<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1998
---------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission file number 1-13513
UNITED STATES EXPLORATION, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1120323
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1560 Broadway, Suite 1900, Denver, Colorado 80202
- ------------------------------------------- -----
(Address or principal executive offices) (Zip Code)
(303) 863-3550
--------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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. Yes [XX] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class of Stock Amount Outstanding
-------------- ------------------
Common Stock, $.0001 par value 8,825,946 shares outstanding
at May 14, 1998
<PAGE> 2
UNITED STATES EXPLORATION, INC.
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements........................................................... 3
Item 2. Management's Discussion and Analysis or Plan of Operation...................... 10
Part II - OTHER INFORMATION............................................................................... 15
SIGNATURES................................................................................................ 16
EXHIBIT INDEX............................................................................................. 17
</TABLE>
2
<PAGE> 3
UNITED STATES EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $15,586,196 $15,988,152
Accounts receivable 418,631 561,016
Inventory 53,576 14,889
Prepaid expenses and deposits 21,991 32,267
----------- -----------
Total current assets 16,080,395 16,596,324
PROPERTY AND EQUIPMENT, AT COST, NET
Oil and gas property and equipment 3,308,420 3,390,640
Natural gas gathering systems 1,396,172 1,367,266
Building and other equipment 376,397 392,644
----------- -----------
5,080,989 5,150,551
OTHER ASSETS
Land 700,000 700,000
Natural gas stripping plant -- 20,000
Equipment -- 10,000
Pipeline lease, less accumulated amortization
of $210,502 at March 31, 1998 and
of $197,871 at December 31, 1997 496,807 509,437
Loan costs 116,935 --
----------- -----------
1,313,742 1,239,437
----------- -----------
Total assets $22,475,126 $22,986,312
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
UNITED STATES EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 516,710 $ 371,898
Accrued liabilities 126,790 33,266
Due related parties 48,524 62,334
Dividends payable -- 460,200
------------ ------------
Total current liabilities 692,024 927,698
SHAREHOLDERS' EQUITY
Preferred stock-$.01 par value
Authorized-100,000,000 shares
Issued and outstanding Series C Cumulative
Convertible-3,820,000 shares at March 31,
1998 and 3,835,000 at December 31, 1997
(liquidation preference of $22,920,000) 22,920,000 23,010,000
Common stock-$.0001 par value
Authorized-500,000,000 shares
Issued and outstanding-8,825,946 shares at
March 31, 1998 and 8,795,400 shares at
December 31, 1997 883 880
Capital in excess of par 12,614,979 12,523,345
Accumulated deficit (13,752,760) (13,475,611)
------------ ------------
Total shareholders' equity 21,783,102 22,058,614
------------ ------------
Total liabilities and shareholders' equity $ 22,475,126 $ 22,986,312
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
UNITED STATES EXPLORATION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 1998 March 1997
------------------ -------------------
<S> <C> <C>
REVENUES
Sale of purchased gas $ 377,044 $ 203,003
Sale of Company produced oil and gas 367,935 831,445
Contracting, drilling and oil field supplies 14,501 75,487
------------------ -------------------
759,480 1,109,935
COSTS AND EXPENSES
Gas acquisition costs 194,916 94,196
Gathering and transmission costs 154,812 12,615
Production costs-oil and gas 308,421 504,880
Other operating costs 25,164 57,364
Depletion, depreciation, and amortization 261,264 462,623
Provision for impairment of assets -- 321,397
General and administrative expenses 291,883 145,639
------------------ -------------------
1,236,460 1,598,714
Earnings (loss) from operations (476,980) (488,779)
OTHER INCOME (EXPENSE)
Interest income 204,044 223,845
Interest expense -- (400)
Other (2,575) 56,177
------------------ -------------------
201,469 279,622
------------------ -------------------
NET LOSS (275,511) (209,157)
Preferred stock dividends attributable to period (460,037) (480,000)
------------------ -------------------
Net loss applicable to common shareholders $ (735,548) $ (689,157)
================== ===================
Basic and diluted loss per common share $ (0.08) $ (0.08)
================== ===================
Weighted average common shares outstanding 8,797,775 8,309,691
