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, 1997
-------------------------------------------
[ ] 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)
441-295-1422
................................................................................
(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 20, 1997 was 40,056,358.
PART I - 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,
1997 1996
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 125,840 $ 424,330
Accounts and interest receivable 53,650 105,115
U.S. Government securities 2,212,516 3,341,820
Prepaid insurance 227,990 178,868
------------- -------------
Total current assets 2,619,996 4,050,133
------------- -------------
U.S. Government securities 1,999,792 2,001,441
Unproved oil, gas and mineral properties (full cost method) 4,385,546 3,943,520
Other 26,634 25,644
------------- -------------
$9,031,968 $10,020,738
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 110,719 $ 262,422
------------- -------------
Minority interests
- -
Shareholders' equity:
Common stock, par value 12(cent) per share:
Authorized - 250,000,000 shares
Outstanding - 40,056, 358 and 40,046,358 shares 4,806,763 4,805,563
Capital in excess of par value 28,693,032 28,442,983
------------- -------------
33,499,795 33,248,546
Deficit accumulated during development stage (24,578,546) (23,490,230)
------------- -------------
Total shareholders' equity 8,921,249 9,758,316
------------- -------------
$ 9,031,968 $ 10,020,738
============= =============
PART I - 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 Sept. 30,
------------- ------------- ------------
1997 1996 1997 1996 1997
---- ---- ---- ---- ----
Interest and other income $66,713 $78,698 $221,330 $113,890 3,447,987
------- ------- -------- -------- ---------
Expenses:
Legal fees and costs 329,379 115,112 650,530 336,621 11,073,654
Administrative expenses 107,684 78,677 334,095 244,681 6,255,622
Salaries 39,000 36,500 117,000 112,167 2,711,278
Shareholder communications 40,298 21,524 169,031 82,699 3,417,418
Exploration costs 28,935 17,955 38,990 23,606 739,026
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,865
Contractual services - - - - 2,155,728
---------- ---------- ------------ ---------- -----------
545,296 269,768 1,309,646 799,774 28,026,532
---------- ---------- ------------ ---------- -----------
Net loss $(478,583) $(191,070) $(1,088,316) $(685,884)
========== ========== ============ ==========
Deficit accumulated during
development stage $24,578,546
===========
Average number of shares
outstanding 40,056,358 40,046,358 40,055,358 36,706,995
========== ========== ========== ==========
Net loss per share $(.01) $( - ) $(.03) $(.02)
====== ====== ====== ======
PART I - 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 Sept. 30,
1997 1996 1997
----- ----- ----
Operating activities:
Net loss $(1,088,316) $ (685,884) $(24,578,546)
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 51,465 (37,805) (53,650)
U.S. Government securities 1,129,304 (5,343,814) (2,212,516)
Prepaid insurance (49,122) (52,725) (227,990)
Current liabilities (151,703) (12,152) 110,719
Other (991) 34,193 472,270
------------ ------------- -------------
Net cash used for operating activities (109,363) (6,098,187) (26,366,713)
------------ ------------- -------------
Investing activities:
Additions to oil, gas, and mineral
properties net of assets acquired
for common stock (442,026) (189,360) (4,385,546)
Reimbursement of lease rentals and
other expenses - - 1,243,086
U.S. Government securities purchased - - (1,999,792)
Purchase of fixed assets 1,649 - (61,649)
------------ ------------- -------------
Net cash provided by (used for) investing activities
(440,377) (189,360) (5,203,901)
----------- ------------- -------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - 6,356,326 26,342,205
Shares issued upon exercise of
options 11,250 13,500 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares 240,000 240,000 3,720,000
------------ ------------- -------------
Net cash provided by
financing activities 251,250 6,609,826 31,696,454
------------ ------------- -------------
Net increase (decrease) in cash
and cash equivalents (298,490) 322,279 125,840
Cash and cash equivalents at
beginning of period 424,330 247,452 -
------------ ------------- -------------
Cash and cash equivalents at
end of period $ 125,840 $ 569,731 $ 125,840
========== =========== ============
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1997
ITEM 1 - Financial Statements
The information for the three and nine month periods ended September
30, 1997 and 1996 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 59.25% owned subsidiary, Coastal
Petroleum Company ("Coastal Petroleum").
The Company's principal assets are oil, gas, and mineral leases, the
costs of which total $4.4 million at September 30, 1997. The Company has been
and continues to be involved in several legal 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, 1997, Coastal Caribbean had cash and securities of
approximately $4.3 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.
