UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended Commission File No.
March 31, 2002 0-9120
THE EXPLORATION COMPANY OF DELAWARE, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 84-0793089
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
500 NORTH LOOP 1604 E., SUITE 250 SAN ANTONIO, TEXAS 78232
(Address of principal executive offices)
Registrant's telephone number, including area code: (210) 496-5300
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of May 10, 2002.
Common Stock $0.01 par value 19,971,716
(Class of Stock) (Number of Shares)
THIS DOCUMENT IS AVAILABLE ON THE INTERNET AT WWW.TXCO.COM
Total number of pages is 12
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Assets March 31, 2002 December 31, 2001
- ------ -------------- -----------------
Current Assets
Cash $ 832,589 $ 2,019,164
Accounts receivable, net 1,367,937 1,942,643
Prepaid expenses 354,287 273,603
------------ ------------
Total Current Assets 2,554,813 4,235,410
Property and Equipment
Oil and gas properties, net 20,698,070 19,566,617
Other property and equipment, net 295,618 327,123
------------ ------------
20,993,688 19,893,740
Other Assets
Deferred tax asset 5,232,718 5,232,718
Other assets 528,639 481,564
------------ ------------
5,761,357 5,714,282
------------ ------------
Total Assets $ 29,309,858 $ 29,843,432
============ ============
See notes to consolidated financial statements.
2
THE EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Liabilities and Stockholders' Equity March 31, 2002 December 31, 2001
- ------------------------------------ -------------- -----------------
Current Liabilities
Accounts payable and accrued expenses $ 2,269,368 $ 4,122,669
Due to joint interest owners 710,322 1,368,785
Current portion of long-term debt 248,587 298,410
------------ ------------
Total Current Liabilities 3,228,277 5,789,864
Long-term debt, net of current portion 3,311,249 563,767
Minority interest in consolidated subsidiaries 429,862 433,105
Stockholders' Equity
Preferred stock, authorized 10,000,000 shares
issued and outstanding -0- shares
Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 17,496,849 shares,
outstanding 17,397,049 shares 174,968 174,968
Additional paid-in capital 44,017,983 44,017,983
Accumulated deficit (21,606,474) (20,890,248)
Less treasury stock, at cost
99,800 shares in 2002 and 2001 (246,007) (246,007)
------------ ------------
Total Stockholders' Equity 22,340,470 23,056,696
------------ ------------
Total Liabilities and Stockholders' Equity $ 29,309,858 $ 29,843,432
============ ============
See notes to consolidated financial statements.
3
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 2001
--------------- --------------
Revenues:
Oil and gas sales $ 1,818,778 $ 5,557,399
Other operating income 269,300 257,038
-------------- -------------
2,088,078 5,814,437
Costs and Expenses:
Lease operations 683,275 361,879
Production taxes 125,480 407,498
Exploration expenses 295,190 1,028,107
Impairment and abandonments 363,700 351,000
Depreciation, depletion and amortization 782,202 625,655
General and administrative 580,736 508,421
-------------- -------------
Total costs and expenses 2,830,583 3,282,560
-------------- -------------
Income (Loss) from Operations (742,505) 2,531,877
Other Income (Expense):
Interest income 5,666 80,899
Interest expense (34,851) (35,048)
-------------- -------------
(29,185) 45,851
-------------- -------------
Income (loss) before income taxes
and minority interest (771,690) 2,577,728
Minority interest in income of subsidiaries (19,536) (48,334)
-------------- -------------
Income (loss) before income taxes (791,226) 2,529,394
Income tax benefit (expense) 75,000 (220,000)
-------------- -------------
Net Income (Loss) $ (716,226) $ 2,309,394
============== =============
Earnings (Loss) Per Share:
Basic $ (0.04) $ 0.13
============== =============
Diluted $ (0.04) $ 0.13
============== =============
See notes to consolidated financial statements.
