UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number 0-14731
HALLADOR PETROLEUM COMPANY
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1014610
(State of incorporation) (IRS Employer Identification No.)
1660 Lincoln Street, Suite 2700, Denver, Colorado 80264
(Address of principal executive offices)
303-839-5504 FAX: 303-832-3013
(Issuer's telephone numbers)
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, and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Shares outstanding as of May 10, 2000: 7,093,150
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31,
2000 1999*
--------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 2,006 $ 1,957
AFE cash calls 151
Accounts receivable-
Oil and gas sales 636 600
Well operations 151 230
------ ------
Total current assets 2,944 2,787
------ ------
Oil and gas properties (successful efforts), at cost:
Unproved properties 239 236
Proved properties 21,148 21,114
Less - accumulated depreciation
depletion, amortization and impairment (14,480) (14,247)
------ ------
6,907 7,103
------ ------
Oil and gas operator bonds 228 228
Investment in Catalytic Solutions 72 62
Other assets 132 132
------ ------
$10,283 $10,312
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 419 $ 1,036
Oil and gas sales payable 139 74
------ ------
Total current liabilities 558 1,110
------ ------
Bank debt 1,231 1,231
------ ------
Key employee bonus plan 247 234
------ ------
Minority interest 4,916 4,763
------ ------
Stockholders' equity:
Preferred stock, $.10 par value; 10,000,000
shares authorized; no shares issued
Common stock, $.01 par value; 100,000,000
shares authorized; 7,093,150 shares issued 71 71
Additional paid-in capital 18,061 18,061
Accumulated deficit (14,801) (15,158)
------ ------
3,331 2,974
------ ------
$10,283 $10,312
====== ======
- ------------------------------
*Derived from the Form 10-KSB.
See accompanying note.
Consolidated Statement of Operations
(in thousands, except per share amounts)
Three months ended
March 31,
2000 1999
--------- --------
Revenue:
Oil $1,629 $ 441
Gas 226 95
NGLs 93 44
Interest and other 24 30
Non-recurring water disposal fee, net 208
Gain on stock sales 75
----- -----
1,972 893
----- -----
Costs and expenses:
Lease operating 897 523
General and administrative 242 150
Exploration cost 62 92
Interest 28 54
Depreciation, depletion and amortization 233 91
----- -----
1,462 910
----- -----
Income (loss) before minority interest 510 (17)
Minority interest (153) 5
Net income (loss) $ 357 $ (12)
===== =====
Net income (loss) per share $ .05 (1)
=====
Weighted average shares outstanding 7,093 7,093
===== =====
(1) Less than $.01.
See accompanying note.
Consolidated Statement of Cash Flows
(in thousands)
Three months ended
March 31,
2000 1999
------ ------
Net cash provided by operating activities $ 774 $ 176
----- -----
Cash flows from investing activities:
AFE prepayments (124)
Marketable securities 236
Properties (715) (105)
Prospect sales 201
Other (10)
----- -----
Net cash provided by (used in) investing activities (725) 208
----- -----
Cash flows from financing activities:
Repayments of debt (1,846)
Brokerage account (110)
Other (65)
----- -----
Net cash used in financing activities (2,021)
----- -----
Net increase (decrease) in cash and cash equivalents 49 (1,637)
Cash and cash equivalents, beginning of period 1,957 3,073
----- -----
Cash and cash equivalents, end of period $2,006 $1,436
===== =====
See accompanying note.
Note to Financial Statements
1. The interim financial data is unaudited; however, in our opinion, it
includes all adjustments, consisting only of normal recurring adjustments
necessary for a fair statement of the results for the interim periods.
The financial statements included herein have been prepared pursuant to the
SEC's rules and regulations. Certain information and footnote disclosures
normally included in GAAP financial statements have been condensed or
omitted pursuant to the SEC's rules and regulations.
Our organization and business, the accounting policies we follow and other
information are contained in the notes to our financial statements filed as
part of our 1999 Form 10-KSB. This quarterly report should be read in
conjunction with such annual report.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
YEAR-TO-DATE COMPARISON
- -----------------------
The table below provides sales data (in thousands) and average prices for the
period.
2000 1999
Sales Volume Average Price Sales Volume Average Price
------------ ------------- ------------ -------------
Oil - barrels
South Cuyama field 61 $26.60 44 $9.93
Other .5 9.72
Gas - mcf
South Cuyama field 10 2.70 5 1.83
Other 89 2.24 45 1.91
NGLs - barrels
South Cuyama field 3.6 20.56 3.7 10.54
Other 1.2 15.83 1 5.00
Significantly higher oil prices and production caused the increase in oil
revenue. Gas revenue increased primarily because of higher production from the
new wells in Northern California and South Texas.
During first quarter 1999, oil prices were so low that we kept operating
expenses to a bare minimum. During first quarter 2000, oil prices nearly
tripled, and consequently, we substantially increased the SC Field's activity
which resulted in higher LOE.
The increase in G&A is due primarily to bonuses and the addition of one extra
person.
The increase in DD&A is due to an increase of $2 million in costs being
amortized, because of the new wells that were drilled during the last 12 months
and a downward revision in reserve estimates.
The SC Field's oil price on May 10, 2000 was $26.00/bbl. Gas prices in the
Merlin prospect are currently $2.80/mcf, South Texas is $3.00, and SC Field is
$2.60.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and cash to be provided from operations are expected to enable us to meet
our obligations as they become due during the next several years.
THE FOLLOWING DISCUSSION UPDATES THE MD&A CONTAINED IN ITEM 6 OF THE 1999
FORM 10-KSB AND THE TWO DISCUSSIONS SHOULD BE READ TOGETHER.
PROSPECT DEVELOPMENT AND EXPLORATION ACTIVITY
- ---------------------------------------------
South Cuyama Field
------------------
At December 31, 1999, our pre-tax PV10 for the SC Field was $20 million based
on year-end oil prices of $23.45 per barrel. Based on May 10, 2000 higher
prices of $26.00, and in spite of upward revisions to future operating costs,
we now estimate the PV-10 to continue to be $20 million.
Davis Prospect
--------------
This prospect which is approximately 20 miles south of the Merlin prospect
was brought to us by Equity Oil Company, the operator of the Merlin prospect.
Before May 31, 2000, we plan to participate in the drilling of two exploratory
gas wells. We have a 28% WI (23% NRI). The AFE to drill and complete each
well is about $500,000 to the 100%. Our investment would be about $300,000.
We estimate our dry hole risk to be 50/50.
South Texas
-----------
Before May 31, 2000, we plan to participate in the drilling of an exploratory
gas well. AFE to the 100% is $300,000 (about $60,000 net to us).
San Juan Basin
--------------
Three development gas wells were drilled in early April 2000. The results are
very encouraging and we hope to double the gas production from this field.
We receive about $10,000 in monthly gas revenue from this field and are hoping
these three wells will increase the monthly gas revenue to $20,000.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule; EDGAR filing only
10.1 - Credit Agreement dated as of March 10, 1999, by and among Santa
Barbara Partners and Hallador Petroleum, LLP and U.S. Bank
National Association.
10.2 - Amendment to Credit Agreement
(b) No reports on Form 8-K were filed during the quarter.
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HALLADOR PETROLEUM COMPANY
Date: May 10, 2000 By: /S/Victor P. Stabio
Chief Executive Officer and
Chief Financial Officer
Signing on behalf of the registrant
and as principal financial officer.