FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
----------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to____________________
Commission file number 1-4668
COASTAL CARIBBEAN OILS & MINERALS, LTD.
................................................................................
Exact name of registrant as specified in its charter)
BERMUDA NONE
................................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House, Church Street, Hamilton, Bermuda NONE
................................................................................
(Address of principal executive offices) (Zip Code)
809-295-1422
................................................................................
(Registrant's telephone number, including area code)
................................................................................
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
l934 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.
X Yes No
The number of shares outstanding of the issuer's single class of common
stock as of October 15, 1996 was 40,046,358.
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
(unaudited)
September 30, December 31,
1996 1995
----- ----
ASSETS
Current assets:
Cash and cash equivalents $ 569,731 $ 247,452
Accounts and interest receivable 44,642 6,836
U.S. government securities 5,343,814 -
Prepaid insurance 178,067 125,342
------------ ------------
Total current assets 6,136,254 379,630
Unproved oil, gas and mineral properties (full cost method) 3,877,928 3,688,568
Other 25,514 59,708
------------- -------------
$10,039,696 $ 4,127,906
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 59,060 $ 71,212
-------------- --------------
Minority interests
- -
- -
Shareholders' equity:
Common stock, par value 12(cent) per share:
Authorized - 100,000,000 shares
Outstanding - 40,046, 358 and 33,363,632 shares, respectively 4,805,563 4,003,636
Capital in excess of par value 28,202,983 22,395,084
----------- -----------
33,008,546 26,398,720
Deficit accumulated during development stage (23,027,910) (22,342,026)
------------- ------------
9,980,636 4,056,694
------------- -------------
$10,039,696 $ 4,127,906
=========== =============
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. dollars)
(unaudited)
From inception
Three months ended Nine months ended (Jan. 31, 1953)
------------------ -----------------
September 30, September 30, to September 30,
------------- ------------- ----------------
1996 1995 1996 1995 1996
---- ---- ---- ---- ----
Interest and other income $78,698 $ 3,389 $113,890 $ 12,081 $3,148,178
------- --------- -------- --------- ----------
Expenses:
Legal fees and costs 115,112 78,069 336,621 241,215 10,028,914
Administrative expenses 78,677 62,789 244,681 244,923 5,827,614
Salaries 36,500 39,500 112,167 110,167 2,555,778
Shareholder communications 21,524 11,647 82,699 81,981 3,237,538
Exploration costs 17,955 2,022 23,606 2,703 696,709
Lawsuit judgments - - - 1,941,916
Minority interests - - - (632,974)
Other - - - 364,865
Contractual services - - - - 2,155,728
--------------- --------------- ---------------- --------------- -----------
269,768 194,027 799,774 680,989 26,176,088
--------- --------- ---------- --------- ----------
Net loss $(191,070) $(190,638) $(685,884) $(668,908)
========== ========== ========== ==========
Deficit accumulated during
development stage $(23,027,910)
============
Average number of shares
outstanding 40,046,358 33,363,632 36,706,995 33,363,632
============ ========== =========== ==========
Net loss per share $ - $(.01) $(.02) $(.02)
=== ====== ====== ======
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
(unaudited)
From inception
Nine months ended (Jan. 31, 1953)
September 30, to September 30,
1996 1995 1996
----------- ----------- ----------------
Operating activities:
Net loss $ (685,884) $(668,908) $(23,027,910)
Adjustments to reconcile net loss
to net cash used for operating activities:
Minority interest - - (632,974)
Exploration and other - - 755,974
Net change in:
Accounts receivable (37,805) (22,209) (44,642)
U.S. Government securities (5,343,814) - (5,343,814)
Prepaid insurance (52,725) 16,822 (178,067)
Current liabilities (12,152) (13,239) 59,060
Other 34,193 2 473,392
------------ --------------- ------------
Net cash used for operating activities (6,098,187) (687,532) (27,938,981)
------------ ----------- ------------
Investing activities:
Additions to oil, gas, and mineral
properties net of assets acquired
for common stock (189,360) - (3,877,928)
Reimbursement of lease rentals and
other expenses - - 1,243,086
Purchase of fixed assets - - -
Net cash used for investing activities - - (61,649)
----------------- ---------------- --------------
(189,360) - (2,696,491)
Financing activities:
Cash proceeds from sale of
common stock less expenses 6,356,326 - 26,342,204
Shares issued upon exercise of
options 13,500 - 872,999
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares 240,000 360,000 3,240,000
------------ ----------- -----------
Net cash provided by
financing activities 6,609,826 360,000 31,205,203
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 322,279 (327,532) 569,731
Cash and cash equivalents at
beginning of period 247,452 553,236 -
------------ ---------- ------------------
Cash and cash equivalents at
end of period $ 569,731 $ 225,704 $ 569,731
============= =========== ============
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1996
ITEM 1 - Financial Statements
The information for the three and nine month periods ended September
30, 1996 and 1995 is unaudited, but includes all adjustments which Coastal
Caribbean Oils & Minerals, Ltd. (the "Company") considers necessary for a fair
statement of the results of operations for those periods. The consolidated
financial statements include the Company's 63.4% owned subsidiary, Coastal
Petroleum Company ("Coastal Petroleum").
The Company's principal assets are oil, gas, and mineral leases which
total $3.9 million at September 30, 1996. The Company has been and continues to
be involved in several proceedings which have limited the Company's ability to
commence development activities on its unproved oil and gas properties or obtain
compensation for certain property rights it believes have been confiscated.
