FORM-10Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarter Ended November 30, 1996 Commission File Number 0-9098
OIL CITY PETROLEUM, INC.
(Exact name of Registrant as specified in its Charter)
Texas 75-1614001
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5579 South Lewis, Tulsa, Oklahoma 74105
(Address of principal executive offices) (Zip Code)
(918) 749-0483
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports re-
quired to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes X No
The Registrant had 14,912,492 shares of common stock, no par value outstanding
as of the close of the period covered by this report.
OIL CITY PETROLEUM, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Statement of Operations - Three Months Ended
November 30, 1996 and 1995 3
Balance Sheet - November 30, 1996 and August 31, 1996 4
Statement of Cash Flows - Three Months Ended
November 30, 1996 and 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OIL CITY PETROLEUM, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
November 30,
1996 1995
Revenues:
Oil and Gas Sales $ 16,217 $ 11,681
Rental Income 9,929 9,145
Interest and Other Income 324 363
Gain (Loss) on Sale of Assets -- --
26,470 21,189
Costs and Expenses:
Oil & Gas Operating Expenses 13,160 11,392
Rental Expenses 4,237 4,429
Depreciation, Depletion & Amortization 4,974 5,493
Administrative and General 32,125 34,232
Interest Expense - Non-affiliates 4,163 4,453
Interest Expense - Affiliates 22,340 20,368
80,999 80,367
Net Income or (Loss) $ (54,529) $ (59,178)
Net Income or (Loss) Per Share $ (.01) $ (.01)
Average Number of Shares
Outstanding 14,912,492 14,912,492
SEE NOTES TO FINANCIAL STATEMENTS
OIL CITY PETROLEUM, INC.
BALANCE SHEET
(UNAUDITED)
Nov. 30, Aug. 31,
ASSETS 1996 1996
Current Assets:
Cash $ 5,442 $ 311
Short-term Investments 25,000 25,000
Accounts Receivable 14,665 15,119
Crude Oil Inventory 4,992 4,992
Other Current Assets 4,974 3,597
Total Current Assets 55,073 49,019
Property and Equipment, at Cost:
Oil and Gas Properties, Successful Efforts Method 1,094,018 1,094,018
Field Equipment 7,945 7,945
Building, Land and Office Equipment 261,101 254,331
Total Property and Equipment, at Cost 1,363,064 1,356,294
Less Accumulated Depreciation, Depletion,
and Amortization (717,690) (712,716)
Net Property and Equipment 645,374 643,578
Other Assets -- --
Total Assets $ 700,447 $ 692,597
SEE NOTES TO FINANCIAL STATEMENTS
OIL CITY PETROLEUM, INC.
BALANCE SHEET
(UNAUDITED)
Nov. 30, Aug. 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1996
Current Liabilities:
Accounts Payable and Accrued Expenses $ 20,795 $ 14,670
Current Portion of Long-Term Debt 12,171 12,171
Note and Accrued Interest Payable to Affiliate 1,524,986 1,465,807
Total Current Liabilities 1,557,952 1,492,648
Long-Term Debt Less Current Portion 144,465 147,390
Shareholders' Equity:
Common Stock, No Par Value - Authorized
30,000,000 Shares, Issued and Outstanding
14,912,492 Shares 5,692,571 5,692,571
Additional Paid-in Capital 1,567,243 1,567,243
Accumulated Deficit (8,261,784) (8,207,255)
Total Shareholders' Equity (Deficit) (1,001,970) (947,441)
Total Liabilities and Shareholders' Equity $ 700,447 $ 692,597
SEE NOTES TO FINANCIAL STATEMENTS
OIL CITY PETROLEUM, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
Nov. 30,
1996 1995
Cash Flows from Operating Activities:
Net Loss $ (54,529) $ (59,178)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation, Depletion, and Amortization 4,974 5,493
Interest Expense - Affiliates 22,340 20,368
Net (Gain) Loss on Sale of Assets -- --
Change in Assets and Liabilities:
(Increase) Decrease in Receivables 454 956
(Increase) Decrease in Inventory -- --
(Increase) Decrease in Other Current Assets (1,377) (1,415)
Increase (Decrease) in Accounts
Payable and Accrued Expenses 6,125 (1,845)
Total Adjustments 32,516 23,557
Net Cash Used in Operating Activities (22,013) (35,621)
Cash Flows from Investing Activities:
Decrease (Increase) in Capital Expenditures (6,770) --
Proceeds from Sale of Assets -- --
Net Cash Provided (Used) by Investing Activities (6,770) --
Cash Flows from Financing Activities:
Increase in Borrowings from Affiliate 36,839 37,734
Principal Payments on Long-term Debt (2,925) (2,634)
Net Cash Provided by Financing Activities 33,914 35,100
Net Increase (Decrease) 5,131 (521)
Cash at Beginning of Year 311 3,964
Cash at End of Period $ 5,442 $ 3,443
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of the management, all adjustments considered
necessary for a fair presentation have been included. Operating results for
the three-month period ended November 30, 1996 are not necessarily indicative
of the results that may be expected for the year ended August 31, 1997. For
further information, refer to the financial statements and notes thereto
included in the Registrant's annual report on Form 10-K for the year ended
August 31, 1996.
NET LOSS PER SHARE
Loss per share is computed based on the net loss for the period, divided
by the weighted average number of common shares outstanding during each period.
Common equivalent shares are not included in the computation because of their
anti-dilutive effect.
LONG-TERM DEBT
Since 1987, cash advances have been made to the Registrant by National Oil
& Gas, Inc., an affiliated entity, in order to finance working capital
deficits. The terms of the notes representing such cash advances are 6% to 9%
interest with all principal and accrued interest due on demand. Outstanding
principal and accrued interest of $1,524,986 at November 30, 1996 are
classified on the balance sheet as a current liability as these notes are
payable on demand. National Oil & Gas, Inc. is an affiliated company
controlled by Mr. William G. Moser, Chairman of the Board of the Registrant.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
In view of the continuing volatile conditions in the oil and gas industry
and the significant sales of oil and gas properties in recent years, the
Registrant anticipates that cash flow from operations will not be sufficient
to provide for the payment of its indebtedness, necessitating the renewal or
refinancing of such indebtedness at maturity. No assurance can be given that
the Registrant will be able to renew or refinance such indebtedness or that
additional cash infusions will be available.
RESULTS OF OPERATIONS
Three Months Ended November 30, 1996 and 1995
Oil and gas sales of $16,217 for the period ended November 30, 1996
increased $4,536 from the same quarter of the prior year. This increase is
primarily due to increased production from well workovers performed during the
prior year.
Rental income of $9,929 increased $784 from the same quarter of the prior
year due to a higher occupancy rate in the current year.
Oil & Gas operating expenses of $13,160 increased $1,768 from $11,392
experienced in the same quarter of the prior year, due to downhole pump repairs
performed in an attempt to increase production.
Rental expenses of $4,237 decreased $192 from the same quarter of the
prior year, due to less interest expense on the building mortgage.
Depreciation and depletion expense of $4,974 decreased $519 from $5,493
experienced during the same quarter of the prior year due to lower depletion
rates on oil leases, and due to the sale of a depreciating storage building in
Louisiana.
Administrative and general expense of $32,125 decreased $2,107 from that
experienced during the same period of the prior year, primarily due to lower
fees for accounting services.
Interest expense to affiliates increased $1,972 from that experienced in
the same period of the prior year because the Registrant's debt to affiliates
has increased $134,840 since that time.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-X:
None.
(b) Reports on Form 8-K during the three months ended
November 30, 1996:
None.
SIGNATURE
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.
OIL CITY PETROLEUM, INC.
Date: January 14, 1997 Herman E. Nichols, Jr.
Herman E. Nichols, Jr.
President