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632 Adams Street — Suite 700
Bowling Green, KY 42101
United States Security and Exchange Commission
Division of Corporation Finance — Mail Stop 7010
Washington, DC 20549-7010
Re: | Bayou City Exploration, Inc. Form 10-KSB for Fiscal Year ended December 31, 2007 Filed April 15, 2008 Form 10-QSB for Fiscal Quarter Ended March 31, 2008 Filed May 20, 2008 File NO 0-27443 | |
Response to SEC Comment letter dated July 21, 2008 | ||
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• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; | ||
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and | ||
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
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Director | Age | Company Position or Office | Director Since | |||
Robert D. Burr | 62 | Chairman, President and CEO | 1996 | |||
Harry J. Peters | 64 | Director | 2000 | |||
Gregory B. Shea | 45 | Director | 1999 |
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Change in | ||||||||||||||||||||||||||||||||||||
pension value | ||||||||||||||||||||||||||||||||||||
and non- | ||||||||||||||||||||||||||||||||||||
Non-equity | qualified | |||||||||||||||||||||||||||||||||||
Name and | Stock | Option | incentive plan | deferred | All other | |||||||||||||||||||||||||||||||
Principal | Salary | Bonus | Awards | Awards | compensation | compensation | compensation | Total | ||||||||||||||||||||||||||||
Position | Year | ($) | ($) | ($) | ($) | Non-Equipty | earnings ($) | ($) | ($) | |||||||||||||||||||||||||||
Wayne T. Harden President and CEO (1) | 2007 | $ | 55,000 | — | — | — | — | — | — | $ | 55,000 | |||||||||||||||||||||||||
Robert D. Burr President and CEO (2) | 2007 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
D. Edwin Suhr, Jr. Senior Vice President Lan/Secretary (3) | 2007 | $ | 60,000 | — | — | — | — | — | — | $ | 60,000 |
(1) | Mr. Harden resigned effective April 4, 2007. | |
(2) | Mr. Burr has served as President and CEO since April 4, 2007 with no compensation. | |
(3) | Mr. Suhr resigned effective May 1, 2007. |
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Number of | ||||||||||||
securities | ||||||||||||
remaining available | ||||||||||||
for future issuance | ||||||||||||
under equity | ||||||||||||
compensation plans | ||||||||||||
Number of | (excluding | |||||||||||
securities to be | securities to be | |||||||||||
issued upon | Weighted-average | issued upon | ||||||||||
exercise of | exercise price of | exercise of | ||||||||||
outstanding | outstanding | outstanding | ||||||||||
options, warrants | options, warrants | options, warrants, | ||||||||||
Plan category | and rights | and rights | and rights) | |||||||||
Equity compensation plans approved by security holders | 3,068,750 | $ | 0.428 | 3,100,000 | ||||||||
Equity compensation plans not approved by security holders | None | n/a | None | |||||||||
Total | 3,068,750 | $ | 0.428 | 3,100,000 |
OPTION AWARDS | ||||||||||||||||||||
Equity Incentive | ||||||||||||||||||||
Number of | Number of | Plan Awards: Number | ||||||||||||||||||
Securities | Securities | of Securities | ||||||||||||||||||
Underlying | Underlying | Underlying | ||||||||||||||||||
Unexercised Options | Unexercised Options | Unexercised | Option Exercise | |||||||||||||||||
(#) | (#) | Unearned Options | Price | Option Expiration | ||||||||||||||||
Name | Exercisable | Unexerciseable | (#) | ($) | Date | |||||||||||||||
Robert D. Burr President and CEO(1) | 75,000 | — | — | $ | 0.04 | 04/30/11 | ||||||||||||||
281,250 | — | — | $ | 0.04 | 04/30/12 | |||||||||||||||
967,500 | — | — | $ | 0.09 | 02/22/10 |
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Non-Qualified | ||||||||||||||||||||||||||||
Fees Earned | Non-Equity | Deferred | ||||||||||||||||||||||||||
or Paid | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||
in Cash | Stock Awards | Option Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Robert D. Burr | — | — | — | — | — | — | — | |||||||||||||||||||||
Harry J. Peters | — | — | — | — | — | — | — | |||||||||||||||||||||
Gregory B. Shea | — | — | — | — | — | — | — |
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Name and Address | Amount and Nature of | Percent | ||||||
of Beneficial Owner | Beneficial Ownership | of Class | ||||||
Robert D. Burr | 3,907,721 | (1) | 14.0 | % | ||||
632 Adams Street, Suite 710 Bowling Green, KY 42101 | ||||||||
Blue Ridge Group, Inc. | 3,638,371 | (2) | 13.7 | % | ||||
632 Adams Street, Suite 710 Bowling Green, KY 42101 |
(1) | Mr. Burr’s beneficial ownership includes vested options of 1,323,750 shares and 2,583,971 shares (71.02% of 3,638,371) of BR Group’s direct ownership of common shares. By virtue of his position as Chairman of the Board of BR Group, Mr. Burr may be deemed to beneficially own the 3,638,371 shares of the Company’s Common Stock beneficially owned by BR Group Mr. Burr disclaims beneficial ownership of these shares except to the extent described in the following sentence. Mr. Burr beneficially owns approximately 71.02% of the outstanding shares of BR Group, which beneficially owns approximately 13.8% of the Company. | |
(2) | BR Group’s beneficial ownership is attributable to its direct ownership of 3,638,371 shares of the Company’s Common Stock. |
Name of | Amount and Nature of | Percent | ||||||
Beneficial Owner | Beneficial Ownership(4) | of Class | ||||||
Robert D. Burr(1) | 3,907,721 | 14.0 | % | |||||
Harry J. Peters(2) | 1,012,263 | 3.7 | % | |||||
Gregory B. Shea(3) | 762,263 | 2.8 | % | |||||
All directors, nominees and officers as a group (3 persons) | 5,682,247 | 20.2 | % |
