1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: June 30, 1996
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________
Commission File Number: 0-3912
PETROL INDUSTRIES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA 75-1282449
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation of Organization)
202 N. THOMAS, SUITE 4 SHREVEPORT, LA 71107-6539
(Address of Principal Executive Offices)
(318) 424-6396
(Issuer's Telephone Number, Including Area Code)
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 the Exchange Act during the past 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 [XX] NO [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 1,599,731
2
Item 1. Financial Statements
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
1996 1995
(unaudited)
--------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 221,346 $ 170,012
Accounts receivable:
Trade 70,454 79,136
Other 9,498 11,852
--------- ---------
79,952 90,988
Inventory 38,058 29,990
Prepaid expenses 20,649 15,208
--------- ---------
Total current assets 360,005 306,198
--------- ---------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties successful efforts method 4,258,075 4,366,904
Trucks and other operating equipment 328,566 327,041
Furniture and fixtures 37,072 37,072
--------- ---------
4,630,713 4,738,017
Less accumulated depreciation, depletion and
amortization 4,581,263 4,687,020
--------- ---------
49,450 50,997
--------- ---------
Cash surrender value of life insurance, net 44,926 39,376
Other assets 1,107 1,107
--------- ---------
$ 455,488 $ 397,678
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,477 $ 42,219
Payable to interest owners 259,499 244,078
Payable to officer, net 183,641 110,708
Accrued expenses 112,596 82,355
--------- ---------
Total current liabilities 594,213 479,360
--------- ---------
Stockholders' equity:
Preferred stock-no par value. Authorized 1,000,000
shares; no shares issued or outstanding --- ---
Common stock-$.10 par value. Authorized 10,000,000
shares; issued and outstanding 1,597,231 and
1,597,241 shares in 1996 and 1995, respectively 159,723 159,724
Accumulated deficit (298,448) (241,406)
--------- ---------
Total stockholders' equity (138,725) (81,682)
--------- ---------
$ 455,488 $ 397,678
========= =========
3
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
-------------------- --------------------
Revenues:
Oil and gas sales $ 230,142 207,219 440,594 425,304
Other operating income 3,598 3,232 7,171 5,862
--------- --------- --------- ---------
233,740 210,451 447,765 431,166
--------- --------- --------- ---------
Expenses:
Lease operating expense 174,783 170,065 340,094 324,044
General and administrative 88,869 83,076 175,795 167,695
Depreciation, depletion and
amortization 1,710 3,525 3,420 7,050
--------- --------- --------- ---------
265,362 256,666 519,309 498,789
--------- --------- --------- ---------
Operating loss (31,622) (46,215) (71,544) (67,623)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets 19,473 --- 19,473 4,212
Interest income 2,431 2,901 4,752 5,477
Interest expense (5,114) (4,270) (9,722) (7,992)
--------- --------- --------- ---------
16,790 (1,369) 14,503 1,697
--------- --------- --------- ---------
Net loss $ (14,832) (47,584) (57,041) (65,926)
========= ========= ========= =========
Net loss per share $ (.01) (.03) (.04) (.05)
_________ _________ _________ _________
Average common shares 1,597,231 1,597,241 1,597,231 1,597,241
outstanding ========= ========= ========= =========
4
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995
(unaudited)
1995 1994
---- ----
Operating activities:
Net loss $ (57,041) (65,926)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 3,420 7,050
Gain on sale of assets (19,473) (4,212)
Losses on retirements of property and
equipment included in lease operating
expenses 2,968 9,361
Decrease (increase) in cash surrender
value of life insurance (5,550) (5,550)
Other --- ---
Decrease (increase) in accounts receivable 11,036 2,909
Decrease (increase) in inventory (8,068) (13,047)
Decrease (increase) in prepaid expenses (5,441) 5,649
Increase (decrease) in accounts payable, accrued
expenses, payable to interest owners
and officer 114,853 51,618
------- -------
Net cash provided (used) by operating
activities 36,704 (12,148)
Investing activities:
Purchases of property and equipment (5,368) (16,116)
Proceeds from sale of property and equipment 20,000 12,550
------- -------
Net cash (used) provided by investing
activities 14,632 (3,566)
------- -------
Financing activities-purchase and retirement of
common stock (2) ---
------- -------
Increase (decrease) in cash and cash equivalents 51,334 (15,714)
Cash and cash equivalents at beginning of period 170,012 292,795
------- -------
Cash and cash equivalents at end of period $ 221,346 277,081
======= =======
5
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Six months ended June 30, 1996 and 1995
(unaudited)
1996 1995
---- ----
Stockholders' equity at January 1 $ (81,682) $ 89,938
Retirement of stock (2) ---
Net loss for the six-month period (57,041) (65,926)
-------- --------
Stockholders' equity at June 30 $ (138,725) $ 24,012
======== ========
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PETROL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
1. The accompanying unaudited consolidated financial statements have
been prepared by the Registrant in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading. In
the opinion of management, the accompanying financial statements contain all
adjustments necessary for a fair statement of the results for the interim
periods presented. It is suggested that these consolidated financial
statements be used in conjunction with the consolidated financial statements
and the notes thereto included in the Registrant's 1995 Annual Report on Form
10-KSB.
