SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
Commission file number: 0-12633
TEXOIL, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0177083
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 SMITH STREET
SUITE 4000
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(713) 652-5741
(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 (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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,113,541 shares of common stock,
$.01 par value, issued and outstanding at November 14, 1995.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]
Page 1 of 15
TEXOIL, INC.
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet as of September 30, 1995.............. 3
Consolidated Statement of Income (Loss) and Retained
Deficit for the three months and nine months
ended September 30, 1994 and 1995............................. 4
Consolidated Statement of Cash Flows for the nine months
ended September 30, 1994 and 1995............................. 5
Notes to Consolidated Financial Statements....................... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................................. 8
PART II. OTHER INFORMATION............................................ 11
Page 2 of 15
TEXOIL, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
SEPTEMBER 30,
1995
------------
ASSETS
Current assets:
Cash and cash equivalents ................................... $ 856
Accounts receivable ......................................... 371,630
Other current assets ........................................ 122,805
------------
Total current assets ................................... 495,291
------------
Property and equipment, at cost:
Oil and gas properties (on the basis of full cost
accounting including unevaluated costs of $839,342) ........ 17,838,585
Other ....................................................... 314,207
------------
18,152,792
Less - accumulated depreciation, depletion and amortization .... (14,093,244)
------------
4,059,548
------------
$ 4,554,839
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities .................... $ 1,062,907
Note payable to bank ........................................ 234,000
Notes payable to stockholders ............................... 1,012,500
Preferred stock dividends payable ........................... 69,000
------------
Total current liabilities .............................. 2,378,407
Note payable to bank ........................................... 152,000
Other long-term liabilities .................................... 205,771
Stockholders' equity:
Series A preferred stock, $.01 par; redeemable
and convertible with liquidation
preference of $100 per share plus
cumulative accrued unpaid dividends
at annual rate of $12 per share; 10,000,000 shares
authorized; 23,000 shares issued and outstanding ......... 2,300,000
Common stock, $.01 par; 50,000,000 shares authorized;
4,105,065 shares issued and outstanding .................. 41,050
Additional paid-in capital .................................. 4,540,055
Retained deficit ............................................ (5,062,444)
------------
1,818,661
------------
$ 4,554,839
============
The accompanying notes are an integral part of this statement.
Page 3 of 15
TEXOIL, INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)
(unaudited)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------------ ------------------------------
1994 1995 1994 1995
----------- ----------- ----------- -----------
Revenues:
Oil and gas sales ................................... $ 174,052 $ 201,853 $ 417,379 $ 783,981
----------- ----------- ----------- -----------
Costs and expenses:
Lease operating expenses ............................ 61,942 69,903 169,671 205,957
Depreciation, depletion and amortization ............ 107,932 149,603 214,842 445,203
Production taxes .................................... 16,304 7,785 41,396 35,117
General and administrative expenses, net ............ 234,559 165,100 839,696 581,048
Other (income) expenses:
Interest expense .................................... 28,162 41,097 109,091 109,260
Interest income and other ........................... (18,885) (421) (25,772) (4,354)
----------- ----------- ----------- -----------
430,014 433,067 1,348,924 1,372,231
----------- ----------- ----------- -----------
Loss before income taxes ............................... (255,962) (231,214) (931,545) (588,250)
Provision for income taxes ............................. -- -- -- --
----------- ----------- ----------- -----------
Net loss ............................................... (255,962) (231,214) (931,545) (588,250)
Dividends on preferred stock ........................... (69,000) (69,000) (207,000) (207,000)
----------- ----------- ----------- -----------
Net loss applicable to common stock .................... (324,962) (300,214) (1,138,545) (795,250)
Retained deficit, beginning of period .................. (3,661,834) (4,762,230) (2,848,251) (4,267,194)
----------- ----------- ----------- -----------
Retained deficit, end of period ........................ $(3,986,796) $(5,062,444) $(3,986,796) $(5,062,444)
=========== =========== =========== ===========
Net loss per share of common stock ..................... $ (0.08) $ (0.07) $ (0.30) $ (0.20)
=========== =========== =========== ===========
Average number of shares outstanding ................... 4,058,628 4,087,643 3,760,355 4,068,419
=========== =========== =========== ===========
The accompanying notes are an integral part of this statement.
