<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
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 Number 0-19279
EVERFLOW EASTERN PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 34-1659910
----------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
585 West Main Street
P.O. Box 629
Canfield, Ohio 44406
- ------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330)533-2692
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 [X] No [ ]
There were 6,095,193 Units of limited partnership interest of the
Registrant as of May 12, 2000. The Units generally do not have any voting
rights, but, in certain circumstances, the Units are entitled to one vote per
Unit.
Except as otherwise indicated, the information contained in this Report
is as of March 31, 2000.
<PAGE> 2
EVERFLOW EASTERN PARTNERS, L.P.
<TABLE>
<CAPTION>
INDEX
DESCRIPTION PAGE NO.
----------- --------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999 F-1
Consolidated Statements of Income
Three Months Ended March 31, 2000 and 1999 F-3
Consolidated Statements of Partners' Equity
Three Months Ended March 31, 2000 and 1999 F-4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999 F-5
Notes to Unaudited Consolidated Financial Statements F-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 3
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 6
Signature 7
</TABLE>
2
<PAGE> 3
EVERFLOW EASTERN PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
March 31, 2000 and December 31, 1999
------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited) (Audited)
------------- -------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 2,154,668 $ 2,684,605
Accounts receivable:
Production 1,648,048 2,040,298
Officers and employees 451,993 526,030
Joint venture partners 265,413 474,355
Short-term investments 4,052,071 1,513,273
Other 85,760 88,991
------------- -------------
Total current assets 8,657,953 7,327,552
PROPERTY AND EQUIPMENT
Proved properties (successful efforts
accounting method) 110,897,353 110,483,039
Pipeline and support equipment 507,472 507,472
Corporate and other 1,553,397 1,545,233
------------- -------------
112,958,222 112,535,744
Less accumulated depreciation, depletion,
amortization and write down (66,051,187) (64,521,335)
------------- -------------
46,907,035 48,014,409
OTHER ASSETS 80,351 81,025
------------- -------------
$ 55,645,339 $ 55,422,986
============= =============
</TABLE>
See notes to unaudited consolidated financial statements.
F-1
<PAGE> 4
EVERFLOW EASTERN PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
March 31, 2000 and December 31, 1999
------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited) (Audited)
----------- -----------
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 55,502 $ 54,493
Accounts payable 1,148,674 1,202,605
Accrued expenses 193,388 189,333
----------- -----------
Total current liabilities 1,397,564 1,446,431
LONG-TERM DEBT, NET OF CURRENT PORTION 623,474 637,796
DEFERRED INCOME TAXES 50,000 50,000
COMMITMENTS AND CONTINGENCIES -- --
LIMITED PARTNERS' EQUITY, SUBJECT TO
REPURCHASE RIGHT
Authorized - 8,000,000 Units
Issued and outstanding - 6,095,193 Units 52,990,958 52,708,525
GENERAL PARTNER'S EQUITY 583,343 580,234
----------- -----------
Total partners' equity 53,574,301 53,288,759
----------- -----------
$55,645,339 $55,422,986
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
F-2
<PAGE> 5
EVERFLOW EASTERN PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2000 and 1999
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
REVENUES
Oil and gas sales $ 4,451,767 $ 4,085,041
Well management and operating 132,368 134,224
Other 696 904
----------- -----------
4,584,831 4,220,169
DIRECT COST OF REVENUES
Production costs 835,202 592,797
Well management and operating 33,544 71,188
Depreciation, depletion and amortization 1,516,833 1,485,808
Abandonment and write down of
oil and gas properties 75,000 25,000
----------- -----------
Total direct cost of revenues 2,460,579 2,174,793
GENERAL AND ADMINISTRATIVE EXPENSE 341,724 591,596
----------- -----------
Total cost of revenues 2,802,303 2,766,389
----------- -----------
INCOME FROM OPERATIONS 1,782,528 1,453,780
OTHER INCOME (EXPENSE)
Interest income 57,733 36,317
Interest expense (14,145) (46,469)
----------- -----------
43,588 (10,152)
----------- -----------
INCOME BEFORE INCOME TAXES 1,826,116 1,443,628
PROVISION FOR INCOME TAXES
Current -- --
Deferred -- --
----------- -----------
-- --
----------- -----------
NET INCOME $ 1,826,116 $ 1,443,628
=========== ===========
Allocation of Partnership Net Income
Limited Partners 1,806,232 1,428,104
General Partner 19,884 15,524
----------- -----------
$ 1,826,116 $ 1,443,628
=========== ===========
Net income per unit $ .30 $ .23
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
F-3
<PAGE> 6
EVERFLOW EASTERN PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
Three Months Ended March 31, 2000 and 1999
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
PARTNERS' EQUITY - JANUARY 1 $ 53,288,759 $ 52,171,076
Net income 1,826,116 1,443,628
Cash distributions (1,540,574) (779,954)
------------ ------------
PARTNERS' EQUITY - MARCH 31 $ 53,574,301 $ 52,834,750
============ ============
</TABLE>
See notes to unaudited consolidated financial statements.
