FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File No. 0-9392
CLX ENERGY, INC.
(Exact name of registrant as specified in its charter)
CO 84-0749623
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1776 Lincoln Street, Suite 806, Denver, CO 80203
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (303) 894-0763
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
class of common stock, as of the latest practicable date.
3,220,821 shares of Common Stock, $.01 par value at July 23, 1996
CLX ENERGY, INC.
June 30, 1996
INDEX
Form 10-Q
Part I. - Financial Information
Balance Sheets - June 30, 1996 and
September 30, 1995
Statements of Operations for the nine months
and three months ended June 30,
1996 and 1995
Statements of Cash Flows for the nine months
ended June 30, 1996 and 1995
Notes to Unaudited Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Part II. - Other Information
Signatures
CLX ENERGY, INC.
BALANCE SHEETS
June 30, 1996 and September 30, 1995
(Unaudited)
June 30, September 30,
ASSETS: 1996 1995
Current assets:
Cash 11,112 6,719
Accounts Receivable:
Trade 2,240 2,334
Oil and gas sales 13,623 7,178
Deposits and prepaid expenses 123 720
------- -------
Total current assets 27,098 16,951
------- -------
Property and equipment, at cost:
Oil and gas properties
(successful effort method):
Proved 329,732 330,049
Unproved 7,438 20,463
Office equipment 4,763 4,763
------- -------
341,933 355,275
Less accumulated depreciation
and depletion (156,240) (132,806)
------- -------
185,693 222,469
------- -------
Total assets 212,791 239,420
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 6,875 11,598
Note payable-bank 57,000 53,375
Current portion on long-term debt 8,304 16,680
Due joint interest owners 8,355 8,355
Accrued expenses 358 392
------- -------
Total current liabilities 80,892 90,400
Long-term debt, less current portion 4,134
------- -------
Total liabilites 80,892 94,534
------- -------
Stockholders' equity:
Preferred stock, $.01 par value,
2,000,000 shares authorized,
600,000 shares designated Series A
$.06 cumulative convertible:
134,000 shares issued and outstanding
(aggregate involuntary liquidation
preference of $134,000 plus unpaid
dividends) 1,340 1,340
Common stock, $.01 par value,
50,000,000 shares authorized,
3,220,821 shares issued and
outstanding 32,208 32,208
Additional paid-in capital 424,750 424,750
Accumulative deficit (326,399) (313,412)
------- -------
Net stockholders' equity 131,899 144,886
------- -------
Total Liabilities and Equities 212,791 239,420
======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
CLX ENERGY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues:
Oil and gas sales 79,725 77,357 30,715 23,483
Management fees 17,726 17,760 - -
------- ------- ------- -------
Total revenue 97,451 95,117 30,715 23,483
Operating costs and expenses:
Lease operating and
production taxes 26,120 20,275 10,570 3,785
Lease rentals and abandonments 1,888 3,088 464 1,646
Depreciation and depletion 23,751 39,700 6,450 13,564
General and administrative 97,194 102,669 27,059 21,301
------- ------- ------- -------
Total operating costs and expenses 148,953 165,732 44,543 40,296
------- ------- ------- -------
Operating loss ( 51,502) ( 70,615) ( 13,828) ( 16,813)
------- ------- ------- -------
Other income (expenses):
Gain on sale of assets 44,587 6,752 2,500 1,752
Interest income - 623 - 62
Interest expense ( 6,072) ( 5,642) ( 1,764) ( 2,228)
------- ------- ------- -------
Total other income (expenses) 38,515 1,733 736 ( 414)
------- ------- ------- -------
Net loss ( 12,987) ( 68,882) ( 13,092) ( 17,227)
======= ======= ======= =======
Weighted average number of common
shares outstanding 3,220,821 3,220,821 3,220,821 3,220,821
========= ========= ========= =========
Net loss per common share ( .01) ( .02) ( .01) ( .01)
<FN>
The accompanying notes are an integral part of these financial statements.
CLX ENERGY, INC.
STATEMENTS OF CASH FLOWS
Nine Months Ended June 30, 1996 and 1995
(Unaudited)
1996 1995
Cash flows from operating activities:
Net loss ( 12,987) ( 68,882)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and depletion 23,751 39,700
Abandoned properties 520
Gain on sale of assets ( 44,587) ( 6,752)
(Increase) decrease in
accounts receivable ( 6,351) 4,046
Decrease in
prepaid expenses 597 225
Increase (decrease) in
accounts payable ( 4,723) ( 2,121)
Increase (decrease) in
accrued expenses and other ( 34) 111
------- -------
Net cash provided by (used in)
operating activities ( 43,814) ( 33,673)
------- -------
Cash flows from investing activities:
Proceeds from sale of property and equipment 71,075 25,421
Redemption of certificate of deposit,
pledges on bond - 25,000
Purchase of property and equipment ( 13,983) ( 34,501)
------- -------
Net cash provided by (used in)
investing activities 57,092 15,920
------- -------
Cash flows from financing activities:
New short-term borrowings 14,000 30,000
Payments on short-term borrowings ( 10,375) ( 10,000)
Payments on long-term borrowings ( 12,510) ( 12,510)
------- -------
Net cash provided by (used in)
financing activities ( 8,885) 7,490
------- -------
Net increase (decrease) in cash 4,393 ( 10,263)
Cash, beginning of period 6,719 20,197
------- -------
Cash, end of period 11,112 9,934
======= =======
Supplemental disclosures of cash
flow information - cash paid
during period for interest 6,106 5,531
======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
CLX ENERGY, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 1996
Note A - Basis of Presentation
The balance sheet as of June 30, 1996, the statements of operations
for the nine months and three months ended June 30, 1996 and 1995 and
the statements of cash flows for the nine months ended June 30, 1996
and 1995 have been prepared by the Company, without audit. In the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results
of operations and cash flows at June 30, 1996 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principals have been condensed or omitted as permitted by
the rules and regulations of the Securities and Exchange Commission.
While the Company believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these
financial statements be read in conjunction with the September 30, 1995
financial statements of CLX Energy, Inc., the notes thereto and the
Independent Auditors' Report thereon.
Note B - Net loss per common share
Net loss per common share is computed on the basis of the weighted
average number of common and common equivalent shares outstanding
during the period. Common stock equivalents, consisting of options,
have not been considered in the computation because they would have
been antidilutive.
Note C - Preferred stock
Each share of the Company's outstanding Series A preferred stock was
convertible into one share of common stock until the conversion
privilege expired in a prior year (April 30, 1983.) Except in certain
specified circumstances, the Series A preferred stock is nonvoting.
The Series A shares are redeemable at the option of the Company at $1.50 per
share, plus any accrued and unpaid dividends. The Series A preferred
stock has an involuntary liquidation preference of $1 per share plus
accrued and unpaid dividends. Dividends on preferred stock of $.06
per share, $8,040, were not declared in 1984 through 1996 for a total
of $104,520 and are in arrears at June 30, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Analysis of Financial Condition
During the nine months ended June 30, 1996, the Company purchased
unproved oil and gas properties at a cost of approximately $13,900.
During the same period, the Company sold part of its interest in
certain unproved oil and gas prospects for $68,575 and sold a producing
property for $2,500. The Company received $17,726 for management fees
in connection with acting as contract operator for certain wells drilled
in early 1996. The seismic program that the Company was receiving $5,000
in management fees per month in 1994 terminated at the end of December, 1994.
Capital Resources and Liquidity
At June 30, 1996 the Company had negative working capital of $53,794.
Revenues from existing oil and gas production and management fees from
operating a drilling program will not be adequate to cover the normal
operating expenses of the Company without a reduction of general
and administrative expenses. In addition, the Company may be required
to continue to sell some of its oil and gas properties or raise additional
capital from other sources to participate in any drilling activities.
The Company continues to attempt to acquire producing properties for
stock or in leveraged transactions to increase its monthly revenues.
Analysis of Results of Operations
Oil and gas sales increased for the nine months and the three months ended
June 30, 1996 as a result of higher oil and gas prices and sales from a new
gas well that was completed in late February of 1995. Management fees did not
change significantly for the nine months ended June 30, 1996 compared to the
nine months ended June 30, 1995. The 1996 fees were received for acting as
contract operator on certain wells drilled in early 1996 while the 1995
management fees were received for acting as contract operator for a seismic
program.
Lease operating expenses and production taxes increased primarily due to a
general increase in operating costs on wells. Depreciation and depletion
decreased primarily as a result of declining production on most of the oil
and gas properties and a lower cost basis of producing properties as a result
of an impairment provision at September 30, 1995. General and administrative
expenses decreased for the nine months ended June 30, 1996 primarily due to a
general decrease in activity. General and administrative expenses increased
for the three months ended June 30, 1996 as compared to the three months ended
June 30, 1995 primarily due to an increase in wages paid.
During the nine months ended June 30, 1996 the Company sold part of its
interests in three unproved oil and gas prospects that resulted in gains
of approximately $42,000 and sold a producing property resulting in a gain
of $2,500. In prior year, the Company sold part of its interest in an
unproved oil and gas prospect that resulted in a gain of approximately
$6,700. Interest expense increased for the nine months ended June 30, 1996
as a result of additional short-term borrowings. Interest expense decreased
for the three months ended June 30, 1996 primarily due to payments on
long-term debt.
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.
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) 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.
CLX ENERGY, INC.
/s/ E. J. Henderson
By: E. J. Henderson
President and Chief
Financial Officer
Dated: July 23, 1996