SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ending March 31, 1995 Commission File #0-5704
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MAYNARD OIL COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 75-1362284
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(State or other jurisdic- (IRS Employer
tion of incorporation) Identification No.)
8080 N. Central Expressway, Suite 660, Dallas, Texas 75206
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Registrant's telephone number, including area code: (214) 891-8880
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 10, 1995.
4,891,166 shares of common stock, par value $0.10
MAYNARD OIL COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Part I. Financial Information Page
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 3
Consolidated Statements of Operations
Three Months ended March 31, 1995 and 1994 4
Consolidated Statements of Shareholders' Equity
Three Months ended March 31, 1995 5
Consolidated Statements of Cash Flows
Three Months ended March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information and Reports on Form 8-K 11
Signatures 12
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31,
1995 1994
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(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,483,854 $ 5,836,389
Accounts receivable, trade 2,808,055 2,411,451
Recoverable income taxes 320,500 320,500
Inventories 233,021 261,959
Prepaid expenses and other current
assets 153,778 199,628
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Total current assets 9,999,208 9,029,927
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Property and equipment, at cost:
Oil and gas properties, successful
efforts method 92,190,611 81,863,254
Other property and equipment 779,739 670,110
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92,970,350 82,533,364
Less accumulated depreciation and
amortization (44,692,382) (43,492,197)
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Net property and equipment 48,277,968 39,041,167
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$58,277,176 $48,071,094
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of
long-term debt $ 2,781,250 $ 1,750,000
Accounts payable 2,794,700 2,611,209
Accrued expenses 766,640 590,138
Income taxes payable 50,000 --
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Total current liabilities 6,392,590 4,951,347
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Deferred income taxes 1,882,510 1,732,510
Long-term debt 13,281,250 5,250,000
Shareholders' equity:
Preferred stock of $.50 par value.
Authorized 1,000,000 shares; none
issued -- --
Common stock of $.10 par value.
Authorized 20,000,000 shares;
4,891,379 shares issued
and outstanding 489,138 489,138
Additional paid-in capital 18,725,538 18,725,538
Retained earnings 17,506,150 16,922,561
Total shareholders' equity 36,720,826 36,137,237
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Commitments $58,277,176 $48,071,094
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See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statement of Operations
Three Months ended March 31,
1995 1994
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Revenues:
Oil and gas sales royalties $4,263,731 $3,200,210
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Costs and expenses:
Operating expenses 1,795,475 1,206,318
Dry holes and abandonments 66,839 19,603
Lease rentals and seismic 10,015 109,334
General and administrative 250,330 453,161
Depreciation and amortization 1,455,907 1,402,084
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3,578,566 3,190,500
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Operating profit 685,165 9,710
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Other income (deductions):
Interest income 81,578 97,698
Interest expense (129,332) (40,915)
Gain on disposition of assets 146,178 6,232
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98,424 63,015
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Net income before income taxes 783,589 72,725
Income tax expense 200,000 26,000
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Net income $ 583,589 $ 46,725
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Weighted average number of common shares
outstanding 4,891,379 4,891,744
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Net income per common share $ .12 $ .01
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MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Three Months Ended March 31, 1995
(Unaudited)
Additional
Common Stock Paid-in
--------------- Capital Retained
Shares Amount Amount Earnings Total
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Balance at
December 31, 1994 4,891,379 $489,138 $18,725,538 $16,922,561 $36,137,237
Net income (loss) -- -- -- 583,589 583,589
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Balance at
March 31, 1995 4,891,379 $489,138 $18,725,538 $17,506,150 $36,720,826
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See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31,
1995 1994
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Cash flows from operating activities:
Net income $ 583,589 $ 46,725
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,455,907 1,402,084
Deferred income taxes 150,000 (36,000)
Dry holes and abandonments 66,839 19,603
Current year costs of dry holes and
abandonments (66,839) (19,603)
(Gain) on disposition of assets (146,178) (6,232)
(Increase) decrease in current assets:
Accounts receivable (396,604) 394,436
Inventories 28,938 (19,615)
Prepaid expenses and other current assets 43,850 (9,021)
Increase (decrease) in current liabilities:
Accounts payable 183,491 (669,058)
Accrued expenses 176,502 (14,700)
Income taxes payable 50,000 (438,000)
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Net cash provided by operating
activities 2,129,495 650,619
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Cash flows from investing activities:
Proceeds from disposition of assets 303,386 7,781
Additions to property and equipment (10,847,916) (734,608)
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Net cash used by investing
activities (10,544,530) (726,827)
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Cash flows from financing activities:
Proceeds from issuance of long-term debt 9,500,000 --
Principal payments on long-term debt (437,500) (500,000)
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Net cash provided (used) by
financing activities 9,062,500 (500,000)
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Net increase (decrease) in cash and cash
equivalents 647,465 (576,208)
Cash and cash equivalents at beginning of year 5,836,389 12,404,197
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Cash and cash equivalents at end of period $ 6,483,854 $11,827,989
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See Accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1995
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments, consisting of all
recurring adjustments, necessary to present fairly the Company's
financial position as of March 31, 1995 and December 31, 1994, the
results of operations for the three months ended March 31, 1995 and 1994
and changes in cash and cash equivalents for the three months ended
March 31, 1995 and 1994.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in the 1994 Annual Report to
Shareholders.
