texas' wholly-
owned subsidiaries, Excel Gas Gathering, Inc., Excel Consulting
and Management Company, Inc., Excel Pipeline, Inc., Excel
Ventures, Inc., and Excel Gas Marketing, Inc., an affiliate of
the Company through common ownership. All significant
intercompany transactions have been eliminated.
Equipment and Depreciation
Equipment is stated at cost. Depreciation is computed over
the estimated useful lives of the assets using the straight-line
method for financial reporting purposes and accelerated methods
for income tax purposes. The estimated useful lives of equipment
for purposes of computing depreciation are:
Class Life
Transmission equipment 22 years
Office furniture and equipment 10 - 12 years
Transportation equipment 7 years
Leasehold improvements 3 - 5 years
Oil and Gas Properties
The Company follows the full cost method of accounting, as
defined by the Securities and Exchange Commission, whereby all
costs incurred in connection with the acquisition, exploration
and development of oil and gas properties, whether productive or
nonproductive, are capitalized. Capitalized costs related to
proved properties and estimated future costs to be incurred in
the development of proved reserves are amortized using the unit-
of-production method. The average depletion rate based on
equivalent Mcf of natural gas for the three months ended March
31, 1996, and 1995 was $.84 and $.83, respectively.
Capitalized costs are annually subjected to a test of
recoverability by comparison to the present value of future net
revenues from proved reserves. Any capitalized costs in excess
of the present value of future net revenue from proved reserves,
adjusted for the cost of certain unproved properties, are
expensed in the year in which such an excess occurs. There was
no such test nor any related adjustment for the three months
ended March 31, 1996.
Revenue Recognition
Revenues are recognized when the gas products are delivered
to customers. In the movement of natural gas, it is common for
differences to arise between volumes of gas contracted or
nominated, and volumes of gas actually received or delivered.
These situations are the result of certain attributes of the
natural gas commodity and the industry itself. Consequently, the
credit given to the Company by a pipeline for volumes received
from producers may be different than volumes actually delivered
by a pipeline. When all necessary information, such as the final
pipeline statement for receipts and deliveries is available,
these differences are resolved by the Company.
The Company records imbalances based on amounts received and
classifies the imbalances as adjustments to the trade accounts
receivable or trade accounts payable, as appropriate.
Deferred Revenue
The Company has long-term throughput contracts with certain
customers on its offshore oil and gas wells (see Note 3). The
contracts contain "take or pay" provisions whereby the Company
is entitled to a minimum throughput. The Company recognizes
income only on its entitlement sales. Payment for surpluses over
entitlements are credited to deferred revenues to offset future
deficiencies. If the Company's take of production is less than
the entitlement, the Company recognizes revenue on its full
entitlement and charges long-term receivables. At March 31, 1996,
and December 31, 1995, the Company had a long-term gas balancing
receivable of $313,961 and $491,287 and an offsetting long-term
gas balancing payable of $146,849 and $146,849, respectively.
Earnings (loss) per Share
Earnings per share amounts are based on the weighted average
number of common shares outstanding.
Marketable Securities
Marketable securities consist of direct obligations of the
U.S. Government and futures contracts. Securities are stated at
cost, which approximates market value.
Cash Equivalents
Cash equivalents include any highly liquid investment
instruments purchased with an original maturity date of three
months or less.
NOTE 2 - Purchase of Oil and Gas Leases
Effective January 1, 1994, the Company acquired working
interests in certain oil and gas properties from three unrelated
entities for a total purchase price of $7,692,027 net of gas
imbalance positions. The payment of the purchase price was made
in April 1994, from funds provided by one of the Company's major
suppliers.
The borrowed funds were repayable within six months beginning June
1994 from future production payments from the properties and or
dedicated natural gas trades. Management is currently involved in
negotiations for refinancing this short term debt; however, it can
not be assumed that such negotiations will be successfully
concluded.
NOTE 3 - Oil and Gas Exploration, Development and Producing
Activities (Unaudited)
Results of Operations
The results of oil and gas producing activities during the
three months ended March 31, 1996, are as follows:
Amount
Production revenues $1,482,190
Production costs 576,509
Depreciation, depletion and amortization 521,436
Operating income - producing activities $ 384,335
Cost Incurred
For the three months ended March 31, 1996, the costs
incurred in oil and gas producing activities totaled $576,509,
all of which was charged to expense.
