UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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, 2005
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ____________________
Commission file number 1-5507
MAGELLAN PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-0842255
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Columbus Boulevard, Hartford, CT 06106
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(860) 293-2006
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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. [X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
The number of shares outstanding of the issuer's single class of common
stock as of MAY 13, 2005 was 25,783,243
MAGELLAN PETROLEUM CORPORATION
FORM 10-Q
MARCH 31, 2005
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
ITEM 1 Financial Statements (unaudited)
Condensed consolidated balance sheets at March 31, 2005
and June 30, 2004 3
Condensed consolidated statements of income (loss) for the three
and nine months ended March 31, 2005 and 2004 4
Condensed consolidated statements of cash flows for the
nine months ended March 31, 2005 and 2004 5
Notes to condensed consolidated financial statements 6
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
ITEM 3 Quantitative and Qualitative Disclosure About Market Risk 19
ITEM 4 Disclosure Controls and Procedures 19
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings 21
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 21
ITEM 6 Exhibits 21
Signatures 22
Certifications 23
2
MAGELLAN PETROLEUM CORPORATION
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
MARCH 31 JUNE 30,
2005 2004
---- ----
(UNAUDITED) (NOTE)
ASSETS
Current assets:
Cash and cash equivalents $ 20,057,264 $ 20,406,620
Accounts receivable-Trade 4,239,190 2,931,609
Accounts receivable-Working Interest Partners 460,094 1,044,619
Marketable securities 2,591,006 2,584,296
Inventories 658,900 595,948
Other assets 471,619 318,141
------------ ------------
Total current assets 28,478,073 27,881,233
------------ ------------
Marketable securities 890,976 592,138
Property and equipment:
Oil and gas properties (successful efforts method) 80,939,782 69,970,134
Land, buildings and equipment 2,565,852 2,264,004
Field equipment 1,638,426 1,482,639
------------ ------------
85,144,060 73,716,777
Less accumulated depletion, depreciation and amortization (59,804,105) (49,295,770)
------------ ------------
Net property and equipment 25,339,955 24,421,007
------------ ------------
Total assets $ 54,709,004 $ 52,894,378
============ ============
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,667,719 $ 4,367,305
Accrued liabilities 1,718,498 1,550,045
Income taxes payable 166,252 267,645
------------ ------------
Total current liabilities 4,552,469 6,184,995
------------ ------------
Long term liabilities:
Deferred income taxes 653,060 403,261
Asset retirement obligations 5,634,996 4,852,416
------------ ------------
Total long term liabilities 6,288,056 5,255,677
------------ ------------
Minority interests 17,621,955 16,533,491
Commitments
Stockholders' equity:
Common stock, par value $.01 per share:
Authorized 200,000,000 shares, Outstanding 25,783,243 257,832 257,832
Capital in excess of par value 44,402,182 44,402,182
------------ ------------
Total capital 44,660,014 44,660,014
Accumulated deficit (15,521,273) (15,248,422)
Accumulated other comprehensive loss (2,892,217) (4,491,377)
------------ ------------
Total stockholders' equity 26,246,524 24,920,215
------------ ------------
Total liabilities, minority interests and stockholders' equity $ 54,709,004 $ 52,894,378
============ ============
Note: The balance sheet at June 30, 2004 has been derived from the audited
consolidated financial statements at that date.
See accompanying notes.
3
MAGELLAN PETROLEUM CORPORATION
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
REVENUES:
Oil sales $ 2,018,033 $ 1,362,321 $ 5,419,392 $ 3,636,534
Gas sales 3,426,625 3,013,700 9,251,165 9,931,831
Other production related revenues 551,330 463,274 1,356,971 1,265,893
------------ ------------ ------------ ------------
Total revenues 5,995,988 4,839,295 16,027,528 14,834,258
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Production costs 1,477,850 1,277,313 4,321,781 4,055,062
Exploration and dry hole costs 1,042,310 680,111 3,095,562 2,585,043
Salaries and employee benefits 604,664 702,161 1,924,242 1.982,767
Depletion, depreciation and amortization 1,918,223 1,581,332 5,372,640 4,324,933
Auditing, accounting and legal services 81,180 89,470 363,088 329,875
Accretion expense 103,583 102,629 299,234 273,093
Shareholder communications 46,989 35,149 201,841 155,631
Other administrative expenses 323,715 131,068 657,797 427,000
------------ ------------ ------------ ------------
Total costs and expenses 5,598,514 4,599,233 16,236,185 14,133,404
------------ ------------ ------------ ------------
Operating income (loss) 397,474 240,062 (208,657) 700,854
Interest income 102,765 270,331 835,452 847,765
------------ ------------ ------------ ------------
Income before income taxes and minority interests 500,239 510,393 626,795 1,548,619
Income tax provision (101,967) (114,523) (259,764) (463,391)
------------ ------------ ------------ ------------
Income before minority interests 398,272 395,870 367,031 1,085,228
Minority interests (293,732) (254,052) (634,025) (381,758)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 104,540 $ 141,818 $ (266,994) $ 703,470
============ ============ ============ ============
Average number of shares outstanding
Basic 25,783,243 25,741,343 25,783,243 25,602,693
============ ============ ============ ============
Diluted 25,783,448 25,894,912 25,783,243 25,640,557
============ ============ ============ ============
NET INCOME (LOSS) PER SHARE (BASIC AND DILUTED) $ -- $ .01 $ (.01) $ .03
============ ============ ============ ============
See accompanying notes.