F-4
<PAGE> 7
EVERFLOW EASTERN PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2000 and 1999
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,826,116 $ 1,443,628
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 1,529,852 1,500,920
Abandonment and write down of
oil and gas properties 75,000 25,000
Changes in assets and liabilities:
Accounts receivable 601,192 495,398
Short-term investments (2,538,798) (29,092)
Other current assets 3,231 (33,681)
Other assets 674 674
Accounts payable (53,931) (359,586)
Accrued expenses 4,055 (347,237)
----------- -----------
Total adjustments (378,725) 1,252,396
----------- -----------
Net cash provided by operating activities 1,447,391 2,696,024
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds received on receivables from officers and
employees 112,269 212,554
Advances disbursed to officers and employees (38,232) (50,433)
Purchase of property and equipment (497,478) (1,804,981)
----------- -----------
Net cash used by investing activities (423,441) (1,642,860)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions (1,540,574) (779,954)
Proceeds from issuance of debt, including
revolver activity -- 1,000,000
Payments on debt, including revolver activity (13,313) (1,106,180)
----------- -----------
Net cash used by financing activities (1,553,887) (886,134)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS (529,937) 167,030
CASH AND EQUIVALENTS AT BEGINNING
OF YEAR 2,684,605 294,518
----------- -----------
CASH AND EQUIVALENTS AT END OF
FIRST QUARTER $ 2,154,668 $ 461,548
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 13,391 $ 35,540
Income taxes -- --
</TABLE>
See notes to unaudited consolidated financial statements.
F-5
<PAGE> 8
EVERFLOW EASTERN PARTNERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Summary of Significant Accounting Policies
A. Interim Financial Statements - The interim
consolidated financial statements included herein
have been prepared by the management of Everflow
Eastern Partners, L.P., without audit. In the opinion
of management, all adjustments (which include only
normal recurring adjustments) necessary to present
fairly the financial position and results of
operations have been made.
Use of Estimates - The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Information and footnote disclosures normally
included in financial statements prepared in
accordance with generally accepted accounting
principles have been condensed or omitted. It is
suggested that these financial statements be read in
conjunction with the financial statements and notes
thereto which are incorporated in Everflow Eastern
Partners, L.P.'s report on Form 10-K filed with the
Securities and Exchange Commission on March 29, 2000.
The results of operations for the interim periods may
not necessarily be indicative of the results to be
expected for the full year.
B. Organization - Everflow Eastern Partners, L.P.
("Everflow") is a Delaware limited partnership which
was organized in September 1990 to engage in the
business of oil and gas exploration and development.
Everflow was formed to consolidate the business and
oil and gas properties of Everflow Eastern, Inc.
("EEI") and Subsidiaries and the oil and gas
properties owned by certain limited partnership and
working interest programs managed or sponsored by EEI
("EEI Programs" or "the Programs").
F-6
<PAGE> 9
EVERFLOW EASTERN PARTNERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 1. Organization and Summary of Significant Accounting Policies
(Continued)
B. Organization (Continued)
Everflow Management Limited, LLC, an Ohio limited
liability company, is the general partner of
Everflow. Everflow Management Limited, LLC is
authorized, in general, to perform all acts necessary
or desirable to carry out the purposes and conduct of
the business of Everflow. The members of Everflow
Management Limited, LLC are Everflow Management
Corporation ("EMC"), two individuals who are Officers
and Directors of EEI, and Sykes Associates, a limited
partnership controlled by Robert F. Sykes, the
Chairman of the Board of EEI. EMC is an Ohio
corporation formed in September 1990 and is the
managing member of Everflow Management Limited, LLC.
C. Principles of Consolidation - The consolidated
financial statements include the accounts of
Everflow, EEI and EEI's wholly owned subsidiaries,
and investments in oil and gas drilling and income
partnerships (collectively, "the Company") which are
accounted for under the proportional consolidation
method. All significant accounts and transactions
between the consolidated entities have been
eliminated.
D. Allocation of Income and Per Unit Data - Under the
terms of the limited partnership agreement,
initially, 99% of revenues and costs were allocated
to the Unitholders (the limited partners) and 1% of
revenues and costs were allocated to the General
Partner. Such allocation has changed and will change
in the future due to Unitholders electing to exercise
the Repurchase Right (see Note 4).
Earnings per limited partner Unit have been computed
based on the weighted average number of Units
outstanding, during the period for each period
presented. Average outstanding Units for earnings per
Unit calculations amounted to 6,095,193 and 6,172,537
for the three months ended March 31, 2000 and 1999,
respectively.
E. New Accounting Standards - In June 1998, SFAS 133,
"Accounting for Derivative Instruments and Hedging
Activities," was issued. SFAS 133 establishes
accounting and reporting standards for derivative
instruments and hedging activities. SFAS 133, as
amended
F-7
<PAGE> 10
EVERFLOW EASTERN PARTNERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 1. Organization and Summary of Significant Accounting Policies
(Continued)
E. New Accounting Standards (Continued)
by SFAS 137, is effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000. The
effect of adoption of the standard is expected to
have no material effect on the Company's financial
statements.
Note 2. Short-Term Investments
Short-term investments consist of marketable corporate debt
securities which are classified as trading. The fair values of
the investments approximate cost.
Note 3. Credit Facilities and Long-Term Debt
In May 1999, the Company entered into an agreement that
replaced its prior credit agreement. The agreement provides
for a revolving line of credit in the amount of $7,000,000,
all of which is available. The revolving line of credit
provides for interest payable quarterly at LIBOR plus 175
basis points with the principal due at maturity, May 31, 2001.
The Company anticipates renewing the facility every other year
to minimize debt origination, carrying and interest costs
associated with long-term bank commitments. Borrowings under
the facility are unsecured; however, the Company has agreed,
if requested by the bank, to execute any supplements to the
agreement including security and mortgage agreements on the
Company's assets. The agreement contains restrictive covenants
requiring the Company to maintain the following: (i) loan
balance not to exceed the borrowing base of $7,000,000; (ii)
tangible net worth of at least $40,000,000; and (iii) a total
debt to tangible net worth ratio of not more than 0.5 to 1.0.
In addition, there are restrictions on mergers, sales and
acquisitions, the incurrence of additional debt and the pledge
or mortgage of the Company's assets.
The Company purchased a building and funded its cost,
including improvements, in part, through mortgage notes. The
notes have an aggregate balance of $678,976 and $692,289 at
March 31, 2000 and December 31, 1999, respectively, and at
March 31, 2000 bear interest at fixed (converting in certain
subsequent years to variable) rates ranging from 6.51% - 8.41%
and a weighted average rate of 7.34%. The notes at March 31,
2000 require aggregate payments of principal and interest of
$8,637 per month.
F-8
<PAGE> 11
EVERFLOW EASTERN PARTNERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 3. Credit Facilities and Long-Term Debt (Continued)
The Company is exposed to market risk from changes in interest
rates since it, at times, funds its operations through
long-term and short-term borrowings. The Company's primary
interest rate risk exposure results from floating rate debt
with respect to the Company's revolving credit.
Note 4. Partners' Equity
Units represent limited partnership interests in Everflow. The
Units are transferable subject only to the approval of any
transfer by Everflow Management Limited, LLC and to the laws
governing the transfer of securities. The Units are not listed
for trading on any securities exchange nor are they quoted in
the automated quotation system of a registered securities
association. However, Unitholders have an opportunity to
require Everflow to repurchase their Units pursuant to the
Repurchase Right.
Under the terms of the limited partnership agreement,
initially, 99% of revenues and costs are allocated to the
Unitholders (the limited partners) and 1% of revenues and
costs are allocated to the General Partner. Such allocation
has changed and will change in the future due to Unitholders
electing to exercise the Repurchase Right.
The partnership agreement provides that Everflow will
repurchase for cash up to 10% of the then outstanding Units,
to the extent Unitholders offer Units to Everflow for
repurchase pursuant to the Repurchase Right. The Repurchase
Right entitles any Unitholder, between May 1 and June 30 of
each year, to notify Everflow that he elects to exercise the
Repurchase Right and have Everflow acquire certain or all of
his Units. The price to be paid for any such Units is
calculated based upon the audited financial statements of the
Company as of December 31 of the year prior to the year in
which the Repurchase Right is to be effective and
independently prepared reserve reports. The price per Unit
equals 66% of the adjusted book value of the Company allocable
to the Units, divided by the number of Units outstanding at
the beginning of the year in which the applicable Repurchase
Right is to be effective less all Interim Cash Distributions
received by a Unitholder. The adjusted book value is
calculated by adding partners' equity, the Standardized
Measure of Discounted Future Net Cash Flows and the tax effect
included in the Standardized Measure and subtracting from that
sum the carrying value of oil and gas properties (net of
undeveloped lease costs). If
F-9
<PAGE> 12
EVERFLOW EASTERN PARTNERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 4. Partners' Equity (Continued)
more than 10% of the then outstanding Units are tendered
during any period during which the Repurchase Right is to be
effective, the Investors' Units tendered shall be prorated for
purposes of calculating the actual number of Units to be
acquired during any such period. The price associated with the
Repurchase Right, based upon the December 31, 1999
calculation, is $6.11 per Unit, net of the distributions
($.625 per Unit in total) made in January and April 2000.
Units repurchased pursuant to the Repurchase Right for each of
the last five years are as follows:
<TABLE>
<CAPTION>
Calculated Units
Price for Less # of Out-standing
Repurchase Premium Interim Net Units Following
Year Right Offered Distributions Price Paid Repurchased Repurchase
---- ---------- ------- ------------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995 $4.72 $.28 $.375 $4.625 81,522 6,433,044
1996 $4.48 $.27 $.250 $4.500 53,103 6,379,941
1997 $5.46 $ - $.250 $5.210 172,290 6,207,651
1998 $5.24 $ - $.250 $4.990 35,114 6,172,537
1999 $6.16 $ - $.375 $5.790 77,344 6,095,193
</TABLE>
Note 5. Commitments and Contingencies
Everflow paid a quarterly dividend in April 2000 of $.375 per
Unit to Unitholders of record on March 31, 2000. The
distribution amounted to approximately $2,310,000.
EEI is the general partner in certain oil and gas
partnerships. As general partner, EEI shares in unlimited
liability to third parties with respect to the operations of
the partnerships and may be liable to limited partners for
losses attributable to breach of fiduciary obligations.
The Company operates exclusively in the United States, almost
entirely in Ohio and Pennsylvania, in the exploration,
development and production of oil and gas.
The Company operates in an environment with many financial
risks, including, but not limited to, the ability to acquire
additional economically recoverable oil and gas reserves, the
inherent risks of the search for,
F-10
<PAGE> 13
EVERFLOW EASTERN PARTNERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Note 5. Commitments and Contingencies (Continued)
development of and production of oil and gas, the ability to
sell oil and gas at prices which will provide attractive rates
of return, the volatility and seasonality of oil and gas
production and prices, and the highly competitive nature of
the industry and worldwide economic conditions. The Company's
ability to expand its reserve base and diversify its
operations is also dependent upon the Company's ability to
obtain the necessary capital through operating cash flow,
additional borrowings or additional equity funds. Various
federal, state and governmental agencies are considering, and
some have adopted, laws and regulations regarding
environmental protection which could adversely affect the
proposed business activities of the Company. The Company
cannot predict what effect, if any, current and future
regulations may have on the operations of the Company.
F-11
<PAGE> 14
Part I: Financial Information
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes the Company's financial position at
March 31, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------------- --------------------
(Amounts in Thousands) Amount % Amount %
------ --- ------ ---
<S> <C> <C> <C> <C>
Working capital $ 7,260 13% $ 5,881 11%
Property and equipment (net) 46,907 87 48,015 89
Other 80 -- 81 --
------- ------- ------- -------
Total $54,247 100% $53,977 100%
======= ======= ======= =======
Long-term debt $ 623 1% 638 1%
Deferred income taxes 50 -- 50 --
Partners' equity 53,574 99 53,289 99
------- ------- ------- -------
Total $54,247 100% $53,977 100%
======= ======= ======= =======
</TABLE>
Working capital surplus of $7.3 million as of March 31, 2000
represented an increase of $1.4 million from December 31, 1999 due primarily to
an increase in short-term investments. The increase was partially offset by a
reduction in accounts receivable.
In May 1999, the Company modified its revolving credit facility. The
facility provides for a revolving line of credit in the amount of $7.0 million,
all of which is available. The revolving line of credit provides for interest
payable quarterly at LIBOR plus 175 basis points with principal due at maturity,
May 31, 2001. The Company anticipates renewing the facility every other year to
minimize debt origination, carrying and interest costs associated with long-term
bank commitments. Management of the Company believes this revolving credit
facility is sufficient to allow the Company to continue to fund the development
of oil and gas properties, repurchase Units pursuant to the Repurchase Right and
make quarterly Cash Distributions.
The Company's cash flow from operations before the change in working
capital increased $461 thousand, or 16%, during the three months ended March 31,
2000 as compared to the same period in 1999. Changes in working capital other
than cash and cash equivalents decreased cash by $2.0 million during the three
months ended March 31, 2000. The increase in short-term investments of $2.5
million at March 31, 2000 compared to
3
<PAGE> 15
December 31, 1999 is primarily the result of higher investments in marketable
corporate debt securities at March 31, 2000.
Cash flows provided by operating activities was $1.4 million for the
three months ended March 31, 2000. Cash was primarily used to purchase property
and equipment and pay a quarterly distribution.
Borrowings for operations may be required during the summer months due
to the seasonal nature of the gas purchase agreements with The East Ohio Gas
Company entered into beginning in 1991. Seasonal price reductions and production
restrictions during the summer months reduce operating revenues and consequently
cash flows from operations during such periods.
In the fall of 1999, the Company received a decrease in the price
received for natural gas pursuant to the pricing adjustments contained in the
Company's Intermediate Term Adjustable Price Gas Purchase Agreements with The
East Ohio Gas Company. The Company anticipates these pricing adjustments should
decrease cash flow from gas production during 2000, assuming similar production
levels. Recent oil prices have increased and will increase the Company's cash
flows from oil production should pricing remain at such levels.
Management of the Company has explored the possible sale of the
Company. Although management may, from time to time, continue to engage in
discussions concerning a potential sale, management does not intend to pursue
actively a sale of the Company at the present time. Management will continue to
evaluate this and other alternatives in attempting to maximize Unitholder value.
4
<PAGE> 16
RESULTS OF OPERATIONS
The following table and discussion is a review of the results of
operations of the Company for the three months ended March 31, 2000 and 1999.
All items in the table are calculated as a percentage of total revenues. This
table should be read in conjunction with the discussions of each item below:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------
2000 1999
---- ----
<S> <C> <C>
Revenues:
Oil and gas sales 97% 97%
Well management and operating 3 3
----- ----
Total Revenues 100 100
Expenses:
Production costs 18 14
Well management and operating 1 2
Depreciation, depletion and amortization 33 35
Abandonment and write down of
oil and gas properties 2 1
General and administrative 7 14
Other (1) -
---- ----
Total Expenses 60 66
----- ----
Net income 40% 34%
===== ====
</TABLE>
Revenues for the three months ended March 31, 2000 increased $365
thousand, or 9%, compared to the same period in 1999. This increase was due to
an increase in oil and gas sales during the first three months of 2000, as
compared to the same period in 1999.
Oil and gas sales increased $367 thousand, or 9%, during the three
months ended March 31, 2000 compared to the same period in 1999. Higher gas
production volumes and oil prices during the first quarter of 2000 were
responsible for this increase compared to this same period in 1999.
Production costs increased $242 thousand, or 41%, during the three
months ended March 31, 2000 compared to the same period in 1999. Additional
producing properties, production volumes and increased costs were responsible
for this increase between 1999 and 2000.
Well management and operating costs decreased $38 thousand, or 53%,
during the three months ended March 31, 2000 compared to the same period in
1999. Purchased oil and
5
<PAGE> 17
gas property interests from investors in Company operated properties was
primarily responsible for this decrease in 2000.
Depreciation, depletion and amortization increased $31 thousand, or 2%,
during the three months ended March 31, 2000 compared to the same period in
1999. The increase in depreciation, depletion and amortization is the result of
increased production from producing oil and gas properties.
General and administrative expenses decreased $250 thousand, or 42%,
during the first quarter of 2000 compared to the first quarter of 1999. The
primary reason for this decrease is due to reduced personnel costs resulting
from the Company's decision to decrease its level of activity in the development
of oil and gas properties. This decrease was also the result of higher
professional fees and associated costs involved with exploring the possible sale
of the Company during the first quarter of 1999.
The Company reported net income of $1.8 million, an increase of $382
thousand, or 26%, during the three months ended March 31, 2000 compared to the
same period in 1999. The increase in oil and gas sales was primarily responsible
for this increase in net income. Although production costs increased
significantly, lower general and administrative expense more than offset the
increase. Net income represented 40% and 34% of total revenue during the three
months ended March 31, 2000 and 1999, respectively.
Except for historical financial information contained in this Form
10-Q, the statements made in this report are forward-looking statements. Factors
that may cause actual results to differ materially from those in the forward
looking statement include price adjustments pursuant to the Company's
Intermediate Term Adjustable Price Gas Purchase Agreements with The East Ohio
Gas Company, price fluctuations in the natural gas and crude oil markets in the
Appalachian Basin, the weather in the Northeast Ohio area, the number of Units
tendered pursuant to the Repurchase Right and the ability to locate economically
productive oil and gas prospects for development by the Company.
Part II. Other Information
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) No reports on Form 8-K were filed with the Commission
during the Company's first quarter.
6
<PAGE> 18
SIGNATURE
Pursuant to the requirement 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.
EVERFLOW EASTERN PARTNERS, L.P.
By: EVERFLOW MANAGEMENT LIMITED, LLC
General Partner
By: EVERFLOW MANAGEMENT CORPORATION
Managing Member
May 12, 2000 By: /s/William A. Siskovic
------------------------
William A. Siskovic
Vice President and Principal Financial and
Accounting Officer
(Duly Authorized Officer)
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANTS FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31,
2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,154,668
<SECURITIES> 4,052,071
<RECEIVABLES> 2,365,454
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,657,953
<PP&E> 112,958,222
<DEPRECIATION> 66,051,187
<TOTAL-ASSETS> 55,645,339
<CURRENT-LIABILITIES> 1,397,564
<BONDS> 678,976
0
0
<COMMON> 0
<OTHER-SE> 53,574,301
<TOTAL-LIABILITY-AND-EQUITY> 55,645,339
<SALES> 4,451,767
<TOTAL-REVENUES> 4,584,831
<CGS> 835,202
<TOTAL-COSTS> 2,460,579
<OTHER-EXPENSES> 341,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,145
<INCOME-PRETAX> 1,826,116
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,826,116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,826,116
<EPS-BASIC> 0.30
<EPS-DILUTED> 0.30
</TABLE>
