U.S. 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 September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number 0-14731
HALLADOR PETROLEUM COMPANY
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(Exact name of small business issuer as specified in its charter)
COLORADO 84-1014610
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1660 Lincoln St., Suite 2700, Denver, Colorado 80264
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(Address of principal executive offices)
303-839-5504 FAX 303-832-3013
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(Issuer's telephone number)
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 [ ]
As of November 13, 1996 7,094,000 shares of the issuer's common stock
were outstanding.
This report contains 8 pages. There are no exhibits.
1
PART I. FINANCIAL INFORMATION:
HALLADOR PETROLEUM COMPANY
Consolidated Balance Sheet
(in thousands)
September 30, December 31,
1996 1995 *
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ASSETS
- ------
Current assets:
Cash and cash equivalents $ 831 $ 3,459
Interest-bearing securities
available for sale 2,831
Accounts receivable-
Oil and gas sales 496 419
Well operations 275 331
Insurance claim received
in January 1996 114
Accrued interest 24
-------- -------
Total current assets 4,457 4,323
________ _______
Oil and gas properties (full cost
accounting), at cost:
Unproved properties 475 245
Evaluated properties 39,447 39,317
Less - accumulated depreciation,
depletion, amortization (32,543) (32,118)
________ _______
7,379 7,444
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Other assets 162 159
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$ 11,998 $ 11,926
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*Derived from the Form 10-KSB.
See accompanying notes.
HALLADOR PETROLEUM COMPANY
Consolidated Balance Sheet
(in thousands)
September 30, December 31,
1996 1995 *
------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 247 $ 185
Oil and gas sales payable 76 39
Debt with recourse only to
the South Cuyama Field 650 670
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Total current liabilities 973 894
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Debt with recourse only to the
South Cuyama Field 5,553 6,203
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Deferred Bonus Plan 158 127
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Other 65 65
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Stockholders' equity:
Preferred stock, $.10 par value;
10,000,000 shares authorized;
no shares issued
Common stock, $.01 par value;
100,000,000 shares authorized;
7,094,000 (post split) shares
issued and 70,982,723 (pre-split) 71 710
Additional paid-in capital 18,063 17,428
Accumulated deficit (12,885) (13,501)
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5,249 4,637
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$ 11,998 $ 11,926
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*Derived from the Form 10-KSB.
See accompanying notes.
3
PAGE
HALLADOR PETROLEUM COMPANY
Consolidated Statement of Operations
(in thousands, except per share amounts)
Nine months ended Three months ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- --------
Revenue:
Oil $ 3,105 $ 2,717 $ 1,067 $ 843
Gas 235 368 80 88
NGLs 367 363 122 105
Interest 159 33 55 15
Other 39 4
------- ------- ------- -------
3,905 3,481 1,328 1,051
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Costs and expenses:
Lease operating 2,068 2,105 657 599
Depreciation, depletion
and amortization 425 460 141 139
General and
administrative 343 285 95 96
Interest 453 711 146 240
------- ------- ------- -------
3,289 3,561 1,039 1,074
------- ------- ------- -------
Net income (loss) $ 616 $ (80) $ 289 $ (23)
======= ======= ======= =======
Net per share amounts* $ .09 $ (.10) $ .04 $ (.03)
======= ======= ======= =======
Weighted average shares
outstanding* 7,094 766 7,094 766
======= ======= ======= =======
* The 1995 amounts have been restated to reflect the May 29, 1996 stock
split.
See accompanying notes.
4
PAGE
HALLADOR PETROLEUM COMPANY
Consolidated Statement of Cash Flows
(in thousands)
Nine months ended
September 30,
1996 1995
-------- --------
Cash flows from operating activities $ 1,233 $ 746
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Cash flows used in investing activities:
Marketable securities (2,831)
Proceeds from property sales 354
Additions to oil and gas properties (42) (118)
Additions to unproved properties (318)
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Net cash (used in) investing activities (3,191) 236
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Cash flows used in financing activities:
Repayments of debt (670) (400)
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Net increase (decrease) in cash and
cash equivalents (2,628) 582
Cash and cash equivalents, beginning of period 3,459 438
------- -------
Cash and cash equivalents, end of period $ 831 $ 1,020
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NOTES TO FINANCIAL STATEMENTS
1. The interim financial data is unaudited; however, in the opinion
of management, the interim data 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 by the
Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principals have
been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures included
herein are adequate to make the information presented not
misleading.
The organization and business of the Company, accounting policies
followed by the Company and other information are contained in
the notes to the Company's financial statements filed as part of
the Company's December 31, 1995 Form 10-KSB. This quarterly
report should be read in conjunction with such annual report.
5
HALLADOR PETROLEUM COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Properties Sold in July 1995
----------------------------
In July 1995, the Company sold substantially all its Texas
properties for $354,000. LOE for these properties for the six-month period
ended June 30, 1995 was approximately $44,000. Sales data for the six-months
are set forth in the following table:
Six Month Sales
1995
Volume Value
------ ------
Oil-barrels 2,955 $50,713
Gas-MCF 34,486 56,391
Year-to-date Comparison
-----------------------
1996 1995
Sales Volume Average Price Sales Volume Average Price
------------ ------------- ------------ -------------
Oil - barrels 165,077 $18.81 169,220 $16.06
Gas - MCF 152,781 1.54 262,155 1.40
NGLs- barrels 29,841 12.30 33,177 10.95
Revenue increased due to a higher average prices, interest income
and non-recurring refunds. Higher prices more than offset the decline in gas
sales resulting from lower production levels and the Texas property sale.
General and administrative expenses increased due to annual meeting
expenses of $15,000, non-recurring expenses of $16,000 and state taxes of
$18,000. The Company did not have an annual meeting in 1995 and state taxes
were insignificant.
Interest expense decreased due to the conversion of the
convertible debt in November 1995.
6
Quarter-to-date Comparison
--------------------------
1996 1995
Sales Volume Average Price Sales Volume Average Price
------------ ------------- ------------ -------------
Oil - barrels 54,362 $19.62 54,230 $15.54
Gas - MCF 41,802 1.92 68,945 1.28
NGLs- barrels 10,020 12.17 10,897 9.65
Revenue increased due to the reasons stated above.
During the third quarter $88,000 of unproved properties were
deemed impaired and transferred to evaluated properties.
OUTLOOK FOR REMAINDER OF 1996
Hedging
-------
The Company continues to evaluate hedging strategies for its oil
production but has never entered into such actions and at this time does not
expect to. As of November 12, 1996, the Company is receiving $20.25 per
barrel for its California production.
Liquidity and Capital Resources
-------------------------------
Cash from operations and available funds will enable the Company
to meet its obligations, commitments and capital expenditures through the
next 12 months.
Future Results of Operations
----------------------------
Assuming stable production and prices, a profit in the $250,000
range is forecasted for the fourth quarter. Management believes that current
oil and gas production from the South Cuyama Field for the next twelve months
will be maintained.
Current Prospects
-----------------
The Company owns a 60% working interest (50% revenue interest) in a
northern California joint venture operated by Colorado-based Sharon Energy,
Ltd. Sharon trades on the Boston Stock Exchange ("SHA") and the Vancouver
Stock Exchange ("SHY"). Through September 30, 1996, the Company has invested
approximately $200,000. The joint venture has entered into a contract with
Kemp Geophysical of Houston, Texas to undertake the acquisition of
approximately 14 square miles of 3-D seismic on the Merlin Prospect in Glenn
County. Data acquisition will be completed during 1996 with processing an
interpretation expected in early 1997. The entire survey, including
processing, is expected to cost $525,000. The Company's share will
approximate $300,000, for a total investment in excess of $500,000.
7
Ten potential drilling targets have been identified from existing
2-D seismic data. The 3-D survey will allow further evaluation of these
targets and possibly add others. Operators in the area have achieved a
better than 75% success rate using 3-D technology. Drilling is expected to
commence next spring or summer. Management believes the prospect has
potential for 10 to 30 BCF of gas reserves.
The Company operates a second joint venture designed to build
exploration prospects and acquire existing production in the Big Horn Basin
of Wyoming. Blackstone Energy, Inc. of Red Lodge, Montana is providing
technical support in exchange for an overriding royalty position. The 600-
acre Hand Creek Field (currently shut in) in Hot Springs County was purchased
in October 1996 for approximately $100,000. Existing wells within the field
are currently being evaluated, and a new horizontal well or a horizontal kick
off from an existing wellbore is planned for next spring. Additionally, the
Company holds approximately 15,000 net and gross undeveloped acres in
Washakie and Hot Springs Counties at a cost of $80,000.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Ex-27 Financial Data Schedule; EDGAR filing only.
(b) No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1996.
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: November 13, 1996 By:/s/Victor P. Stabio
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Victor P. Stabio
Chief Executive Officer and
Chief Financial Officer
Signing on behalf of the
registrant and as principal
financial and accounting officer.