Page 4 of 15
TEXOIL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------
1994 1995
----------- ---------
Operating activities:
Net loss .......................................................................... $ (931,545) $(588,250)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation, depletion and amortization ....................................... 214,842 445,204
Non-cash compensation expense .................................................. -- 80,330
Decrease (increase) in accounts receivable ..................................... (46,912) 31,203
Decrease in other current assets ............................................... 225,936 42,306
Increase in accounts payable ................................................... 351,446 145,048
Decrease in advances from joint
interest owners .............................................................. (49,896) (506)
Increase (decrease) in other long-term liabilities ............................. 6,978 31,320
----------- ---------
Net cash provided by (used in) operating activities ........................ (229,151) 186,655
----------- ---------
Investing activities:
Capital expenditures .............................................................. (1,545,953) (653,089)
Proceeds from sales of prospects .................................................. -- 172,500
----------- ---------
Net cash used in investing activities ...................................... (1,545,953) (480,589)
----------- ---------
Financing activities:
Proceeds of public unit offering .................................................. 3,633,862 --
Proceeds from borrowings .......................................................... 450,000 389,000
Payments on borrowings ............................................................ (1,025,000) (88,000)
Preferred stock dividends paid .................................................... (207,000) (207,000)
----------- ---------
Net cash provided by financing activities .................................. 2,851,862 94,000
----------- ---------
Net increase (decrease) in cash and cash equivalents ................................. 1,076,758 (199,934)
Cash and cash equivalents at beginning of period ..................................... 109,808 200,790
----------- ---------
Cash and cash equivalents at end of period ........................................... $ 1,186,566 $ 856
=========== =========
The accompanying notes are an integral part of this statement.
Page 5 of 15
TEXOIL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - ACCOUNTING POLICIES:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to interim financial reporting as prescribed
by the Securities and Exchange Commission. All adjustments, which, in the
opinion of management, are necessary for a fair presentation of the results for
the interim periods have been reflected in the accompanying unaudited financial
statements. For further information regarding accounting policies, refer to the
Company's audited financial statements for the years ended December 31, 1993 and
1994 included in its 1994 Annual Report on Form 10-KSB. The average number of
shares outstanding reflected in the net loss per share of common stock for the
periods presented herein gives effect to a public offering of the Company's
securities and a related surrender of common stock shares that took place in
June 1994 (see Note 2).
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has suffered
recurring operating losses as well as cash flow deficits that raise substantial
doubt about its ability to meet the future expenditure obligations necessary to
fully evaluate and develop its oil and gas properties and to continue as a going
concern. Accordingly, management has determined that the Company should seek an
additional equity infusion in order to fully pursue new exploration
opportunities in accordance with its business plan. The Company has undertaken
preliminary capital raising efforts directed toward an equity infusion, however,
the structure, timing and amount of any such transaction are presently
uncertain. The consolidated financial statements do not reflect any adjustments
that might result from the outcome of these uncertainties. At September 30,
1995, the Company had capitalized in other current assets $65,780 of accounting,
legal and other third party costs related to additional capital raising efforts.
NOTE 2 - STOCKHOLDERS EQUITY:
In the second quarter of 1994, the Company completed a public offering of its
securities. A total of 750,000 units were sold at an offering price to the
public of $6.25 per unit with each unit comprised of two shares of the Company's
common stock, one Class A Warrant to purchase a share of the Company's common
stock at a price of $3.50 per share and one Class B Warrant to purchase an
additional share of the Company's common stock at a price of $4.50 per share.