2. Net income for the three months ended March 31, 1995 is not necessarily
indicative of the results of the operations of Maynard Oil Company and
Subsidiaries for the year ending December 31, 1995, and is subject to
audit adjustments at year-end.
3. Net income (loss) per common share is based on the weighted average
number of shares outstanding in each period, which was 4,891,379 and
4,891,744 shares at March 31, 1995 and 1994, respectively. The
difference between primary and fully diluted earnings per share, which
assumes the exercise of stock options, is not significant.
4. Effective January 1, 1995, the Company purchased interests in
approximately 200 producing wells in eight West Texas counties from
Pennzoil Exploration and Production Company for a gross purchase price
of $10.5 million, which has been added to oil and gas properties on the
Consolidated Balance Sheet. This amount will be adjusted for the
results of operations from January 1, 1995 through March 29, 1995, the
closing date for this transaction. The funds to acquire these
properties were provided from the Company's cash resources to the extent
of $1 million and additional bank borrowings to the extent of $9.5
million (See Note 5 below).
5. Long-term debt at March 31, 1995 is summarized as follows:
March 31
1995
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Amended term note due in 20 equal quarterly installments
commencing July 1, 1995, plus one payment of $437,500
due April 1, 1995. Interest paid quarterly at varying
rates. Secured by certain oil and gas properties. $16,062,500
Less current installments 2,781,250
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Long-term debt $13,281,250
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Effective March 29, 1995, the Company amended its loan agreement with
Bank One, Texas to increase its outstanding loan from $6,562,500 to
$16,062,500 in connection with the acquisition of the Pennzoil
properties discussed in Note 4 above.
6. The provision for income taxes consists of the following (thousands of
dollars):
Three months Ended
March 31
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1995 1994
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Federal:
Current $ 50 $ 62
Deferred (benefit) 150 (36)
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$ 200 $ 26
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1994 COMPARED TO QUARTER ENDED MARCH 31, 1993
The Company reported net income of $583,589, or twelve cents per share,
on revenues of $4,263,731 for the quarter ended March 31, 1995 compared with
net income of $46,725, or one cent per share, on revenues of $3,200,210 for
the same quarter a year ago. Results for the first quarter of 1995 were
favorably impacted by operations on the waterflood properties acquired
December 22, 1994 in Carter County, Oklahoma. Oil volumes rose 63,252
barrels during this first quarter with 85% of the increase coming from these
new properties. Oil pricing increases also helped the current period
results; the average price received during the 1994 quarter was $12.87
compared to $16.70 per barrel during the 1995 quarter, a 30% increase, which
helped offset a 12% decline in gas volumes and a 27% drop in gas pricing.
Other categories which contributed to better results for the 1995 quarter
were fewer dollars spent on lease rentals and seismic expense, general and
administrative expense, and a gain from the disposition of certain assets.
General and administrative expenses are $202,831 less than the same period a
year ago, in spite of the addition of the new properties referred to above.
The Company's accounting procedure offsets the monies earned from being
operator of oil and gas properties against general and administrative
expenses. There were approximately 200 properties acquired in December on
which the Company is now the operator, thus lowering the overall general and
administrative costs. Additionally, the Company sold one of the non-operated
properties acquired in December and generated the gain reflected in the
current period.
Offsetting the favorable results discussed above were higher dry holes
and abandonments and increased interest expense. One dry hole was drilled
during first quarter 1995 compared to none the first quarter of last year.
Interest expense rose and interest income declined due to the financing of
the acquired properties referred to above and those discussed in Note 4 to
the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended its first quarter with working capital of approximately
$3,606,000 and a current ratio of 1.6 to 1, compared to working capital of
approximately $9,690,000 and a current ratio of 3.1 to 1 a year ago. The
decline in working capital between the current quarter and a year ago,
$6,084,000, was caused by the acquisition of producing properties for cash
and additional bank financing during the fourth quarter of 1994 and the first
quarter of 1995. The Company has completed two producing property
acquisitions totaling $20 million. The funds to acquire these properties
were provided from the company's cash resources to the extent of $5.5 million
and additional bank borrowings to the extent of $14.5 million. At March 31,
1995 the Company's total debt was $16,062,500. The Company believes that it
has sufficient cash being generated from operating activities or additional
borrowing capacity to fund its planned development and exploratory work.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Fourth Amendment to Loan Agreement, dated March 29, 1995
between Maynard Oil Company and Bank One, Texas, N.A., filed
herewith.
(b) On April 13, 1995, the Registrant filed its Current Report on
Form 8-K with the Securities and Exchange Commission reporting
the acquisition of certain producing oil and gas properties
which closed on March 29, 1995.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
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Glenn R. Moore
President
By: /s/ Kenneth W. Hatcher
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Kenneth W. Hatcher
Vice President of Finance
Dated: May 11, 1995