4
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, 2002 March 31, 2001
-------------- --------------
Operating Activities:
Net income (loss) $ (716,226) $ 2,309,394
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Deferred income taxes -0- 170,000
Depreciation, depletion and amortization 783,565 625,655
Impairment and abandonments 363,700 351,000
Minority interest in income of subsidiaries 19,536 48,334
Changes in operating assets and liabilities:
Receivables 574,706 209,226
Prepaid expenses and other (80,684) 86,006
Accounts payable and accrued expenses (2,511,764) (48,612)
-------------- ------------
Net cash provided (used) in operating activities (1,567,167) 3,751,003
Investing Activities:
Development and purchases
of oil and gas properties (2,243,350) (2,350,473)
Purchase of other equipment (2,500) (112,774)
Proceeds from the sale of
oil and gas properties -0- 2,005,133
Distributions to minority interests (22,779) (56,449)
------------- ------------
Net cash (used) in investing activities (2,268,629) (514,563)
Financing Activities:
Deferred financing fees (48,437) -0-
Proceeds from debt obligations 2,800,000 -0-
Payments on debt obligations (102,342) (188,404)
------------- ------------
Net cash provided (used) in financing activities 2,649,221 (188,404)
------------- ------------
Change in cash and equivalents (1,186,575) 3,048,036
Cash and equivalents at beginning of period 2,019,164 5,898,015
------------- ------------
Cash and equivalents at end of period $ 832,589 $ 8,946,051
============= ============
See notes to consolidated financial statements
5
THE EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIODS ENDED MARCH 31, 2002 AND MARCH 31, 2001 (Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of The
Exploration Company (TXCO or the Company) have been prepared in accordance with
U.S. generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 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.
The accounting policies followed by the Company are set forth in Note A to the
December 31, 2001 audited consolidated financial statements contained in the
Company's annual report on Form 10-K.
In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Registrant Company's annual
report on Form 10-K for the year ended December 31, 2001, which is incorporated
herein by reference.
2. Common Stock and Basic Income or Loss Per Share
As of March 31, 2002, the Company had outstanding and exercisable warrants
and options to purchase 3,144,429 shares of common stock at prices ranging from
$0.98 to $6.00 per share. The warrants and options expire at various dates
through August 2011.
The following table sets forth the determination of the number of shares
used in the earnings per share computations:
Three Months Ended
March 31,
2002 2001
---- ----
Weighted average number of
shares outstanding-basic 17,397,049 17,471,849
Net number of shares issued
on the assumed exercise of
stock options and warrants 89,850 323,541
----------- -----------
Number of shares used in the
computation of diluted
earnings per share 17,486,899 17,795,390
=========== ===========
3. INCOME TAXES
The Company has recorded a deferred tax asset for the amount expected to be
realized through taxable earnings. In determining taxable earnings, the Company
uses income projections reduced by graduating percentages to compensate for
uncertainties inherent in future years' projections. Total income tax expense is
computed based on the Company's estimated annualized federal income tax for the
year, considering the impact of any change in the amount of deferred tax asset.
The Company recorded a current tax benefit of $75,000 in the quarter ended March
31, 2002 as a result of certain changes to the Corporate alternative minimum tax
included in the Job Creation and Worker Assistance Act of 2002 signed into law
on March 9, 2002.
