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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2000.
[ ] 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 0-8532
OAKRIDGE ENERGY, INC.
(Exact name of small business issuer as specified in its charter)
Utah 87-0287176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4613 Jacksboro Highway
Wichita Falls, Texas 76302
(Address of principal executive offices)
(940) 322-4772
(Issuer's telephone number)
Not Applicable
(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 [ ]
The number of shares outstanding of each of the issuer's classes of common
equity, as of November 30, 2000: Common Stock, $.04 par value - 4,472,123 shares
Transitional Small Business Disclosure Format (check one);
YES [ ] NO [X]
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INDEX
Page #
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Part I - Financial Information
1. Financial Statements:
Condensed Balance Sheets at
February 29, 2000 and November 30, 2000 1
Condensed Statements of Operations
For the Three Months Ended November 30, 1999 and 2000 2
For the Nine Months Ended November 30, 1999 and 2000
Statements of Cash Flows
For the Nine Months Ended November 30, 1999 and 2000 3
Notes to Condensed Financial Statements 4
2. Management's Discussion and Analysis or Plan of Operation 5
Part II - Other Information
6. Exhibits and Reports on Form 8-K 10
Signatures 10
Part I of this Report contains forward looking statements that involve risks and
uncertainties. Accordingly, no assurances can be given that the actual events
and results will not be materially different than the anticipated results
described in the forward looking statements. See "Item 2. - Management's
Discussion and Analysis or Plan of Operation" for a description of various
factors that could materially affect the ability of the Company to achieve the
results described in the forward looking statements.
(i)
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Item 1. Financial Statements.
Oakridge Energy, Inc.
CONDENSED BALANCE SHEETS
ASSETS
As of As of
February 29, 2000 November, 2000
----------------- --------------
Current assets: (Unaudited)
Cash and cash equivalents $ 2,672,543 $ 3,147,223
Trade accounts receivable 196,836 208,299
Investment securities 245,175 193,795
Deferred tax asset 283,925 197,729
Prepaid expenses and other 179,736 90,192
---------------- ----------------
Total current assets 3,578,215 3,837,238
---------------- ----------------
Oil and gas properties, at cost using the successful efforts method of
accounting, net of accumulated depletion and depreciation of
$4,908,202 on February 29, 2000 and $5,094,980 on November 30, 2000 1,526,338 1,743,901
Coal and gravel properties, net of accumulated depletion and depreciation
of $8,402,067 on February 29, 2000 and $8,204,729 on November 30, 2000 336,861 321,761
Real estate held for development 2,761,119 2,790,796
Other property and equipment, net of accumulated depreciation
of $321,775 on February 29, 2000 and $345,121 on November 30, 2000 150,955 127,610
Other assets 1,010,875 1,025,875
---------------- ----------------
$ 9,364,363 $ 9,847,181
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 91,155 $ 56,369
Accrued expenses 75,750 57,992
---------------- ----------------
Total current liabilities 166,905 114,361
Reserve for reclamation costs 413,000 413,000
Deferred federal income taxes 122,392 327,593
---------------- ----------------
Total liabilities 702,297 854,954
---------------- ----------------
Stockholders' equity:
Common stock, $.04 par value, 20,000,000
shares authorized, 10,157,803 shares issued 406,312 406,312
Additional paid-in capital 805,092 805,092
Retained earnings 17,050,509 17,425,584
Unrealized loss on investment securities
available for sale, net of income taxes (131,372) (70,092)
Less treasury stock, at cost, 5,645,130 shares on February 29, 2000
and 5,685,680 on November 30, 2000 (9,468,475) (9,574,669)
---------------- ----------------
Total stockholders' equity 8,662,066 8,992,227
---------------- ----------------
$ 9,364,363 $ 9,847,181
================ ================
The accompanying notes are an integral part of these financial statements.