(1) | Mr. Burr’s beneficial ownership includes vested options of 1,323,750 shares and 2,583,971 shares (71.02% of 3,638,371) of BR Group’s direct ownership of common shares. By virtue of his position as Chairman of the Board of BR Group, Mr. Burr may be deemed to beneficially own the 3,638,371 shares of the Company’s Common Stock beneficially owned by BR Group Mr. Burr disclaims beneficial ownership of these shares except to the extent described in the following sentence. Mr. Burr beneficially owns approximately 71.02% of the outstanding shares of BR Group, which beneficially owns approximately 13.8% of the Company. | |
(2) | Mr. Peters’ beneficial ownership includes vested options of 947,500 shares and 64,763 shares (1.78% of 3,638,371) of BR Group’s direct ownership of common shares. | |
(3) | Mr. Shea’s beneficial ownership includes vested options of 697,500 shares and 64,763 shares (1.78% of 3,638,371) of BR Group’s direct ownership of common shares. | |
(4) | These beneficial ownerships represent vested stock options and options exercisable within 60 days of July 31, 2008. |
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December | December | |||||||
30, 2007 | 31, 2006 | |||||||
Trade payable to BR Group | $ | 3,000 | $ | 27,000 | ||||
Payable to BR Group for proceeds from sale of asset | 23,000 | — | ||||||
Drilling Advances payable to Gulf Coast Drilling Co. | 154,000 | 197,000 | ||||||
Payable to minority shareholders for operating capital | 85,000 | — | ||||||
Note payable to BR Group | 123,000 | 130,000 | ||||||
Line of Credit payable to BR Group for operating capital | 316,000 | — | ||||||
Note payable to Peter Chen — a minority shareholder | 100,000 | — | ||||||
Accrued Interest | 18,000 | — | ||||||
Total Payable or Notes Payable to Related Parties | $ | 822,000 | $ | 354,000 | ||||
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• | The Company is responsible for the adequacy and accuracy of the disclosure in the filing; | ||
• | Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and | ||
• | The company may not assert staff comments as a defense in any proceedings initiated by the Commission or any person under the federal securities laws of the United States. |
Sincerely, | ||||
Date: September 5, 2008 | By: | /s/ Robert D. Burr | ||
Robert D. Burr | ||||
Chief Executive Officer and President | ||||
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þ | ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
NEVADA | 61-1306702 | |
(STATE OR OTHER JURISDICTION OF | (I.R.S. EMPLOYER IDENTIFICATION NUMBER) | |
INCORPORATION OR ORGANIZATION) | ||
632 Adams Street — Suite 700, Bowling Green, KY | 42101 | |
(ADDRESS OF PRINCIPLE EXECUTIVE OFFICES) | (ZIP CODE) |
(ISSUER’S TELEPHONE NUMBER, INCLUDING AREA CODE)
COMMON STOCK PAR VALUE $.005 PER SHARE
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1. | DESCRIPTION OF BUSINESS |
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In 2006, 11,200 Series E warrants were exercised at $0.40 per share for total proceeds to the Company of $4,480.
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2. | DESCRIPTION OF PROPERTIES |
Developed Acreage | Undeveloped Acreage | |||||||||||||||
Geographic Area: | Gross Acres | Net Acres | Gross Acres | Net Acres | ||||||||||||
Texas | — | — | 875 | 875 | ||||||||||||
Totals | — | — | 875 | 875 | ||||||||||||
Gross Wells | Net Wells | |||||||||||||||
Geographic Area: | Oil | Gas | Oil | Gas | ||||||||||||
Texas | — | 2 | — | .14 | ||||||||||||
Kentucky | — | 11 | — | .11 | ||||||||||||
West Virginia | — | 6 | — | .30 | ||||||||||||
Totals | — | 19 | — | .56 | ||||||||||||
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Bridges #1 well in Shelby County, Texas: The Company owns a 0.7% indirect working interest in this well through two partnerships managed by BR Group.
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Net | Net | |||||||
Production | Production | |||||||
For the Year | For the Year | |||||||
12/31/07 | 12/31/06 | |||||||
Net Volumes (Equivalent Barrels) | 1,152 | 3,453 | ||||||
Average Sales Price per Equivalent Barrel | $ | 44.04 | $ | 56.77 | ||||
Average Production Cost per Equivalent Barrel (includes production taxes) | $ | 32.59 | $ | 27.86 |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Natural | Natural | |||||||||||||||
Oil | Gas | Oil | Gas | |||||||||||||
(Bbls) | (Mcf) | (Bbls) | (Mcf) | |||||||||||||
Balance, Beginning of Year | 39,364 | 1,103,000 | 34,768 | 1,562,390 | ||||||||||||
Extensions, discoveries and other additions Revisions of previous estimates | (7,797 | ) | (8,659 | ) | 6,399 | (400,492 | ) | |||||||||
Sales of minerals in place | (7,019 | ) | — | (49,000 | ) | |||||||||||
Production | (262 | ) | (5,341 | ) | (1,803 | ) | (9,898 | ) | ||||||||
Balance, End of Year | 24,286 | 1,089,000 | 39,364 | 1,103,000 | ||||||||||||
Proved Developed Reserves | — | 6,000 | 15,078 | 20,000 | ||||||||||||
Mcf: Thousand cubic feet of gas
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Oil Wells | Gas Wells | Dry Wells | ||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||
Exploratory Wells | — | 2 | — | — | — | 6 | ||||||||||||||||||
Development Wells | — | — | — | — | — | — | ||||||||||||||||||
Total Wells | — | 2 | — | — | — | 6 | ||||||||||||||||||
3. | LEGAL PROCEEDINGS |
4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
5. | MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
High Bid | Low Bid | |||||||
March 31, 2006 | $ | 2.36 | $ | 1.95 | ||||
June 30, 2006 | 2.49 | 1.95 | ||||||
September 30, 2006 | 2.11 | 1.75 | ||||||
December 31, 2006 | 2.27 | 0.85 | ||||||
March 31, 2007 | $ | 0.99 | $ | 0.40 | ||||
June 30, 2007 | 0.49 | 0.12 | ||||||
September 30, 2007 | 0.31 | 0.21 | ||||||
December 31, 2007 | 0.48 | 0.22 |
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In 2006, 11,200 Series E warrants were exercised at $0.40 per share for total proceeds to the Company of $4,480.
