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 June 30, 1997 Commission File #0-5704
MAYNARD OIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 75-1362284
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
8080 N. Central Expressway, Suite 660, Dallas, Texas 75206
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 / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 6, 1997.
4,889,450 shares of common stock, par value $0.10
MAYNARD OIL COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Page
Part I. Financial Information
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
Consolidated Statements of Operations
Six Months and Three Months ended
June 30, 1997 and 1996
Consolidated Statements of Shareholders' Equity
Six Months ended June 30, 1997
Consolidated Statements of Cash Flows
Six Months ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
1997 1996
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $21,706,483 $21,817,447
Accounts receivable, trade 3,169,544 4,274,439
Other current assets 616,446 585,021
Total current assets 25,492,473 26,676,907
Property and equipment, at cost:
Oil and gas properties, successful
efforts method 105,056,883 103,223,604
Other property and equipment 565,663 540,736
105,622,546 103,764,340
Less accumulated depreciation and
amortization (52,642,411) (49,183,946)
Net property and equipment 52,980,135 54,580,394
$ 78,472,608 $ 81,257,301
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 5,000,000 $ 5,000,000
Accounts payable 3,036,058 3,592,404
Accrued expenses 2,083,366 1,710,681
Income taxes payable 105,234 3,431,476
Total current liabilities 10,224,658 13,734,561
Deferred income taxes 2,474,000 2,219,000
Long-term debt 13,750,000 16,250,000
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;
4,889,450 shares issued and
outstanding 488,945 488,945
Additional paid-in capital 18,831,138 18,831,138
Retained earnings 32,703,867 29,733,657
Total shareholders' equity 52,023,950 49,053,740
Contingencies and commitments $ 78,472,608 $ 81,257,301
See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
Six Months ended Three Months ended
June 30, June 30,
1997 1996 1997 1996
Revenues:
Oil and gas sales $13,976,736 $14,875,602 $ 6,207,323 $ 7,608,837
Interest and other 586,924 232,372 314,493 168,056
Gain on disposition of assets 57,292 481,244 55,260 480,583
14,620,952 15,589,218 6,577,076 8,257,476
Costs and expenses:
Operating expenses 4,952,188 5,026,735 2,500,111 2,555,494
Exploration, dry holes
and abandonments 390,760 185,667 316,512 84,919
General and administrative 661,406 521,406 344,208 264,919
Depreciation and amortization 3,492,265 4,728,290 1,792,265 2,302,516
Interest and other 684,123 914,486 332,597 460,448
10,180,742 11,376,584 5,285,693 5,668,296
Income before income taxes 4,440,210 4,212,634 1,291,383 2,589,180
Income tax expense 1,470,000 1,250,000 435,000 770,000
Net income $ 2,970,210 $ 2,962,634 $ 856,383 $1,819,180
Weighted average number of common
shares outstanding 4,889,450 4,889,851 4,889,450 4,889,747
Net income per common share $ .61 $ .61 $ .18 $ .37
See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Six Months Ended June 30, 1997
(Unaudited)
Additional
Common Stock Paid-in
Capital Retained
Shares Amount Amount Earnings Total
Balance at December 31, 1996 4,889,450 $488,945 $18,831,138 $29,733,657 $49,053,740
Net income -- -- -- 2,970,210 2,970,210
Balance at June 30, 1997 4,889,450 $488,945 $18,831,138 $32,703,867 $52,023,950
See accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30,
1997 1996
Cash flows from operating activities:
Net income $2,970,210 $2,962,634
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,492,265 4,728,290
Deferred income taxes 255,000 (200,000)
Exploration, dry holes and abandonments 390,760 170,349
Current year costs of dry holes and
abandonments (390,760) (80,641)
(Gain) on disposition of assets (57,292) (481,244)
(Increase) decrease in current assets:
Accounts receivable 1,104,895 (1,205,041)
Prepaid expenses and other current assets (31,425) 69,898
Increase (decrease) in current liabilities:
Accounts payable (556,346) 414,267
Accrued expenses 372,685 321,298
Income taxes payable (3,326,239) 570,901
Net cash provided by
operating activities 4,223,753 7,270,711
Cash flows from investing activities:
Proceeds from disposition of assets 65,662 1,393,989
Additions to property and equipment (1,900,379) (1,068,473)
Net cash provided (used) by
investing activities (1,834,717) 325,516
Cash flows from financing activities:
Principal payments on long-term debt (2,500,000) (2,312,500)
Purchase of common stock -- (1,891)
Net cash provided (used) by
financing activities (2,500,000) (2,314,391)
Net increase (decrease) in cash and
cash equivalents (110,964) 5,281,836
Cash and cash equivalents at beginning of year 21,817,447 6,138,903
Cash and cash equivalents at end of period $ 21,706,483 $ 11,420,739
See Accompanying Notes to Consolidated Financial Statements.