Net proceeds to the Company were $3,633,862.
In conjunction with the unit offering, the holders of the Company's outstanding
"restricted" common stock agreed to surrender on a pro rata basis an aggregate
of 987,856 shares of common stock. Such surrendered shares have been accounted
for as contributed treasury stock which have been canceled and restored to
unissued shares.
Page 6 of 15
In July 1995, the Company's stockholders approved the 1995 Stock Compensation
Plan (the "Plan"), which provides for the issuance of shares of common stock to
certain employees and consultants whose cash compensation was reduced by 30%
effective April 1, 1995. Pursuant to the Plan, a total of 46,422 shares of
common stock were issued to such individuals in recognition of their reduced
cash compensation for the months of April through September 1995. The Company
recognized compensation expense in the amount of $80,330 representing the fair
market value of such shares issued in lieu of reduced cash compensation for the
months of April through September 1995. The Company anticipates making further
monthly issuances of common stock during the remainder of 1995 under the Plan,
for which compensation expense will be recognized simultaneously. In that
regard, an additional 8,471 shares of common stock were issued under the Plan at
the end of October 1995 with the related compensation expense being recognized
in that month.
NOTE 3 - NOTES PAYABLE:
In the first nine months of 1995, the Company borrowed and made payments
aggregating $189,000 and $63,000, respectively, under its revolving credit/term
loan agreement with a bank resulting in an outstanding balance due to the bank
under the agreement of $386,000 as of September 30, 1995 (under the terms of the
revolving credit/term loan agreement, $234,000 of such balance is due within one
year from September 30, 1995). A principal payment of $21,000 was made in
October 1995. The Company also paid a $25,000 note payable to a stockholder
under a "bridge loan" program in February 1995 and subsequently borrowed an
aggregate $200,000 from other stockholders resulting in an aggregate balance of
notes payable outstanding under such program of $1,012,500 as of September 30,
1995. An additional $50,000 was borrowed from a stockholder under the bridge
loan program in October 1995.
NOTE 4 - SUBSEQUENT EVENTS:
In October 1995, the Company sold a 60% interest in a new 3-D exploration
program to Meridian Oil Inc. and received proceeds from the sale in the amount
of $134,097. The prospect encompasses a 20 square mile 3-D seismic survey in
Galveston County, Texas. The Company will own a 40% working interest in the
project after completion of the 3-D survey and Meridian Oil Inc.
will be the operator.
Texoil is also finalizing participation agreements with several other parties
covering participation in a 3-D program at Raceland, Lafourche Parish,
Louisiana. Under the agreements, Texoil will be the operator of an approximate
64 square mile survey to begin in early 1996. Texoil's anticipated interest in
the program will be 30%.
With reference to Texas Meridian's current activities at Lake Boeuf Field in
Lafourche Parish, Louisiana, on October 31, 1995 the Louisiana Office of
Conservation ordered a producing unit for the Rob C Unit which will include
between 20% and 25% of the acreage in which Texoil has the right to participate
in both a working interest and an overriding royalty interest. Texoil is
currently evaluating the economics of participating to the extent of 2% to 2.5%
working interest in not only these two presently producing wells, but also in
Page 7 of 15
up to 10% in another well, the TMRX, Pacific Enterprises No. 3, which is
currently drilling on the Texoil participation rights acreage below 13,500 feet.
Texoil's right to receive an overriding royalty will not be affected by its
election to participate or not to participate in a working interest.
Texoil is actively discussing with several other parties a private placement of
either debt or equity in the range of $1,500,000 to $2,500,000 to fund its share
of the cost in participating in the Texoil 3-D programs as well as in the Texas
Meridian projects. As of this date, nothing definitive has resulted from these
discussions.