================== ===================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
UNITED STATES EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, 1998 March 31, 1997
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net loss $ (275,511) $ (209,157)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating activities:
Depreciation, depletion and amortization 261,264 462,623
Provision for impairment of assets -- 321,397
(Gain) loss on sale of assets 4,282 1
Decrease (increase) in accounts receivable 142,385 405,510
Decrease (increase) in due from related parties -- 41,475
Decrease (increase) in inventory (38,687) 8,785
Decrease (increase) in prepaid expenses 10,276 2,632
Increase (decrease) in accounts payable
and accrued expenses 238,336 (216,475)
Decrease (increase) in due to related parties (13,810) 15,215
Other -- (31,302)
----------- -----------
Net cash provided by operating activities 328,535 800,704
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificate of deposit -- (1,500,000)
Capital expenditures (179,366) --
Proceeds from sale of equipment and other assets 26,010 116,105
Acquisition of oil and gas leases -- (1,481,000)
Acquisition of companies, net of cash received -- (674,731)
----------- -----------
Net cash used in investing activities (153,356) (3,539,626)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of note payable to bank -- (165,000)
Loan costs related to acquisition financing (116,935) --
Dividend paid on preferred stock (460,200) (360,000)
Proceeds from exercise of stock options -- 21,500
----------- -----------
Net cash used in financing activities (577,135) (503,500)
Net decrease in cash and cash equivalents (401,956) (3,242,422)
Cash and cash equivalents-beginning of period 15,988,152 18,565,460
----------- -----------
Cash and cash equivalents-end of period $15,586,196 $15,323,038
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
United States Exploration, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - COMPANY HISTORY AND NATURE OF OPERATIONS
United States Exploration, Inc. (the "Company") was incorporated in 1989. The
Company is an independent producer of oil and gas and an operator of gas
gathering systems. For both periods presented, the Company's operations were
located in southern Kansas and northern Oklahoma. See Note D.
The consolidated financial statements include the accounts of United States
Exploration, Inc. and its wholly owned subsidiaries Producers Service
Incorporated, Performance Petroleum Co., Pacific Osage, Inc., and United States
Gas Gathering Co., Inc. All significant intercompany transactions and balances
have been eliminated.
The foregoing financial information is unaudited. In the opinion of management,
the unaudited financial information includes all adjustments necessary to
reflect properly the results of operations for the interim periods presented.
The adjustments consist only of normal recurring accruals, except as described
in the following paragraph. The results of operations for the three months ended
March 31, 1998 are not necessarily indicative of the results to be expected for
the year.
During 1997, the Company changed its fiscal year end from March 31 to December
31, resulting in a transition period of nine months from April 1, 1997 to
December 31, 1997. The unaudited statements of operations and cash flows for the
three-month period ended March 31, 1997 were derived by subtracting the
Company's results for the nine-month period ended December 31, 1996 from the
results for the fiscal year ended March 31, 1997. As a result, the statements
included in this Report for the quarter ended March 31, 1997 reflect all of the
year-end audit adjustments for the fiscal year. Some of these adjustments relate
to the whole year rather than to the fiscal quarter. Consequently, comparisons
between the results of operations and cash flows of the Company for the quarters
ended March 31, 1997 and 1998 may not be meaningful.
NOTE B - FINANCIAL STATEMENTS
In accordance with applicable rules of the Securities and Exchange Commission,
substantially all footnotes relating to the condensed financial statements of
the Company have been omitted. The condensed financial statements should be read
in conjunction with the Company's audited financial statements contained in its
Annual Report on Form 10-KSB for the transition period ended December 31, 1997.
7
<PAGE> 8
NOTE C - LOSS PER COMMON SHARE
Loss per common share has been computed by dividing net loss, after reduction
for preferred stock dividends applicable to the period, by the weighted average
number of common shares outstanding during each period presented.
