<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ______ to _______
---------------------------
Commission File No. 0-21702
---------------------------
MIDDLE BAY OIL COMPANY, INC.
(Exact name of small business issuer as specified in its charter)
ALABAMA 63-1081013
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
115 SOUTH DEARBORN STREET
MOBILE, ALABAMA 36602
(Address of principal executive offices)
(334) 432-7540
(Issuer's telephone number)
N/A
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of Exchange Act 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 [ ]
Number of shares outstanding of each of the Registrant's classes of common
stock, as of the latest practicable date:
Common stock, $.02 par value
1,318,917 shares as of April 30, 1996
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
Total number of sequentially numbered pages:
<PAGE> 2
MIDDLE BAY OIL COMPANY, INC.
INDEX
Page
No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets-
March 31, 1996 and December 31, 1995 ............... 1
Statements of Operations-
Three months ended March 31, 1996 and 1995 ......... 2
Statements of Cash Flows-
Three months ended March 31, 1996 and 1995 ......... 3
Notes to Financial Statements ....................... 4
Item 2. Management's Discussion and Analysis
or Plan of Operation ...................... 12
Item 6. Exhibits and Reports on Form 8-K ............. 16
<PAGE> 3
PART I- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MIDDLE BAY OIL COMPANY, INC.
Balance Sheets
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31 December 31
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash $60,828 $80,791
Notes and Accounts Receivable- Trade 714,314 880,715
Other Current Assets 8,729 52,785
------- ---------
Total Current Assets 783,871 1,014,291
Non-current Assets
Notes Receivable- Stockholder (Note 2) 134,204 132,547
------- -------
134,204 132,547
Property (At Cost) (Note 1)
Oil and Gas (Successful Efforts Method) 11,498,431 11,400,288
Real Estate-undeveloped 55,217 54,414
Furniture, Fixtures and Other (Note 2) 353,897 350,676
Accumulated Depreciation and Depletion (4,240,380) (3,976,923)
--------- ---------
7,667,165 7,828,455
Other Assets 5,652 9,459
TOTAL ASSETS $8,590,891 $8,984,752
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Maturity of Long-term Debt (Note 3) $810,995 $810,861
Accounts Payable and Accrued Expenses 348,392 624,144
--------- ---------
Total Current Liabilities 1,159,387 1,435,005
Long-term Debt 3,992,578 4,195,391
Deferred Income Taxes (Note 5) 495 495
Redeemable Common Stock (Note 4) 852,642 852,642
Commitments and Contingencies (Note 6)
Stockholders' Equity (Note 4)
Common Stock, $.02 Par Value, 5,000,000
Authorized, 1,318,917 Issued and
Outstanding at March 31, 1996 and
December 31, 1995 26,378 26,378
Paid-in-capital 3,241,040 3,241,040
Retained Earnings (Deficit) (681,628) (766,199)
--------- ---------
Total Stockholders' Equity 2,585,790 2,501,219
Total Liabilities and Equity $8,590,891 $8,984,752
========= =========
See Accompanying Notes.
</TABLE>
<PAGE> 4
Middle Bay Oil Company, Inc.
Statements of Operations
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31 March 31
1996 1995
-------- --------
<S> <C> <C>
Revenue
Oil and Gas Production $1,016,276 $713,471
Interest 3,421 3,317
Other 26,902 30,997
Gain on Sale of Property 3,031 9,081
--------- -------
Total Revenue 1,049,629 756,866
--------- -------
Costs and Expenses
Well Operating $403,798 $263,634
Depreciation, Depletion and
Amortization 269,815 243,843
Abandonment - -
Interest 120,174 103,705
General and Administrative 171,271 174,906
------- -------
Total Expenses 965,058 786,088
Income (Loss) Before Income Taxes 84,572 (29,222)
Income Taxes - -
------ ------
Net Income (Loss) $84,572 ($29,222)
====== ======
Average Common Shares Outstanding 1,318,917 1,318,628
========= =========
Net Income (Loss) per Common Share $0.06 ($0.02)
==== ====
See Accompanying Notes.
</TABLE>
<PAGE> 5
Middle Bay Oil Company, Inc.