Page 8 of 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED
TO THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995
Texoil, Inc. (the "Company") recorded net losses of $255,962 and $231,214 in the
three months ended September 30, 1994 and 1995, respectively. Such amounts are
included in net losses of $931,545 and $588,250 in the nine month periods ended
September 30, 1994 and 1995, respectively. The reductions in these comparative
net losses resulted from the following factors:
DECREASE IN NET LOSS
-----------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
------------------ ------------------
Increase in oil and gas production
income (revenues less lease operating
expenses and production taxes) .............................................. $ 28,359 $ 336,595
Increase in depreciation, depletion and
amortization expense ........................................................ (41,671) (230,361)
Decrease in net general and
administrative expenses ..................................................... 69,459 258,648
Other, net ................................................................... (31,399) (21,587)
--------- ---------
$ 24,748 $ 343,295
========= =========
The increases in oil and gas production income in the three month and nine month
periods ended September 30, 1995 of 30% and 163%, respectively, are primarily
attributable to increases in production volumes arising from new wells that went
on production in the Buras Field in March 1994 and in the Bayou Lafourche Field
in October 1994. The impact of fluctuations in oil and gas prices was
essentially neutral, however, as increases in oil prices in the three month and
nine month periods ended September 30, 1995 (in relation to the comparable 1994
periods) were substantially offset by declines in gas prices for the same
periods.
The increases in depreciation, depletion and amortization ("DD&A") expense were
due largely to the increases in oil and gas production volumes noted above.
Further compounding the effect of higher production volumes were increases in
the Company's DD&A rates from $7.29 per barrel of oil equivalent ("BOE") in the
nine months ended September 30, 1994 to $8.37 per BOE in the three month and
nine month periods ended September 30, 1995. The increased DD&A rates in 1995
reflect relatively higher cost additions that were made in the fourth quarter of
1994 and the second quarter of 1995 to the "base" of oil and gas properties
subject to DD&A.
The decreases in net general and administrative expenses in both 1995 periods
were due primarily to the absence of expenses associated with the Company's June
1994 public offering of its securities (such offering efforts began in the
fourth quarter of 1993).
Page 9 of 15
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATIONS. The Company's net cash flow from operations resulted
in a deficit of $229,151 and an increase in cash of $186,655 for the nine month
periods ended September 30, 1994 and 1995, respectively. The improvement in the
Company's operating cash flow in the first nine months of 1995 reflects the
increase in oil and gas production income and decrease in general and
administrative expenses noted above, partially offset by changes in certain
working capital components since December 31, 1994. Management anticipates
increased oil and gas revenues and cash flow from operations during the fourth
quarter of 1995 (in comparison to the fourth quarter of 1994) as a result of the
successful completions of a development well at the Company-operated Main Pass 3
Field in the third quarter of 1994 and an exploratory well at the non-operated
Bayou Lafourche Field in the third quarter of 1994 (the production from one such
completion commenced in the latter part of the fourth quarter of 1994).
CAPITAL EXPENDITURES. The Company's net capital expenditures totaled $1,545,953
and $653,089 in the nine month periods ended September 30, 1994 and 1995,
respectively. Of the former amount, approximately $560,000 relates to an
exploratory well at the non-operated Bayou Lafourche Field that was completed in
June 1994 and went on production in October 1994. The Company's capital
expenditures during the remainder of 1994 were funded largely from a portion of
the proceeds of the Company's public offering. There are no remaining unexpended
proceeds from the public offering after allowing for the payment of such capital
expenditures and of certain debt obligations and preferred stock dividends which
were made simultaneous with or subsequent to the closing of the public offering
(see " - Cash Flow from Financing" below). In order to fund the Company's
proposed level of participation in various non-operated and Company-operated
exploration prospects described in the two following paragraphs, management
believes that it will be necessary to seek an additional capital infusion. The
Company has undertaken preliminary capital raising efforts directed toward an
equity infusion, however, the structure, timing and amount of any such
transaction are presently uncertain. Should the Company be unsuccessful in
obtaining an equity infusion, management nevertheless believes sufficient debt
financing would be available to develop its evaluated oil and gas properties and
to support its existing operations through December 31, 1995. The Company would,
however, in that instance be required to significantly reduce its proposed level
of investment in the exploration opportunities described below, as well as take
measures to address its working capital deficit.