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Oakridge Energy, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended
November 30, 1999 November 30, 2000 November 30, 1999 November 30, 2000
----------------- ----------------- ----------------- -----------------
Revenues:
Oil and gas $ 402,140 $ 478,628 $ 1,113,331 $ 1,394,506
Coal and gravel 25,460 24,504 68,228 67,273
Other 9,750 9,750 29,250 29,250
----------------- ----------------- ----------------- -----------------
Total revenues 437,350 512,882 1,210,809 1,491,029
----------------- ----------------- ----------------- -----------------
Operating expenses:
Oil and gas 237,615 203,897 928,962 687,962
Coal and gravel 15,580 17,722 47,128 53,544
Real estate development 6,445 5,188 22,428 19,342
General and administrative 99,059 99,824 340,651 370,156
----------------- ----------------- ----------------- -----------------
Total operating expenses 358,699 326,631 1,339,169 1,131,004
----------------- ----------------- ----------------- -----------------
Income (loss) from operations 78,651 186,251 (128,360) 360,025
----------------- ----------------- ----------------- -----------------
Other income:
Interest and dividend income 42,827 54,658 126,158 153,355
Gain (loss) on sale of oil and gas properties (8,166) 1,480 6,386 13,069
Other, net (7,672) 0 (1,660) 68,624
----------------- ----------------- ----------------- -----------------
Total other income 26,989 56,138 130,884 235,048
----------------- ----------------- ----------------- -----------------
Income before income taxes 105,640 242,389 2,524 595,073
----------------- ----------------- ----------------- -----------------
Income tax expense 52,520 89,611 17,690 219,998
----------------- ----------------- ----------------- -----------------
Net income (loss) $ 53,120 $ 152,778 $ (15,166) $ 375,075
================= ================= ================= =================
Basic and diluted income (loss)
per common share $ 0.01 $ 0.03 $ (0.00) $ 0.08
================= ================= ================= =================
Weighted average shares outstanding 4,588,354 4,472,123 4,607,574 4,481,732
================= ================= ================= =================
The accompanying notes are an integral part of these financial statements.
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Oakridge Energy, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
For 9 Months For 9 Months
Ended Ended
November 30, 1999 November 30, 2000
----------------- -----------------
Cash flows from operating activities:
Net income (loss) $ (15,166) $ 375,075
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depletion and depreciation 421,404 257,762
Accretion on investment securities, net 14 0
Gain on sales of property and equipment (4,214) (141,114)
Loss on sale of investment securities 0 59,424
Deferred federal income taxes (50,013) 205,201
Net changes in assets and liabilities:
Trade accounts receivable (48,610) (11,463)
Federal income tax receivable (42,987) 0
Prepaid expenses and other current assets 17,771 78,630
Accounts payable 15,520 (34,786)
Accrued expenses (22,641) (17,758)
----------------- -----------------
Net cash provided by operating activities 271,078 770,971
----------------- -----------------
Cash flows from investing activities:
Additions to oil and gas properties (93,567) (426,126)
Additions to real estate held for development (68,984) (41,770)
Investment in partnership 0 (15,000)
Proceeds from sale of oil and gas properties 9,887 13,385
Proceeds from sale of other property and equipment 75,768 139,980
Proceeds from investments available for sale 100,000 139,434
----------------- -----------------
Net cash provided by (used in) Investing activities 23,104 (190,097)
----------------- -----------------
Cash flows from financing activities:
Purchases of treasury stock (283,400) (106,194)
----------------- -----------------
Net cash used in financing activities (283,400) (106,194)
----------------- -----------------
Net increase in cash and cash equivalents 10,782 474,680
Cash and cash equivalents at beginning of period 2,614,499 2,672,543
----------------- -----------------
Cash and cash equivalents at end of period $ 2,625,281 $ 3,147,223
================= =================
Supplemental disclosures of cash flow information:
Interest paid $ 74 $ 0
Income taxes paid $ 27,666 $ 23,792
Recognition in Stockholders' Equity of the net unrealized holding gain on
available for sale securities of $37,840 net of tax effect of $19,494 during the
nine months ended November 30, 1999, and $70,092 net of tax effect of $41,112
during the nine months ended November 30, 2000.
The accompanying notes are an integral part of these financial statements.
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OAKRIDGE ENERGY, INC.
Notes to Condensed Financial Statements
(Unaudited)
(1) The accompanying unaudited financial statements for the three and nine
month periods ended November 30, 1999 and 2000 reflect, in the opinion of
management, all adjustments, which are of a normal and recurring nature,
necessary for a fair presentation of the results for such periods.
(2) The foregoing financial statements should be read in conjunction with the
annual financial statements and accompanying notes for the fiscal year
ended February 29, 2000.