NOTE D - SUBSEQUENT EVENT
On May 15, 1998, the Company acquired from Union Pacific Resources
Company ("UPR"), a subsidiary of Union Pacific Resources Group, Inc., effective
January 1, 1998, all of UPR's working interests in producing oil and gas wells
in 34 oil and gas fields in the Wattenberg area of the Denver-Julesburg Basin
in northeastern Colorado for a cash purchase price of $41 million, subject to
adjustments. At the closing of the acquisition, the Company also entered into an
Exploration Agreement with UPR giving the Company the right to explore and
develop all of UPR's undeveloped acreage in the Wattenberg area, excluding
certain acreage already committed to other agreements.
The producing properties acquired include 336 gross producing wells,
which, on the effective date of the acquisition, were producing 5.5 Mmcf. of gas
and 640 barrels of oil per day net to UPR's interest. UPR acted as operator of
81 of the producing properties and the Company has taken over those
operations.
The Exploration Agreement covers approximately 400,000 gross acres and
will also cover any undeveloped acreage currently committed to another agreement
that reverts to UPR during its term. In order to keep the Exploration Agreement
in effect, the Company must drill 15 commitment wells during the first 18 months
and 20 commitment wells during each succeeding 12-month period for up to five
12-month option periods. If the Company does not drill the required number of
commitment wells during any period, the Exploration Agreement will terminate at
the end of the period and the Company will be required to pay liquidated damages
of $125,000 for each commitment well that was not drilled during the period. In
addition, the Exploration Agreement requires UPR to transfer to the Company any
working interests in wells in the subject area that UPR acquires under existing
agreements during the term of the Exploration Agreement. That requirement covers
a number of existing wells in which UPR has the right to obtain a working
interest or convert an overriding royalty interest into a working interest after
payout has been reached and will cover other wells that may be drilled by
operators with whom UPR has existing farm-out or similar agreements. The Company
will also have the right to take over wells on the UPR lands that are required
to be offered to UPR prior to abandonment.
In the case of minerals owned in fee by UPR, the Company was and will
be granted oil and gas leases under the purchase agreement and the Exploration
Agreement. In the aggregate, the Company believes that there are over 600
separate drilling, deepening and reworking opportunities on the UPR properties.
8
<PAGE> 9
In connection with the acquisition of the UPR properties, the Company
entered into a Credit Agreement with ING (U.S.) Capital Corporation establishing
a revolving credit facility (the "Credit Agreement"). The maximum available
borrowings under the Credit Agreement are $35 million, subject to periodic
redeterminations of the borrowing base. The Company borrowed $29 million under
the Credit Agreement to pay a portion of the purchase price of the UPR
properties, and the balance was paid with the Company's existing funds.
Principal is repayable in 20 quarterly installments beginning March 31, 2000.
Interest is generally payable on a quarterly basis at a rate selected by the
Company which is determined by reference to LIBOR or the lender's reference rate
plus varying margins. At May 15, 1998, the interest rate was 7.625% per annum.
The Credit Agreement prohibits the payment of dividends on Common Stock and
prohibits the payment of dividends on the Series C Preferred Stock for periods
ending after June 30, 1999. Prior to June 30, 1999, no dividend can be paid on
the Series C Preferred Stock if a default under the Credit Agreement exists or
would exist after the payment. The Company intends to use additional borrowings
under the Credit Agreement to finance development work on the properties
acquired and on the properties subject to the Exploration Agreement.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This discussion is qualified in its entirety by Note D to the unaudited
Financial Statements presented and the Company's Form 8-K filed April 17, 1998.
The acquisition of properties from UPR, the operations contemplated by the
Exploration Agreement and the borrowings under the Credit Agreement will have a
significant impact on the Company. Accordingly, the following discussion of the
Company's liquidity, capital resources and results of operations at March 31,
1998 and for the quarter then ended should not be considered indicative of the
Company's liquidity, capital resources or results of operations in future
periods.