4
MAGELLAN PETROLEUM CORPORATION
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
NINE MONTHS ENDED
MARCH 31
--------
2005 2004
---- ----
OPERATING ACTIVITIES:
Net income (loss) $ (266,994) $ 703,470
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization 5,372,640 4,324,933
Accretion expense 299,234 273,093
Deferred income taxes 208,666 1,474
Minority interests 634,025 381,758
Exploration and dry hole costs 2,167,581 2,275,557
Increase (decrease) in operating assets and liabilities:
Accounts and notes receivable (298,599) 533,946
Other assets (153,479) (219,469)
Inventories 660 (253,354)
Accounts payable and accrued liabilities (2,045,251) (1,343,239)
Income taxes payable and receivable (114,062) (7,960)
------------ ------------
Net cash provided by operating activities 5,804,421 6,670,209
------------ ------------
INVESTING ACTIVITIES
Additions to property and equipment (4,477,488) (4,792,966)
Oil and gas exploration activities (2,167,581) (2,275,557)
Marketable securities matured (4,189,500) (5,208,687)
Marketable securities purchased 3,874,988 4,513,896
------------ ------------
Net cash used in investing activities (6,959,581) (7,763,314)
------------ ------------
FINANCING ACTIVITIES:
Dividends to MPAL minority shareholders (821,732) (744,971)
------------ ------------
Net cash used in financing activities (821,732) (744,971)
------------ ------------
Effect of exchange rate changes on cash and cash equivalents 1,627,536 1,675,412
------------ ------------
Net increase (decrease) in cash and cash equivalents (349,356) (162,664)
Cash and cash equivalents at beginning of year 20,406,620 20,041,464
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20,057,264 $ 19,878,800
============ ============
See accompanying notes.
5
Note 1. Basis of Presentation
Magellan Petroleum Corporation (the Company or MPC) is engaged in the
sale of oil and gas and the exploration for and development of oil and gas
reserves. At March 31, 2005, MPC's principal asset was a 55% equity interest in
its subsidiary, Magellan Petroleum Australia Limited (MPAL), which has one class
of stock that is publicly held and traded in Australia. MPAL's major assets are
two petroleum production leases covering the Mereenie oil and gas field (35%
working interest) and one petroleum production lease covering the Palm Valley
gas field (52% working interest). Both fields are located in the Amadeus Basin
in the Northern Territory of Australia. MPC has a direct 2.67% carried interest
in the Kotaneelee gas field in the Yukon Territory of Canada.
The accompanying unaudited condensed consolidated financial statements
include the accounts of MPC and MPAL and have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All such adjustments are
of a normal recurring nature. Operating results for the three and nine month
periods ended March 31, 2005 are not necessarily indicative of the results that
may be expected for the year ending June 30, 2005. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended June 30, 2004. All
amounts presented are in United States dollars, unless otherwise noted.
Certain reclassifications have been made to previously disclosed amounts to
conform to current period reporting.
Note 2. Kotaneelee Litigation
During September 2003, the litigants in the Kotaneelee litigation
entered into a settlement agreement. During October 2003, the Company received
approximately $851,000, after Canadian withholding taxes and reimbursement of
certain past legal costs. The plaintiffs agreed to terminate all litigation
against the defendants related to the field, including the claim that the
defendants failed to fully develop the field. Since each party agreed to bear
its own legal costs, there were no taxable costs assessed against any of the
parties. The components of the settlement payment, which was recorded in
September 2003, were as follows:
Gas sales $1,135,000
Interest income 102,000
Canadian withholding taxes (386,000)
----------
Total $ 851,000
==========
Note 3. Capital and stock options
MPC through its stock repurchase plan may purchase up to one million
shares of its common stock in the open market. Through March 31, 2005, MPC had
purchased 680,850 of its shares at a cost of approximately $686,000, all of
which shares have been cancelled. No purchases of shares under the repurchase
plan were made by MPC during the three and nine month periods ended March 31,
2005.
On July 10, 2003, a subsidiary of Origin Energy, Sagasco Amadeus Pty.
Limited, agreed to exchange 1.2 million shares of MPAL for 1.3 million shares of
the Company's common stock. The exchange was completed on September 2, 2003. The
fair value of the 1,300,000 shares on July 10, 2003 was $1,508,000, based on the
closing price of the Company's common stock on the Nasdaq SmallCap market on
that date.
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB No. 25) and related
interpretations in accounting for its stock options because the alternative fair
value accounting provided under FASB Statement No. 123, "Accounting for Stock
Based Compensation," as amended by SFAS 148 "Accounting for Stock-based
Compensation - Transition and Disclosure" requires use of option valuation
models to value stock options. Under APB No. 25, because the exercise price of
the Company's stock options equals the market price of the underlying stock on
the date of grant, no compensation expense is recognized.
EXPIRATION NUMBER OF
OPTIONS OUTSTANDING DATES SHARES EXERCISE PRICES ($)
------------------- ----- ------ -------------------
June 30, 2002 871,000 1.28-1.57
Granted Jan. 2008 50,000 .85
--------
6
June 30, 2003 921,000 .85-1.57
Expired (126,000) 1.57
Cancelled (25,000) .85
Exercised (175,000) .85-1.28
--------
June 30, 2004 595,000 1.28
Granted July 1, 2014 30,000 1.45
--------
December 31, 2004 625,000 ($1.29 weighted average)
Expired (595,000) 1.28
--------
March 31, 2005 30,000 1.45
========
7
SUMMARY OF OPTIONS OUTSTANDING AT March 31, 2005
EXPIRATION EXERCISE
DATES TOTAL VESTED PRICES ($)
----- ----- ------ ----------
Granted 2004 July 2014 30,000 -- 1.45
-------
Total 30,000
=======
OPTIONS RESERVED FOR FUTURE GRANTS 795,000
=======
Option valuation models require the input of highly subjective
assumptions including the expected stock price volatility. The assumptions used
in the 2004 valuation model were: risk free interest rate - 4.95%, expected life
- - 10 years, expected volatility - .518, expected dividend - 0. These models
assumes that the options will vest ratably over three years.
Pro forma information regarding net income and earnings per share is
required by Statement 148, and has been determined as if the Company had
accounted for its stock options under the fair value method of Statement 123.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model. The Company's pro forma information follows:
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2005 MARCH 31, 2004
-------------- --------------
Net income as reported $ 104,540 $ -- $ 141,818 $.01
Stock option expense (4,500) -- -- --
--------- ---- --------- ----
Pro forma net (loss) income $(100,040) $ -- $ 141,818 $.01
========= ==== ========= ====
NINE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 2005 MARCH 31, 2004
-------------- --------------
Net (loss) income as reported $(266,994) $(.01) $ 703,470 $.03
Stock option expense (13,500) -- -- --
--------- ----- --------- ----
Pro forma net (loss) income $(280,494) $(.01) $ 703,470 $.03
========= ===== ========= ====
Note 4. Depletion, depreciation and amortization (DD&A)
The operator of the Mereenie field has implemented an extensive program
for additional drilling and capital improvements to meet gas sales' contract
requirements. During 2004, the Mereenie Producers installed additional
compression equipment in the field at a cost of $13.1 million (MPAL share $4.6
million) designed to increase field deliverability and partially meet certain
gas contract requirements. During the last quarter of calendar 2004, two gas
wells necessary to improve field deliverability and meet gas contractual
requirements were drilled and completed. The wells were suspended pending
installation of surface and gas gathering facilities. They were connected to the
central treatment plant in late February 2005 and are currently on production.
8
Note 5. Comprehensive income (loss)
Total comprehensive income (loss) during the three and nine month
periods ended March 31, 2005 and 2004 is as follows:
ACCUMULATED OTHER
THREE MONTHS ENDED NINE MONTHS ENDED COMPREHENSIVE
MARCH 31, 2005 MARCH 31, 2005 LOSS
-------------- -------------- ----
2005 2004 2005 2004
Balance at June 30, 2004 $(4,491,377)
Net income (loss) $ 104,540 $ 141,818 $ (266,994) $ 703,470
Foreign currency translation
Adjustments (870,575) 429,122 1,599,160 3,162,263 1,599,160
----------- ----------- ----------- ----------- ------------
Total comprehensive income (loss) $ (766,035) $ 570,940 $ 1,332,166 $ 3,865,733
=========== =========== =========== ===========
Balance at March 31,2005 $(2,892,217)
============
Note 6. Investment in MPAL
During the first quarter of fiscal 2005, MPC invested $29,466 in 31,606
shares of MPAL. This increased MPC's interest in MPAL from 55.06% to 55.13%. The
difference between the acquisition cost of the MPAL shares and the book value of
the additional MPAL interest acquired was allocated to oil and gas properties.
Note 7. Earnings per share
Earnings per common share are based upon the weighted average number of
common and common equivalent shares outstanding during the period. The Company's
basic and diluted calculations of EPS are the same for the three month and nine
month periods ended March 31, 2005 and 2004. The potential dilution items are
the outstanding stock options disclosed in Note 3.
Note 8. Segment Information
The Company has two reportable segments, MPC and its subsidiary, MPAL.
Each company is in the same business; MPAL is also a publicly held company with
its shares traded on the Australian Stock Exchange. MPAL issues separate audited
consolidated financial statements and operates independently of MPC. Segment
information (in thousands) for the Company's two operating segments is as
follows:
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Revenues:
MPC $ 68 $ 119 $ 226 $ 1,445
MPAL 5,928 4,720 15,802 13,389
-------- -------- -------- --------
Total consolidated revenues $ 5,996 $ 4,839 $ 16,028 $ 14,834
======== ======== ======== ========
Net income (loss):
MPC $ (211) $ (169) $ (900) $ 237
MPAL 316 311 633 466
-------- -------- -------- --------
Consolidated net income (loss) $ 105 $ 142 $ (267) $ 703
======== ======== ======== ========
Note 9. Exploration and Dry Hole Costs
The 2005 and 2004 costs related primarily to the exploration work being
performed on MPAL's properties. The dry holes were drilled on MPAL properties in
Australia and New Zealand.
Note 10. Asset Retirement Obligations
A reconciliation of the Company's asset retirement obligations for the
nine months ended March 31, 2005 is as follows:
Balance at July 1, 2004 $4,852,000
Liabilities incurred
Liabilities settled
Accretion expense 299,000
Revisions to estimate
Exchange effect 484,000
----------
Balance at March 31, 2005 $5,635,000
==========
9
Note 11. Pension plan costs
On August 31, 2004, the MPAL board formally terminated MPAL's defined
benefit plan. The termination was effective as of June 30, 2004 and a settlement
and curtailment loss of $1,237,425 was recognized during the fourth quarter of
2004. All amounts have been paid out. Therefore, there were no pension costs
during the three and nine month periods ended March 31, 2005. Pension costs for
the three and nine month periods ended March 31, 2004 were approximately $43,000
and $27,000, respectively.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby identified as, forward looking statements for
purposes of the "Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995. The Company cautions readers that forward looking statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those indicated in the forward looking statements.
Among these risks and uncertainties are pricing and production levels from the
properties in which the Company has interests, and the extent of the recoverable
reserves at those properties and changes in foreign currency exchange notes.
In addition, the Company has a large number of exploration permits and faces the
risk that any wells drilled may fail to encounter hydrocarbons in commercially
recoverable quantities. The Company undertakes no obligation to update or revise
forward-looking statements, whether as a result of new information, future
events, or otherwise.
CRITICAL ACCOUNTING POLICIES
Oil and Gas Properties
The Company follows the successful efforts method of accounting for its
oil and gas operations. Under this method, the costs of successful wells,
development dry holes and productive leases are capitalized and amortized on a
units-of-production basis over the life of the related reserves. Cost centers
for amortization purposes are determined on a field-by-field basis. The Company
records its proportionate share in joint venture operations in the respective
classifications of assets, liabilities and expenses. Unproved properties with
significant acquisition costs are periodically assessed for impairment in value,
with any impairment charged to expense. The successful efforts method also
imposes limitations on the carrying or book value of proved oil and gas
properties. Oil and gas properties are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amounts may not be
recoverable. The Company estimates the future undiscounted cash flows from the
affected properties to determine the recoverability of carrying amounts. In
general, analyses are based on proved developed reserves, except in
circumstances where it is probable that additional resources will be developed
and contribute to cash flows in the future.
Exploratory drilling costs are initially capitalized pending
determination of proved reserves but are charged to expense if no proved
reserves are found. Other exploration costs, including geological and
geophysical expenses, leasehold expiration costs and delay rentals, are expensed
as incurred. Because the Company follows the successful efforts method of
accounting, the results of operations may vary materially from quarter to
quarter. An active exploration program may result in greater exploration and dry
hole costs.
Asset Retirement Obligations
Effective July 1, 2002, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") 143, "Accounting for Asset Retirement
Obligations." SFAS 143 requires legal obligations associated with the retirement
of long-lived assets to be recognized at their fair value at the time that the
obligations are incurred.
Upon initial recognition of a liability, that cost is capitalized as
part of the related long-lived asset (oil & gas properties) and amortized on a
units-of-production basis over the life of the related reserves. Accretion
expense in connection with the discounted liability is recognized over the
remaining life of the related reserves.
The estimated liability is based on the future estimated cost of land
reclamation, plugging the existing oil and gas wells and removing the surface
facilities equipment in the Palm Valley, Mereenie, Kotaneelee, Nockatunga and
Dingo fields. The liability is a discounted liability using a credit-adjusted
risk-free rate on the date such liabilities are determined. A market risk
premium was excluded from the estimate of asset retirement obligations because
the amount was not capable of being estimated. Revisions to the
10
liability could occur due to changes in the estimates of these costs,
acquisition of additional properties and as new wells are drilled.
Estimates of future asset retirement obligations include significant
management judgment and are based on projected future retirement costs. Such
costs could differ significantly when they are incurred.
Revenue Recognition
The Company recognizes oil and gas revenue from its interests in
producing wells as oil and gas is produced and sold from those wells. Oil and
gas sold is not significantly different from the Company's share of production.
Revenues from the purchase, sale and transportation of natural gas are
recognized upon completion of the sale and when transported volumes are
delivered. Shipping and handling costs in connection with such deliveries are
included in production costs. Revenue under carried interest agreements is
recorded in the period when the net proceeds become receivable, measurable and
collection is reasonably assured. The time the net revenues become receivable
and collection is reasonably assured depends on the terms and conditions of the
relevant agreements and the practices followed by the operator. As a result, net
revenues may lag the production month by one or more months.
Use of Estimates
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Estimates are particularly
sensitive in the calculation of proven reserves, depletion, depreciation and
amortization and the amount of the Company's asset retirement obligations.
Actual results could differ from those estimates.
New Accounting Standards
In December 2004, the Financial Accounting Standards Board (FASB)
published Statement of Financial Accounting Standards (SFAS) No. 123 (revised
2004), (SFAS 123(R)) "Share Based Payment". SFAS 123(R) establishes standards
for the accounting for transactions in which an entity exchanges its equity
instruments for goods or services. SFAS 123(R) eliminates the ability to account
for share-based compensation transactions using APB Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees", and generally requires that such
transactions be accounted for using a fair-value-based method. SFAS 123(R) is
effective as of the first annual reporting period of a registrant's fiscal year
that begins on or after June 15, 2005, therefore, the effective date for the
Company is July 1, 2005. SFAS 123(R) applies to all awards granted after the
required effective date and to awards modified, repurchased, or cancelled after
that date and as a consequence future employee stock option grants and other
stock based compensation plans will be recorded as expense over the vesting
period of the award based on their fair values at the date the stock based
compensation is granted. The cumulative effect of initially applying SFAS 123(R)
is to be recognized as of the required effective date using a modified
prospective method. Under the modified prospective method the Company will
recognize stock-based compensation expense from July 1, 2005 as if the fair
value based accounting method had been used to account for all outstanding
unvested employee awards granted, modified or settled in prior years. The
ultimate impact on future years results of operation and financial position will
depend upon the level of stock based compensation granted in future years.
For further information regarding equity- based compensation, see Note
3 "capital and stock options" to the consolidated financial statements
On March 30, 2005 the FASB issued FASB Interpretation No. (FIN) 47,
"Accounting for Conditional Asset Retirement Obligations." FIN 47 requires an
entity to recognize a liability for the fair value of an asset retirement
obligation that is conditional on a future event if the liability's fair value
can be reasonably estimated. FIN 47 is effective for the fiscal year ending June
30, 2005.
On April 4, 2005 the FASB adopted FASB Staff Position (FSP) FAS 19-1
"Accounting for Suspended Well Costs" that amends SFAS 19, "Financial Accounting
and Reporting by Oil and Gas Producing Companies," to permit the continued
capitalization of exploratory well costs beyond one year if the well found a
sufficient quantity of reserves to justify its completion as a producing well
and the entity is making sufficient progress assessing the reserves and the
economic and operating viability of the project. The guidance in the FSP is
required to be applied prospectively in the fourth quarter of 2005.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated
11
At March 31, 2005, the Company on a consolidated basis had
approximately $20.0 million of cash and cash equivalents and $3.5 million of
marketable securities.
Net cash provided by operations was $5.8 million during the nine months
ended March 31, 2005 compared to cash provided by operations of $6.7 million
during the nine months ended March 31, 2004. The decrease in cash provided by
operations is primarily related to the absence in 2004 of cash received from the
Kotaneelee settlement and payment of 2003 payables in 2004 related to the Palm
Valley drilling program.