(3) The Company's operating segments are set forth in the annual financial
statements and accompanying notes for the fiscal year ended February 29,
2000.
Information regarding operations and assets by segment is as follows:
For the Three Months Ended For the Nine Months Ended
November 30, November 30,
1999 2000 1999 2000
------------ ------------ ------------ ------------
Business segment revenue:
Oil and gas $ 411,890 $ 488,378 $ 1,142,581 $ 1,423,756
Gravel 25,460 24,504 68,228 67,273
------------ ------------ ------------ ------------
$ 437,350 $ 512,882 $ 1,210,809 $ 1,491,029
------------ ------------ ------------ ------------
Business segment profit (loss):
Oil and gas $ 174,275 $ 284,481 $ 213,619 $ 735,794
Coal and gravel 9,880 6,782 21,100 13,729
Real estate development (6,445) (5,188) (22,428) (19,342)
General corporate (99,059) (99,824) (340,651) (370,156)
------------ ------------ ------------ ------------
Income (loss) from operations 78,651 186,251 (128,360) 360,025
Interest and dividend income 42,827 54,658 126,158 153,355
Gain (loss) on sales of oil and gas properties (8,166) 1,480 6,386 13,069
Other, net (7,672) 0 (1,660) 68,624
------------ ------------ ------------ ------------
Income before income taxes $ 105,640 $ 242,389 $ 2,524 $ 595,073
------------ ------------ ------------ ------------
As of As of
February 29, November 30,
2000 2000
------------ ------------
Total assets:
Oil and gas $ 5,119,166 $ 5,700,296
Coal and gravel 336,861 321,761
Real estate development 2,761,119 2,790,796
General corporate 1,147,217 1,034,328
------------ ------------
$ 9,364,363 $ 9,847,181
------------ ------------
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with Items 6 and
7 of the Company's Annual Report on Form 10-KSB for the fiscal year ended
February 29, 2000 and the Notes to Condensed Financial Statements contained in
this report.
RESULTS OF OPERATIONS
The Company had net income of $152,778 ($.03 per share) in the three
months ended November 30, 2000 compared to net income of $53,120 ($.01 per
share) in the three months ended November 30, 1999. In the nine-month 2000
period, the Company had net income of $375,075 ($.08 per share) compared to a
net loss of $15,166 ($.00 per share) in the 1999 nine-month period. As was the
case in the three and six months ended August 31, 2000, substantially improved
oil and gas revenues and reduced oil and gas operating expenses were primarily
responsible for the improved performance in the 2000 periods. Interest and
dividend income and income from the sale of miscellaneous assets also
contributed to the 2000 nine-month results.
Oil and gas revenues increased approximately $76,500 (19.0%) and
$281,200 (25.3%) in the three and nine-month periods ended November 30, 2000,
respectively, due to continued strong average oil and gas prices received by the
Company which once again overcame sales production declines. The following
tables compare the revenues and average prices received by the Company and its
sale production volumes of oil and gas during the three and nine-month 2000
periods with those of the 1999 periods:
THREE MONTHS THREE MONTHS
ENDED ENDED PERCENTAGE
NOVEMBER 30, 1999 NOVEMBER 30, 2000 DIFFERENCE
----------------- ----------------- ----------
Gas:
Revenues $ 63,864 $ 93,566 +46.5%
Production (MCF) 21,068 18,341 -12.9
Average Price $ 3.03 $ 5.10 +68.3
Oil:
Revenues $ 330,863 $ 377,392 +14.1%
Production (Bbls.) 14,536 11,384 -21.7
Average Price $ 22.76 $ 33.15 +45.6
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NINE MONTHS NINE MONTHS
ENDED ENDED PERCENTAGE
NOVEMBER 30, 1999 NOVEMBER 30, 2000 DIFFERENCE
----------------- ----------------- ----------
Gas:
Revenues $ 194,988 $ 256,943 +31.8%
Production (MCF) 80,724 62,990 -22.0
Average Price $ 2.42 $ 4.08 +68.9
Oil:
Revenues $ 899,746 $1,109,889 +23.4%
Production (Bbls.) 48,498 36,631 -24.5
Average Price $ 18.55 $ 30.30 +63.3
Non-material amounts of natural gas liquids revenues and production for both
periods are excluded from the foregoing tables.
