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, 1997
[ ] 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: 1,597,196
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Item 1. Financial Statements
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
1997 1996
----------- ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 213,797 218,355
Accounts receivable:
Trade 72,875 83,287
Other 9,497 9,497
--------- ---------
82,372 92,784
Inventory 39,385 47,647
Prepaid expenses 9,077 5,325
--------- ---------
Total current assets 344,631 364,111
--------- ---------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas properties-
successful efforts method 4,261,564 4,262,884
Trucks and other operating equipment 340,837 336,098
Furniture and fixtures 43,640 37,902
--------- ---------
4,653,041 4,643,884
Less accumulated depreciation, depletion and
amortization 4,590,342 4,587,912
--------- ---------
62,699 55,972
--------- ---------
Cash surrender value of life insurance, net 56,026 50,476
Other assets 1,107 1,107
--------- ---------
$ 464,463 471,666
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 46,114 51,064
Payable to interest owners 294,222 278,556
Payable to officer, net 319,647 241,255
Accrued expenses 138,205 115,720
--------- ---------
Total current liabilities 798,188 686,595
Stockholders' deficit:
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 1,597,196 and
1,597,241 shares in 1997 and 1996 159,720 159,720
Accumulated deficit (493,445) (374,649)
--------- ---------
Total stockholders' deficit (333,725) (214,929)
--------- ---------
$ 464,463 471,666
========= =========
3
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
---------------- ----------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Oil and gas sales $ 186,169 230,142 393,725 440,594
Other operating income 3,858 3,598 8,019 7,171
--------- --------- --------- ---------
190,027 233,740 401,744 447,765
--------- --------- --------- ---------
Expenses:
Lease operating expense 167,535 174,783 342,863 340,094
General and administrative 80,529 88,869 166,543 175,795
Depreciation, depletion and
amortization 915 1,710 2,430 3,420
--------- --------- --------- ---------
248,979 265,362 511,836 519,309
--------- --------- --------- ---------
Operating loss (58,952) (31,622) (110,092) (71,544)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets --- 19,473 --- 19,473
Interest income 2,932 2,431 5,669 4,752
Interest expense (7,478) (5,114) (14,373) (9,722)
--------- --------- --------- ---------
(4,546) 16,790 (8,704) 14,503
--------- --------- --------- ---------
Net loss $ (63,498) (14,832) (118,796) (57,041)
========= ========= ========= =========
Net loss per share $ (.04) (.01) (.07) (.04)
========= ========= ========= =========
Average common shares
outstanding 1,597,196 1,597,231 1,597,196 1,597,231
========= ========= ========= =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and 1996
(unaudited)
1997 1996
---- ----
Operating activities:
Net loss $ (118,796) (57,041)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, depletion and amortization 2,430 3,420
Gain on sale of assets --- (19,473)
Losses on retirements of property and
equipment included in lease operating
expenses 3,132 2,968
Changes in assets and liabilities:
Cash surrender value of life insurance (5,550) (5,550)
Accounts receivable 10,412 11,036
Inventory 8,262 (8,068)
Prepaid expenses (3,752) (5,441)
Accounts payable and accrued expenses 17,535 26,499
Payable to officer, net 78,392 72,933
Payable to interest owners 15,666 15,421
--------- ---------
Net cash provided by operating
activities 7,731 36,704
Investing activities:
Capital expenditures (12,289) (5,368)
Proceeds from sale of property and equipment --- 20,000
--------- ---------
Net cash (used) provided by investing
activities (12,289) 14,632
Financing activities-purchase and retirement of
common stock --- (2)
--------- ---------
Increase (decrease) in cash and cash equivalents (4,558) 51,334
Cash and cash equivalents at beginning of period 218,355 170,012
--------- ---------
Cash and cash equivalents at end of period $ 213,797 221,346
========= =========
</TABLE
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Six months ended June 30, 1997 and 1996
(unaudited)
1997 1996
---- ----
Stockholders' deficit at January 1 $ (214,929) (81,682)
Retirement of stock --- (2)
Net loss for the six-month period (118,796) (57,041)
--------- ---------
Stockholders' deficit at June 30 $ (333,725) (138,725)
========= =========
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PETROL INDUSTRIES, INC. & 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 state
ment 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 1996 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 1997 or 1996.
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
1997 1996
---- ----
January 31 1,597,196 1,597,241
February 28 1,597,196 1,597,241
March 31 1,597,196 1,597,241
April 30 1,597,196 1,597,241
May 31 1,597,196 1,597,231
June 30 1,597,196 1,597,231
4. The expected tax benefit resulting from operating losses for the first
six months of 1997 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, 1997.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Oil and gas sales revenues decreased approximately 19.1% in the second
quarter of 1997, compared to the second quarter of 1996, the result being a
decrease in average oil prices of approximately $2.06 per barrel. The
Company's net loss for the period increased to $63,498, or ($.04) per share,
compared to $14,832 in the 1996 period, or ($.01) per share.
The Company sustained an operating loss of $58,652 in the second quarter
of 1997, compared to an operating loss of $31,622 in the prior year's second
quarter. For the six month period ended June 30, 1997, the Company's net loss
increased approximately 52.0% to $118,796 from the $57,041 net loss in the
prior year's period.
Management has attempted to reduce operating costs over the past several
years in an effort to restore profitability in the face of current oil
prices. 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 $17.93 per barrel during the second quarter of 1997,
compared to an average of $19.99 per barrel in the 1996 period. For the six
month period, oil prices averaged $19.30 per barrel in 1997 compared to $19.00
in 1996.
The Company had cash and cash equivalents at June 30, 1997, of $213,797,
compared to $218,355 at the end of the 1996 fiscal year. Management estimates
that it owes $294,222 from the settlement of the Horne Lease dispute with Oryx
to owners of other interests in the Horne Lease.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
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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 11, 1997 By: s/ Joseph M. Rodano
--------------------------------------
Joseph M. Rodano
President and Treasurer
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EXHIBIT INDEX
Exhibit
No. Description
------- -----------
27 Financial Data Schedule