During 1997, the Company changed its fiscal year end from March 31 to
December 31, resulting in a transition period of nine months from April 1, 1997
to December 31, 1997. The unaudited statements of operations and cash flows for
the three-month period ended March 31, 1997 were derived by subtracting the
Company's results for the nine-month period ended December 31, 1996 from the
results for the fiscal year ended March 31, 1997. As a result, the statements
included in this Report for the quarter ended March 31, 1997 reflect all of the
year-end audit adjustments for the fiscal year. Some of these adjustments relate
to the whole year rather than to the fiscal quarter. Consequently, comparisons
between the results of operations and cash flows of the Company for the quarters
ended March 31, 1997 and 1998 may not be meaningful.
Results of Operations
Sales of purchased gas for the three months ended March 31, 1998 were
$377,044 compared to $203,003 for the three months ended March 31, 1997. Gas
acquisition and gas gathering and transportation costs totaled $349,728 for the
three months ended March 31, 1998 compared to $106,811 for the three months
ended March 31, 1997. Sales of purchased gas net of related direct costs have
10
<PAGE> 11
historically produced a small profit or loss for the Company. The margin between
sales of purchased gas ($203,003) and direct acquisition, gathering and
transportation costs ($106,811) for the three months ended March 31, 1997 is
affected by reclassifications and audit adjustments for the year ended March 31,
1997, which cover more than three months. The Company expects to make a small
profit or loss on its gas gathering systems in the future until more purchased
gas is acquired for resale. There can be no assurance that additional purchased
gas will be available in quantities that will materially affect the results of
the Company's operation of its gathering systems.
Sales of Company produced oil and gas for the three months ended March
31, 1998 were $367,935 compared to $831,445 for the three months ended March 31,
1997. The three months ended March 31, 1997 contained sales from producing oil
and gas properties acquired by the Company late in calendar year 1996 and early
in calendar year 1997. Decreased production levels and pricing are the main
reasons sales of Company produced oil and gas declined.
Income from contracting, drilling and oil field supplies for the three
months ended March 31, 1998 was only $14,501 compared to $75,487 for the three
months ended March 31, 1997. This decrease reflects the Company's decision in
early 1997 to close its supply store and phase out its oilfield servicing
activities. This decision also resulted in a decrease in other operating costs
from $57,364 for the three months ended March 31, 1997 to $25,164 for the three
months ended March 31, 1998.
Oil and gas production costs decreased from $504,880 for the three
months ended March 31, 1997 to $308,421 for the three months ended March 31,
1998. Most of the additional production costs for the three-month period ended
March 31, 1997 relate to producing oil and gas properties acquired late in
calendar year 1996 and early in calendar year 1997. The accounting entries made
in connection with those acquisitions may have resulted in the concentration of
production costs attributable to prior quarters in the quarter ended March 31,
1997. Production costs for the three-month period ended March 31, 1997 are also
affected by audit reclassifications and adjustments for the year ended March 31,
1997 which cover more than three months. Production costs for the quarter ended
March 31, 1998 reflected the costs of the Company's program to clean up and
repair its Oklahoma and Kansas properties. The Company expects production costs
for these properties to remain at approximately the same level for the three
months ending June 30, 1998 as the Company continues that program.
Depletion, depreciation and amortization decreased from $462,623 for
the three months ended March 31, 1997 to $261,264 for the three months ended
March 31, 1998. Most of this decrease is attributable to audit adjustments for
the year ended March 31, 1997 based upon the reserve study as of that date. The
lower recoverable reserves estimated in that study resulted in additional
depletion, depreciation and amortization for the year, all of which was recorded
in the final fiscal quarter ended March 31, 1997. Similarly, the decrease in the
provision for impairment of assets from $321,397 for the quarter ended March 31,
1997 to zero for the quarter ended March 31, 1998 reflects the write-down of
certain assets to estimated net realizable value and the write-off of goodwill
from a prior acquisition that were recognized in the 1997 quarter.
11
<PAGE> 12
General and administrative expenses were $291,883 for the three months
ended March 31, 1998 as compared to $145,369 for the three months ended March
31, 1997. Most of this increase is attributable to increased staffing, although
legal and accounting expenses also increased.
