U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING SEC File Number:
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CUSIP Number:
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[X] Form 10-K and Form 10-KSB [ ] Form 20-F [ ] Form 11-K
[ ] Form 10-Q and Form 10-QSB [ ] Form N-SAR
For Period Ended: December 31, 1998
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended: Not Applicable
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Nothing in this form shall be construed to imply that the
Commission has verified any information contained herein.
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If the notification relates to a portion of the filing check
above, identified Item9s) to which the notification relates: Not
Applicable
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PART I -- REGISTRANT INFORMATION
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Full name of Registrant:
American Resources Offshore, Inc.
Former Name if Applicable:
American Resources of Delaware, Inc.
Address of Principal Executive Office (Street and Number):
160 Morgan Street, P.O. Box 87
City, State and Zip Code:
Versailles, Kentucky 40383
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PART II -- RULES 12b-25(b) and (c)
If the subject report could not be filed without unreasonable
effort or expense and the registrant seeks relief pursuant to
Rule 12b-25, the following should be completed. (Check box if
appropriate.)
X (a) The reasons described in reasonable detail in Part III
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of this form could not be eliminated without unreasonable effort
or expense;
X (b) The subject annual report, semi-annual report,
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transition report on Form 10-K, Form 20-F, Form 11-K or Form
N-SAR, or portion thereof, will be filed on or before the
fifteenth calendar day following the prescribed due date; or the
subject quarterly report or transition report on Form 10-Q, or
portion thereof will be filed on or before the fifth calendar day
following the prescribed due date; and
(c) The accountant's statement or other exhibit required by
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Rule 12b-25(c) has been attached if applicable.
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PART III -- NARRATIVE
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State below in reasonable detail the reasons why Form 10-K and
Form 10-KSB, 20-F, 11-K, 10-Q and Form 10-QSB, N-SAR, or the
transition report or portion thereof could not be filed within
the prescribed period.
See EXHIBIT A attached hereto and incorporated herein by
reference.
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PART IV -- OTHER INFORMATION
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(1) Name and telephone number of person to contact in regard to
this notification:
Karen Underwood 606 873-5455
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(Name) (Area Code) (Telephone Number)
(2) Have all other period reports required under Section 13 or
15(d) of the Securities Exchange Act of 1934 or Section 30
of the Investment Company Act of 1940 during the preceding
12 months or for such shorter period that the registrant was
required to file such report(s) been filed? If answer is
no, identify report(s).
[X] Yes [ ] No
(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal
year will be reflected by the earnings statements to be
included in the subject report or portion thereof?
[X] Yes [ ] No
If so, attach an explanation of the anticipated change, both
narratively and quantitatively, and if appropriate, state
the reasons why a reasonable estimate of the results cannot
be made.
See Exhibit B attached hereto and incorporated herein by
reference.
American Resources Offshore, Inc.
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(Name of Registrant as specified in charter)
has caused this notification to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 31, 1999 By: /s/ Ralph Currie
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Ralph Currie
Chief Financial Officer
INSTRUCTION: The form may be signed by an executive officer of
the registrant or by any other duly authorized representative.
The name and title of the person signing the form shall be typed
or printed beneath the signature. If the statement is signed on
behalf of the registrant by an authorized representative (other
than an executive officer), evidence of the representative's
authority to sign on behalf of the registrant shall be filed with
the form.
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ATTENTION
Intentional misstatements or omissions of fact constitute
Federal Criminal Violations (See 18 U.S.C. 1001).
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EXHIBIT A
The Registrant is unable to timely file without unreasonable
effort or expenses, due to settlement negotiations taking place
during the first quarter of 1999 between the Registrant and
various creditors, the results of which have had a material
effect on the financial position of the Registrant. As a result
of these recently concluded settlements with certain creditors
and the ongoing settlement negotiations with other creditors, the
Registrant has been unable to complete its financial statements
and the required disclosures to be included in its Annual Report
on Form 10-K on a schedule which would permit the completion of
the audit of the financial statements and the receipt by March
31, 1999, of the consents from professional firms which are
required to be part of the Form 10-K.
The Registrant, without the appropriate filing consents from
such professionals, cannot eliminate this impediment in order to
allow the timely filing of its Form 10-K.
(BW)(AMERICAN RESOURCES OFFSHORE, INC. [NASDAQ Small Cap:
GASS]) American Resources Offshore, Inc. announces year-end
results of operations.
Versailles, Kentucky--(BUSINESS WIRE)--March 31, 1999--
American Resources Offshore, Inc. (ARO) today announced results
of operations for its fiscal year ended December 31, 1998.
Financial highlights were as follows:
ARO-owned production revenues increased 37% to $26.7 million
as compared with $19.5 million for 1997. The increase was
primarily attributable to wells acquired and drilled on
acreage acquired from TECO Oil & Gas, Inc. ("TECO") during
1998. Gross revenues for 1998 decreased 5% to $36.1 million
from the $38 million reported for 1997.
Operating loss for the year was ($41.2 million) after having
been ($322,000) for 1997; and net loss for 1998 was ($46.2
million) as compared with ($1.85 million) for 1997. The
differences were due primarily to:
i) a $36.7 million non-cash impairment of assets (more
particularly discussed below) compared with $5.1
million for 1997;
ii) a 171% increase in interest expense to $7.4 million
compared with $2.8 million for 1997 due primarily to
additional borrowings to fund the TECO acquisition;
iii) a 92% increase in oil and gas production expense to $5
million compared with $2.6 million for 1997 due to
operating costs associated with increased production;
iv) a 544% increase in exploration costs to $5.1 million
compared with $785,000 for the previous year; and
v) an 110% increase in depreciation, depletion and
amortization expense to $18.0 million compared with
$8.6 million for the previous year primarily as a
result of increased depletion attributable to the TECO
acquisition.
The resultant basic loss per share for 1998 was ($4.61) on
10,029,415 weighted average outstanding shares as compared
with a basic loss per share in 1997 of ($0.21) on 9,021,810
weighted average outstanding shares.
Despite increased production, lower prices resulted in a
slight increase in EBITDA for 1998 to $13.6 million compared
with $13.5 million for 1997.*
During the year ended December 31, 1998, ARO produced 11.671
billion cubic feet of gas equivalent (bcfe) for average
daily production of 32 million cubic feet of gas equivalent
(mmcfe), compared with total production of 7.134 bcfe and
average daily production of 19.5 mmcfe during 1997.
ARO was required to recognize a non-cash impairment charge
in the amount of $36.7 million for 1998 due to the fact that the
carrying amount of its assets exceeded the sum of the estimated
future undiscounted cash flows of the assets. The reduction in
estimated future undiscounted cash flows occurred primarily as a
result of year-end oil and gas prices, which were at their lowest
levels in recent years, operational problems experienced by ARO's
two largest producing fields and bids received in amounts less
than their carrying value on ARO's Kentucky properties which are
being actively offered for sale in an attempt to reduce debt.
All of these non-cash items impacted ARO's income but did not
impact its cash flow from operating activities.
As of December 31, 1998, ARO had current liabilities in
excess of current assets (excluding the current portion of long-
term debt) of approximately $6.3 million, was not in compliance
with its primary credit facility and bridge loans with DNB Energy
Assets, Inc., of approximately $48 million and $15.7 million,
respectively, and was in default under its $18.5 million loan
with TECO. This situation is primarily the result of:
i) the lack of available outside funding to complete the
scheduled refinancing of the interim loans and capital
expenditures associated with the acquisition and
development of properties from TECO;
ii) the marked decline in oil and gas prices;
iii) the more than 60% decline in ARO's two largest
producing wells; and
iv) trade payables incurred in association with the capital
requirements for the development of additional wells.
ARO's management has taken steps in an attempt to remedy its
deficiencies, including, but not limited to, the reduction of
administrative expenses and settlement of trade creditors for
amounts less than face value; and ARO's officers and directors
are diligently pursuing additional measures, including the sale
of its Appalachian properties and alternatives for debt
restructuring.
Rick G. Avare, President and CEO, stated: "We certainly are
not the exception as far as the write down of our assets is
concerned. Year-end price levels have required many energy-based
companies, both large and small, to recognize substantial
impairments to their properties. We are currently focusing our
attentions on finding the best alternative for the restructuring
of our company which will enable us to realize the most value for
our shareholders."
<TABLE>
EARNINGS RECAP:
Year Ended
December 31
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(Dollars in thousands
except share data)
1998 1997
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<S> <C> <C>
Revenue $36,137 $38,032
======= =======
Net income (loss) attributable
to common shares ($46,273)** ($1,895)***
========= ========
Net income (loss) per share ($4.61) ($0.21)
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Basic weighted average
shares outstanding 10,029,415 9,021,810
========== =========
OTHER FINANCIAL DATA:
EBITDA* $13,633 $13,545
======= =======
</TABLE>
*EBITDA is earnings before interest, taxes,
depreciation/depletion and amortization/impairment. EBITDA is
presented because it is a widely accepted financial indication of
a company's ability to service and incur debt. EBITDA should not
be considered as an alternative to earnings (loss) as an
indicator of the Company's operating performance or to cash flow
as a measure of liquidity.
**Includes a pre-tax, non-cash impairment to assets of $36.7
million.
***Includes a pre-tax, non-cash impairment to assets and a
reserve for future plugging and abandonment costs totalling $5.5
million.
American Resources Offshore, Inc. is a fully integrated
producer of oil and gas. ARO owns pipelines and production
located primarily in the Gulf Coast region. For information,
contact ARO's Investor Relations Department at (606)873-5455, or
visit our website at www.arisgc.com.
AMERICAN RESOURCES OFFSHORE, INC.
AND SUBSIDIARY
CONDENSED, CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
Year Ended
December 31
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(Dollars in thousands
except per share data)
1998 1997
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<S> <C> <C>
Revenues $36,374 $38,032
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Income (loss) from operations ($41,173)* ($322)**
Other income (expense) ($7,097) ($2,717)
Income tax expense (benefit) $2,346 $1,192
Preferred dividends ($49) ($48)
Net income (loss) ($46,273) ($1,895)
========= ========
EARNINGS PER SHARE:
Basic:
Income (loss) from operations ($4.14) ($0.04)
Other income (expense) ($0.71) ($0.30)
Income taxes $0.23 $0.13
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Net income (loss) ($4.61) ($0.21)
======= =======
**Includes a non-cash impairment to assets of $36.7 million.
*Includes a non-cash impairment to assets and a reserve for
future plugging and abandonment costs totalling $5.5 million.
</TABLE>