Subject to obtaining an additional equity infusion of at least $1.5 million (or
other financing arrangements), the Company anticipates making further capital
expenditures during the remainder of 1995 and in early 1996 relating to its
participation in a series of Company-operated and non-operated exploration
prospects in South Louisiana. The latter group of prospects are included in an
agreement dated December 31, 1992, whereby the Company sold fourteen unleased
exploratory geological prospects to Texas Meridian Resources Corporation ("Texas
Meridian") for $500,000 cash and is entitled to receive overriding royalties of
from 2.0% to 3.75% in each well subsequently drilled on the prospects sold. The
Texas Meridian prospect sale agreement also grants the Company the option to
acquire, on an unpromoted basis, up to a 10% working interest in wells drilled
on the prospects sold. Management anticipates that any drilling recommendations
will be made by Texas Meridian after it has completed three-dimensional ("3-D")
seismic acquisition, processing and evaluation of each prospect area. The
Company's overriding royalty interests and working interest options relate to
most but not all of the lease acreage which Texas Meridian may choose to
assemble with respect to each prospect. The prospect at Bayou Lafourche
(referred to in the paragraph above) is the first such Texas Meridian-operated
prospect in which the Company was given the option to participate as a working
interest owner. Management believes it likely that the Company will elect to
participate for its full 10% working interest in each subsequent well proposed
by Texas Meridian under the aforementioned agreement, but the final decision of
whether it will do so will depend upon a review of then
Page 10 of 15
available geological and geophysical data as well as the Company's ability to
finance such participation. The number of wells to be actually proposed for
drilling by Texas Meridian on acreage subject to the aforementioned agreement is
presently uncertain.
With respect to one of the Texas Meridian Prospects, Lake Boeuf, in Lafourche
Parish, Louisiana, a portion of the acreage in which Texoil has the right to
participate with TMRX is being considered for inclusion in a producing unit for
the Rob C reservoir, which was found productive in the TMRX, Pacific Enterprises
Nos. 1 and 2 Wells. The extent of the inclusion of Texoil participation rights
acreage will be determined at a hearing conducted by the Louisiana Office of
Conservation in Baton Rouge.
The Company also expects to make capital expenditures during the remainder of
1995 and in 1996 with respect to certain exploratory prospects not included in
the Texas Meridian prospect sale. These capital expenditures are expected to
include costs for further geological and geophysical evaluation of the
prospects, including 3-D seismic surveys where warranted, and leasehold
acquisition and other costs necessary for the Company to obtain working interest
participants in the prospects and, possibly, prepare one or more of the
prospects for drilling during the remainder of 1995 and in 1996. The amount and
timing of such capital expenditures will depend on many factors, including the
Company's ability to obtain other participants for drilling of the prospects and
the preferences of such participants as to these matters, as well as the
availability of sources to finance the Company's equity in such prospects. In
the second quarter of 1995, the Company sold interests in one such prospect to
third party participants and received proceeds from the sale of the interests in
the amount of $172,500. The spudding of an exploratory test well on the prospect
was commenced by the Company in June 1995 and the well was plugged and abandoned
as a dry hole in July 1995.
CASH FLOW FROM FINANCING. The Company has a revolving credit/term loan agreement
with First Interstate Bank of Texas, N.A. ("FIBOT"). The revolving credit/term
loan agreement dated December 31, 1994, provides for interest on borrowings at a
rate of 1 1/4% above FIBOT's prime rate (8.75% at September 30, 1995) and is
secured by substantially all of the Company's oil and gas producing properties.