2. The consolidated financial statements included herein are
consolidated with the accounts of Petrolind Drilling Funds, Inc. and Realco,
Inc., both wholly owned subsidiaries of the Registrant, neither of which was
active during 1995 or 1994.
3. Net income per share of common stock is computed on the weighted
average number of shares outstanding during the six months ended June 30. The
weighted average number of shares outstanding was determined by totaling the
number of shares outstanding at the end of each month and dividing that total
by the number of months.
Total Number of
Shares Outstanding
1996 1995
--------- ---------
January 31 1,597,241 1,597,241
February 28 1,597,241 1,597,241
March 31 1,597,241 1,597,241
April 30 1,597,241 1,597,241
May 31 1,597,231 1,597,241
June 30 1,597,231 1,597,241
4. The expected tax benefit resulting from operating losses for the
first six months of 1996 has not been recorded because it is not expected to
be realizable. Additionally, there were no significant changes in the
temporary differences that give rise to significant portions of the deferred
tax assets and deferred tax liabilities at June 30, 1996.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Oil and gas revenues increased approximately 11.1% in the second quarter
of 1996, compared to the second quarter of 1995, the result being a slight
increase in oil prices. The Company's net loss for the period decreased to
$14,832, or ($.01) per share, compared to $47,584 in the 1995 period, or
($.03) per share.
The Company sustained an operating loss of $31,622 in the second quarter
of 1996, compared to an operating loss of $46,215 in the prior year's second
quarter. For the six month period ended June 30, 1996, the Company's net loss
decreased approximately 13.5% to $57,041 from the $65,926 net loss in the
prior year's period.
Management has reduced operating costs over the past several years in an
effort to restore profitability in the face of current oil prices, and has
seen substantial savings from these reductions. Profitability is contingent
essentially upon two factors: increasing production from the Company's mineral
leases, or increases in world oil prices. While Management continues to
explore possible approaches to increasing oil production, including
technological developments or pursuing drilling operations, improvements in
production are expected to come, if at all, more from general improvements in
local weather conditions than from other factors.
Oil prices averaged $19.99 per barrel ($19.88 including the barrel
equivalent of gas) during the second quarter of 1996, compared to an average
of $17.47 per barrel in the 1995 period ($17.35 including the barrel
equivalent of gas). For the six month period, oil prices averaged $19.00 per
barrel in 1996 ($18.89 including the barrel equivalent of gas) compared to
$17.12 ($17.01 including the barrel equivalent of gas) in 1995.
The Company had cash and cash equivalents at June 30, 1996 of $221,346,
compared to $170,012 at the end of the 1995 fiscal year. Management estimates
that it owes $259,499 from the settlement of the Horne Lease dispute with Oryx
to owners of other interests in the Horne Lease.
8
SIGNATURE
---------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PETROL INDUSTRIES, INC.
Dated: August 13, 1996 By: s/ Joseph M. Rodano
--------------------------------------
Joseph M. Rodano
President and Treasurer
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EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule