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 March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT of 1934
For the transition period from to
Commission File No. 2-72232
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION
(Exact name of small business issuer as specified in its charter)
COMMONWEALTH OF VIRGINIA 54-1082057
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5990 Greenwood Plaza Blvd., Suite 127
Greenwood Village, Colorado 80111-4708
(Address of principal executive offices)
Issuer's telephone number: (303) 773-6016
NONE
(Former name, former address and former fiscal year, if changed
since last report.)
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
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date:
Common Stock, $.10 par value 18,844,245
Class Outstanding at April 30, 1996
Transitional Small Business Disclosure Format: Yes No X
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial statements
Consolidated Balance Sheet....................... 3
Consolidated Statement of Operations............. 4
Consolidated Statement of Cash Flows............. 5
Notes to Consolidated Financial Statements....... 6
Item 2. - Management's Discussion and Analysis of
Financial Condition and Result of
Operations........................... 7
PART II. Other Information............................ 9
Signature.................................... 10
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31,
1996 December 31,
(Unaudited) 1995
-----------------------
ASSETS (In thousands)
CURRENT ASSETS
Cash......................................... $ 540 $ 439
Certificates of deposit...................... 314 311
Receivables, net of allowance for doubtful
accounts of $234 in 1996 and 1995........... 653 274
Prepaid expenses and other current assets.... 16 146
------- -------
Total current assets..................... 1,523 1,170
------- -------
OIL AND GAS PROPERTIES, at cost (accounted
for using the successful efforts method)
Proved oil and gas properties............... 9,496 9,472
Undeveloped leaseholds...................... 65 65
Pipeline equipment.......................... 1,336 1,304
Equipment inventory......................... 39 37
------- -------
10,936 10,878
Less accumulated depreciation, depletion,
amortization and impairment................ ( 9,644) ( 9,603)
------- -------
1,292 1,275
Properties held under installment sales, net
of accumulated depreciation, depletion and
amortization of $1,019 and 961, respectively 1,191 1,265
------- -------
2,483 2,540
------- -------
OTHER ASSETS.................................. 77 73
------- -------
4,083 $3,783
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable................................ $ 17 $ 17
Accounts payable and accrued expenses........ 166 115
------- -------
Total current liabilities................ 183 132
------- -------
NOTES PAYABLE................................. 38 40
------- -------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Preferred stock, $10.00 par value, 4,000,000
shares authorized, none issued or outstanding
Common stock, $.10 par value, 40,000,000
shares authorized, 18,844,245 shares issued
and outstanding............................. 1,884 1,884
Additional paid-in capital................... 29,242 29,242
Accumulated deficit.......................... (27,219) (27,470)
Notes receivable - officers.................. (45) (45)
------- -------
3,862 3,611
------- -------
$4,083 $3,783
======= =======
<FN>
The accompanying notes are an integral part
of the consolidated financial statements.
</FN>
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months
Ended March 31,
------------------
1996 1995
---- ----
(In thousands, except
per share amounts)
REVENUES
Oil and gas sales........................ $ 210 $ 147
Gas transmission sales................... 213 236
Income from pipeline relocation.......... 498 -
Installment sales income (loss), net..... (2) 28
Interest and other income................ 5 4
------ ------
924 415
------ ------
EXPENSES
Production costs......................... 52 61
Cost of gas transmission................. 191 272
Cost of pipeline relocation.............. 258 -
Depletion, depreciation and amortization. 47 49
General and administrative............... 125 180
------ ------
673 562
------ ------
NET INCOME (LOSS)......................... $ 251 $ (147)
====== ======
NET INCOME (LOSS) PER SHARE............... $ .01 $ (.01)
====== ======
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING.............................. 18,844 18,844
====== ======
<FN>
The accompanying notes are an integral part
of the consolidated financial statements.
</FN>
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
------------------
1996 1995
---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................... $ 251 $ (147)
Adjustments to reconcile net income (loss)
to net cash provided by (used for) operating
activities:
(Increase) decrease in accounts receivable. (379) 2
Decrease in other current assets.......... 130 6
Depletion, depreciation and amortization.. 47 49
Depletion, depreciation and amortization
charged against installment sales income
(loss), net.............................. 58 77
Increase (decrease) in accounts payable
and accrued expenses..................... 51 (9)
------ ------
Net cash provided by (used for)
operating activities................... 158 (22)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in certificates of deposit......... (3) -
Additions to oil and gas properties......... (42) (100)
Increase in other assets.................... (10) -
------ ------
Net cash used for investing activities.. (55) (100)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of debt.......................... (2) -
INCREASE (DECREASE) IN CASH.................. 101 (122)
CASH AT BEGINNING OF PERIOD.................. 439 272
------ ------
CASH AT END OF PERIOD........................ $ 540 $ 150
====== ======
<FN>
The accompanying notes are an integral part
of the consolidated financial statements.
</FN>
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The interim financial data are unaudited; however, in the opinion of
Great Eastern Energy and Development Corporation and Subsidiaries ("Great
Eastern" or the "Company"), the interim data include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
statement of the results for the interim periods. These financial
statements should be read in conjunction with Great Eastern's December 31,
1995 audited consolidated financial statements and notes thereto included
in Form 10-KSB.
The consolidated financial statements include the accounts of Great
Eastern and its wholly-owned subsidiaries, Patton Oil Co., Zoandra
Petroleum, Inc. and Sycamore Valley Gathering, Ltd. All significant
intercompany balances and transactions have been eliminated in
consolidation.
NOTE 2 - RECLASSIFICATIONS
Certain reclassifications were reflected in the December 31, 1995
balance sheet to conform to the 1996 presentation.
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
First Quarter 1996 Compared to First Quarter 1995. The Company's
first quarter of fiscal 1996 operations reflected net income of $251,000 as
compared to net loss of $147,000 for the corresponding quarter of fiscal
1995. Increased sales volumes from oil properties under waterflood have
resulted in increased profits from oil and gas operations of $158,000 in
the first quarter of fiscal 1996 as compared to $86,000 for the
corresponding quarter of fiscal 1995.
A decrease in production volumes from coalbed methane gas wells,
partially offset by an increase in product prices, has resulted in a
decline in gas transmission sales. The decline in gas transmission sales
volumes resulted in a corresponding reduction in the cost of gas, and the
effect of cost containment policies was a reduction to operating expenses.
Natural gas transmission operations reflected a profit of $22,000 for the
first quarter of fiscal 1996 as compared to a loss of $36,000 for the
corresponding quarter of fiscal 1995.
Management entered into a fixed-price contract whereby the Kansas
Department of Transportation agreed to pay the Company $498,000 to relocate
certain portions of its pipeline. Construction was completed during the
first quarter of fiscal 1996 at an aggregate cost of $258,000, and
resulting in a profit of $240,000 from the arrangement.
A loss from installment sales of $2,000, net of depreciation,
depletion and amortization of $58,000, is reflected in the first quarter of
fiscal 1996 consolidated statement of operations as compared to installment
sales income of $28,000, net of depreciation, depletion and amortization of
$77,000 for the corresponding quarter of fiscal 1995. The decrease in
installment sales income resulted from a decrease in production volumes
from coalbed methane gas wells.
As a part of management's continued efforts to contain costs, general
and administrative costs were reduced by $55,000 to $125,000 during the
first quarter of fiscal 1996 as compared to $180,000 for the corresponding
quarter of fiscal 1995. The principal reductions were for legal,
consulting and payroll expenses.
No provision for income taxes was reflected in the first quarter 1996
consolidated statement of operations, as the Company has adequate net
operating loss carryforwards available to offset taxable income.
Current Operations
Since January 1, 1996, there have been no exploratory or developmental
drilling activities.
Liquidity and Capital Resources
Working Capital. The Company had working capital of $1,340,000 and
$1,038,000 at March 31, 1996 and December 31, 1995, respectively. The
Company has no bank debt and no oil and gas properties are pledged as
collateral. Management believes that the Company's liquidity is adequate
to meet operating activities for fiscal 1996. Oil and gas development
activities, if any, will be funded solely from excess cash generated from
operations and from proceeds generated from the installment sale of certain
southeastern Kansas coalbed methane gas properties.
Future Operations. Some selected developmental drilling for oil and
gas may be conducted in Kansas in 1996. No exploratory wells are scheduled
to be drilled in 1996.
Other. On September 26, 1994, the Company retained the services of
Kirkpatrick Energy Associates, Inc. ("Kirkpatrick"), an investment banking
firm, to evaluate options available to the Company to maximize shareholder
value, including a possible sale of the Company. Except as to certain
identified companies considered to be active and viable candidates for the
purchase of, or merger with, Great Eastern, Kirkpatrick's services were
terminated October 30, 1995.
Except as noted above, management has assumed sole responsibility for
such efforts heretofore. There is no assurance that any action, including
a possible sale, will occur.
PART II - OTHER INFORMATION
Items 1 through 6 are not applicable.
SIGNATURES
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.
GREAT EASTERN ENERGY AND
DEVELOPMENT CORPORATION
-------------------------
(Registrant)
Date: May 10, 1996 By: /s/DONALD G. JUMPER
------------------------
Donald G. Jumper
Chief Executive Officer, President, Chief
Financial and Accounting Officer and
Director