Capitalized Costs
Capitalized costs relating to oil and gas exploration,
development and producing activities were as follows:
March 31, 1996
Costs subject to amortization -
all proved properties
$ 9,333,663
Less accumulated depreciation, depletion,
and amortization: (5,471,892)
$ 3,861,771
Proved Reserves
The following schedule presents estimates of proved oil and
natural gas reserves attributable to the Company, all of which
are located offshore from the continental United States. Proved
reserves are estimated quantities of oil and natural gas which
geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions.
Proved - developed reserves are those which are expected to be
recovered through existing wells with existing equipment and
operating methods. Reserves are stated in barrels of oil and
millions of cubic feet of natural gas. Geological and
engineering estimates of proved oil and natural gas reserves at
one point in time are highly interpretive, inherently imprecise
and subject to ongoing revisions that may be substantial in
amount. Although every reasonable effort is made to ensure that
the reserve estimates represent the most accurate assessments
possible, these estimates are by their nature not precise and
are often different from the quantities ultimately recovered.
Three Months Ended
March 31, 1996
(Bbl) (Mmcf)
Proved reserves:
Beginning of the period 5,797 7,829,000
Production (1,045) (620,595)
Proved reserves:
End of the period 4,752 7,208,405
Standardized Measure of Discounted Future Net Cash Flows
The following schedules present the standardized measure of
estimated discounted future net cash flows from the Company's
proved reserves and an analysis of the changes in these amounts
for the three months ended March 31, 1996. Estimated future cash
flows were based on independent reserve data.
Because the standardized measure of future net cash flows
was prepared using the prevailing economic conditions existing
at March 31, 1996, it should be emphasized that such conditions
continually change. Accordingly, such information should not
serve as a basis in making any judgment on the potential value
of the Company's recoverable reserves or in estimating future
results of operations.
Standardized measures of discounted future net cash flows:
March 31,1996
Future production revenues $ 14,752,160
Future capital costs (1,010,602)
Future production costs (5,238,628)
Total future costs 6,249,230
Future cash flows before income taxes 8,502,930
Future income tax benefit (1,488,013)
Future net cash flows 9,990,943
Effect of discounting
future annual net cash
flows at 10% (1,398,732)
Standardized measure of
discounted future net
cash flows $ 8,592,211
NOTE 4 - Notes Payable
Notes payable, consisted of the following:
March 31, 1996 December 31, 1995
Purchase note payable in default payable
on demand currently being repaid from
production from oil and gas properties and /or
dedicated natural gas trades interest imputed
at 20% subject to renegotiation (See Note 2) $ 3,505,532 $ 3,990,867
Note payable to a company with an effective
interest rate of approximately 6%, due March 1,
1995, in default 67,477 66,494
3,573,009 4,057,361
Less current maturities (3,573,009) (4,057,361)
$ - $ -
NOTE 5 - Income Taxes
At March 31, 1996, the Company had net operating loss
carryforwards of approximately $11,951,000 that may be offset
against future taxable income through 2010. No tax benefit has
been reported in the 1996 financial statements, because the
potential tax benefits of the net operating loss carryforwards
are offset by a valuation allowance of the same amount.
NOTE 6 - Commitments
The Company leases office space and certain equipment
under operating lease agreements. At March 31, 1996, the
estimated future minimum rental payments required under the
leases were:
Year ending December 31, Amount
1996 73,000
1997 79,000
1998 78,000
Thereafter 82,000
Total $ 369,000
Rental expense for the Three Months ended March 31, 1996,
and 1995, totaled approximately $33,909 and $33,817,
respectively.
NOTE 7 - Employee Benefit Plan
The Company has a 401(k) deferred compensation plan. Under
this plan, employees meeting eligibility requirements, (as defined
in the plan), contribute a percentage of their before tax
compensation to the plan with the Company matching the first two
percent of the employee contribution. Additional Company
contributions may be made at the discretion of the Board of
Directors. The Company made no contributions for either the three
months ended March 31, 1996 or the three months ended March 31,
1995.
NOTE 8 - Related Party Transactions
The Company has a note receivable from its primary stockholder
for various expenditures paid by the Company on behalf of the
stockholder. The advances bear interest at 6% and are payable upon
demand by the Company. The following is a summary of the notes
receivable:
March 31, December 31,
1996 1995
Notes receivable balance $ 503,577 $ 503,577
Advances during year $ 0 $ 0
Repayments during the year$ 67,466 $ 37,699
The notes receivable from stockholder are reflected as a reduction
in stockholder's equity (capital deficit).
NOTE 9 - Supplemental Disclosure of Cash Flow Information
1996 1995
Interest paid $185,570 $61,174
Item 2.
Management's Discussion and Analysis of the Financial Condition and
Results of Operations.
Total sales for the quarter ended March 31, 1996, were
$1,679,700, representing a $673,951 or 67% increase over the first quarter
ended March 31, 1995, total sales of $1,005,749. The increase resulted from a
increase of $712,927 in Company-owned natural gas and oil
production sales. The marketing activities of third-party gas by
Excel Gas Marketing, Inc. have diminished to only one small active
customer. Natural gas prices continued to show strength throughout
the first three months of 1996, reaching levels as high as $3.50
per MMBtu in Gulf Coast region. These price increases have had a
favorable impact on the Company's production revenues.
Gross profit for the first quarter of 1996 was $445,098
representing a $99,144 or 28.7% increase over the first quarter
of 1995. This increase was due to an increase in sales of
Company-owned gas and oil production as outlined above. Total
depletion on the Company's producing properties was approximately
$521,000 which is included in the cost of sales.
The net loss of $151,815 for the quarter ended March 31,
1996, a substantial improvement over a loss of $1,001,859 for the
quarter ended March 31, 1995, reflects declining general and
administrative costs, declining interest expense and improved
sales volume and margin from Company-owned production,
Liquidity and Capital Resources
The principal sources of cash for the first quarter of 1996
were funds provided from current and past operations of the
Company. Cash outflows included funds used in operations and the
repayment of debt.
The net cash used in operating activities during the first
quarter of 1996 was $81,055, compared to $513,959 used in
operations in the first quarter of 1995. The negative cash flow
in the first quarter of 1996 was primarily due to payments that
were made to reduce debt. The negative cash flow in the first
quarter of 1995 was primarily due to payments made to gas
producers from prior period gas marketing activities.
The net cash flow provided by investing activities during
the first quarter of 1996 was $77,466, compared with $350,000
provided by investing activities in 1995. The 1996 cash flow was
from the sale of equipment and the partial repayment of a note
receivable from a stockholder, and the 1995 cash flow was from
the sale of a pipeline system.
The Company had no cash flow from financing activities
during the first quarter of 1996. Net cash flow from financing
activities for the first quarter of 1995 was $156,979, reflecting
equity investments of approximately $800,000 less repayment of
debt of approximately $640,000. This repayment of debt was
primarily to a major customer which advanced funds to the Company
in the first quarter of 1994 for the purchase of offshore oil and
gas producing properties.
As of March 31, 1996, the Company's current liabilities of
$12,009,507 exceeded its current assets of $477,112 by
$11,532,395. The Company expects to be able to address its
liquidity pressures through additional equity funding and continue
to operate.
Throughout 1995, the Company received $3.6 million in equity
financing from Union Financiere Privee S.A. (UFIP) of Geneva,
Switzerland, a private investment firm and several private
European investors working with UFIP. The financing agreement
between UFIP and the Company was terminated in January, 1996. The
Company continues to seek funds in the European debt and equity
markets, as well as those within the United States.
The Company also is currently seeking additional sources of
both equity and debt financing to fund current and future
acquisitions. Each acquisition is evaluated and judged on its
future potential cash flows. It is the objective of the Company
that each acquisition generate cash flows sufficient to fund the
particular acquisition's operations and its associated debt.