MAYNARD OIL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997
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 June 30, 1997 and December 31, 1996, the results of operations for
the six months ended June 30, 1997 and 1996 and changes in cash and cash
equivalents for the six months ended June 30, 1997 and 1996.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements in the 1996 Annual Report to
Shareholders.
2. Net income for the six months ended June 30, 1997 is not necessarily
indicative of the results of the operations of Maynard Oil Company and
Subsidiaries for the year ending December 31, 1997, and is subject to audit
adjustments at year-end.
3. Net income per common share is based on the weighted average number of
shares outstanding in each period, which was 4,889,450 and 4,889,851 shares
at June 30, 1997 and 1996, respectively.
4. The provision for income taxes consists of the following (thousands of
dollars):
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
Current $1,215 $1, 450 $ 315 $1,050
Deferred (benefit) 255 (200) 120 (280)
$1,470 $ 1,250 $ 435 $ 770
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
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The Company reported net income of $2,970,210, or sixty-one cents per
share, on revenues of $14,620,952 for the six months ended June 30, 1997
compared with net income of $2,962,634, or sixty-one cents per share, on
revenues of $15,589,218 for the same period a year ago. Earnings for the two
six month periods were similar in amount, but category comparisons reveal broad
variations. Oil and gas revenues declined 6% due to the loss of hydrocarbon
volumes after last year s property sales. Oil volumes fell 11% and gas volumes
were 29% lower than a year ago. Product pricing increases helped offset the
production volumes lost; the average price received during the current six
months was $20.59 per barrel of oil sold and $2.72 per thousand cubic feet of
gas sold (mcf). These amounts compare to $19.72 per barrel and $1.96 per mcf in
the same six month period a year ago, a 4% and 39% increase, respectively.
Interest income more than doubled at $586,924 due to the build up of cash
balances resulting from the prior year property dispositions and cash generated
from continuing operating activities. However, this interest earned was not
sufficient to offset the gains that were recognized from the property sales
during the prior year.
Exploration costs, which include dry holes and abandonments, increased
$205,093, between the two six month periods. During the 1996 period, the
Company drilled a dry hole and incurred approximately $15,000 on its three-
dimensional seismic programs, while the current six month period includes the
costs associated with a dry hole plus approximately $216,000 in three-
dimensional seismic work.
General and administrative expenses rose almost 27% over the prior period
reflecting the loss of overhead reimbursement charges on properties which were
sold last year, as well as the accrual of expense related to employee phantom
stock options.
Depreciation and amortization expense declined 26% between the first six
months of 1996 and 1997 due to lower production volumes.
Interest expense decreased over 25% between the prior period and the
current six months because of scheduled debt payments.
Quarter Ended June 30, 1997 Compared with Quarter Ended June 30, 1996
- ---------------------------------------------------------------------
For the quarter ended June 30, 1997, the Company earned $856,383, or
eighteen cents per share, compared with net income of $1,819,180, or thirty-
seven cents per share, for the same quarter a year ago. The current quarter s
results declined because of reduced oil and gas sales related to the loss of
production volumes attributable to last year s property sales, reduced oil
pricing during the second quarter of 1997, and the gains from property sales
which were posted a year ago, but were nonrecurring during the current quarter.
Liquidity and Capital Resources
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The Company ended its first six months of 1997 with working capital of
approximately $15,268,000 compared to working capital of approximately
$4,553,000 a year ago. The improvement in working capital is attributable to
the proceeds received from last year s property sales and to the fact that the
Company has allowed its cash balance to grow in anticipation of an additional
acquisition of producing properties. At June 30, 1997 the Company's total debt
was $18,750,000, which was utilized to finance the acquisition of oil and gas
properties over the last year and a half. 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 or
further property additions.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on May 21, 1997.
(b) Not applicable.
(c) 1. Set forth below is the tabulation of the votes on each
nominee for election of a director:
WITHHOLD
NAME FOR AUTHORITY
Ralph E. Graham 4,650,296 3,255
Robert B. McDermott 4,650,296 3,255
James G. Maynard 4,650,296 3,255
2. Not applicable.
ITEM 6. Exhibit and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
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
-------------------------------
Glenn R. Moore
President
By: /s/ Kenneth W. Hatcher
-------------------------------
Kenneth W. Hatcher
Vice President of Finance
Dated: August 14, 1997