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6. | MANAGEMENT’S DISCUSSION AND FINANCIAL ANALYSIS OF FINANCIAL CONDITION |
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The successful efforts method reflects the volatility that is inherent in exploring for oil and gas resources in that costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include seismic costs (G&G costs), other exploratory costs (carrying costs) and exploratory dry hole costs. Under the full cost method, these costs would be capitalized and then expensed (depreciated/amortized) over time.
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7. | FINANCIAL STATEMENTS |
8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
8A. | CONTROLS AND PROCEDURES |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; | ||
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and | ||
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. | ||
8B. | OTHER INFORMATION |
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9. | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act |
Director | Age | Company Position or Office | Director Since | |||||||
Robert D. Burr | 62 | Chairman, President and CEO | 1996 | |||||||
Harry J. Peters | 64 | Director | 2000 | |||||||
Gregory B. Shea | 45 | Director | 1999 |
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10. | Executive Compensation |
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Change in | ||||||||||||||||||||||||||||||||||||
pension value | ||||||||||||||||||||||||||||||||||||
and non- | ||||||||||||||||||||||||||||||||||||
Non-equity | qualified | |||||||||||||||||||||||||||||||||||
Name and | Stock | Option | incentive plan | deferred | All other | |||||||||||||||||||||||||||||||
Principal | Salary | Bonus | Awards | Awards | compensation | compensation | compensation | Total | ||||||||||||||||||||||||||||
Position | Year | ($) | ($) | ($) | ($) | Non-Equipty | earnings ($) | ($) | ($) | |||||||||||||||||||||||||||
Wayne T. Harden President and CEO (1) | 2007 | $ | 55,000 | — | — | — | — | — | — | $ | 55,000 | |||||||||||||||||||||||||
Robert D. Burr President and CEO (2) | 2007 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
D. Edwin Suhr, Jr. Senior Vice President Lan/Secretary (3) | 2007 | $ | 60,000 | — | — | — | — | — | — | $ | 60,000 |
(1) | Mr. Harden resigned effective April 4, 2007. | |
(2) | Mr. Burr has served as President and CEO since April 4, 2007 with no compensation. | |
(3) | Mr. Suhr resigned effective May 1, 2007. | |
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Number of securities | ||||||||||||
remaining available for | ||||||||||||
future issuance under | ||||||||||||
equity compensation | ||||||||||||
plans (excluding | ||||||||||||
Number of securities to | Weighted-average | securities to be issued | ||||||||||
be issued upon exercise | exercise price of | upon exercise of | ||||||||||
of outstanding options, | outstanding options, | outstanding options, | ||||||||||
Plan category | warrants and rights | warrants and rights | warrants, and rights) | |||||||||
Equity compensation plans approved by security holders | 3,068,750 | $ | 0.428 | 3,100,000 | ||||||||
Equity compensation plans not approved by security holders | None | n/a | None | |||||||||
Total | 3,068,750 | $ | 0.428 | 3,100,000 |
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Number of | Number of | |||||||||||||||||||
Securities | Securities | Equity Incentive Plan | ||||||||||||||||||
Underlying | Underlying | Awards: Number of | ||||||||||||||||||
Unexercised | Unexercised | Securities Underlying | ||||||||||||||||||
Options | Options | Unexercised | Option Exercise | Option | ||||||||||||||||
(#) | (#) | Unearned Options | Price | Expiration | ||||||||||||||||
Name | Exercisable | Unexerciseable | (#) | ($) | Date | |||||||||||||||
Robert D. Burr President and CEO(1) | 75,000 | — | — | $ | 0.04 | 04/30/11 | ||||||||||||||
281,250 | — | — | $ | 0.04 | 04/30/12 | |||||||||||||||
967,500 | — | — | $ | 0.09 | 02/22/10 |
Fees | Non- | |||||||||||||||||||||||||||
Earned | Qualified | |||||||||||||||||||||||||||
or | Non-Equity | Deferred | ||||||||||||||||||||||||||
Paid in | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||
Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Robert D. Burr | — | — | — | — | — | — | — | |||||||||||||||||||||
Harry J. Peters | — | — | — | — | — | — | — | |||||||||||||||||||||
Gregory B. Shea | — | — | — | — | — | — | — |
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11. | SECURITIES OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT |
Name and Address | Amount and Nature of | |||||||
of Beneficial Owner | Beneficial Ownership | Percent of Class | ||||||
Robert D. Burr | 3,907,721 | (1) | 14.0 | % | ||||
632 Adams Street, Suite 710 Bowling Green, KY 42101 | ||||||||
Blue Ridge Group, Inc. | 3,638,371 | (2) | 13.7 | % | ||||
632 Adams Street, Suite 710 Bowling Green, KY 42101 |
(1) | Mr. Burr’s beneficial ownership includes vested options of 1,323,750 shares and 2,583,971 shares (71.02% of 3,638,371) of BR Group’s direct ownership of common shares. By virtue of his position as Chairman of the Board of BR Group, Mr. Burr may be deemed to beneficially own the 3,638,371 shares of the Company’s Common Stock beneficially owned by BR Group Mr. Burr disclaims beneficial ownership of these shares except to the extent described in the following sentence. Mr. Burr beneficially owns approximately 71.02% of the outstanding shares of BR Group, which beneficially owns approximately 13.8% of the Company. | |
(2) | BR Group’s beneficial ownership is attributable to its direct ownership of 3,638,371 shares of the Company’s Common Stock. |
Name of | Amount and Nature of | Percent | ||||||
Beneficial Owner | Beneficial Ownership(4) | of Class | ||||||
Robert D. Burr(1) | 3,907,721 | 14.0 | % | |||||
Harry J. Peters(2) | 1,012,263 | 3.7 | % | |||||
Gregory B. Shea(3) | 762,263 | 2.8 | % | |||||
All directors, nominees and officers as a group (3 persons) | 5,682,247 | 20.2 | % |
(1) | Mr. Burr’s beneficial ownership includes vested options of 1,323,750 shares and 2,583,971 shares (71.02% of 3,638,371) of BR Group’s direct ownership of common shares. By virtue of his position as Chairman of the Board of BR Group, Mr. Burr may be deemed to beneficially own the 3,638,371 shares of the Company’s Common Stock beneficially owned by BR Group Mr. Burr disclaims beneficial ownership of these shares except to the extent described in the following sentence. Mr. Burr beneficially owns approximately 71.02% of the outstanding shares of BR Group, which beneficially owns approximately 13.8% of the Company. |
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(2) | Mr. Peters’ beneficial ownership includes vested options of 947,500 shares and 64,763 shares (1.78% of 3,638,371) of BR Group’s direct ownership of common shares. | |
(3) | Mr. Shea’s beneficial ownership includes vested options of 697,500 shares and 64,763 shares (1.78% of 3,638,371) of BR Group’s direct ownership of common shares. | |
(4) | These beneficial ownerships represent vested stock options and options exercisable within 60 days of July 31, 2008. | |
December | December | |||||||
30, 2007 | 31, 2006 | |||||||
Trade payable to BR Group | $ | 3,000 | $ | 27,000 | ||||
Payable to BR Group for proceeds from sale of asset | 23,000 | — | ||||||
Drilling Advances payable to Gulf Coast Drilling Co. | 154,000 | 197,000 | ||||||
Payable to minority shareholders for operating capital | 85,000 | — | ||||||
Note payable to BR Group | 123,000 | 130,000 | ||||||
Line of Credit payable to BR Group for operating capital | 316,000 | — | ||||||
Note payable to Peter Chen — a minority shareholder | 100,000 | — | ||||||
Accrued Interest | 18,000 | — | ||||||
Total Payable or Notes Payable to Related Parties | $ | 822,000 | $ | 354,000 | ||||
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13. | EXHIBITS |
23.1 | Consent of Independent Consulting Engineer (R. A. Lenser & Associates) | |
31.1 | Section 302 Certification of Chief Executive Officer’s | |
31.2 | Section 302 Certification of Chief Financial Officer’s | |
32.1 | Section 906 Certification of Chief Executive Officer | |
32.2 | Section 906 Certification of Chief Financial Officer |
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14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Bayou City Exploration, Inc. | ||||
By: | /s/ Robert D. Burr | |||
Chief Executive Officer and President | ||||
By: | /s/ Robert D. Burr | |||
Acting Chief Financial Officer | ||||
Bayou City Exploration, Inc., Registrant | ||||||
Date: September 5, 2008 | ||||||
By: | /s/ ROBERT D. BURR | |||||
ROBERT D. BURR Director, Chairman of the Board | ||||||
By: | /s/ Gregory B. Shea | By: | /s/ HARRY J. PETERS | |||
Gregory B. Shea Director | HARRY J. PETERS Director |
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Bayou City Exploration, Inc.
Bowling Green, Kentucky
/s/ Killman, Murrell & Company, P.C. | ||||
Killman, Murrell & Company, P.C. | ||||
Odessa, Texas | ||||
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Stockholders of Bayou City Exploration, Inc.
Houston, Texas
Louisville, Kentucky
April 20, 2007
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December 31 | ||||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 21,714 | $ | 1,178,946 | ||||
Accounts receivable: | ||||||||
Managed limited partnerships | — | 12,883 | ||||||
Related party | — | 19,081 | ||||||
Trade and other (net of reserve — $241,363 as of December 31, 2007) | 13,457 | 524,277 | ||||||
Prepaid expenses and other current assets | — | 33,909 | ||||||
Total current assets | 35,171 | 1,769,096 | ||||||
Property and Equipment, net | 494,718 | 595,244 | ||||||
Other Non-current Assets | 7,024 | 7,024 | ||||||
Total assets | $ | 536,913 | $ | 2,371,364 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 519,051 | $ | 1,034,539 | ||||
Accounts payable-related party | 281,965 | 223,731 | ||||||
AFE advances from JIB owners | 51,186 | 377,439 | ||||||
Current portion of long-term debt | 552,138 | 86,299 | ||||||
Total current liabilities | 1,404,340 | 1,722,008 | ||||||
Long-Term Liability-P&A Costs | 43,806 | 67,291 | ||||||
Long-Term Debt | — | 65,483 | ||||||
Total liabilities | 1,448,146 | 1,854,782 | ||||||
Commitments and Contingencies(Notes 8 and 10) | — | — | ||||||
Stockholders’ Equity | ||||||||
Preferred Stock, $0.001 par value; 5,000,000 shares authorized; Series E; 0 shares issued and outstanding at December 31, 2007; 23,300 shares issued and outstanding at December 31, 2006 (liquidation preference of $233,000 in 2006) | — | 23 | ||||||
Common Stock, $0.005 par value; 150,000,000 shares authorized; 26,653,633 shares issued and outstanding at December 31, 2007; 26,276,943 shares issued and outstanding at December 31, 2006 | 133,268 | 131,385 | ||||||
Additional paid-in capital | 13,276,765 | 13,214,625 | ||||||
Accumulated deficit | (14,321,266 | ) | (12,829,451 | ) | ||||
Total stockholders’ equity (deficit) | (911,233 | ) | 516,582 | |||||
Total liabilities and stockholders’ equity | $ | 536,913 | $ | 2,371,364 | ||||
and notes to financial statements
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Year Ended December 31 | ||||||||
2007 | 2006 | |||||||
Operating Revenue | ||||||||
Prospect fees from related parties | $ | $ | 40,000 | |||||
Prospect fees from others | 22,500 | |||||||
Management fees | 40,000 | |||||||
Oil and gas sales | 49,946 | 196,025 | ||||||
Total operating revenue | 49,946 | 298,525 | ||||||
Operating Costs and Other Expenses | ||||||||
Lease operating expenses | 37,539 | 96,207 | ||||||
Impairment, abandonment and dry hole costs | 292,403 | 1,074,958 | ||||||
Exploration costs | 252,596 | 435,792 | ||||||
Depreciation, depletion and amortization | 67,437 | 81,615 | ||||||
Accretion expense | — | 2,919 | ||||||
Marketing costs | 12,779 | 234,974 | ||||||
General and administrative costs | 849,647 | 2,441,284 | ||||||
Total operating costs | 1,512,401 | 4,367,749 | ||||||
Operating loss | (1,462,455 | ) | (4,069.224 | ) | ||||
Other Income (Expense) | ||||||||
Interest and other, net | (20,885 | ) | (23,752 | ) | ||||
Gain on sale of assets | 19,485 | 201,813 | ||||||
Loss from continuing operations before income taxes | (1,463,855 | ) | (3,891,163 | ) | ||||
Income Tax Provision | — | — | ||||||
Net loss | (1,463,855 | ) | (3,891,163 | ) | ||||
Less Series E Preferred Stock Cash Dividends | (27,960 | ) | (27,960 | ) | ||||
Net loss attributable to common stockholders | $ | (1,491,815 | ) | $ | (3,919,123 | ) | ||
Net Loss Per Common Share | $ | (0.06 | ) | $ | (0.16 | ) | ||
Weighted Average Common Shares Outstanding — Basic and Diluted | 26,309,726 | 25,069,443 | ||||||
and notes to financial statements
-F-4-
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Preferred Stock | Common Stock | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balance, December 31, 2005 | 23,300 | $ | 23 | 24,436,467 | $ | 122,182 | ||||||||||
2006 Regulation S Offering at $1.25 per share | — | — | 105,000 | 525 | ||||||||||||
2005 Regulation S Offering at $1.00 per share | — | — | 315,000 | 1,575 | ||||||||||||
2005 Regulation D Offering at $1.00 per share | — | — | 110,000 | 550 | ||||||||||||
Exercise of common stock warrants | — | — | 1,075,000 | 5,375 | ||||||||||||
Exercise of Series E Warrants | — | — | 11,200 | 57 | ||||||||||||
Exercise of Common Stock Options | — | — | 311,334 | 1,556 | ||||||||||||
Rescission of Common Stock Options | — | — | (87,058 | ) | (435 | ) | ||||||||||
Balance, December 31, 2006 | 23,300 | $ | 23 | 26,276,943 | $ | 131,385 | ||||||||||
2007 Regulation S Offering at $0.25 per share | — | — | 256,000 | 1,280 | ||||||||||||
Conversion of Series E Preferred Shares to Common | (23,300 | ) | (23 | ) | 116,500 | 582 | ||||||||||
Correction of Common Shares | — | — | 4,190 | 21 | ||||||||||||
Balance, December 31, 2007 | $ | — | 26,653,633 | $ | 133,268 | |||||||||||
Additional | Accumulated | |||||||||||
Paid-in Capital | Deficit | Total | ||||||||||
Balance, December 31, 2005 | $ | 11,318,377 | $ | (8,910,328 | ) | $ | 2,530,254 | |||||
2006 Regulation S Offering at $1.25 per share | 130,725 | — | 131,250 | |||||||||
2005 Regulation S Offering at $1.00 per share | 313,425 | — | 315,000 | |||||||||
2005 Regulation D Offering at $1.00 per share | 109,450 | — | 110,000 | |||||||||
Exercise of common stock warrants | 532,125 | — | 537,500 | |||||||||
Exercise of Series E Warrants | 4,423 | — | 4,480 | |||||||||
Exercise of Common Stock Options | 3,444 | — | 5,000 | |||||||||
Rescission of Common Stock Options | 435 | — | — | |||||||||
Stock Issuance Costs | (31,000 | ) | — | (31,000 | ) | |||||||
Stock Based Compensation | 833,221 | — | 833,221 | |||||||||
Dividends paid on preferred stock | — | (27,960 | ) | (27,960 | ) | |||||||
Net loss | — | (3,891,163 | ) | (3,891,163 | ) | |||||||
Balance, December 31, 2006 | $ | 13,214,625 | $ | (12,829,451 | ) | $ | 516,582 | |||||
2007 Regulation S Offering at $0.25 per share | 62,720 | — | 64,000 | |||||||||
Conversion of Series E Preferred Shares to Common | (559 | ) | — | — | ||||||||
Correction of Common Shares | (21 | ) | — | — | ||||||||
Dividends paid on preferred stock | — | (27,960 | ) | (27,960 | ) | |||||||
Net loss | — | (1,463,855 | ) | (1,463,855 | ) | |||||||
Balance, December 31, 2007 | $ | 13,276,765 | $ | (14,321,266 | ) | $ | (911,233 | ) | ||||
and notes to financial statements
-F-5-
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Year Ended December 31 | ||||||||
2007 | 2006 | |||||||
Cash Flows From Operating Activities | ||||||||
Net loss | $ | (1,463,855 | ) | $ | (3,891,163 | ) | ||
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||
Depreciation, depletion and amortization | 67,437 | 81,615 | ||||||
Accretion expense | — | 2,919 | ||||||
Impairment, dry holes and abandonment losses | 292403 | 1,074,958 | ||||||
Reserve for abandonment losses | (241,363 | ) | ||||||
Stock based compensation | — | 833,221 | ||||||
Gain on sale of oil and gas properties | (19,485 | ) | (201,813 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable-trade and other | 523,703 | 148,900 | ||||||
Accounts receivable-related party | 19,081 | 199,880 | ||||||
Prepaid expenses and other assets | 33,909 | 42,316 | ||||||
AFE advances-JIB owners | (326,253 | ) | (134,086 | ) | ||||
Accounts payable-related party | 58,234 | 176,131 | ||||||
Accounts payable and accrued expenses | (515,488 | ) | 600,777 | |||||
Decrease in P&A Cost Liability | (23,485 | ) | ||||||
Net cash used in operating activities | (1,595,162 | ) | (1,066,345 | ) | ||||
Cash Flows From Investing Activities | ||||||||
Purchase of furniture and computer equipment | (7,821 | ) | (54,601 | ) | ||||
Purchase of oil and gas properties and equipment | (60,095 | ) | (881,865 | ) | ||||
Proceeds from sale of oil and gas properties | 69,450 | 146,999 | ||||||
Reimbursement of oil and gas properties and equipment | 755,288 | |||||||
Net cash used in investing activities | 1,534 | (34,179 | ) | |||||
Cash Flows From Financing Activities | ||||||||
Payments on long-term debt | (16,051 | ) | (72,547 | ) | ||||
Proceeds from long term debt | 416,407 | — | ||||||
Proceeds from 2005 Regulation D Offering | — | 110,000 | ||||||
Proceeds from 2005 Regulation S Offering | — | 315,000 | ||||||
Proceeds from 2006 Regulation S Offering | — | 131,250 | ||||||
Proceeds from 2007 Regulation S Offering | 64,000 | |||||||
Proceeds from exercise of common stock warrants | — | 537,500 | ||||||
Proceeds from the exercise of stock options | — | 5.000 | ||||||
Proceeds from the exercise of Series E Warrants | — | 4,480 | ||||||
Stock issuance costs | — | (31,000 | ) | |||||
Dividends paid | (27,960 | ) | (27,960 | ) | ||||
Net cash provided by financing activities | 436,396 | 971,723 | ||||||
Net (Decrease) in Cash | (1,157,232 | ) | (128,801 | ) | ||||
Cash, Beginning of Year | 1,178,946 | 1,307,747 | ||||||
Cash, End of Year | $ | 21,714 | $ | 1,178,946 | ||||
Supplemental Disclosure of Cash Flow Information | ||||||||
Cash paid for interest | $ | 20,855 | $ | 23,752 | ||||
Cash paid for federal income taxes | $ | — | $ | — | ||||
Sale of property in exchange for reduction of debt. See NOTE 4 | $ | $ | 198,188 | |||||
and notes to financial statements
-F-6-
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December 31, 2006 and 2005
- F - 7 -
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- F - 8 -
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- F - 9 -
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Computer Equipment and Software | 5 years | |
Furniture and Fixtures | 10 years |
(1) | the costs of acquiring mineral interest in properties, | ||
(2) | costs to drill and equip exploratory wells that find proved reserves, | ||
(3) | costs to drill and equip development wells, and | ||
(4) | costs for support equipment and facilities used in oil and gas producing activities. |
- F - 10 -
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- F - 11 -
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Oil Price Per Bbbl | 2007 | 2006 | ||||||
Year 1 | $ | 96.00 | $ | 54.29-$61.05 | ||||
Year 2 | $ | 96.00 | 54.29 - $61.05 | |||||
Year 3 | $ | 96.00 | 54.29 - $61.05 | |||||
Year 4 | $ | 96.00 | 54.29 - $61.05 | |||||
Thereafter | $ | 96.00 | 54.29 - $61.05 | |||||
Maximum | $ | 96.00 | 54.29 - $61.05 |
Gas Price Per Mcf | 2007 | 2006 | ||||||
Year 1 | $ | 6.44 | $ | 5.40-$6.30 | ||||
Year 2 | $ | 7.15 | $ | 5.40-$6.30 | ||||
Year 3 | $ | 7.17 | $ | 5.40-$6.30 | ||||
Year 4 | $ | 7.17 | $ | 5.40-$6.30 | ||||
Thereafter | $ | 7.17 | $ | 5.40-$6.30 | ||||
Maximum | $ | 7.17 | $ | 5.40-$6.30 |
2007 | 2006 | |||||||
Loss from operations | $ | (1,463,855 | ) | $ | (3,891,163 | ) | ||
Less preferred stock dividends | (27,960 | ) | (27,960 | ) | ||||
Loss available to common stockholders | $ | (1,491,815 | ) | $ | (3,919,123 | ) | ||
Common stock outstanding for the full year | 26,276,943 | 24,436,467 | ||||||
Weighted average of private stock issuance and exercise of stock warrants and stock options | 32,783 | 632,976 | ||||||
Weighted average common shares outstanding | 26,309,726 | 25,069,443 | ||||||
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December 30, 2007 | December 31, 2006 | |||||||
Trade payable to BR Group | $ | 3,000 | $ | 27,000 | ||||
Payable to BR Group for proceeds from sale of asset | 23,000 | — | ||||||
Drilling Advances payable to Gulf Coast Drilling Co. | 154,000 | 197,000 | ||||||
Payable to minority shareholders for operating capital | 85,000 | — | ||||||
Note payable to BR Group | 123,000 | 130,000 | ||||||
Line of Credit payable to BR Group for operating capital | 316,000 | — | ||||||
Note payable to Peter Chen — a minority shareholder | 100,000 | — | ||||||
Accrued Interest | 18,000 | — | ||||||
Total Payable or Notes Payable to Related Parties | $ | 822,000 | $ | 354,000 | ||||
- F - 14 -
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- F - 15 -
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December 31 | ||||||||
2007 | 2006 | |||||||
Proved oil and gas properties | $ | 84,030 | $ | 840,339 | ||||
Investment in partnerships | 21,326 | 26,653 | ||||||
Unproved oil and gas properties | 337,933 | 288,673 | ||||||
Furniture and computer equipment | 357,321 | 349,501 | ||||||
Total property and equipment | $ | 800,610 | $ | 1,505,166 | ||||
Less accumulated depletion, depreciation and amortization | (305,892 | ) | (909,922 | ) | ||||
Less impairment | — | — | ||||||
Net property and equipment | $ | 494,718 | $ | 595,244 | ||||
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Year ending | ||||
2008 | $ | 552,138 | ||
2009 and beyond | — | |||
Total principal payments | $ | 552,138 | ||
2007 | 2006 | |||||||
Net operating loss carry forward | $ | 3,345,000 | $ | 2,888,500 | ||||
Intangible drilling costs | (419,000 | ) | (399,999 | ) | ||||
Depletion, depreciation and amortization | 416,000 | 426,733 | ||||||
Impairment of property | 267,000 | 266,603 | ||||||
Stock based compensation | 316,000 | 316,624 | ||||||
Valuation allowance | (3,925,000 | ) | (3,498,461 | ) | ||||
Net deferred tax liability | $ | — | $ | — | ||||
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2007 | 2006 | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
Income tax benefit computed at the statutory rate | $ | 383,000 | 34.0 | % | $ | 1,322,995 | 34.0 | % | ||||||||
Increase (reduction) in tax benefit resulting from: | ||||||||||||||||
State and local income taxes, net of federal tax effect | 45,000 | 4.0 | % | 155,647 | 4.0 | |||||||||||
Permanent items | (1,000 | ) | (0.1 | )% | (3,559 | ) | (0.1 | ) | ||||||||
Valuation allowance | (427,000 | ) | (37.9 | )% | (1,475,083 | ) | (37.9 | ) | ||||||||
Income tax benefit | $ | — | — | $ | — | — | ||||||||||
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- F - 19 -
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- F - 21 -
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Number of Weighted Average | Options Exercise Price | |||||||
Options at December 31, 2006 | 3,593,750 | $ | 0.52 | |||||
Options expired | (525,000 | ) | 1.98 | |||||
Options at December 31, 2007 | 3,068,750 | $ | 0.49 | |||||
Options exercisable at December 31, 2007 | 3,068,750 | |||||||
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
Net Loss, as reported | $ | (1,464,000 | ) | $ | (3,891,163 | ) | ||
Add: Stock based compensation included in Net Loss | — | 883,221 | ||||||
Deduct: Stock based compensation determined under fair value | — | (883,221 | ) | |||||
Pro Forma Net Loss | $ | (1,464,000 | ) | $ | (3,891,163 | ) | ||
Net Loss Attributable to Common Stockholders, as reported | $ | (1,492,000 | ) | $ | (3,919,123 | ) | ||
Add: Stock based compensation included in Net Loss | — | 833,221 | ||||||
Deduct: Stock based compensation determined under fair value | — | (833,221 | ) | |||||
Pro Forma Net Loss | $ | (1,492,000 | ) | $ | (3,919,123 | ) | ||
Basic and Diluted Income (Loss) per Common Share, as reported | $ | (.06 | ) | $ | (0.16 | ) | ||
Basic and Diluted Income (Loss) per Common Share, Pro Forma | $ | (.06 | ) | $ | (0.16 | ) |
- F - 22 -
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December 31, 2006 | ||
Risk free interest rate | 3.98% to 4.35% | |
Expected option life | 5 to 7.5 years | |
Expected dividend yield | 0% | |
Expected volatility range | 0.77 to 1.56 | |
Expected volatility weighted average | 1.28 |
TITLE OF | AGGREGATE AMOUNT | DATE FROM | PRICE AT | ISSUED IN | ||||
ISSUE OF | OF SECURITIES | WHICH WARRANTS | WHICH WARRANTS | CONNECTION WITH | ||||
SECURITIES | CALLED FOR BY WARRANTS | ARE EXERCISABLE | ARE EXERCISABLE | WARRANTS ISSUED | ||||
Series K | 110,000 | December 31, 2006 | $1.75 for 1 share | 2005 US Exempt | ||||
Stock Warrants | Warrants | through | Of | Offering | ||||
June 30, 2008 | Common Stock | |||||||
Series L | 315,000 | December 31, 2006 | $1.75 for 1 share | 2005 Regulation S | ||||
Stock Warrants | Warrants | through | of | Offering | ||||
June 30, 2008 | Common Stock | |||||||
Common Stock | 52,500 | August 31, 2006 | $2.00 for 1 share | 2006 Regulation S | ||||
Warrants | Warrants | through | of | Offering | ||||
August 31, 2008 | Common Stock |
- F - 23 -
Table of Contents
December 31 | ||||||||
2007 | 2006 | |||||||