The Company currently has 5,000,000 authorized but unissued
shares of preferred stock and nearly 88,000,000 shares of
authorized but unissued common stock. The Company did not issue
any common stock during the first quarter of 1996. The Company
will continue to pursue opportunities to acquire properties in
exchange for its stock.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company and Excel Gas Marketing, Inc., an affiliate of
the Company, are either individually or jointly involved in a
number of claims, as well as litigation, for breach of contract
primarily arising from the nonpayment for natural gas purchased.
Liquidity problems encountered by both the Company and Excel Gas
Marketing, Inc. during 1994 were the primary factors giving rise
to such claims. Management believes that the outcome of such
litigation will not have a material adverse effect upon the
Company, since all claims, excluding legal fees (which the
Company believes will be immaterial in amount), are properly
reflected in the financial statements. The Company is continuing
its efforts to secure funding sufficient to pay all amounts for
which it is liable. The following is a listing of those legal
actions:
- - - - July 6, 1994, Scana Hydrocarbons, Inc. filed suit against Excel
Gas Marketing, Inc. ("Excel Gas Marketing") for breach of
contract for nonpayment of $252,818.00 plus interest and legal
costs. The suit also claimed fraud on the part of Excel Gas
Marketing for failure to place gas sales contract proceeds into
an escrow account. Excel Gas Marketing and the Company have
finalized a settlement of this suit, which settlement provides
for amounts remaining due to Scana to be paid in monthly
installments over a one-year period beginning March 15, 1996.
Neither the March payment nor any subsequent payment due
thereafter has been made.
- - - - July 19, 1994, Entex, a division a NorAm Energy Corporation
filed a Petition of Interpleader in the Judicial District Court
of Harris County, Texas, against the Company and Excel Gas
Marketing. The action caused a total of $1,969,349.49 of accounts
receivable due to the Company to be placed with the clerk of the
court for distribution to the appropriate parties. The
Interpleader was filed by Entex to make payments to other parties
of the funds owed to the Company and Excel Gas Marketing. These
claims were made due to the Company's and Excel Gas Marketing's
failure to pay outstanding natural gas purchases. The mediation
for the Petition of Interpleader was held on July 27, 1995, with
all parties to the action agreeing to the distribution of the
above mentioned funds. Two major creditors received a total of
$1,700,000. The balance of the funds were distributed on a pro-
rata basis among the remaining creditor parties to the action. In
addition, in connection with the mediation process, Cypress
Operating Company obtained an agreed judgment against Excel Gas
Marketing, Inc. for $117,648.56 plus interest and attorneys'
fees. Mobil Natural Gas, Inc. was granted an agreed judgment
against Excel Gas Marketing and Excel-Texas in the amount of
$2,911,754.00 plus post judgment interest. The amounts due in
connection with the judgments have not been fully paid, but
ExcelTexas and Excel Gas Marketing are working with the
respective parties to satisfy same.
- - - - August 8, 1994, Gas Marketing & Transportation Co. filed suit
against Excel Gas Marketing for breach of contract due to
nonpayment of gas purchases of $290,386 plus interest and legal
costs. The suit was filed in the Judicial Court of Nueces County,
Texas. This matter was settled on November 28, 1994, between the
respective parties. Under the provisions of the Mutual
Release and Settlement Agreement, Excel Gas Marketing was to pay
Gas Marketing & Transportation Co., Inc. $246,353.97 by December
28, 1994. Such required amount was not paid by the specified date
and has not been paid as of the date hereof; however, payments have
been made to reduce such amount.
- - - - August 11, 1994, Oxy U.S.A. filed suit against the Company in the
Judicial Court of Harris County, Texas, for breach of contract. Oxy
U.S.A. seeks to collect $171,139.36 plus interest at 18% per annum.
They are also seeking recovery of attorneys' fees and court costs.
This matter was settled on April 18, 1995, between the respective
parties. Under the provisions of the Mutual Release and Settlement
Agreement, the Company was to pay to Oxy U.S.A. $171,139.36 by May
27, 1995. Such required amount was not paid by the specified date
and has not been paid as of the date hereof; however, payments have
been made to reduce such amount.