Statements of Cash Flows
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31 March 31
1996 1995
-------- --------
<S> <C> <C>
Operating Activities
Net Income (Loss) $84,572 ($29,222)
Adjustments to Reconcile Net Income (Loss)
To Net Cash Provided by Operating Activities
Depletion, Depreciation and Amortization 269,815 243,843
Changes in Current Assets and Liabilities:
Accounts Receivable 450,682 (132,826)
Accounts Payable and Accrued Expenses (515,972) 186,453
Gain on Sale of Properties (3,031) (9,080)
Other Charges (Credits) (2,553) 1,693
------- -------
Net Cash Provided (Used) by Operating
Activities 283,513 260,861
Investing Activities
Proceeds from Sales of Properties 25,000 44,688
Additions to Oil and Gas Properties (121,473) (3,232,208)
Purchase of Equipment 0 (4,060)
Furniture, Fixtures and Other Assets (2,666) (12,172)
Receipts from (Advances To) Stockholder (1,657) (1,838)
------- ---------
Net Cash Used by Investing
Activities (100,796) (3,205,590)
Financing Activities
Proceeds from Debt Issued 0 5,628,000
Principal Payments on Debt (202,680) (2,639,420)
------- ---------
Net Cash Provided (Used ) by Financing
Activities (202,680) 2,988,580
Net Increase (Decrease) in Cash (19,963) 43,851
Cash- Beginning 80,791 183,516
------ -------
Cash- Ending $60,828 $227,367
====== =======
Supplemental Cash Flow Information:
Interest Paid in Cash $120,174 $103,705
======= =======
See Accompanying Notes.
</TABLE>
<PAGE> 6
MIDDLE BAY OIL COMPANY, INC.
Notes to Financial Statements
March 31, 1996 and 1995
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Middle Bay Oil Company, Inc. (the Company), an Alabama corporation, was
formed in connection with a transaction (the Transaction) approved by the
unitholders on December 22, 1992 to reorganize the business of Bay City
Consolidated Partners, Ltd. (the Partnership) into the Company. The
Partnership was formed in 1988 to succeed to the business of 10 affiliated
oil and gas limited partnerships. The partnership was owned 95% by the
limited partners and 5% by the general partner.
Pursuant to the Transaction, the Partnership transferred substantially
all its assets and liabilities to the Company on December 31, 1992 in
exchange for subscribing to all the outstanding shares of the Company's
common stock. The Partnership allocated 7.0 shares of the Company's common
stock for each common unit. Concurrently, the Partnership distributed to its
former unitholders, including the general partner, 7.0 shares of common stock
for each common unit.
BASIS OF PRESENTATION
In management's opinion, the accompanying financial statements contain
all adjustments (consisting solely of normal recurring adjustments) necessary
to present fairly the financial position of the Company as of March 31, 1996
and the results of operations and cash flows for the three months ended March
31, 1996 and 1995.
The accompanying financial statements have not been audited by an
independent accountant. Certain information and disclosures normally
included in annual audited financial statements prepared in accordance with
generally accepted accounting principles have been omitted, although the
Company believes that the disclosures made are adequate to make the
information presented not misleading. These financial statements should be
read in conjunction with the Company's financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995.
PRINCIPLES OF CONSOLIDATION
The Transaction has been reflected in the accounts of the Company as a
reorganization of entities under common control whereby the historical bases
of the assets and liabilities of the Partnership are carried forward as the
recorded bases for the Company.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Company classifies all
cash investments with original maturities of three months or less as cash.
MARKETABLE SECURITIES
Marketable securities held by the Company are categorized as available-for-
sale in accordance with the provisions of SFAS No. 115. Available-for-sale
securities are carried at fair value, with the unrealized gains and losses,
net of tax, reported as a separate component of stockholders' equity.
Realized gains and losses and declines in value judged to be other-than-
temporary are include in investment income.
PROPERTIES
The Company follows the "successful efforts" method of accounting for
its oil an gas properties. Under the successful efforts method, costs of
acquiring undeveloped oil and gas leasehold acreage, including lease bonuses,
brokers' fees and other related costs are capitalized. Provisions for
impairment of undeveloped oil and gas leases are based on periodic
evaluations. Annual lease rentals and exploration expenses, including
geological and geophysical expenses and exploratory dry hole costs, are
charged against income as incurred. Costs of drilling and equipping
productive wells, including developmental dry holes and related production
facilities are capitalized.
Depletion, depreciation and amortization of capitalized costs are
computed separately for each property based on the unit-of-production method
using only proved oil and gas reserves. In arriving at such rates,
commercially recoverable reserves have been estimated by an independent
petroleum engineering firm. If the capitalized costs of total proved
properties exceed the sum of undiscounted estimated future net revenues
before income taxes from total proved reserves (determined on a field-by-field
basis), such excess is charged to expense in the period in which it occurs
and is not reinstated.
With respect to normal dispositions, the cost of properties retired or
otherwise disposed of, and the applicable accumulated depreciation, depletion
and amortization are removed from the accounts, and the resulting profit or
loss, if any, is reflected in current operations.
SITE RESTORATION, DISMANTLEMENT & ABANDONMENT COSTS
Site restoration, dismantlement and abandonment costs (P&A costs) include
costs associated with dismantling and disposing of the facilities and
equipment required to operate a well and restoring the well site to specified
conditions. The Company develops specific estimates of its P&A costs based
on consultations with its engineers and reevaluates such estimates annually.
Estimated future P&A costs are accrued on a unit-of-production method based
on proved reserves. As of March 31, 1996 and December 31, 1995, the P&A
costs accrued were immaterial.
IMPAIRMENT OF LONG-LIVED ASSETS
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
(SFAS #121) was issued in March 1995 and was adopted by the Company in the
fourth quarter of 1995. This statement requires that long-lived assets be
reviewed for impairment when events or changes in circumstances indicate that
the carrying value of such assets may not be recoverable. This review
consists of a comparison of the carrying value of the asset with the asset's
expected future undiscounted cash flows without interest costs.
Estimates of expected future cash flows are to represent management's
best estimate based on reasonable and supportable assumptions and
projections. If the expected future cash flows exceed the carrying value of
the asset, no impairment is recognized. If the carrying value of the asset
exceeds the expected future cash flows, an impairment exists and is measured
by the excess of the carrying value over the estimated fair value of the
asset. Any impairment provisions recognized in accordance with SFAS #121 are
permanent and may not be restored in the future.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated on the
accelerated method over the appropriate life of the property.
INCOME TAXES
The Company provides for income taxes using the asset and liability
method under which deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax
rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities. The effect on deferred taxes of a change in tax laws or tax
rates is recognized in income in the period that includes the enactment date.
(2) RELATED PARTY TRANSACTIONS
The Company has a receivable, including accrued interest, from Bay City
Energy Group, Inc. (BCEG), a significant stockholder, as of March 31, 1996
and December 31, 1995 in the amount of $134,204 and $132,547, respectively.
The note is secured by 75,000 shares of Company common stock with principal
and accrued interest at 5% per annum due in full on January 1, 2001.
In January, 1993, BCEG contributed computer equipment and software,
office furnishings and equipment, maps, logs and other geological and
engineering data to the Company in partial payment of the amount owed. In
December, 1993, the Company purchased from BCEG land valued at $125,000 and
fee minerals valued at $150,000. The land was sold in April, 1995.
On December 31, 1995, BCEG contributed proved oil and gas reserves valued
at $186,938 to the Company as partial payment on the amount owed. The
reserves were evaluated on a basis similar to the evaluation of the Company's
reserves as detailed in the Company's 1995 10-KSB Footnote 9.
During the three months ended March 31, 1996 and 1995, BCEG did not make
any payments and was not advanced any funds. Interest of $13,943 was accrued
on the note at March 31, 1996.
(3) LONG-TERM DEBT
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
-------- -----------
<S> <C> <C>
Term note of $5,628,000, due
February 1, 2002, secured by
oil and gas properties, repay-
able in monthly installments
of $67,000 plus interest at
1.5% over prime $4,657,000 $4,858,000
Note, due 1/1/99, secured by
office building, repayable
in monthly installments of
$1,511 including interest
at 7 3/4% 146,573 148,252
--------- ---------
Total $4,803,573 $5,006,252
Less current maturities 810,995 810,861
--------- ---------
Long-term debt excluding
current maturities $3,992,578 $4,195,391
========= =========
</TABLE>
The $5,628,000 note contains certain restrictive provisions, the most
significant of which restricts additional borrowings, either directly or
indirectly, and payment of dividends. At March 31, 1996, the Company was in
compliance with all covenants specified in the term loan agreement.