12
During 2005, the Company had net investments in marketable securities
of $314,512 compared to net maturities of $694,791 in 2004.
The Company invested $6.6 million and $7.1 million in oil and gas
property and exploration activities during the nine months ended March 31, 2005
and 2004, respectively. The Company continues to invest in exploratory projects
that result in exploratory and dry hole expenses in the consolidated financial
statements.
Effect of exchange rate changes
The value of the Australian dollar relative to the U.S. dollar
increased 10.1% to $.7702 at March 31, 2005, compared to a value of $.6993 at
June 30, 2004.
As to MPC
At March 31, 2005, MPC, on an unconsolidated basis, had working capital
of approximately $3.2 million. MPC's current cash position and its annual MPAL
dividend should be adequate to meet its current cash requirements. MPC has in
the past invested and may in the future invest substantial portions of its cash
to maintain or increase its majority ownership interest in its subsidiary.
During November 2004, MPC received a dividend of approximately $975,000
from MPAL.
MPC through its stock repurchase plan may purchase up to one million
shares of its common stock in the open market. Through March 31, 2005, MPC had
purchased 680,850 of its shares at a cost of approximately $686,000, all of
which shares have been cancelled. No purchases of shares under the repurchase
plan were made by MPC during the three and nine month periods ended March 31,
2005.
As to MPAL
At March 31, 2005, MPAL had working capital of approximately $20.8
million. MPAL has budgeted approximately $4 million for specific exploration
projects in fiscal year 2005 as compared to the $5 million expended during
fiscal 2004. However, the total amount to be expended may vary depending on when
various projects reach the drilling phase. MPAL's future revenues are expected
to be derived from the sale of gas in Australia, based on its current
composition of oil and gas reserves. MPAL's current contracts for the sale of
Palm Valley and Mereenie gas will expire during fiscal year 2012 and 2009,
respectively. Unless MPAL is able to obtain additional contracts for its
remaining gas reserves or be successful in its current exploration program, its
revenues will be materially reduced after 2012.
OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We do not use off-balance sheet arrangements such as securitization of
receivables with any unconsolidated entities or other parties. The Company does
not engage in trading or risk management activities and does not have material
transactions involving related parties. The following is a summary of our
consolidated contractual obligations:
PAYMENTS DUE BY PERIOD
MORE
LESS THAN THAN
CONTRACTUAL OBLIGATIONS TOTAL 1 YEAR 1-3 YEARS 3-5 YEARS 5 YEARS
- ----------------------- ----- ------ --------- --------- -------
Operating Lease Obligations $ 858,000 $ 163,000 $ 347,000 $ 348,000 --
Purchase Obligations(1) 4,496,000 4,102,000 394,000 -- --
Asset Retirement Obligations 5,635,000 39,000 161,000 4,407,000 1,028,000
----------- ----------- ----------- ----------- ---------
Total $10,989,000 $ 4,304,000 $ 902,000 $ 4,755,000 1,028,000
=========== =========== =========== =========== =========
(1) Represents firm commitments for exploration and capital expenditures.
Exploration contingent expenditures of $36.4 million which are not legally
binding have been excluded from the table above and, based on exploration
decisions, would be due as follows: $17.2 million (less than 1 year), $16.6
million (1-3 years), $2.6 million (3-5 years).
MPAL expects to fund its exploration costs through its cash and cash
equivalents and cash flow from Australian operations. MPAL also expects that it
will seek partners to share the above exploration costs. If MPAL's effort to
find partners is unsuccessful, it may be unable or unwilling to complete the
exploration program for some of its properties. In addition to the expenditures
discussed above, the operator of the Mereenie field is implementing an extensive
program for additional drilling and capital improvements to meet gas sales'
contract requirements. During the last quarter of 2004, two gas wells necessary
to improve field deliverability and
13
meet gas contractual requirements through 2009 were drilled and completed.
14
RESULTS OF OPERATIONS THREE MONTHS ENDED March 31, 2005 vs. March 31, 2004
REVENUES
OIL SALES INCREASED 48% in the 2005 quarter to $2,018,000 from
$1,362,000 in 2004 because of the 2% Australian foreign exchange rate increase
discussed below, and a 56% increase in the average sales price per barrel,
partially offset by a decrease in volumes sold. Oil unit sales (after deducting
royalties) in barrels (bbls) and the average price per barrel sold during the
periods indicated were as follows:
THREE MONTHS ENDED MARCH 31,
----------------------------
2005 SALES 2004 SALES
AVERAGE AVERAGE
PRICE PRICE
BBLS A.$ PER BBL BBLS A.$ PER BBL
---- ----------- ---- -----------
Australia:
Mereenie field 28,792 67.32 27,759 43.93
Cooper Basin 1,095 74.63 1,408 37.51
Nockatunga project 7,758 56.97 10,869 37.67
------ ----- ------ -----
Total 37,645 65.46 40,036 42.07
====== ===== ====== =====
GAS SALES INCREASED 14% to $3,427,000 in 2005 from $3,014,000 in 2004.
This is the result of the 2% Australian foreign exchange rate increase discussed
below, as well as increased volume and average price during the 2005 period.
THREE MONTHS ENDED MARCH 31,
----------------------------
2005 2004
---- ----
Australia $3,359,000 $2,895,000
Canada-recurring 68,000 119,000
---------- ----------
Total $3,427,000 $3,014,000
========== ==========
During the 2005 period, the volume of gas sold in Australia increased
6%, and the average price of gas sold increased 5%. The volumes in billion cubic
feet (bcf) (after deducting royalties) and the average price of gas per thousand
cubic feet (mcf) sold during the periods indicated were as follows:
THREE MONTHS ENDED MARCH 31,
----------------------------
2005 SALES 2004 SALES
A.$ AVERAGE PRICE A.$ AVERAGE PRICE
----------------- -----------------
PER PER
BCF MCF BCF MCF
--- --- --- ---
Australia: Palm Valley .485 2.15 .589 2.13
Australia: Mereenie 1.027 3.00 .825 2.78
----- ---- ----- ----
Total 1.512 2.63 1.414 2.51
===== ==== ===== ====
OTHER PRODUCTION RELATED REVENUES INCREASED 19% to $551,000 in 2005
from $463,000 in 2004 Other production related revenues are primarily MPAL's
share of gas pipeline tariff revenues.
INTEREST INCOME DECREASED 62% to $103,000 in 2005 from $270,000 in 2004
primarily because of lower cash balances during the period.
COSTS AND EXPENSES
PRODUCTION COSTS INCREASED 16% IN 2005 to $1,478,000 from $1,277,000 in
2004. The increase is the result of more money spent during the 2005 quarter in
all areas and also the 2% Australian foreign exchange rate increase discussed
below.
EXPLORATION AND DRY HOLE COSTS INCREASED 53% to $1,042,000 in 2005 from
$680,000 in 2004. These costs related to the exploration work performed on
MPAL's properties. The primary reason for the increase is increased expenditures
in the Taranki Basin of New Zealand and also the 2% Australian foreign exchange
rate increase discussed below.
SALARIES AND EMPLOYEE BENEFITS DECREASED 14% to $605,000 in 2005 from
$702,000 in 2004. During the 2005 period there was a 2% increase in the
Australian foreign exchange rate discussed below. This was offset by the
termination of the MPAL defined benefit plan discussed in Note 11.
15
DEPLETION, DEPRECIATION AND AMORTIZATION INCREASED 21% from $1,581,000
in 2004 to $1,918,000 in 2005 During the 2005 period, there was a 2% increase in
the Australian foreign exchange rate as discussed below. Depletion expense for
the Palm Valley and Mereenie fields increased during the period primarily
because of the increased depletion rate for 2005 due to lower reserves and
increased capital expenditures. In addition, depletion increased in the 2005
period for the Cooper Basin.
AUDITING, ACCOUNTING AND LEGAL EXPENSES DECREASED 9% in 2005 to $81,000
from $89,000 in 2004. The Company anticipates that it will be required in the
future to incur significant administrative, auditing and legal expenses with
respect to new SEC and accounting rules adopted pursuant to the Sarbanes-Oxley
Act of 2002, particularly the requirements to document, test and audit the
Company's internal controls to comply with Section 404 of the Act and rules
adopted thereunder that will apply to the Company for the first time with
respect to its annual report for the fiscal year ending June 30, 2007.
ACCRETION EXPENSE INCREASED 1% IN THE 2005 PERIOD from $103,000 in 2004
to $104,000 in 2005. Accretion expense represents the accretion on the asset
retirement obligations (ARO) under SFAS 143 that was adopted effective July 1,
2002.
SHAREHOLDER COMMUNICATIONS COSTS INCREASED 34% from $35,000 in 2004 to
$47,000 in 2005 primarily because of MPC and MPAL's increased costs related to
preparing public filings for distribution and the 2% increase in the Australian
foreign exchange rate discussed below.
OTHER ADMINISTRATIVE EXPENSES INCREASED 147% from $131,000 in 2004 to
$324,000 in 2005. During the 2005 period, there was a 2% increase in the
Australian foreign exchange rate discussed below and increases in insurance,
consulting, repairs and maintenance and travel costs.
INCOME TAX PROVISION DECREASED IN 2005 to $102,000 from $115,000 in
2004. The components of the income tax provision (in thousands) between MPC and
MPAL are as follows:
2005 2004
---- ----
Income before income taxes and minority interests $ 500 $ 511
MPC's non Australian loss (a) 227 139
Permanent differences-Australia (452) (337)
----- -----
Book taxable income -Australia $ 275 $ 313
===== =====
Australian tax rate 30% 30%
Australian income tax provision (benefit) $ 83 $ 94
Tax benefit of MPAL losses -- (8)
MPC income tax provision (a) 19 29
----- -----
Income tax provision $ 102 $ 115
===== =====
Current income tax provision $ 19 $ 29
Deferred income tax provision 83 86
----- -----
Income tax provision $ 102 $ 115
===== =====
Effective tax rate 20% 22%
===== =====
(a) MPC did not recognize a deferred tax benefit for its non Australian income
tax losses during the quarter, as it is not likely that such deferred assets
will be realized.
EXCHANGE EFFECT
THE VALUE OF THE AUSTRALIAN DOLLAR RELATIVE TO THE U.S. DOLLAR
DECREASED TO $.7702 AT MARCH 31, 2005 compared to a value of $.7801 at DECEMBER
31, 2004. This resulted in a $871,000 foreign currency translation loss for the
three months ended March 31, 2005. The average exchange rate used to translate
MPAL's operations in Australia was $.7776 for the quarter ended March 31, 2005,
which was an 2% increase compared to the $.7658 rate for the quarter ended March
31, 2004.
16
NINE MONTHS ENDED MARCH 31, 2005 VS. MARCH 31, 2004
REVENUES
OIL SALES INCREASED 49% in the nine months to $5,419,000 from
$3,637,000 in 2004 because of the 5% Australian foreign exchange rate increase
discussed below, and a 52% increase in the average sales price per barrel
partially offset by a decrease in volumes sold. Oil unit sales (after deducting
royalties) in barrels (bbls) and the average price per barrel sold during the
periods indicated were as follows:
NINE MONTHS ENDED MARCH 31,
---------------------------
2005 SALES 2004 SALES
AVERAGE
AVERAGE PRICE PRICE
BBLS A.$ PER BBL BBLS A.$ PER BBL
---- ----------- ---- -----------
Australia:
Mereenie field 87,253 62.57 87,069 41.48
Cooper Basin 3,319 59.56 5,604 36.14
Nockatunga project 22,856 55.12 27,309 36.60
------- ----- ------- -----
Total 113,428 61.04 119,982 40.16
======= ===== ======= =====
GAS SALES DECREASED 7% to $9,251,000 in 2005 from $9,932,000 in 2004.
The decrease was primarily the result of the one time proceeds of $1,135,000
from the Kotaneelee gas field settlement recorded in 2003. This was partially
offset by the 5% Australian foreign exchange rate increase discussed below and
the 3.5% increase in price per mcf sold.
NINE MONTHS ENDED MARCH 31,
---------------------------
2005 2004
---- ----
Australia $9,025,000 $8,487,000
Canada-recurring 226,000 310,000
Canada-settlement -- 1,135,000
---------- ----------
Total $9,251,000 $9,932,000
========== ==========
The volumes in billion cubic feet (bcf) (after deducting royalties) and
the average price of gas per thousand cubic feet (mcf) sold during the periods
indicated were as follows:
NINE MONTHS ENDED MARCH 31,
---------------------------
2005 SALES 2004 SALES
A.$ AVERAGE PRICE A.$ AVERAGE PRICE
PER PER
BCF MCF BCF MCF
Australia: Palm Valley 1.540 2.14 1.79 2.19
Australia: Mereenie 2.803 2.91 2.57 2.81
----- ---- ---- ----
Total 4.343 2.63 4.36 2.54
===== ==== ==== ====
OTHER PRODUCTION RELATED REVENUES INCREASED 7% to $1,357,000 in 2005
from $1,266,000 in 2004. Other production related revenues are primarily MPAL's
share of gas pipeline tariff revenues.
INTEREST INCOME DECREASED 1.5% to $835,000 in 2005 from $848,000 in
2004 primarily due to lower cash balances partially offset by the 5% Australian
foreign exchange rate increase discussed below and.
COSTS AND EXPENSES
PRODUCTION COSTS INCREASED 6.5% IN 2005 to $4,322,000 from $4,055,000
in 2004. The increase in 2005 was primarily the result of increased expenditures
in the Mereenie and Palm Valley fields and the 5% Australian foreign exchange
rate increase discussed below, partially offset by lower expenditures for the
Nockatunga project and the Cooper Basin.
17
EXPLORATION AND DRY HOLE COSTS INCREASED 20% to $3,096,000 in 2005 from
$2,585,000 in 2004. These costs related to the exploration work performed on
MPAL's properties. The primary reasons for the increase in 2005 were seismic
work performed on the Nockatunga project, costs related to exploration
activities in New Zealand and the 5% Australian foreign exchange rate increase
discussed below. These costs were partially offset by less costs incurred in
2005 on properties in Southern Australia.
SALARIES AND EMPLOYEE BENEFITS DECREASED 3% to $1,924,000 in 2005 from
$1,982,000 in 2004 The decrease in 2005 was the result of the termination of the
MPAL defined benefit plan discussed in Note 11. This was partially offset by the
5% increase in the Australian foreign exchange rate discussed below and the
regular annual increases in salaries.
DEPLETION, DEPRECIATION AND AMORTIZATION INCREASED 24% from $4,325,000
in 2004 to $5,373,000 in 2005 During the 2005 period, there was a 5% increase in
the Australian foreign exchange rate discussed below. Depletion expense for the
Palm Valley and Mereenie fields increased 22% during the period primarily
because of the increased depletion rate for 2005 due to lower reserves and
increased capital expenditures. In addition, depletion increased in the 2005
period for the Cooper Basin.
AUDITING, ACCOUNTING AND LEGAL EXPENSES INCREASED 10% IN 2005 to
$363,000 from $330,000 in 2004. The Company anticipates that it will be required
in the future to incur significant administrative, auditing and legal expenses
with respect to new SEC and accounting rules adopted pursuant to the
Sarbanes-Oxley Act of 2002, particularly the requirements to document, test and
audit the Company's internal controls to comply with Section 404 of the Act and
rules adopted thereunder that will apply to the Company for the first time with
respect to its annual report for the fiscal year ending June 30, 2007.
ACCRETION EXPENSE INCREASED 9.5% IN THE 2005 PERIOD from $273,000 in
2004 to $299,000 in 2005. Accretion expense represents the accretion on the
asset retirement obligations (ARO) under SFAS 143 that was adopted effective
July 1, 2002. The increase in the 2005 period is primarily the 5% increase in
the Australian foreign exchange rate discussed below and the increased rate used
for the Palm Valley and Mereenie fields.
SHAREHOLDER COMMUNICATIONS COSTS INCREASED 29% from $156,000 in 2004 to
$202,000 in 2005 primarily because of MPC and MPAL's increased costs related to
preparing public filings for distribution and the 5% increase in the Australian
foreign exchange rate discussed below.
OTHER ADMINISTRATIVE EXPENSES INCREASED 54% from $427,000 in 2004 to
$658,000 in 2005. primarily due to increased consulting and insurance costs and
the 5% increase in the Australian foreign exchange rate discussed below.
INCOME TAX PROVISION DECREASED IN 2005 to $260,000 from $463,000 in
2004 because of lower book taxable income in 2005. The components of the income
tax provision (in thousands) between MPC and MPAL are as follows:
2005 2004
---- ----
Income(loss) before income taxes and minority interests $ 627 $ 1,549
MPC's non Australian loss (income) (a) 978 (700)
Permanent differences-Australia (933) (819)
------- -------
Book taxable income -Australia $ 672 $ 30
======= =======
Australian tax rate 30% 30%
Australian income tax provision $ 202 $ 9
Tax benefit of MPAL losses (9)
MPC income tax provision (a) 58 463
------- -------
Income tax provision $ 260 $ 463
======= =======
Current income tax provision 58 $ 463
Deferred income tax provision 202 --
------- -------
Income tax provision $ 260 $ 463
======= =======
Effective tax rate 41% 30%
======= =======
(a) MPC did not recognize a deferred tax benefit for its non Australian income
tax losses during the quarter, as it is not likely that such deferred assets
will be realized.