Borrowings at various levels have remained outstanding under a previous
credit/term agreement since November 12, 1991; borrowings outstanding to FIBOT
amounted to $386,000 at September 30, 1995 and the Company has remained current
on interest and principal payments as they have become due. The borrowing base
of the new credit/term loan was established at $575,000 in December 1994 and is
declining by $21,000 each month through December 1995 and, thereafter, will
decline $19,000 each month through May 1997. The revolving credit/term loan
agreement contains certain financial covenants related to maintenance of working
capital (current assets, plus unevaluated property costs anticipated to be
recovered currently, must exceed current liabilities) and stockholders' equity
(must be at least $2,300,000). The Company was not in compliance with such
covenants as of September 30, 1995, and has requested a waiver from FIBOT with
respect to these covenants.
On April 2, 1993, the Board of Directors authorized the Company to incur
additional, short-term borrowings in an amount of up to $1,750,000 from a
combination of its then-Chairman, other stockholders and unrelated private
investors. As of March 31, 1994, the Company had borrowed $1,737,500 from these
persons in order to finance the Company's working capital needs prior to
completion of the public offering in June 1994. As approved by the Board of
Directors, interest has been paid on such outstanding borrowings at a rate of 2%
per annum over FIBOT's prime rate. As an incentive for the Company's
then-Chairman, the other stockholders and the private investors to enter into
these loan arrangements, the Company issued such individuals warrants to
purchase 154,375 shares of the Company's common stock (exercisable until May
1996) at an exercise price equal to the per share public offering price
attributable to one share of common stock included in the public "unit"
offering, being $3.00 per share. In accordance with the terms of the underlying
loan
Page 11 of 15
agreements, $900,000 of such borrowings were repaid on or before December
31, 1994 resulting in an outstanding balance of $837,500 at that date. Net
borrowings of an additional $225,000 were made under the bridge loan program
during the first ten months of 1995 (without issuance of additional common stock
purchase warrants) and the noteholders who are presently owed the aggregate
balance outstanding of $1,062,500 have agreed to extend the maturity of their
notes to February 1, 1996. Further borrowings under the bridge loan facility are
likely to be made prior to completion of the proposed additional equity infusion
(see - "Capital Expenditures").
Prior to entering into the financing arrangement described in the preceding
paragraph, the Company had historically supplemented its funding needs with
borrowings from its former Chairman at FIBOT's prime rate. After giving effect
to the conversion of a portion of such indebtedness to preferred stock in
October 1992, the Company remained indebted to its former Chairman in the
principal amount of $250,000 pursuant to a promissory note payable on December
31, 1994 bearing interest at FIBOT's prime rate (the note was repaid on its due
date). Dividends of $2.00 per share on the outstanding preferred stock were
declared for the last two months of 1992 and paid in January 1993 and dividends
of $3.00 per share were declared for each of the first three quarters of 1993
and paid in April, July and October 1993, respectively. The Company passed the
quarterly dividends which were otherwise due for the fourth quarter of 1993 and
the first quarter of 1994 (amounting to $69,000 per quarter) but subsequently
declared such dividends and paid them in July 1994 when the regularly scheduled
dividend for the second quarter of 1994 in the amount of $3.00 per share was
paid. Quarterly dividends of $3.00 per share have been declared in each
subsequent quarter.
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings - None
Item 2 - Changes in Securities - None
Item 3 - Defaults upon Senior Securities
The Company has a revolving credit/term loan agreement with
First Interstate Bank of Texas, N.A. ("FIBOT"). The revolving
credit/term loan agreement contains certain financial covenants
related to maintenance of working capital (current assets, plus
unevaluated property costs anticipated to be recovered currently,
must exceed current liabilities) and stockholders' equity (must be
at least $2,300,000). The Company was not in compliance with such
covenants as of September 30, 1995, and has requested a waiver from
FIBOT with respect to these covenants. As of September 30, 1995, the
outstanding loan balance with FIBOT was $386,000. An additional
regularly scheduled payment of $21,000 plus interest was made in
October 1995 against this balance and the Company has remained
current on interest and principal payments as they have become due.
Item 4 - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on July
10, 1995. The items of business noticed and transacted at the
Meeting were: (i) the election of directors to serve until the next
annual meeting of stockholders; and (ii) the approval of the
Company's 1995 Stock Compensation Plan. A total of 4,058,648 shares
of the Company's Common Stock, par value $.01 per share, and 23,000
shares of Series A Preferred Stock, par value $.01 per share, were
issued and outstanding as of May 15, 1995, the record date for
determining the stockholders entitled to notice of, and the number
of shares entitled to vote at the Meeting as one class. The holders
of 3,781,850 shares of Common Stock
Page 12 of 15
and 23,000 shares of Series A Preferred Stock were represented at
the Meeting in person or by proxy. These shares were voted as
follows:
PRESENT SHARES
FOR WITHHELD NOT VOTING
-------- -------- --------------
Directors
T. W. Hoehn, Jr. 3,826,903 947 -0-
Walter L. Williams 3,826,903 947 -0-
John L. Graves 3,826,903 947 -0-
Joe C. Richardson, Jr. 3,826,903 947 -0-
T. W. Hoehn III 3,826,903 947 -0-
William F. Seagle 3,826,903 947 -0-
FOR AGAINST ABSTAIN
--------- ------- -------
1995 Stock Compensation Plan 3,814,206 7,954 5,690
As a result of voting at the Meeting, all six director nominees (all
of whom were incumbent directors) were elected and the 1995 Stock
Compensation Plan was approved.
Item 5 - Other Information - None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 - Promissory Note, dated November 1, 1995, made by
Texoil, Inc. to T. W. Hoehn, Jr. and Betty Joe
Hoehn Revocable Trust in original principal amount
of $900,000 (filed herewith).
10.2 - Promissory Note, dated November 1, 1995, made by
Texoil, Inc. to Joe C. Richardson, Jr. in original
principal amount of $12,500 (filed herewith).
10.3 - Promissory Note, dated November 1, 1995, made by
Texoil, Inc. to Betty Brown Williams in original
principal amount of $50,000 (filed herewith).
10.4 - Promissory Note, dated November 1, 1995, made by
Texoil, Inc. to Hart Brown in original principal
amount of $100,000 (filed herewith).
10.5 - 1995 Stock Compensation Plan (filed herewith).
10.6 - 1995 Stock Compensation Plan Participation
Agreement, dated April 1, 1995 between Texoil,
Inc. and Walter L. Williams (filed herewith).
10.7 - 1995 Stock Compensation Plan Participation
Agreement, dated April 1, 1995 between Texoil,
Inc. and John L. Graves (filed herewith).
10.8 - 1995 Stock Compensation Plan Participation
Agreement, dated April 1, 1995 between Texoil,
Inc. and Ruben Medrano (filed herewith).
Page 13 of 15
10.9 - 1995 Stock Compensation Plan Participation
Agreement, dated April 1, 1995 between Texoil,
Inc. and Lynn W. Graves (filed herewith).
10.10 - 1995 Stock Compensation Plan Participation
Agreement, dated April 1, 1995 between Texoil,
Inc. and Dennis A. Drake (filed herewith).
10.11 - 1995 Stock Compensation Plan Participation
Agreement, dated August 1, 1995 between Texoil,
Inc. and Warren M. Shimmerlik (filed herewith).
(b) Report on Form 8-K
A Form 8-K regarding the elections of Walter L. Williams as
Chairman and Chief Executive Officer and John L. Graves as
President and Chief Operating Officer was filed on July 10,
1995.
Page 14 of 15
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.
TEXOIL, INC.
Date: NOVEMBER 14, 1995 By: /s/ WALTER L. WILLIAMS
----------------- ------------------------
Walter L. Williams
Chairman and Chief Executive Officer