(4) STOCKHOLDERS' EQUITY
On March 21, 1995 Middle Bay Oil Company, Inc. effected a one-for-two
reverse stock split (share consolidation) of its capital stock, thereby
changing the authorized shares of common stock from 10,000,000 shares of $.01
par value to 5,000,000 shares of $.02 par value. The issued and outstanding
shares of common stock were reduced from 2,637,257 to 1,318,629 shares.
Fractional shares resulting from the reverse split, 288 shares, were rounded
up to whole shares and issued. The Company's authorized preferred shares
were reduced from 5,000,000 shares of $.01 par value to 2,500,000 shares of
$.02 par value. No preferred shares have been issued by the Company. All
previous per share data have been restated to account for the reverse stock
split. The reverse split was authorized by the shareholders of the Company
at a special meeting held March 14, 1995.
The Company has a contingent obligation to repurchase the 142,107 common
shares of the Company issued in the Janex Acquisition, upon written notice
delivered to the Company, beginning five years after the closing date and
continuing for thirty days thereafter, at a price of $6.00 per share. This
obligation shall terminate if the Company's stock trades at a share price of
$8.00 or greater for twenty consecutive days during the thirty-six month
period immediately preceding the first day of the fifth year after the
closing date. The closing date of the Janex Acquisition was November 1,
1993. The value of the redeemable common stock at the $6.00 redemption price
is shown in the balance sheet as Redeemable Common Stock. Note that the
shares and price per share have been adjusted for the one-for-two reverse
split effective March 21, 1995.
(5) INCOME TAXES
The Company's income tax expense (benefit) for continuing operations
consists of the following:
<TABLE>
<CAPTION>
Three Months Ended
------------------------
March 31 March 31
1996 1995
-------- --------
<S> <C> <C>
Current $ - $ -
Deferred - -
-------- --------
Total $ - $ -
======== ========
</TABLE>
The Company's net deferred tax liability at March 31, 1996 and December
31, 1995 are as follows:
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
-------- -----------
<S> <C> <C>
Deferred tax liability
Oil and gas properties $ 495 $ 90,648
Deferred tax asset - -
Valuation allowance - -
------- -------
Net deferred tax liability $ 495 $ 90,648
======= =======
</TABLE>
As of March 31, 1996, the Company had approximately $850,000 of operating
loss carryforwards, with $432,000 expiring in 2009 and $418,000 expiring in
2010. As of December 31, 1995 the Company had $36,482 of AMT credit
carryforwards and $22,000 of Section 29 tax credit carryforwards.
(6) COMMITMENTS AND CONTINGENCIES
The Company is obligated under the terms of certain operating leases
for office equipment through December, 1997. Future minimum rental payments
are approximately $9,774 in 1996 and $3,775 in 1997.
The Company is a defendant in various legal proceedings which are
considered routine litigation incidental to the Company's business, the
disposition of which management believes will not have a material effect on
the financial position or results of operations of the Company.
(7) SUBSEQUENT EVENTS
On April 3, 1996, the Company entered into a Joint Expense and
Participation Agreement with Brigham Oil and Gas, L.P. which allows the
Company to participate in the drilling of eighty-seven (87) onshore wells in
Texas and Oklahoma over the twelve-month period beginning April 1, 1996. The
Company is committed to fund $1,500,000 in drilling costs over this twelve-month
period.
<PAGE> 7
Item 2. Management's Discussion and Analysis or Plan of
Operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities for the three months ended March 31,
1996 of $283,513 increased $22,652 over the comparable 1995 period. The
increase was due primarily to higher cash flow from increased production and
higher oil and gas prices. The change in working capital decreased cash flow
by $123,163 over the comparable 1995 period. The change in working capital
was caused principally by timing differences in the payment of expenses and
receipt of revenues. Cash flow from operations before working capital
changes of $351,356 increased $145,815 over the comparable 1995 period.