Acquisition of properties | ||||||||
Proved | $ | — | $ | — | ||||
Unproved | 60,000 | 881,865 | ||||||
Exploration costs | 253,000 | 435,792 | ||||||
Development costs | — | — | ||||||
Total oil and gas acquisitions | $ | 313,000 | $ | 1,317,657 | ||||
December 31 | ||||||||
2007 | 2006 | |||||||
Proved oil and gas properties | $ | 84,000 | $ | 840,339 | ||||
Investment in partnerships | 21,000 | 26,653 | ||||||
Unproved oil and gas properties | 338,000 | 288,673 | ||||||
Total oil and gas properties | 443,000 | 1,155,665 | ||||||
Less accumulated depreciation, depletion and amortization | (107,000 | ) | (771,539 | ) | ||||
Net oil and gas properties | $ | 336,000 | $ | 384,126 | ||||
December 31 | ||||||||
2007 | 2006 | |||||||
Oil and gas sales | $ | 36,000 | $ | 171,663 | ||||
Oil and gas sales from partnerships | 14,000 | 24,362 | ||||||
Production costs | (38,000 | ) | (96,207 | ) | ||||
Accretion Expense | — | (2,919 | ) | |||||
Exploration, abandonment and dry hole expenses | (304,000 | ) | (1,510,750 | ) | ||||
Depreciation, depletion and amortization and valuation provision | (7,000 | ) | (25,613 | ) | ||||
Net operating loss from oil and gas activity before income taxes | (299,000 | ) | (1,439,464 | ) | ||||
Income tax effect | — | — | ||||||
Results of operations from oil and gas producing activities (excluding corporate overhead and financing cost) | $ | (299,000 | ) | $ | (1,439,464 | ) | ||
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Oil (Bbls) | Gas (Mcf) | |||||||
Reserves, December 31, 2005 | 34,768 | 1,562,390 | ||||||
Revisions | (6,399 | ) | (400,492 | ) | ||||
Sale of minerals in place | — | (49,000 | ||||||
Discoveries and extensions | — | — | ||||||
Production | (1,803 | ) | (9,898 | ) | ||||
Reserves, December 31, 2006 | 39,364 | 1,103,000 | ||||||
Revisions | (7,797 | ) | (8,659 | ) | ||||
Sale of minerals in place | (7,019 | ) | — | |||||
Discoveries and extensions | — | — | ||||||
Production | (262 | ) | (5,341 | ) | ||||
Reserves, December 31, 2007 | 24,286 | 1,089,000 | ||||||
Proved developed reserves | ||||||||
December 31, 2005 | 6,532 | 83,390 | ||||||
December 31, 2006 | 15,078 | 20,000 | ||||||
December 31, 2007 | — | 6,000 | ||||||
- F - 25 -
Table of Contents
December 31 | ||||||||
2007 | 2006 | |||||||
Future cash inflows | $ | 10,136,000 | $ | 9,289,000 | ||||
Future development costs | (69,000 | ) | (81,000 | ) | ||||
Future production costs | (754,000 | ) | (1,098,000 | ) | ||||
Future income taxes | (3,166,000 | ) | (2,757,000 | ) | ||||
Future net cash flows | $ | 6,147,000 | $ | 5,353,000 | ||||
10% annual discount for estimated timing of cash flow | (2,403,000 | ) | (2,204,000 | ) | ||||
Standardized measure of discounted future net cash flows | $ | 3,744,000 | $ | 3,149,000 | ||||
December 31 | ||||||||
2007 | 2006 | |||||||
Changes in standardized measure of discounted future net cash flows: | ||||||||
Standardized measure of discounted future net cash flows (beginning) | $ | 3,149,000 | $ | 7,763,371 | ||||
Sales of oil and gas, net of production costs | (12,407 | ) | (83,091 | ) | ||||
Net changes in prices, net of production cost | 941,894 | (1,236,696 | ) | |||||
Revisions of previous quantity estimates | (130,366 | ) | (2,487,679 | ) | ||||
Change in future income taxes | (199,000 | ) | (745,371 | ) | ||||
Accretion of discount | — | 82,685 | ||||||
Discoveries and extensions, net of production and development costs | — | — | ||||||
Sales of reserves in place | (17,121 | ) | (251,851 | ) | ||||
Changes in future development costs | 12,000 | 189,792 | ||||||
Development costs incurred during the period that reduced future development costs | — | — | ||||||
Changes in production rates and other | — | (82,160 | ) | |||||
Standardized measure of discounted future net cash flows (ending) | $ | 3,744,000 | $ | 3,149,000 | ||||
- F - 26 -
Table of Contents
R. A. Lenser & Associates, Inc. Petroleum Engineers | ||||
/s/ Ronald A. Lenser | ||||
Ronald A. Lenser | ||||
PE No. 30558 | ||||
Houston, Texas
Table of Contents
1. | I have reviewed this 10-KSB for the year ended December 31, 2007 of Bayou City Exploration, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; | |
4. | The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | ||
c) | Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and |
5. | The small business issuer’s certifying officer(s) have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal controls over financial reporting. |
/s/ Robert D. Burr | ||||
Robert D. Burr | ||||
Chief Executive Officer and President | ||||
Table of Contents
1. | I have reviewed this 10-KSB for the year ended December 31, 2007 of Bayou City Exploration, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; | |
4. | The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | ||
c) | Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and |
5. | The small business issuer’s certifying officer(s) have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal controls over financial reporting. |
/s/ Robert D. Burr | ||||
Robert D. Burr | ||||
Acting Chief Financial Officer | ||||
Table of Contents
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Robert D. Burr | ||||
Robert D. Burr | ||||
Chief Executive Officer and President | ||||
Table of Contents
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Robert D. Burr | ||||
Robert D. Burr | ||||
Acting Chief Financial Officer | ||||