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1997
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 $500,000 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 $600,000
for 1997 and $1 million for the 1998-1999 period, and is subject to the outcome
of the Florida litigation. During 1997, the Company has spent approximately
$442,000 under its continuing program to identify potential drilling prospects.
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
approximately $5 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 would be required to seek additional financing or
partners to fund these expenditures.
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, 1997 vs. September 30, 1996
The Company incurred a loss of $479,000 for the 1997 quarter, compared
to a loss of $191,000 for the comparable 1996 quarter.
Interest income and other income decreased 15% from $79,000 in 1996 to
$67,000 in 1997 because less funds were available for investment during the 1997
period.
Legal fees and costs increased 186% to $329,000 for the 1997 quarter,
compared to $115,000 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, (2) the appeal of the adverse decision that
there has not been a taking of the Company's royalty interests, and (3)
preparation for the October 20, 1997 administrative hearing regarding the
issuance of the pending drilling permit.
Administrative expenses increased 37% to $108,000 in 1997 from $79,000
in the prior quarter. The amount of directors' and officers' liability insurance
was increased in 1997.
Shareholder communications increased 87% from $22,000 in 1996 to
$40,000 in 1997. In 1996, the Company saved the cost of printing and mailing a
separate annual report by utilizing the May 1996 rights offering prospectus in
lieu of an annual report. In addition, the cost of printing and mailing also
increased in 1997 because of the size of the documents and the number of
mailings.
Exploration costs increased 61% from $18,000 in 1996 to $29,000 in
1997 in connection with the Company's continuing program to identify potential
drilling prospects.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Nine month period ended September 30, 1997 vs. September 30, 1996
The Company incurred a loss of $1,310,000 for the 1997 period, compared
to a loss of $686,000 for the comparable 1996 period.
Interest income and other income increased 94% from $114,000 in 1996
to $221,000 in 1997 due to the funds available for investment from the May 1996
rights offering to shareholders.
Legal fees and costs increased 94% to $651,000 for the 1997 period,
compared to $337,000 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, (2) the appeal of the adverse decision that
there has not been a taking of the Company's royalty interests, and (3)
preparation for the October 20, 1997 administrative hearing regarding the
issuance of the pending drilling permit.
Administrative expenses increased 37% to $335,000 in 1997 from $245,000
in the prior period. The primary reason for the increase is the first time
purchase of directors' and officers' liability insurance in 1996 and an increase
in the amount of coverage in 1997. In addition, accounting and auditing fees
also increased during the 1997 period.
Shareholder communications increased 104% from $83,000 in 1996 to
$169,000 in 1997. In 1996, the Company saved the cost of printing and mailing a
separate annual report by utilizing the May 1996 rights offering prospectus in
lieu of an annual report. In addition, the cost of printing and mailing also
increased in 1997 because of the size of the documents and the number of
mailings.
Exploration costs increased 65% from $24,000 in 1996 to $39,000 in
1997 in connection with the Company's continuing program to identify potential
drilling prospects.
PART II - OTHER INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1997
ITEM 5 - Other Information
On October 20, 1997, an administrative hearing commenced on Coastal
Petroleum Company's drilling permit application and the appeal of the $4.25
billion surety requirement.
ITEM 6 - Exhibits and Reports on Form 8-K
On August 6, 1997, the Company filed a Current Report on Form 8-K
reporting that on August 5, 1997, the First District Court of Appeal in Florida
ruled against the Company in its appeal of the Circuit Court's decision that
there was no taking of Coastal Petroleum Company's royalty acreage.
On September 2, 1997, the Company filed a Current Report on Form 8-K
reporting that the Company's majority owned subsidiary, Coastal Petroleum
Company, advised the State of Florida that its petroleum consultants had
evaluated the offshore St. George Island prospect and estimated the structure to
contain 2.19 billion barrels of oil in place with 546 million barrels
recoverable. The Company disclosed this evaluation in connection with a pending
drilling permit application to test the prospect.
On September 10, 1997, the Company filed a Current Report on Form 8-K
reporting that Florida's governor and cabinet established a $4.25 billion surety
requirement as a condition for the issuance of Coastal Petroleum Company's
outstanding drilling permit.
On September 23, 1997, the Company filed a Current Report on Form 8-K
reporting that an Administrative Law Judge rescheduled a public hearing on
Coastal Petroleum Company's offshore drilling permit application from September
29, 1997 to October 20, 1997. The Judge combined the permit case with the
administrative appeal of the state's recently enacted $4.25 billion surety
requirement.
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 24, 1997 By /s/ James R. Joyce
-----------------------------------
James R. Joyce
Treasurer and Chief Accounting
and Financial Officer