- - - - August 16, 1994, J. M. Huber Corporation filed suit against Excel
Gas Marketing in the Judicial Court of Harris County, Texas, for
breach of contract, seeking $346,499.12 plus interest, attorneys'
fees and court costs. This matter was settled on October 31, 1994,
between the respective parties. Under the provisions of the Mutual
Release and Settlement Agreement, Excel Gas Marketing was to pay
J. M. Huber Corporation $320,605.44 by December 15, 1994. Such
required amount was not fully paid by the specified date and has
not been paid as of the date hereof; however, payments have been
made to reduce such amount.
- - - - August 18, 1994, Rangeline Corporation filed suit against Excel
Gas Marketing in the County Civil Court of Law, Harris County,
Texas for breach of contract. Rangeline Corporation seeks damages
of $65,100 plus interest, attorneys' fees and court costs. This
matter was settled on November 29, 1994, between the respective
parties. Under the provisions of the Mutual Release and Settlement
Agreement, Excel Gas Marketing was to pay to Rangeline Corporation
$67,100.00 on December 29, 1994. Such required amount was not paid
by the specified date; however, Excel Gas Marketing subsequently
paid $67,100.00 to Rangeline Corporation to satisfy this lawsuit.
- - - - August 29, 1994, H & N Gas, Limited Partnership d/lo/a H & N Gas,
Ltd. filed suit against the Company in the County Civil Court of
Law, Harris County, Texas, for breach of contract. H & N Gas has
sought compensation in the amount of $26,601.06 plus interest and
attorneys' fees. This matter was settled between the respective
parties. Under the provisions of the Mutual Release and Settlement
Agreement, the Company paid H & N Gas $29,101.19, thereby
satisfying the judgment.
- - - - September 2, 1994, Sonat Marketing Co. filed suit against the
Company and Excel Gas Marketing in the District Court of Harris
County, Texas, for breach of contract. Sonat sought $1,280,937.62
plus interest, attorneys' fees and court costs. This matter was
settled on January 25, 1995, between the respective parties. Under
the provisions of the Mutual Release and Settlement Agreement, the
Company was to pay to Sonat Marketing Co. $1,247,034.72 on July 20,
1995. Such required amount was not paid by the specified date and
has not been paid as of the date hereof; however, payments have
been made to reduce such amount.
- - - - September 11, 1994, Chevron USA, Inc. filed suit against the
Company for breach of contract due to nonpayment of purchases of
$365,855.46 plus interest and legal costs. The suit was filed in
the Judicial Court of Harris County, Texas. This matter was settled
on February 19, 1996, between the respective parties. Under the
provisions of the Mutual Release and Settlement Agreement, the
Company was to pay to Chevron USA, Inc. $365,855.46 on or before
March 26, 1996. Such required amount was not paid by the specified
date and has not been paid as of the date hereof.
- - - - September 16, 1994, Global Petroleum Corporation filed suit
against the Company and Excel Gas Marketing in the District Court
of Harris County, Texas, for breach of contract, breach of guaranty
and negligent misrepresentation. Global Petroleum Corporation seeks
damages of $358,838.58 plus interest and attorneys' fees. This
matter was settled between the respective parties. Under the
provisions of the Mutual Release and Settlement Agreement, the
Company was to pay to Global Petroleum Corporation $338,875.00 by
December 19, 1994. Such required amount was not paid by the
specified date and has not been paid as of the date hereof;
however, payments have been made to reduce such amount.
- - - - October 6, 1994, Anson Gas Marketing filed suit against Excel Gas
Marketing in the District Court of Caddo County, State of Oklahoma,
for breach of contract. Total amounts owed to Anson Gas Marketing
are $86,265. This matter was settled on January 24, 1995, between
the respective parties. Under the provisions of the Mutual Release
and Settlement Agreement, Excel Gas Marketing was to pay Anson Gas
Marketing $86,265 by February 24, 1995. Such required amount was
not paid by the specified date and has not been paid as of the date
hereof; however, payments have been made to reduce such amount.
- - - - November 23, 1994, Phillips Petroleum Company filed suit against
Excel Gas Marketing for breach of contract due to nonpayment of gas
purchases of $534,921.01 plus interest and legal costs. The suit
was filed in the Judicial Court of Harris County, Texas. This
matter was settled on February 21, 1995, between the respective
parties. Under the provisions of the Mutual Release and Settlement
Agreement, Excel Gas Marketing was to pay to Phillips Petroleum
Company $554,251.81 by April 21, 1995. Such required amount was not
paid by the specified date and has not been paid as of the date
hereof; however, payments have been and continue to be made to
reduce such amount. On March 23, 1996, a Turnover After Judgment
hearing for Excel Gas Marketing, Inc. was held in the Judicial
Court of Harris County, Texas for the application made by Phillips
Petroleum Company. The result of this hearing was an order for the
appointment of a Receiver, effective with the execution of the
Order. The Order was executed with the appointment of the Receiver
and the posting of the Bond of the Receiver on May 13, 1996.
- - - - December 2, 1994, Enserch Gas Company, et al. filed suit against
Excel Gas Marketing for breach of contract due to nonpayment of gas
purchases of $97,194.28 plus interest and legal costs. The suit was
filed in the Judicial Court of Dallas County, Texas. This matter
was settled on July 18, 1995, between the respective parties. Under
the provisions of the Mutual Release and Settlement Agreement,
Excel Gas Marketing was to pay to Enserch Gas Company
$97,194.28 by July 25, 1995. Such required amount was not paid by
the specified date and has not been paid as of the date hereof;
however, payments have been made to reduce such amount.
- - - - December 29, 1994, Hadson Gas Systems, Inc. filed suit against
Excel Gas Marketing for breach of contract due to nonpayment of
gas purchases of $161,838.74 plus interest and legal costs. The
suit was filed in the Judicial Court of Harris County, Texas. This
matter was settled on February 16, 1995, between the respective
parties. Under the provisions of the Mutual Release and Settlement
Agreement, Excel Gas Marketing was to pay to Hadson Gas Systems,
Inc. $161,838.74 by April 17, 1995. Such required amount was not
paid by the specified date and has not been paid as of the date
hereof; however, payments have been made to reduce such amount.
- - - - January 4, 1995, Gulf Coast Marketing Co. filed suit against
Excel Gas Marketing for breach of contract due to nonpayment of
gas purchases of $48,486.39 plus interest and legal costs. The
suit was filed in the Judicial Court of Harris County, Texas. This
matter was settled between the respective parties. Under the
provisions of the Mutual Release and Settlement Agreement, Excel
Gas Marketing was to pay to Gulf Coast Marketing Co. $48,486.39
by February 28, 1995. Such required amount was not paid by the
specified date and has not been paid as of the date hereof;
however, payments have been made to reduce such amount.
- - - - February 10, 1995, NorAm Gas Transmission filed suit against
Excel Gas Marketing for breach of contract due to nonpayment of
gas transportation costs of $274,163.51 plus interest and legal
costs. This suit was filed in the First Judicial District Court
of Caddo Parish, Louisiana. This matter was settled between the
respective parties. Under the provisions of the Mutual Release and
Settlement Agreement, Excel Gas Marketing was to pay to NorAm Gas
Transmission $252,029.66 in installments beginning July 15, 1995.
The July 15, 1995, installment was paid by Excel Gas Marketing.
Subsequent required installment amounts have not been paid by the
specified dates and have not been paid as of the date hereof.
- - - - March 10, 1995, American Exploration Gas System Corporation
filed a suit against Excel Gas Marketing for breach of contract
due to nonpayment of gas purchases of $122,890.89 plus interest
and legal costs. The suit was filed in the District Court of
Harris County, Texas. This matter was settled between the
respective parties. Under the provisions of the Mutual Release and
Settlement Agreement, Excel Gas Marketing was to pay to American
Exploration Gas System Corporation $122,890.89 by May 9, 1995.
Such required amount was not paid by the specified date and has
not been paid as of the date hereof; however, payments have been
be made to reduce such amount.
- - - - April 17, 1995, H & N Gas, Limited Partnership d/lo/a H & N Gas
Ltd. filed suit against the Company for breach of contract due to
nonpayment of gas purchases of $34,624.36. The suit was filed in
the County Civil Court of Harris County, Texas. Under the
provisions of the Mutual Release and Settlement Agreement, the
Company was to pay to H & N Gas Ltd. $36,624.36 by July 17, 1995.