These consolidated financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or amounts and classification of liabilities that may result from the
outcome of this uncertainty.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation
Liquidity and Capital Resources
Short Term Liquidity
At September 30, 1996, Coastal Caribbean had working capital of
approximately $6.1 million. These funds are expected to be used for general
corporate purposes, including exploration and development and to continue the
litigation against the State of Florida.
On May 29, 1996, the Company concluded its offering of approximately
6.7 million shares to its shareholders at $1.00 per share. The offering was
oversubscribed and the proceeds to the Company were approximately $6.4 million
after the expenses of the offering.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1996
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
Long Term Liquidity
The Company estimates that as much as $400,000 per year may be required
in connection with the Florida litigation. The Company expects that the Florida
litigation could continue at least through 1998, although the State may take
actions that could shorten or lengthen that period. The Company has a program to
evaluate the Company's leases which is estimated to cost approximately $2
million and is subject to the outcome of the Florida litigation. At September
30, 1996, the Company has spent approximately $200,000 under a program to
upgrade the leases.
The Company's oil and gas properties are currently unproved and
undeveloped. The Company has applied for a drilling permit from the State of
Florida to drill an exploratory well in the water near Apalachicola, Florida.
The State of Florida has resisted the issuance of a drilling permit. If the
Company is successful in obtaining a state drilling permit, then the Company
must also do the following:
1. Obtain a federal drilling permit.
2. Finance drilling of the well, which is estimated to cost
between $10-15 million.
3. Begin drilling the well within one year of the date the state
permit is issued.
The Company does not currently have assets sufficient to fund these
expenditures to drill the exploration well, if a permit were granted. If oil
and/or gas is discovered in commercial quantities, a production program would
require additional permitting and construction of production, storage and
delivery systems. The Company may seek additional financing to fund these
development expenditures.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1996
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
Results of Operations
Three month period ended September 30, 1996 vs. September 30, 1995
The Company incurred a loss of $191,070 for the third quarter of 1996,
compared to a loss of $190,638 for the comparable 1995 quarter.
Interest income and other income increased from $3,389 in 1995 to $78,698
in 1996 due to the funds available for investment from the May 1996 rights
offering to shareholders.
Legal fees and costs increased 47 % to $115,112 for the 1996 quarter,
compared to $78,069 in the prior period. These costs increased due to (1) the
various appeals filed in connection with the State of Florida's opposition to
the issuance of a drilling permit and (2) preparation of an appeal of the
adverse decision that there has not been a taking of the Company's royalty
interests.
Administrative expenses increased 25% to $78,677 from $62,789. The primary
reason for the increase is the first time purchase of Directors' and Officers'
liability insurance.
Shareholder communications increased 85% from $11,647 to $36,500. The
increase represents the additional cost of press releases and mailings to report
the developments in the permit and royalty interest litigation
Exploration costs increased from $2,022 to $17,955 in connection with the
Company's program to upgrade its unproved oil and gas properties.
Nine month period ended September 30, 1996 vs. September 30, 1995
The Company incurred a loss of $685,884 for the nine months ended September
1996, compared to a loss of $668,908 for the 1995 period.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1996
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
Interest income and other income increased from $12,081 in 1995 to $113,890
in 1996 due to the funds available for investment from the May 1996 rights
offering to shareholders.
Legal fees and costs increased 40% to $336,621 for the 1996 period,
compared to $241,215 in the prior period. These costs increased due to (1) the
various appeals filed in connection with the State of Florida's opposition to
the issuance of a drilling permit and (2) the May 6, 1996 trial to determine
whether there has been a taking of the Company's royalty interests.
Exploration costs increased from $2,703 to $23,606 in 1996 in connection
with the Company's program to upgrade its unproved oil and gas properties.
PART II - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1996
Item 1. Legal Proceedings.
See Item 6 for a summary of legal proceedings during the period.
Item 6. Exhibits and Reports on Form 8-K.
(a) On August 1, 1996, the Company filed a Current Report on Form 8-K
to report that on July 30, 1996, Florida Supreme Court declined to review the
First District Court of Appeal decision that overturned a State of Florida order
that required a $1.9 billion surety bond as a condition for the issuance of a
drilling permit to Coastal Petroleum Company, a majority-owned subsidiary.
(b) On August 6, 1996, the Company filed a Current Report on Form 8-K
to report that Florida's Leon County Circuit Court ruled against Coastal
Petroleum Company in its inverse condemnation case against the State of Florida.
(c) On August 21, 1996, the Company filed a Current Report on Form 8-K
to report that on August 16, 1996, the Company was notified by the Florida
Department of Environmental Protection ("DEP") that the DEP was ready to issue
an offshore drilling permit to Coastal Petroleum Company, its majority owned
subsidiary. The position of the DEP was that the permit issuance was subject to
publication of the DEP's Notice of Intent. The Company notified the DEP that the
Notice of Intent was not required by either law or regulation.
(d) On September 3, 1996, the Company filed a Current Report on Form
8-K that on August 27, 1996, the Company filed a petition with Florida's First
District Court of Appeal to order the state's Department of Environmental
Protection to issue an offshore drilling permit to the Company without further
delay.
(e) On September 17, 1996, the Company filed a Current Report on Form
8-K that Florida's First District Court of Appeal has ordered the State
Department of Environmental Protection to show cause why it should not
immediately issue an offshore drilling permit to the Company's subsidiary,
Coastal Petroleum Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
Registrant
Date: October 23,1996 By /s/ James R. Joyce
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer