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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26662
PANACO, Inc.
(Exact name of registrant as specified in its charter)
Delaware 43 - 1593374
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification
organization) Number)
1050 West Blue Ridge Boulevard, PANACO Building,
Kansas City, Missouri 64145-1216
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 942 - 6300
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 _______ .
20,382,087 shares of the registrant's $.01 par value Common Stock
were outstanding as of March 31, 1997.
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PANACO, Inc.
Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 1997
(Unaudited)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of March 31, 1997 and December 31, 1996 3
Statements of Income (Operations) for the Three Months Ended March 31,
1997 and 1996 5
Statements of Changes in Stockholders' Equity for the Three Months
Ended March 31, 1997 6
Statements of Cash Flows for the Three Months Ended March 31, 1997
and 1996 7
Condensed Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 13
2
PANACO, INC.
Condensed Balance Sheets
(Unaudited)
ASSETS As of As of
March 31, 1997 December 31, 1996
---------------------- ----------------------
CURRENT ASSETS
Cash and cash equivalents $1,274,000 $1,736,000
Accounts receivable 6,023,000 6,197,000
Investment in common stock 1,701,000 1,642,000
Prepaid and other 245,000 424,000
---------------------- ----------------------
Total current assets 9,243,000 9,999,000
---------------------- ----------------------
OIL AND GAS PROPERTIES, AS DETERMINED BY THE
SUCCESSFUL EFFORTS METHOD OF ACCOUNTING
Oil and gas properties, proved 126,553,000 125,283,000
Oil and gas properties, unproved 7,128,000 7,128,000
Less: accumulated depreciation, depletion,
amortization and valuation allowances (84,650,000) (81,871,000)
---------------------- ----------------------
Net oil and gas properties 49,031,000 50,540,000
---------------------- ----------------------
PROPERTY, PLANT AND EQUIPMENT
Pipelines and equipment 12,890,000 10,534,000
Less: accumulated depreciation (534,000) (327,000)
---------------------- ----------------------
Net property, plant and equipment 12,356,000 10,207,000
---------------------- ----------------------
OTHER ASSETS
Restricted deposits 1,584,000 2,115,000
Loan costs, net 559,000 611,000
Other 252,000 296,000
---------------------- ----------------------
Total other assets 2,395,000 3,022,000
---------------------- ----------------------
TOTAL ASSETS $73,025,000 $73,768,000
====================== ======================
The accompanying notes are an integral part of this statement
3
PANACO, INC.
Condensed Balance Sheets
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY As of As of
March 31, 1997 December 31, 1996
---------------------- -----------------------
CURRENT LIABILITIES
Accounts payable $7,226,000 $6,246,000
Interest payable 242,000 524,000
Current portion of long-term debt 0 0
---------------------- -----------------------
Total current liabilities 7,468,000 6,770,000
---------------------- -----------------------
LONG-TERM DEBT 25,000,000 49,500,000
---------------------- -----------------------
STOCKHOLDERS' EQUITY
Preferred Shares, $.01 par value,
5,000,000 shares authorized; no
shares issued and outstanding 0 0
Common Shares, $.01 par value,
40,000,000 shares authorized;
20,382,087 and 14,350,255 shares
issued and outstanding, respectively 204,000 143,000
Additional paid-in capital 53,656,000 31,490,000
Retained earnings (deficit) (13,303,000) (14,135,000)
---------------------- -----------------------
Total stockholders' equity 40,557,000 17,498,000
---------------------- -----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $73,025,000 $73,768,000
====================== =======================
The accompanying notes are an integral part of this statement
4
PANACO, INC.
Statements of Income (Operations)
For the Three Months Ended March 31,
(Unaudited)
1997 1996
----------------- -----------------
REVENUES
Oil and natural gas sales $8,067,000 $7,339,000
COSTS AND EXPENSES
Lease operating 2,911,000 2,355,000
Depletion, depreciation & amortization 3,113,000 2,486,000
General and administrative 198,000 185,000
Production and ad valorem taxes 85,000 211,000
Exploration expenses 67,000 0
Provision for losses and (gains) on disposition
and write-down of assets 0 0
----------------- -----------------
Total 6,374,000 5,237,000
----------------- -----------------
NET OPERATING INCOME 1,693,000 2,102,000
----------------- -----------------
OTHER INCOME (EXPENSE)
Unrealized gain on investment in common stock 60,000 0
Interest expense, net (921,000) (452,000)
----------------- -----------------
Total (861,000) (452,000)
----------------- -----------------
NET INCOME BEFORE INCOME TAXES 832,000 1,650,000
INCOME TAXES 0 0
----------------- -----------------
NET INCOME $832,000 $1,650,000
================= =================
Net income per share $0.05 $0.14
================= =================
The accompanying notes are an integral part of this statement
5
PANACO, INC.
Statement of Changes in Stockholders' Equity
(Unaudited)
Amount ($)
Number of Additional Retained
Common Common Paid-in Earnings
Shares Stock Capital (Deficit)
--------------- ---------------- ---------------- ----------------
Balances, December 31, 1996 14,350,255 $143,000 $31,490,000 ($14,135,000)
Net Income 0 0 0 832,000
Common shares issued - Offering 6,000,000 60,000 22,017,000 0
Common shares issued - ESOP
contribution and stock bonuses 31,832 1,000 149,000 0
--------------- ---------------- ---------------- ----------------
Balance, March 31, 1997 20,382,087 $204,000 $53,656,000 ($13,303,000)
=============== ================ ================ ================
The accompanying notes are an integral part of this statement
6
PANACO, INC.
Statement of Cash Flows
Three Months Ended March 31,
(Unaudited)
1997 1996
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $832,000 $1,650,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion, depreciation and amortization 3,113,000 2,486,000
Unrealized gain on investment in common stock (60,000) 0
Exploration expenses 67,000
Other, net 9,000
Changes in operating assets and liabilities:
Accounts receivable 174,000 (893,000)
Prepaid and other 223,000 282,000
Accounts payable 980,000 66,000
Interest payable (282,000) (17,000)
---------------- ----------------
Net cash provided by operating activities 5,056,000 3,574,000
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of oil and gas properties 23,000 0
Capital expenditures and acquisitions (3,649,000) (336,000)
Decrease/(increase) in restricted deposits 531,000 (1,745,000)
---------------- ----------------
Net cash used by investing activities (3,095,000) (2,081,000)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock offering proceeds, net 22,077,000 0
Long-term debt proceeds 1,500,000 0
Repayment of long-term debt (26,000,000) (3,000,000)
Issuance of common stock-exercise of warrants 0 1,837,000
---------------- ----------------
Net cash used by financing activities (2,423,000) (1,163,000)
---------------- ----------------
NET INCREASE (DECREASE) IN CASH (462,000) 330,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,736,000 1,198,000
---------------- ----------------
CASH AND CASH EQUIVALENTS AT MARCH 31, $1,274,000 $1,528,000
================ ================
The accompanying notes are an integral part of this statement
7
PANACO, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
Note 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the financial
position as of March 31, 1997 and December 31, 1996 and the results of
operations and changes in stockholder's equity and cash flows for the periods
ended March 31, 1997 and 1996. Most adjustments made to the financial statements
are of a normal, recurring nature. Although the Company believes that the
disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures, including significant accounting
policies, normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission (the
"SEC"). It is suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K/A for the year ended December 31, 1996.
Note 2 - OIL AND GAS PROPERTIES AND PIPELINES AND EQUIPMENT
The Company utilizes the successful efforts method of accounting for its
oil and gas properties. Under the successful efforts method, lease acquisition
costs are capitalized. Exploratory drilling costs are also capitalized pending
determination of proved reserves. If proved reserves are not discovered, the
exploratory costs are expensed. All development costs are capitalized. Provision
for depreciation and depletion is determined on a field-by-field basis using the
unit-of-production method. The carrying amounts of proven and unproved
properties are reviewed periodically on a property-by-property basis, based on
future net cash flows determined by an independent engineering firm, with an
impairment reserve provided if conditions warrant.
Pipelines and equipment are carried at cost. Oil and natural gas
pipelines are depreciated on the straight-line method over remaining useful
lives of fifteen years. Other property is also depreciated on the straight-line
method over remaining useful lives ranging from five to seven years.
Note 3 - CASH FLOW INFORMATION
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with original maturities of six months
or less to be cash equivalents. Net cash provided by operating activities
includes cash payments for interest totaling $1,203,000 and $469,000 for the
first three months of 1997 and 1996, respectively.
Note 4 - RESTRICTED DEPOSITS
The Company is party to various escrow and trust agreements which
provide for monthly deposits into escrow and trust accounts to satisfy future
plugging and abandonment obligations. The terms of the agreements vary as to
deposit amounts, based upon fixed monthly amounts or percentages of the
properties' net income. With respect to plugging and abandonment operations,
funds are partially or completely released upon the presentation by the Company
to the escrow agent or trustee of evidence that the operation was or is being
conducted in compliance with applicable laws and regulations. These amounts are
included on the financial statements as Restricted Deposits.
8
Note 5 - INVESTMENT IN COMMON STOCK
In connection with the sale of the Bayou Sorrel Field to National
Energy Group, Inc. in 1996, the Company received 477,612 shares of National
Energy Group, Inc. common stock. The Company has classified this asset as a
trading security. At March 31, 1997 the market value of the stock was
$1,701,000, with an unrealized gain of $60,000 recognized in the first three
months of 1997 to reflect the increase in market value from December 31, 1996.
Note 6 - NET INCOME PER SHARE
The net income per share for the three months ended March 31, 1997 and 1996
has been calculated based on 16,090,053 and 12,068,412 weighted average shares
outstanding, respectively.
Note 7 - SUPPLEMENTAL INFORMATION RELATED TO OIL AND GAS PRODUCING ACTIVITIES
The reserves presented in the following table are prepared by the
Company based upon reports of independent petroleum engineers and are estimates
only and should not be construed as being exact amounts. All reserves presented
are proved reserves that are defined as estimated quantities which geological
and engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions.
Proved developed and undeveloped reserves Oil Gas
(Bbls) (Mcf)
December 31, 1996 2,239,000 41,446,000
Purchase of minerals-in-place -0- -0-
Production (81,000) (2,180,000)
Revisions of previous estimates -0- -0-
------------ ------------
Estimated reserves at March 31, 1997 2,158,000 39,266,000
============ ===========
No major discovery or other favorable or adverse event has caused a significant
change in the estimated proved reserves since March 31, 1997. The Company does
not have proved reserves applicable to long-term supply agreements with
governments or authorities. All proved reserves are located in the United
States.
9
PART I
Item 2.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-looking Statements
Forward-looking statements in this Form 10-Q, future filings by the
Company with the Securities and Exchange Commission, the Company's press
releases and oral statements by authorized officers of the Company are intended
to be subject to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that all forward-looking statements
involve risks and uncertainty, including without limitation, the risk of a
significant natural disaster, the inability of the Company to ensure against
certain risks, the adequacy of its loss reserves, fluctuations in commodity
prices, the inherent limitations in the inability to estimate oil and gas
reserves, changing government regulations, as well as general market conditions,
competition and pricing. The Company believes that forward-looking statements
made by it are based upon reasonable expectations. However, no assurances can be
given that actual results will not differ materially from those contained in
such forward-looking statements. The words "estimate", "anticipate", "expect",
"predict", "believe" and similar expressions are intended to identify
forward-looking statements.
General
The oil and gas industry has experienced significant volatility in
recent years because of the oversupply of most fossil fuels relative to the
demand for such products and other uncertainties in the world energy markets.
These industry conditions should be considered when this analysis is read.
Accordingly, the energy market has been unsettled, making it difficult to
predict future prices.
Liquidity and Capital Resources
On March 5, 1997 the Company completed an offering of 8,403,305 common
shares at $4.00 per share, $3.728 net of the underwriter's commission. The
offering consisted of 6,000,000 shares sold by the Company and 2,403,305 shares
sold by shareholders, primarily Amoco Production Company (2,000,000 shares) and
lenders advised by Kayne, Anderson Investment Management, Inc. (373,305 shares).
The Company's net proceeds of $22,000,000 from the offering were used to prepay
$13,500,000 of its 12% subordinated debt and the remaining was temporarily paid
on the Company's revolving bank loan and will ultimately be used for the
development of its properties and for future acquisitions.
On October 8, 1996 the Company amended its Bank Facility with First
Union National Bank of North Carolina (60%) and Banque Paribas (40%). The loan
is a reducing revolver designed to provide up to $40,000,000 depending on the
borrowing base, as determined by the lenders. The borrowing base on May 1, 1997
was $28 million. At March 31, 1997 the Company had $16,500,000 outstanding under
the loan. The principal amount of the loan is due July 1, 1999. However, at no
time may the Company have outstanding borrowings under the Bank Facility in
excess of its borrowing base. Interest on the loan is computed at the bank's
prime rate or at 1 to 1 3/4% (depending upon the percentage of the facility
being used) over the applicable London Interbank Offered Rate ("LIBOR") on
Eurodollar loans. Eurodollar loans can be for terms of one, two, three or six
months and interest on such loans is due at the expiration of the terms of such
loans, but no less frequently than every three months. Management feels that
this Bank Facility greatly facilitates its ability to make necessary capital
expenditures to maintain and improve production from its properties and makes
available to the Company additional funds for future acquisitions.
10
From time to time the Company has borrowed funds from institutional
lenders who are represented by Kayne, Anderson Investment Management, Inc. In
each case these loans are due at a stated maturity, require payments of interest
only at 12% per annum, 45 days after the end of each calendar quarter, and are
secured by a second mortgage on the Company's offshore oil and gas properties.
The loans were as follows:
(a) 1993 Subordinated Notes. In 1993, $5,000,000 was borrowed, due
December 31, 1999, but prepayable at any time. These Notes were prepaid on March
6, 1997 with a portion of the proceeds from the common share offering.
(b) 1996 Tranche A Convertible Subordinated Notes. On October 8, 1996,
$8,500,000 was borrowed, due October 8, 2003, but prepayable any time after May
8, 1998. After August 28, 1997 the Notes are convertible into 2,060,606 common
shares on the basis of $4.125 per share. The Company may deliver up to
$2,000,000 in payment-in-kind notes in satisfaction of interest payment
obligations.
(c) 1996 Tranche B Bridge Loan Subordinated Notes. On October 8, 1996,
$8,500,000 was borrowed, due October 8, 2003, but prepayable any time after May
8, 1998. These Notes were prepaid on March 6, 1997 with a portion of the
proceeds of the common share offering.
The product prices received by the Company, net of the impact of hedge
transactions, averaged $2.99 per Mcf for natural gas and $19.22 per barrel for
oil for the three months ended March 31, 1997. Cash flow is currently being used
to reduce liabilities, make capital expenditures and pay general and
administrative overhead. Starting in 1997 hedge transactions on natural gas are
based upon published gas pipeline index prices instead of the NYMEX. This change
has mitigated the risk of price differences due to transportation. In 1997,
14,000 MMBtu per day has been hedged, reducing to 10,000 MMBtu per day in 1998
and 7,000 MMBtu per day in 1999. The Company is hedging at a swap price of $1.80
per MMBtu for 1997 with varying levels of participation (93% in January to 40%
in September ) in settlement prices above the $1.80 per MMBtu swap price level.
In 1997 the Company has also hedged its oil prices by selling the equivalent of
720 barrels of oil per day at $20.00, with a 60% participation in prices above
the $20.00 swap price level. Management has generally used hedge transactions to
protect its cash flows when the Company's levels of long-term debt have been
higher and refrained from hedge transactions when long-term debt has been lower.
For accounting purposes, gains or losses on swap transactions are recognized in
the production month to which a swap contract relates.
At March 31, 1997, 84% of the Company's total assets were represented
by oil and gas properties and pipelines and equipment, net of depreciation,
depletion and amortization.
In 1991 certain lenders received a net profits interest (NPI) in the
West Delta properties. During the three months ended March 31, 1997, payments
with respect to this NPI totaled $110,000.
Pursuant to existing agreements the Company is required to deposit
funds in bank trust and escrow accounts to provide a reserve against
satisfaction of its eventual responsibility to plug and abandon wells and remove
structures when certain fields no longer produce oil and gas. Each month, until
November 1997, $25,000 is deposited in a bank escrow account to satisfy such
obligations with respect to a portion of its West Delta properties. The Company
has entered into an escrow agreement with Amoco Production Company under which
the Company will deposit, for the life of the fields, in a bank escrow account
ten percent (10%) of the net cash flow, as defined in the agreement, for the
Amoco properties. The Company has established the "PANACO East Breaks 110
Platform Trust" in favor of the Minerals Management Service of the U.S.
Department of the Interior. This trust required an initial funding of $846,720
in December 1996, and remaining deposits of $244,320 due at the end of each
quarter in 1999 and $144,000 due at the end of each quarter in 2000 for a total
of $2,400,000. In addition, the Company has $9,250,000 in surety bonds to secure
its plugging and abandonment operations.
Through the three months ended March 31, 1997 the Company had spent
$3,649,000 in capital expenditures, primarily for the completion of an oil and
gas pipeline in the West Delta Fields and for development of its oil and gas
properties. Through March 31, 1996 the Company had raised $1,837,000 in equity
as a result of the exercise of warrants.
11
Results of Operations
For the three months ended March 31, 1997 and 1996:
"Oil and natural gas sales" increased 10% for the first three months of
1997. While both oil and natural gas production decreased slightly in 1997,
higher net prices for both products offset this decrease. First quarter 1996
includes the results for the Bayou Sorrel Field which was sold effective
September 1, 1996. First quarter 1997 includes results of operations for the
Amoco properties which were purchased on October 8, 1996.
Production. Natural gas production decreased 6% in 1997 from 2,318,000
Mcf in 1996 to 2,180,000 Mcf. While the loss of the Bayou Sorrel Field natural
gas production was more than offset by the addition of the Amoco properties in
1997, a decrease in production from the West Delta Fields was the primary factor
in the total decrease in gas production. The federal production from West Delta
Block 58 was brought back on-line in March with the completion of a dual six
inch, eight mile pipeline to the West Delta central processing facility, Tank
Battery #3. This pipeline also allowed Tana Oil and Gas Corporation and Samedan
Corporation to resume production from their wells, drilled on farm-outs from the
Company, on which the Company receives overriding royalty revenue and fees for
processing the oil and gas.
Oil production decreased 15% in 1997 from 95,000 barrels in 1996 to
81,000 barrels. The sale of the Bayou Sorrel Field in 1996 decreased the
Company's oil production. In the first quarter of 1996 the Bayou Sorrel Field
produced 34,000 barrels. For the reasons explained above the West Delta federal
oil production was also down in 1997. The Amoco acquisition provided 39,000
barrels of new oil production in first quarter 1997. On an Mcf equivalent basis,
total oil and natural gas production decreased 8% in 1997.
Prices. The reductions in production volumes were offset by higher net
prices received in 1997. The 1997 hedge program reduced the net price received
by only ($.02) per Mcf in 1997 compared to ($.43) per Mcf in 1996. The new hedge
program allows the Company more participation in the increases in market prices
for natural gas, while providing the price stability of no less than $1.80 per
MMBtu in 1997 on over half of its natural gas production. The net gas price per
Mcf in first quarter 1997 was $2.99 versus $2.47 per Mcf in 1996. Oil prices
also increased in 1997 to $19.22 per barrel from $17.01 in 1996.
"Lease operating expenses" increased 24% in 1997 in part due to an
increase in West Delta operating expenses. The rebuilt platform, put back in
service in October 1996 is continuing to be modified to work as efficiently as
possible. Also, fees paid by others for processing oil and gas were only
realized in March with the completion of the eight mile pipeline in West Delta.
First quarter 1996 included a full quarter of the benefit of these processing
fees. First quarter 1997 also includes the operating expenses of thirteen
offshore blocks acquired from Amoco in October 1996. Several of the platforms
included in that acquisition have required significant upgrades and repairs by a
new operator.
12
"Depletion, depreciation and amortization" increased 25% and from $.86
per Mcf equivalent in 1996 to $1.17 per Mcf equivalent in 1997, due to several
factors. Downward engineering revisions from the Company's independent petroleum
engineers, Ryder Scott Company, in the West Delta and East Breaks 110 Fields
were a significant part of the increase. Also, $4,000,000 in capital
expenditures made during 1996 to rebuild Tank Battery #3, the central processing
facility for the West Delta Fields, increased the depletion cost per Mcf.
"Production and ad valorem taxes" decreased 60% in 1997 to 1% of oil
and natural gas sales from 3% of oil and natural gas sales in 1996. The decrease
is due to the Company's shift to federal offshore waters from where there are no
state severance taxes.
"Exploration expenses" incurred in 1997 resulted from an option paid to
participate in an exploratory well in the High Island Area, offshore Texas which
was condemned before the well was drilled because of a dry hole drilled by
another company on an adjacent block. There will be no further exploration
expenses associated with this prospect.
"Interest expense, net" increased 104% in 1997 due to the significant
increase in borrowing levels in 1997. The average outstanding long-term debt in
1997 was $42,000,000 versus $21,000,000 in 1996. The increased debt level was
due to the Amoco acquisition made in October 1996, for which $32,000,000 was
paid in cash and financed with long-term debt. With the closing of a common
share offering the Company prepaid $13,500,000 of subordinated debt and
temporarily prepaid $8,500,000 on its revolving bank loan, ultimately to be used
for property development and future acquisitions. The weighted average interest
rate also increased due to the increased subordinated debt incurred in
connection with the Amoco acquisition in October 1996. The weighted average rate
increased from 8.5% in 1996 to 9.5% in 1997.
The Financial Accounting Standards Board issued FASB Statement 128,
"Earnings Per Share", in February 1997. FASB 128 modifies the way companies
report earnings per share information. The Company will be required to adopt
FASB 128 will materially affect earnings per share data previously reported.
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
January 29, 1997 Sale of the Bayou Sorrel Field
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.
PANACO, INC.
Date:May 15, 1997 /s/Todd R.Bart
-------------------------------------
Todd R. Bart, Chief Financial Officer