6
4. LONG-TERM DEBT
On March 4, 2002, the Company entered into a $25,000,000 Revolving Credit
Facility (the Credit Facility) with Hibernia National Bank providing a credit
line with an initial borrowing base of $5,000,000. The borrowing base is
determined based on the Company's proved oil and gas reserves. Interest is
payable monthly with principal due at maturity in March 2005. The Credit
Facility provides the lender with semiannual scheduled borrowing base
redeterminations, at mid-year and each anniversary date. The Credit Facility
also provides for two unscheduled redeterminations per year at the Company's
discretion. Borrowings under the Credit Facility are secured by a first priority
mortgage covering working and other interests in the majority of its oil and gas
leases. The interest rate under the Credit Facility is initially based on the
prime rate as posted in the Wall Street Journal. The balance outstanding at
March 31, 2002 was $2,800,000 with interest at 4.75% per annum. A Eurodollar
Rate plus applicable margin may be utilized at the election of the Company. The
Credit Facility contains certain financial covenants and other negative
restrictions common for financing of this type. The Company is in compliance
with all covenants. Subsequent to the end of the quarter, the borrowing base was
increased to $10,000,000 and the current outstanding balance on the Credit
Facility is $3,800,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Certain statements in this report are not historical in nature, including
statements of TXCO's and management's expectations, intentions, plans and
beliefs, are inherently uncertain and are "forward-looking statements" within
the meaning of Section 21E of the Securities and Exchange Act of 1934. The
following discussion should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in this Form 10-Q,
and with the Company's latest audited consolidated financial statements and
notes thereto, as reported in its Form 10-K for the year ended December 31,
2001. See "Disclosure Regarding Forward Looking Statements" on page 12.
LIQUIDITY AND CAPITAL RESOURCES
During the three month period ended March 31, 2002 cash reserves of $2,019,164
at December 31, 2001 were reduced by cash used in operating activities of
$1,567,167. In addition, proceeds from borrowings on the new Credit Facility of
$2,800,000 resulted in total cash available of $3,251,997 for use in meeting the
Company's ongoing operational and development needs.
Portions of this cash were used to fund payments on debt totaling $102,342,
financing fees related to the Credit Facility of $48,437 and related interest of
$34,851. The Company applied $2,243,350 to fund the expansion and ongoing
development of its oil and gas producing properties. These expenditures included
$2,164,000 for drilling and completion costs for wells drilled, re-entered or
completed during the period.
7
As a result of the ongoing drilling and re-entry activities the Company ended
the first quarter of 2002 with negative working capital of $673,464 compared to
negative working capital of $1,554,454 at December 31, 2001, while its current
ratio improved to .79 to 1 compared to .73 to 1 for the previous period. During
this same period, cash flow from operating activities decreased to negative
$1,567,167 from positive $3,751,003 in the comparative prior year period
reflecting the substantial decrease in current gas commodity prices compared to
the prior year. For the three months ended March 31, 2002, the Company incurred
a net loss of $716,226. EBITDA for the current quarter was $684,717 as compared
to $4,569,204 for the comparative prior year period reflecting the decreased
revenues caused by the current quarter's lower gas prices.
SUBSEQUENT EVENTS
Subsequent to the end of the current quarter, the Company announced the sale
through a private placement of 2,499,667 shares of restricted common stock at a
price of $6.00 per share to a group of 10 institutional investors. The Company
raised $14,058,004, net of estimated offering costs of $940,000, to be used for
acquisitions and to accelerate the development of the Company's extensive
Maverick Basin acreage holdings. As a part of the placement agreement, the
Company will within 30 days after the final closing of the offering, cause to be
filed on behalf of the investors a registration statement covering the issued
shares. Final closing occurred May 8, 2002.
On May 8, 2002, the Company signed a Purchase and Sale Agreement to acquire the
Pena Creek Field in Dimmit County, Texas. The purchase will be effective April
1, 2002 with closing scheduled for May 31, 2002. Under the terms of the
agreement, the Company can not disclose the purchase price until after closing.
The field produces approximately 300 barrels of oil per day from the San Miguel
formation and contains an estimated 850,000 barrels of proved producing reserves
and an additional 550,000 barrels of proved, undeveloped reserves. The
10,000-acre lease is contiguous to the Company's Comanche lease acreage block
and contains potential for production from the Glen Rose formation. The Company
intends to extend a 3-D seismic survey over the new acreage during the third
quarter of 2002.
Also occurring subsequent to March 31, 2002 and due to the Company's drilling
success during the first quarter, the Company requested a redetermination of the
borrowing base under its new Credit Facility with Hibernia National Bank. As a
result of this redetermination, the Company's borrowing base was increased to
$10,000,000. At May 10, 2002, the Company's outstanding balance under the Credit
Facility was $3,800,000.
Based on the proceeds from the private placement, the anticipated increase in
cash flow from ongoing operations resulting from production increases and the
increased Credit Facility borrowing base, the Company has expanded its original
2002 capital expenditure plan. Initially budgeted at $6,600,000, the original
2002 capital expenditure program included 15 Glen Rose reef wells and four San
Miguel re-entry wells. The Company has increased its capital expenditure program
to approximately $20,700,000. The planned increase incorporates $2,500,000 for
at least five additional Glen Rose reef wells on its Comanche lease, the
producing property acquisition previously discussed and a material expansion of
the Company's gas gathering / pipeline infrastructure across its Maverick Basin
lease block.
8
Although the Company ended the first quarter with a working capital deficit,
significant additional working capital sources have been confirmed subsequent to
March 31, 2002. Management is confident it will be able to meet its ongoing
operating cash requirements for the current year. The Company expects that with
the proceeds from the recent private placement of common stock, the anticipated
production increases from its successful first quarter drilling activities to
date and going forward, the accretive acquisition of the Pena Creek oil wells,
the expanded Credit Facility in place and pending further improvements in oil
and gas prices going forward, it will be able to complete the scheduled
exploration and development goals targeted by a growing 2002 capital expenditure
program. The Company also believes it will maintain sufficient liquidity to be
able to take advantage of new acquisition or growth opportunities as they emerge
during the balance of 2002.
However, if realized oil and gas prices, or if levels of its Maverick Basin or
Williston Basin production are substantially less than expected, or if prices
for goods and services used in the Company's exploration, development and
operating activities rise significantly above budgeted levels, the Company's
financial condition and liquidity could be adversely affected. Should this
occur, Management retains the ability to extend the timing of its planned
development and exploration activities to match available working capital, while
maintaining its current operating activity levels and meeting its financial
obligations on a timely basis.
RESERVE GROWTH
As of March 31, 2002, the Company's estimated proved oil and gas reserves and
the present value of the future net revenues using a 10% discount factor (PV-10
Value), as estimated by Netherland Sewell & Associates, Inc., a Dallas, Texas
engineering firm, are presented below with the comparative information as of
December 31, 2001. The PV-10 Value was prepared in accordance with SEC
requirements using constant prices and expenses as of the calculation date,
discounted at 10% per year on a pretax basis, and is not intended to represent
the current market value of the estimated oil and natural gas reserves owned by
the Company.
March 31, 2002 Dec. 31, 2001 Increase
-------------- ------------- -------------
Oil Reserves (Bbl) 1,247,000 294,000 953,000
Gas Reserves (Mcf) 11,313,000 10,976,000 337,000
Total Reserves (Mcfe) 18,795,000 12,740,000 6,055,000
PV-10 Value $ 34,114,000 $ 13,983,000 $ 20,131,000
RESULTS OF OPERATIONS
Oil and gas revenues decreased 67% for the current quarter ended March 31, 2002
versus the comparable prior period. This decrease is attributable to lower oil
and gas prices realized during the current period and a slight decline in gas
production volumes offset by increased oil production volumes. As reflected in
the following table, average realized gas prices were 71% lower than the
comparable period in 2001 while average oil prices declined 32% for the same
periods. Gas sales volumes decreased slightly due to the general production
decline of the Company's maturing gas wells while offset by sales volumes from
new wells put on line subsequent to March 31, 2001.
9
Oil sales volumes increased 46% reflecting new production from the Saxet 1-111,
placed online at the end of the current quarter.
Three Months Ended March 31,
2002 2001
---- ----
Sales Average Sales Average
Volume Prices Volume Prices
------ ------ ------ ------
Gas (Mcf) 650,868 $ 2.30 660,978 $ 7.92
Oil (Bbls) 17,773 $ 18.21 12,211 $ 26.65
Lease operating expenses increased $321,000 or 89% for the three months ended
March 31, 2002 as compared to the same period of 2001. The increase primarily
reflects additional operating costs of new wells placed on production and
including $106,000 of operating costs associated with continuing de-watering of
the CBM pilot program wells. Production taxes fluctuated proportionately with
the oil and gas revenues compared to the previous period.
Exploration expense decreased 71% compared to the prior year period. The
decrease is primarily due to lower dry hole costs while offset by an increase in
delay rental payments to maintain the Company's extensive lease position in the
Maverick Basin. Dry hole costs were $22,900 for the three months ended March 31,
2002 as compared to the $920,500 for the prior period. Delay rentals increased
by $176,600 reflecting the payments associated with new lease acquisitions.
Depreciation, depletion and amortization increased by 25% over the comparable
prior year period. The increase in depletion was due primarily to higher
estimated depletion rates on maturing wells and higher depletable costs
associated with new wells. Amortization increased by $58,800 due to additional
amortization related to new seismic costs incurred subsequent to March 31, 2001.
General and administrative expense increased by 14% for the three months ended
March 31, 2002 as compared to the same period in 2001, reflecting the higher
sustained levels of Company operations and was due primarily to increased
salaries, wages and benefits associated with staff increases. Interest income
decreased due to lower cash reserve levels during the first quarter of 2002 as
compared to the same period in 2001.
DRILLING ACTIVITIES
During the first quarter of 2002, the Company drilled or participated in the
drilling of six new wells on its 372,000 acre lease block in the Maverick Basin.
Three of these wells are producing while the remaining three were in progress at
March 31, 2002. The producing wells resulted in one Glen Rose shoal horizontal
gas well, one Glen Rose reef gas well and one Glen Rose reef oil well. The
Chittim 1-142 (48% WI) is the first Glen Rose shoal well to be drilled since the
shoal play was identified by the Company in late 2001. The well was drilled to a
vertical depth of 5,350 feet with a horizontal displacement of 3,650 feet and
completed as a horizontal gas well in March 2002 with a calculated AOF of 7.1
MMcfd. The well is currently producing at a rate of 2,000 Mcfd. The Company
plans to drill five additional horizontal shoal wells during 2002. The Glen Rose
reef gas well, the Briscoe Saner 1-46 (100% WI), was drilled to a total depth of
5,200 feet and is currently producing at a rate of 1,150 Mcfd.
10
The third producing well resulted in a significant Glen Rose reef oil well. The
well, the Comanche 1-111 (50% WI) spudded in February 2002, was the first well
to target a Glen Rose reef on the Comanche lease since its acquisition. The well
encountered significant oil flows from a depth of approximately 6,500 feet. The
well produced approximately 5,000 barrels of light crude oil in a 24-hour period
before the operator was able to stop the flow. The well was subsequently
completed and tested rates up to 3,600 BOPD on a 28/64" choke with tubing
pressure of 495 psi before being curtailed due to a lack of surface facilities
to handle the large volume of oil. The well flowed continually at a rate of 500
BOPD on a 10/64" choke with tubing pressure of 735 psi.
The Company (50% WI) and its partner Saxet (50% WI) have established that the
oil discovery is in a large reef complex approximately 850 acres in size with 55
feet of net pay. Drilling on a delineation well commenced March 27, 2002. The
Comanche 1-2 well (50% WI) was spudded approximately 4,500 feet northeast of the
Comanche 1-111 discovery well. The well was drilled to a total depth of 8,100
feet, was plugged back to 6,700 feet and is being completed as an oil producer.
The Company and its partner are in process of filing an application for the
establishment of new field discovery allowable producing rules. As part of this
determination, the Texas Railroad Commission is requiring a Maximum Effective
Rate or MER test on the well. During this 30 day test, the well is produced at
various production rates to gather data regarding potential deliverability flow
rates. The Company believes the Texas Railroad Commission will establish an
allowable rate of up to 1,000 barrels of oil per day on wells in the new field.
The Company's preliminary potential reserve estimates for this discovery range
from 60 to 75 million barrels of oil in place.
In addition to the Comanche 1-2, the Paloma 1-82 and the Kincaid 1-166 were
started in March 2002 and remain in progress at this time. The Paloma 1-82
(97.5% WI), spudded on March 1, was drilled to a total depth of 5,200 feet
targeting a gas well completion in a Glen Rose reef. The well was acidized and
remains under evaluation. The Kincaid 1-166 (63% WI), spudded March 28, was
drilled to a total depth of 5,200 feet also targeting a gas well completion in a
Glen Rose reef. The target zone was found to have low permeability and the
Company is currently evaluating alternative completion procedures in shallower
zones.
Subsequent to the end of the first quarter of 2002, the Company spudded three
additional wells, all of which remain in progress. During April 2002 the Briscoe
Saner 1-45 (100% WI) targeting a Glen Rose reef was drilled to a total depth of
5,200 feet and is currently being completed. In May 2002 the Company spudded the
Chittim 2-143 (59% WI), a Glen Rose shoal horizontal gas target and the Saxet
1-13 (50% WI), a Glen Rose reef gas target. Both of these wells are currently
drilling.
RE-ENTRY ACTIVITIES
During the first quarter of 2002 the Company successfully re-entered four
existing well bores, completing the wells in the San Miguel formation. The wells
expanded the San Miguel water flood injection pilot program initiated by TXCO in
September 2001. This program is targeting oil production from the San Miguel
formation located about 400 feet below the base of the Olmos coal interval on
the Company's Comanche lease. The Company is now operating two water flood pilot
projects on the Comanche lease. These pilots are using CBM pilot program water
production to flood the San Miguel formation. The Company has effectively
reduced its CBM water disposal costs, while initiating secondary oil production
from the underlying formation. To date, initial response from these early stage
water injection pilots has been very encouraging.
JURASSIC FORMATION
During the first quarter of 2002, Blue Star's team of geoscientists met with
TXCO's exploration team on several occasions to obtain the Company's expertise
in interpreting the final results of the long awaited newly enhanced 3-D seismic
processing. Blue Star also requested TXCO's expertise in the identification and
final ranking of multiple proposed Jurassic drilling locations on TXCO's
effected acreage. In March 2002, Blue Star delivered a nearly final processed
data set containing over 83 square miles of digitized seismic data for TXCO's
ongoing review. Blue Star has confirmed it has received acceptable proposals
from several qualified drilling contractors, has conducted field inspections and
has obtained current title opinions on multiple drilling locations under
evaluation. TXCO believes drilling on the first Jurassic prospect on its acreage
block will commence in the very near future.
11
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements which are
not historical, including statements regarding TXCO's or management's
intentions, hopes, beliefs, expectations, representations, projections,
estimations, plans or predictions of the future, and which are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Such statements include those relating to estimated or expected prices,
production volumes, reserve levels, number of drilling locations, expected
drilling results and sources, levels, timing and costs of financing. It is
important to note that actual results may differ materially from the results
predicted in any such forward-looking statements.
The Company undertakes no obligation to update any information contained in this
report or to publicly release the results of any revisions to any such
forward-looking statements that may be made to reflect events or circumstances
that occur, or which the Company becomes aware of, after the date hereof.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty, including without limitation, the costs of exploring and developing
new natural oil and gas reserves, the price for which such reserves can be sold,
environmental concerns effecting the drilling of natural oil and gas wells, as
well as general market conditions, competition and pricing.
More information about potential factors that could affect the Company's
operating and financial results is included in TXCO's annual report on Form 10-K
for the year ended December 31, 2001. This and all previously filed documents
are on file at the Securities and Exchange Commission and can be viewed on
TXCO's Web site at www.txco.com. Copies are available without charge, upon
request from the Company.
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
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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.
THE EXPLORATION COMPANY
(Registrant)
/s/ Roberto R. Thomae
Roberto R. Thomae,
Chief Financial Officer
(Signing on behalf of the Registrant
and as chief accounting officer)
Date: May 10, 2002
12