Additions to oil and gas properties were lower than the comparable period in
1995 due to only minimal acquisitions and drilling in 1996 compared to the
P&P Acquisition which closed in February 1995. The decrease in the proceeds
from debt issued was due to no debt-funded acquisitions in 1996 compared to
the amendment to the Company's term note which allowed for the P&P
Acquisition and the payoff of the remaining principal balance on the $3.8
million term note of $2,545,759, in the comparable period. The decrease in
the amount of cash used for debt payments was due principally to only regular
principal payments in 1996 compared to the payoff of the remaining principal
balance on the $3.8 million term note of $2,545,759 in the comparable period.
The Company's operating activities provided net cash of $283,513 for the
three month period ended March 31, 1996. The sale of oil and gas properties
in March, 1996 provided cash of $25,000. During this period, net cash from
operations and cash from property sales were used principally for
developmental drilling and workovers of approximately $124,000. These funds
were spent on three projects; developmental drilling on one well in the
Campbell Field in Major County, Oklahoma and one well in Rocky Mount Field in
Louisiana and a workover in the Lea Field in Lea County, New Mexico. The
well in the Lea Field is a major gas property of the Company which been shut-in
for approximately twelve months. Amounts spent on debt retirement were
regular monthly principal payments on the $5.6 million term note.
The monthly principal payments on the Company's $3.8 million term note
was amended on January 1, 1995 to reduce the monthly principal payments to
$42,833 from $79,167. On February 23, 1995, the Bank issued $5,628,000 under
a new term note to refinance the $3.8 million term note and to finance the
P&P Acquisition. The net effect on monthly principal payments of the
refinancing of the $3.8 million term note and the P&P Acquisition was an
increase of $24,167, the difference between $42,833 and 67,000. The new term
note is being repaid over seven (7) years at prime plus 1.5%.
The Company had current assets of $783,871 and current liabilities of
$1,159,387 which resulted in working capital deficit of $375,516 as of March
31, 1996. This was a decrease of $45,198 in the working capital deficit of
$420,714 as of December 31, 1995. The deficit decreased primarily due to
cash proceeds from property sales and increased cash flow from oil and gas
production offset partially by cash being spent on long-term debt retirement
and workovers and developmental drilling. The Company's current ratio of
2.25, calculated under the terms of the Credit Agreement which excludes
stockholder receivables and debt due under the Credit Agreement, was in
excess of the 0.50 to 1.00 required.
In general, because the Company's principal natural gas and oil reserves
are depleted by production, its success is dependent upon the results of its
development, acquisition and exploration activities. The Company's strategy
is to enhance and exploit its existing properties for reserves and to invest
in a limited amount of developmental drilling prospects. The Company expects
to incur a total of approximately $600,000 in capital expenditures over the
next three months; $100,000 to invest in development projects on certain of
its existing wells and $500,000 in exploration projects in the Joint
Participation Agreement with Brigham Oil and Gas, L.P., discussed more fully
in the 8-K filed by the Company on April 29, 1996. These projects will be
funded by internally-generated cash flows, proceeds from property sales and
bank debt.
In connection with the issuance of 142,107 shares of common stock in the
Janex Acquisition, the Company has a contingent obligation to repurchase the
shares, upon written notice delivered to the Company, beginning five years
after the Closing Date and continuing for thirty days thereafter, at a price
of $6.00 per share. This contingent obligation shall terminate if the
Company's stock trades at a share price of $8.00 or greater for twenty
consecutive days during the thirty-six month period immediately preceding the
first day of the fifth year after the Closing Date. The closing date of the
Janex Acquisition was November 1, 1993. The redemption value of $852,642 is
shown in the Balance sheet as Redeemable Common Stock. If the trading market
for the Company's stock does not meet the trading limits stated above over
the three year period beginning November 1, 1995 through October 31, 1998,
the Company will have to redeem the shares of stock from the original owners
upon written request at $6.00 per share beginning November 1, 1998 and ending
November 30, 1998. The Company is unable to determine at this time if it
will have to redeem any or all of the shares issued. Depending on the number
of shares the Company may have to redeem, the redemption will be financed
through internal cash flow or by debt financing. The redemption, if any, is
not expected to have a material adverse affect on the operations of the
Company. If the Company has to redeem the entire amount, the redemption
could have an adverse affect on the financial position of the Company. Over
the period November 1, 1995 to March 31, 1996, the trading range of the
Company's common stock has been $4.125 to $2.75.
The Company's liquidity position and current and anticipated cash flows
from operations remain adequate for its general requirements. However,
because future cash flows and the availability of financing are subject to a
number of variables, such as the level of production and prices received for
gas and oil, there can be no assurance that the Company's capital resources
will be sufficient to maintain planned levels of capital expenditures.
CURRENT ACTIVITIES
As of May 7, 1996 there were two exploratory wells and two developmental
wells drilling under the Brigham Agreement. The workover on the N. Lea
Federal is in process as of May 7, 1996.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Total revenues for the three months ended March 31, 1996 of $1,049,629
were $292,763 higher than the same period in 1995. The increase in total
revenues was due primarily to higher oil and gas revenues of $302,805,
consisting primarily of a $118,980 increase in oil revenues and a $155,851
increase in gas revenues. The increase in oil and gas revenues was primarily
the result of the Company's increased oil and gas asset base and consequent
increase in production. Production of oil and gas for the three month period
increased 26% and 9%, respectively, over the comparable 1995 period. A
portion of the increased oil and gas production was due to the increased
production from the Parker & Parsley Acquisition ("P&P Acquisition"). The
P&P Acquisition closed February 23, 1995 with an effective date of March 1,
1995 and one month of the P&P Acquisition production was included in the
income statement for the first quarter of 1995. During the three month
period ended March 31, 1996, the Company sold 27,735 barrels of oil and
241,497 Mcf of gas, as compared to 22,008 barrels and 222,120 Mcf for the
comparable 1995 period. The price received on the gas sold in 1996 of $2.13
per Mcf was higher than the $1.62 per Mcf received in the comparable 1995
period. Oil prices in 1996 of $17.01 per barrel were higher than the $16.03
per barrel received in 1995. The increase in total revenues of $292,763 was
greater than the increase in total expenses of $179,050. Increases in
interest expense, lease operating expense and depreciation and depletion
expense were experienced in 1996 as compared to 1995. Increases in lease
operating expenses and depletion accounted for approximately 92% of the total
expense increase. Lease operating expenses increased by $140,164 due
principally to expenses on acquired properties. Depletion expense increased
by $30,025 while depreciation expense decreased by $4,053, due to additional
depletion on the acquired properties and lower depreciation on lease and well
equipment and corporate office furniture and fixtures which are depreciated
on the accelerated method which declines over the useful life of the asset.
General and administrative expenses decreased by $3,635, due primarily to
lower legal and accounting expenses and lower miscellaneous expenses.
The increase in revenue was greater than the increase in expense and
resulted in operating income of $84,572 versus an operating loss of $29,222
for the comparable period.
The Company reported net income of $84,572 for the three months ended
March 31, 1996 versus a net loss of $29,222 for the comparable 1995 period.
<PAGE> 8
Item 6. Exhibits and Reports on Form 8-K
(a) Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and not filed.
(b) On April 29, 1996, the Company filed a report on Form 8-K under
Item 5 reporting the signing of the Joint Expense and Participation Agreement
with Brigham Oil and Gas, L.P., on April 3, 1996 which allows the Company to
participate in the drilling of eighty-seven (87) onshore wells in Texas and
Oklahoma over the twelve month period beginning April 1, 1996. The Company
has committed to fund $1.5 million in drilling costs under this agreement.
<PAGE> 9
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MIDDLE BAY OIL COMPANY, INC.
(Registrant)
<TABLE>
<S> <C>
Date: May 7, 1996 By: John J. Bassett
------------------------------------
John J. Bassett
President and
Chief Executive Officer
Date: May 7, 1996 By: Frank C. Turner, II
------------------------------------
Frank C. Turner II
Vice-President and
Chief Financial Officer
</TABLE>
<PAGE> 10
EXHIBIT INDEX
-------------
Exhibit No. Description
---------- --------------------------------------------
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Financial Statements - Balance Sheets at March 31, 1996 (unaudited) and the
Statements of Operations at March 31, 1996 (unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 60,828
<SECURITIES> 0
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852,642
0
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</TABLE>