18
EXCHANGE EFFECT
THE VALUE OF THE AUSTRALIAN DOLLAR RELATIVE TO THE U.S. DOLLAR
INCREASED TO $.7702 AT March 31, 2005 compared to a value of $.6993 at June 30,
2004. This resulted in a $1,599,000 foreign currency translation gain for the
nine months ended March, 2005. The average exchange rate used to translate
MPAL's operations in Australia was $.7481 for the nine month period ended March
31, 2005, which was a 5% increase compared to the $.7138 rate for the nine month
period ended March 31, 2004.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company does not have any significant exposure to market risk,
other than as previously discussed regarding foreign currency risk and the risk
of fluctuations in the world price of crude oil, as the only market risk
sensitive instruments are its investments in marketable securities. For the nine
month period ended March 31, 2005, oil sales represented approximately 34% of
production revenues, therefore, an increase in the world price of crude oil
would have a positive impact on the Company's earnings, while a decrease in
crude oil prices would have a similar negative impact on earnings. Gas sales,
which represented approximately 58% of production revenues in 2005, are derived
primarily from the Palm Valley and Mereenie fields in the Northern Territory of
Australia and the gas prices are set according to long term contracts that are
subject to changes in the Australian Consumer Price Index (ACPI). Accordingly,
the price of gas will increase or decrease consistent with movement in the ACPI.
At March 31, 2005, the carrying value of our investments in marketable
securities including those classified as cash and cash equivalents was
approximately $24 million, which approximates the fair value of the securities.
Since the Company expects to hold the investments to maturity, the maturity
value should be realized.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the
participation of the Company's management, including Daniel J. Samela, the
Company's President, Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated
under the Securities and Exchange Act of 1934) as of March 31, 2005. Based on
this evaluation, the Company's President concluded that the Company's disclosure
controls and procedures were effective such that the material information
required to be included in the Company's SEC reports is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms
relating to the Company, including its consolidated subsidiaries, and was made
known to him by others within those entities, particularly during the period
when this report was being prepared.
Internal Control Over Financial Reporting
There have not been any changes in the Company's internal control over
financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the fiscal quarter ended March 31, 2005 that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
Section 404 of the Sarbanes-Oxley Act of 2002 (the "Act") will require
the Company to include an internal control report from management in its annual
report for the year ending June 30, 2007 and in subsequent annual reports
thereafter. The internal control report must include the following: (1) a
statement of management's responsibility for establishing and maintaining
adequate internal control over financial reporting, (2) a statement identifying
the framework used by management to conduct the required evaluation of the
effectiveness of the Company's internal control over financial reporting, (3)
management's assessment of the effectiveness of the Company's internal control
over financial reporting as of June 30, 2007, including a statement as to
whether or not internal control over financial reporting is effective, and (4) a
statement that the Company's independent auditors have issued an attestation
report on management's assessment of internal control over financial reporting.
Management acknowledges its responsibility for establishing and
maintaining internal controls over financial reporting and seeks to continually
improve those controls. In addition, in order to achieve compliance with Section
404 of the Act within the required timeframe, the Company has initiated a
process to document, review and test its internal controls over financial
reporting during the remainder of the fiscal year ending June 30, 2005 and 2006.
As part of its Section 404 compliance project, the Company intends to make
improvements to its internal controls over financial reporting when and as
required by the Act and make disclosure with respect to any such improvements to
the extent such improvements are deemed material to the Company's internal
control over financial
19
reporting.
20
MAGELLAN PETROLEUM CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
March 31, 2005
ITEM 1 LEGAL PROCEEDINGS
During September 2003, the litigants in the Kotaneelee litigation
entered into a settlement agreement. During October 2003, the Company received
approximately $851,000, after Canadian withholding taxes and reimbursement of
certain past legal costs. The plaintiffs terminated all litigation against the
defendants related to the field, including the claim that the defendants failed
to fully develop the field. Since each party agreed to bear its own legal costs,
there were no taxable costs assessed against any of the parties.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following schedule sets forth the number of shares that the Company
has repurchased under any of its repurchase plans for the stated periods, the
cost per share of such repurchases and the number of shares that may yet be
repurchased under the plans:
TOTAL NUMBER OF SHARES
PURCHASED AS PART OF MAXIMUM NUMBER OF SHARES
TOTAL NUMBER OF AVERAGE PRICE PUBLICLY ANNOUNCED PLAN THAT MAY YET BE
PERIOD SHARES PURCHASED PAID SHARE (1) PURCHASED UNDER PLAN
------ ---------------- ---------- --- --------------------
Oct. 1-31, 2004 0 0 0 319,150
Nov. 1-30, 2004 0 0 0 319,150
Mar. 1-31, 2005 0 0 0 319,150
(1) The Company through its stock repurchase plan may purchase up to one
million shares of its common stock in the open market. Through March
31, 2005, the Company had purchased 680,850 of its shares at an average
price of $1.01 per share or a total cost of approximately $686,000, all
of which shares have been cancelled.
ITEM 6. EXHIBITS
31. Rule 13a-14(a) Certifications.
Certification of Daniel J. Samela, President, Chief Executive Officer
and Chief Financial and Accounting Officer, pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934 is filed herein.
32. Section 1350 Certifications.
Certification of Daniel J. Samela, President, Chief Executive Officer
and Chief Financial and Accounting Officer, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, is furnished herein.
21
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:
MAGELLAN PETROLEUM CORPORATION
Registrant
Date: May 16, 2005 By /s/ Daniel J. Samela
------------------------------
Daniel J. Samela,
President and Chief Executive Officer,
Chief Financial and Accounting Officer
22