Interest income decreased from $223,845 for the three months ended
March 31, 1997 to $204,044 for the three months ended March 31, 1998. The
decrease is attributable to a reduced amount of cash, cash equivalents and
certificates of deposit available for investment.
Other income decreased from $56,177 for the three months ended March
31, 1997 to a negative $2,575 for the three months ended March 31, 1998. The
Company had no significant items of other income for the three months ended
March 31, 1998 and does not expect any such items in the future.
Liquidity and Capital Resources
The Company's liquidity and capital resources remained relatively
unchanged at March 31, 1998 as compared to December 31, 1997. Working capital
decreased $280,255 from $15,668,626 at December 31, 1997 to $15,388,371 at March
31, 1998. If the Preferred Stock cash dividend attributable to the quarter ended
March 31, 1998 had been declared as of March 31, 1998 and therefore included as
a current liability at March 31, 1998, working capital would have decreased an
additional $458,400. The Preferred Stock dividend attributable to the quarter
ended March 31, 1998 was paid in April 1998. Current assets, including cash,
decreased slightly during the quarter, primarily as a result of loan costs
incurred, preferred stock dividends paid and increased repair and maintenance
costs.
The Company expects to expend substantial additional amounts to further
develop the UPR properties and to conduct drilling on the properties covered by
the Exploration Agreement. The Company also expects to continue the repairs to
gas gathering systems and workovers of oil and gas wells in the Company's Kansas
and Oklahoma assets that commenced in the quarter ended September 30, 1997,
which the Company anticipates will continue the balance of the second quarter of
1998. The Company also intends to continue to explore additional acquisitions of
producing and non-producing oil and gas properties. The Company intends to use
borrowings under the Credit Agreement, working capital and cash from operations
to fund such expenditures. The Company believes that these sources will be
adequate to fund these increased expenditures.
Net cash provided by the Company's operating activities was $328,535
for the three months ended March 31, 1998, compared to $800,704 for the three
months ended March 31, 1997, primarily as a result of decreases in production
levels and pricing.
During the quarter ended March 31, 1998, 15,000 shares of the Company's
Series C Preferred Stock were converted into 30,546 shares of Common Stock in
accordance with their terms. Subsequent to March 31, 1998, the Company has
received conversion notices from Preferred shareholders wishing to convert
30,000 additional shares of Preferred Stock into 60,580
12
<PAGE> 13
shares of Common Stock. Conversion of outstanding Preferred Stock will
proportionately reduce cash dividends payable during future periods.
The Company continues efforts to dispose of real estate located near
the City of Corpus Christi, Texas. A refinery located on a portion of the real
estate is being dismantled and all of the real estate has been listed for sale.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Portions of this Report contain "forward-looking statements" within the
meaning of the federal securities laws. Such forward-looking statements include,
without limitation, statements regarding the Company's need for working capital,
future revenues and results of operations and are identified by words such as
"anticipates," "plans," "expects" and "estimates." Factors that could cause
actual results to differ materially include, among others, the following:
Reserve Estimates. The Company's estimates of proved reserves of oil
and gas and future net cash flows therefrom are based on various assumptions
and, therefore, are inherently imprecise. Actual future production, revenue,
taxes, development expenditures, operating expenses and quantities of
recoverable oil and gas reserves may be subject to revision based upon
production history, results of future exploration and development, prevailing
oil and gas prices, operating costs and other factors.
Reliance on Key Personnel. The Company is dependent upon its executive
officers and key employees, particularly Bruce D. Benson, its Chief Executive
Officer. The unexpected loss of the services of one or more of these individuals
could have a detrimental effect on the Company. The Company does not have key
person life insurance on any of its officers.
Management of Growth. The acquisition of the UPR properties resulted in
a substantial change in the size and extent of the Company's assets and
operations. In order to accommodate this growth, the Company will have to expand
its staffing, office space and management information systems. The Company could
experience temporary difficulties in the course of assimilating the new
properties and managing the growth within the Company. Any such difficulties
could adversely affect the Company's business, financial condition or results of
operations until resolved.
Availability of Services and Materials. The Company's expanded
operations will require significantly higher levels of third-party services and
materials. Such services and materials have at times been scarce and the
unavailability of a sufficient number of drilling rigs or other goods or
services could impede the Company's ability to achieve its objectives and
significantly increase the costs of its operations.
Increased Debt. The Company's ability to service the debt incurred
under the Credit Agreement is in part dependent upon increasing its cash flows
from the UPR properties through further development work. Although the Company
believes that its cash flows will be sufficient to
13
<PAGE> 14
service the new debt, the higher levels of debt may adversely affect the
Company's ability to obtain additional financing for working capital, capital
expenditures and other purposes, should it need to do so, or to acquire
additional oil and gas properties utilizing new borrowings.
Oil and Gas Prices and Markets. The Company's revenues are dependent
upon prevailing prices for oil and gas. Oil and gas prices can be extremely
volatile. Prevailing prices are also affected by the actions of foreign
governments, international cartels and the United States government. Any
significant decline in oil and gas prices would adversely affect the Company's
revenues and operating income and could result in a reduction in the estimated
proved reserves attributable to the Company's properties, with a resulting
decrease in the Company's borrowing ability. In addition, the Company's revenues
depend upon the marketability of production, which is influenced by the
availability and capacity of gas gathering systems and pipelines, as well as the
effects of federal and state regulation and general economic conditions.
Government Regulation. The production and sale of oil and gas are
subject to various federal, state and local governmental regulations, which may
be changed from time to time in response to economic or political conditions.
Matters subject to regulation include discharge permits for drilling operations,
drilling bonds, reports concerning operations, the spacing of wells, unitization
and pooling of properties, taxation and environmental protection. From time to
time, regulatory agencies have imposed price controls and limitations on
production by restricting the rate of flow of oil and gas wells below actual
production capacity in order to conserve supplies of oil and gas. Changes in
these regulations or the failure to obtain regulatory approval for planned
increased density drilling on the UPR properties could have a material adverse
effect on the Company and its ability to achieve its objectives with respect to
the UPR properties.
Most of these factors are beyond the control of the Company. Investors
are cautioned not to put undue reliance on forward-looking statements.
14
<PAGE> 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
No report required.
Item 2. Changes in Securities.
No report required.
Item 3. Defaults Upon Senior Securities.
No report required.
Item 4. Submission of Matters to a Vote of Security Holders.
No report required.
Item 5. Other Information.
No report required.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits:
None.
B. Reports on Form 8-K:
None.
15
<PAGE> 16
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.
UNITED STATES EXPLORATION, INC.
Date: May 20, 1998 By: /s/ Bruce D. Benson
-------------------------------------
Bruce D. Benson, President,
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
Date: May 20, 1998 By: /s/ F. Michael Murphy
-------------------------------------
F. Michael Murphy, Vice President,
Secretary and Chief Financial Officer
(Principal Financial Officer)
16
<PAGE> 17
EXHIBIT INDEX
Exhibit
Number Item Page No.
27.1 Financial Data Schedule 18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 15,586,196
<SECURITIES> 0
<RECEIVABLES> 440,566
<ALLOWANCES> 21,935
<INVENTORY> 53,576
<CURRENT-ASSETS> 16,080,395
<PP&E> 5,342,253
<DEPRECIATION> 261,254
<TOTAL-ASSETS> 22,475,126
<CURRENT-LIABILITIES> 692,024
<BONDS> 0
0
22,920,000
<COMMON> 883
<OTHER-SE> (1,137,781)
<TOTAL-LIABILITY-AND-EQUITY> 22,475,126
<SALES> 759,480
<TOTAL-REVENUES> 759,480
<CGS> 194,916
<TOTAL-COSTS> 1,236,460
<OTHER-EXPENSES> 2,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (275,511)
<INCOME-TAX> 0
<INCOME-CONTINUING> (275,511)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (275,511)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
