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 March 31, 1997
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.
4,054,154 shares of Common Stock, $.01 par value at May 13, 1997
CLX ENERGY, INC.
March 31, 1997
INDEX
Form 10-Q
Part I. - Financial Information
Balance Sheets - March 31, 1997 and
September 30, 1996
Statements of Operations for the six months
and three months ended March 31,
1997 and 1996
Statements of Cash Flows for the six months
ended March 31, 1997 and 1996
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
March 31, 1997 and September 30, 1996
(Unaudited)
March 31, September 30,
ASSETS: 1997 1996
Current assets:
Cash 46,598 15,245
Accounts Receivable:
Trade 72,482 736
Oil and gas sales 16,995 14,010
Deposits and prepaid expenses - 49
------- -------
Total current assets 136,075 30,040
------- -------
Property and equipment, at cost:
Oil and gas properties
(successful effort method):
Proved 329,732 329,732
Unproved 15,338 7,438
Office equipment 3,618 3,618
------- -------
348,688 340,788
Less accumulated depreciation
and depletion (174,877) (162,039)
------- -------
173,811 178,749
------- -------
Total assets 309,886 208,789
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 63,342 5,677
Note payable-bank - 57,000
Current portion on long-term debt - 4,134
Due joint interest owners 8,355 8,355
Accrued expenses - 356
------- -------
Total current liabilities 71,697 75,522
------- -------
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,
4,054,154 shares issued and
outstanding (3,220,821 at
September 30, 1996) 40,542 32,208
Additional paid-in capital 541,417 424,750
Accumulative deficit (345,110) (325,031)
------- -------
Net stockholders' equity 238,189 133,267
------- -------
Total Liabilities and Equities 309,886 208,789
======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
CLX ENERGY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
March 31, March 31,
1997 1996 1997 1996
Revenues:
Oil and gas sales 72,026 49,010 42,108 26,561
Management fees 17,048 17,726 8,400 13,486
------- ------- ------- -------
Total revenue 89,074 66,736 50,508 40,047
Operating costs and expenses:
Lease operating and
production taxes 21,310 15,550 11,499 8,117
Lease rentals and abandonments 1,667 1,424 293 ( 221)
Depreciation and depletion 12,838 17,301 6,327 6,797
General and administrative 77,137 70,135 30,768 24,882
------- ------- ------- -------
Total operating costs and expenses 112,952 104,410 48,887 39,575
------- ------- ------- -------
Operating income (loss) ( 23,878) ( 37,674) 1,621 472
------- ------- ------- -------
Other income (expenses):
Gain on sale of assets 5,000 42,087 - 18,530
Interest expense ( 1,201) ( 4,308) - ( 2,091)
------- ------- ------- -------
Total other income (expenses) 3,799 37,779 - 16,439
------- ------- ------- -------
Net income (loss) ( 20,079) 105 1,621 16,911
======= ======= ======= =======
Weighted average number of common
shares outstanding 3,756,535 3,220,821 4,054,154 3,220,821
========= ========= ========= =========
Net income (loss) per common share ( .01) .00 .00 .01
<FN>
The accompanying notes are an integral part of these financial statements.
CLX ENERGY, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended March 31, 1997 and 1996
(Unaudited)
1997 1996
Cash flows from operating activities:
Net income (loss) ( 20,079) 105
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and depletion 12,838 17,301
Abandoned properties - 520
Gain on sale of assets ( 5,000) ( 42,087)
(Increase) decrease in
accounts receivable ( 74,730) ( 21,206)
Decrease in
prepaid expenses 49 523
Increase (decrease) in
accounts payable 57,665 3,245
Increase (decrease) in
accrued expenses and other ( 356) 31
------- -------
Net cash provided by (used in)
operating activities ( 29,613) ( 41,568)
------- -------
Cash flows from investing activities:
Proceeds from sale of property and equipment 5,000 68,575
Purchase of property and equipment ( 7,900) ( 13,523)
------- -------
Net cash provided by (used in)
investing activities ( 2,900) 55,052
------- -------
Cash flows from financing activities:
New short-term borrowings - 14,000
Payments on short-term borrowings ( 57,000) ( 5,375)
Payments on long-term borrowings ( 4,134) ( 8,340)
Proceeds from issuance of common stock 125,000 -
------- -------
Net cash provided by (used in)
financing activities 63,866 285
------- -------
Net increase (decrease) in cash 31,353 13,769
Cash, beginning of period 15,245 6,719
------- -------
Cash, end of period 46,598 20,488
======= =======
Supplemental disclosures of cash
flow information - cash paid
during period for interest 1,557 4,277
======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
CLX ENERGY, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1997
Note A - Basis of Presentation
The balance sheet as of March 31, 1997, the statements of operations
for the six months and three months ended March 31, 1997 and 1996 and
the statements of cash flows for the six months ended March 31, 1997
and 1996 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 March 31, 1997 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, 1996
financial statements of CLX Energy, Inc., the notes thereto and the
Independent Auditors' Report thereon.
Note B - Net income (loss) per common share
Net income (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 March 31, 1997.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Analysis of Financial Condition
During the six months ended March 31, 1997, the Company purchased
unproved oil and gas properties at a cost of approximately $7,900.
During the same period, the Company sold part of its interest in
certain unproved oil and gas prospects for $5,000. The Company received
$17,048 for management fees in connection with acting as contract operator for
certain wells drilled during the six months ended March 31, 1997. In December
1996, the Company sold in a private placement 833,333 shares of common stock
for $.15 per share for a total of $125,000.
Capital Resources and Liquidity
At March 31, 1997 the Company had working capital of $64,378. 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 six months and the three months ended
March 31, 1997 primarily as a result of higher oil and gas prices. Management
fees did not change significantly for the six months ended March 31, 1997
compared to the six months ended March 31, 1996. The fees received for the
three months ended March 31, 1997 compared to the three months ended March 31,
1996 decreased due to a decrease in activity on a drilling program that the
Company acts as operator.
Lease operating expenses and production taxes increased due to higher
production taxes as a result of the increase in sales, and an increase in
operating costs caused by adverse weather conditions and a general increase
in costs. Depreciation and depletion decreased primarily as a result of
declining production on most of the oil and gas properties. General and
administrative expenses increased for the six months and the three months ended
March 31, 1997 as compared to the prior periods primarily due to a general
increase in activity.
During the six months ended March 31, 1997 the Company sold part of its
interest in an unproved oil and gas prospect that resulted in a gain of $5,000.
During the six months ended March 31, 1996 the Company sold part of its
interests in three unproved oil and gas prospects that resulted in gains
of approximately $42,000. Interest expense decreased due to the repayment of
all short-term and 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: May 13, 1997