Such required amount was not paid by the specified date and has
not been paid as of the date hereof; however, payments have been
made to reduce such amount.
- - - - September 1, 1995, Marathon Oil Company filed suit against the
Company and Excel Gas Marketing in the District Court of Harris
County, Texas, for breach of contract due to nonpayment of gas
purchases of $124,486.31 plus interest, attorneys' fees and court
costs. This matter was settled on march 14, 1996, between the
respective parties. Under the terms of the Settlement Agreement
Marathon agreed not to execute on the agreed judgment until June
18, 1996. The Company and Marathon are near finalizing
arrangements whereby the balance due Marathon would be repaid in
monthly installments by the Company beginning in September, 1996,
and continuing through December, 1997.
- - - - October 26, 1995, American Prudential Capital d/b/a Texas
Partners Fund (American) filed suit against the Company in the
District Court of Harris County, Texas, seeking, inter alia, a
declaratory judgment that its rights in certain accounts
receivable purchased from the Company, the aggregate amount of
which the Company subsequently paid to American, were and are
superior to the rights of Mobil Natural Gas, Inc. (MNGI), if any,
in such accounts. MNGI is an additional named defendant in such
action and is the party against whom the suit was originally
filed. American's suit also seeks to recover from the Company (i)
an unspecified amount of damages on the basis of breach of
contract and fraud and (ii) attorneys' fees. Although the Company
believes it has met all its obligations in connection with the
subject matter of this action, we cannot predict the outcome of
the suit. The Company will, however, vigorously defend the suit.
- - - - December 28, 1995, Bounty Group, Inc. filed suit against the
Company in the District Court of Harris County, Texas, for breach
of contract due to failure to make certain payments as they
became due under the provisions of a promissory note originally
executed for an amount equal to one hundred eighty thousand
dollars ($180,000.00). Bounty is seeking to recover the unpaid
principal and interest, the aggregate of which bounty claims to
be $66,493.59 as of December 31, 1995, together with subsequent
interest applicable to such amounts, court costs and attorneys'
fees. The Company is currently making efforts to negotiate a
settlement of this suit.
- - - - May 8, 1996, Williams Energy Services Company, formerly
Williams Gas Marketing Company, filed suit against the Company in
the District Court of Tulsa County, Oklahoma, for breach of
contract due to nonpayment of gas purchases of $10,635.20 plus
attorneys' fees and court costs. The Company is currently
finalizing a settlement of this suit.
- - - - June 24, 1996, CNG Producing Company, filed suit against Bounty
Group, Inc. and the Company in the Civil District Court for
Orleans Parish, Louisiana, for the recoupment of the cash value
of a production imbalance attributable to the overproduction by
Bounty and its predecessors-in-interest that allegedly became due
and payable to CNG by the overproduced working interest owner
upon the cessation of production from a gas producing that ceased
gas production within a very short period after the effective
date of the property purchase by the Company from Bounty. CNG is
seeking payment of the value of the gas imbalance, which amount
is claimed to be $84,324.01, interest on such amount, court costs
and attorney's fees. The Company's answer to the suit is pending.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the security holders,
through solicitation of proxies or otherwise, during the first
quarter of the 1996 fiscal year.
Item 5. Other Information
Jerome C. G. Cle terminated his membership on the Company's
Board of Directors during January, 1996. A replacement for Mr.
Cle has not been appointed.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
EXCEL RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 26th day of July, 1996.
EXCEL RESOURCES, INC.
BY: /s/ Francis H. Brinkman
-----------------------
Francis H. Brinkman, Chairman of
the Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed by the following persons on
behalf of the Registrant and in the capacities with the Registrant
indicated on the 26th day of July, 1996.
SIGNATURE: TITLE:
/s/ Francis H. Brinkman
- - - ------------------------
FRANCIS H. BRINKMAN Chairman of the Board, Chief
Executive Officer and Director (Principal
Executive Officer)
/s/ Roger D. Case
- - - -----------------
ROGER D. CASE President, Chief Operating
Officer, Assistant Secretary and Director
(Principal Operating Officer)
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