Revenues from the Company's principal property in Madison County, Texas
tracked overall results in both 2000 periods, increasing approximately $32,500
(10.4%) in the three-month period and $159,500 (18.3%) in the nine-month period,
due to higher average oil and gas prices received and lower production sales
volumes.
In the fiscal quarter ended August 31, 2000, the Company participated
in the drilling of the Arp Oil Unit #2 well (the "Arp #2 Well") on a new
prospect in Smith County, Texas. The Arp #2 Well was completed at a depth of
approximately 8,090 feet and has recently been placed on production as an oil
well. The Company has a 25% working interest in the Arp #2 Well but does not
expect any significant production from it. The Company is committed to drill a
second well on this prospect, which will likely occur during the second quarter
of the fiscal year ending February 28, 2002. Subsequent to November 30, 2000,
the Company participated in the drilling of an approximate 6,000' exploratory
well in Wilbarger County of North Texas. The Company has an 8% working interest
in the well, which is currently being completed as an oil well.
Revenues from the Company's gravel operations declined approximately
$1,000 in each of the three and nine-month 2000 periods due to a slightly lower
level of sales made by Four Corners Materials, Inc. ("Four Corners") from the
Company's Colorado gravel property. Rentals received by the Company from its
surface lease to such corporation were the same in all comparable periods. The
Company is currently involved in negotiations with Four Corners to
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extend the term of and to include additional area within the lease. Any extended
lease will also involve the construction by Four Corners of a second access road
to the Company's land, which should be a significant aid to the Company's real
estate development operations.
The expenses of the Company's oil and gas operations decreased
approximately $33,700 (14.2%) and $241,000 (25.9%) in the three and nine-month
periods ended November 30, 2000. Depletion and depreciation expense was the
biggest contributor to the operations expense decrease, declining approximately
$40,300 (39.4%) and $160,000 (43.4%) in the three and nine-month periods,
respectively, due to lower sales production volumes and to the reduction in the
Company's per equivalent barrel amortization rate. The rate reduction was
attributable to the Company's higher level of estimated proven oil and gas
reserves at February 29, 2000 as compared to the prior year end. Lease operating
expense increased approximately $7,800 (7.7%) and $7,600 (2.1%) in the three and
nine-month 2000 periods due to slightly higher expenses from the Madison County,
Texas property and in the North Texas area and the expense of two new wells (one
purchased, one drilled) in Smith County, Texas. The Company incurred substantial
workover expense on one well on the Madison County, Texas property during the
nine-month 2000 period. During the three and nine-month 2000 periods, the
Company also benefited from the lack of any dry hole costs. In the 1999
nine-month period, the Company incurred approximately $86,700 of such expense.
Production taxes were higher in both 2000 periods due to the increased oil and
gas revenues, but ad valorem taxes were lower because accruals for this expense
were based on the actual taxes paid by the Company in the fiscal year ended
February 29, 2000 when valuations were lower.
The expenses of the Company's coal and gravel operations increased
approximately $2,100 (13.8%) and $6,400 (13.6%) in the three and nine months
ended November 30, 2000. Reclamation expense at the Carbon Junction coal mine,
including associated testing and permitting fees, contributed to the increase in
both periods, and severance benefits paid to a former employee in the first
three months of the nine-month period also contributed to the overall expense
increase in such period. Real estate development expense declined approximately
$1,300 (19.5%) and $3,100 (13.8%) in the three and nine-month 2000 periods due
to the Company's restriction of activities on its land outside Durango, Colorado
pending action on the Company's annexation application filed with the City of
Durango in September 2000. The statewide initiative (called
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Amendment 24) pertaining to Colorado's future growth and development, which was
discussed in the Company's Form 10-QSB for the period ended August 31, 2000, was
defeated in the November 2000 general election and is no longer a factor with
respect to the development.
General and administrative expense increased less than $1,000 in the
three months ended November 30, 2000 but approximately $29,500 (8.7%) in the
2000 nine-month period due to fees paid to maintain letters of credit supporting
the Company's coal reclamation bonds to the State of Colorado with respect to
its abandoned coal mine. Due to a timing difference, no letter of credit fees
were paid in the 1999 nine-month period. Higher auditing expense resulting from
the change in the Company's independent public accountants prior to the start of
the 2000 periods and increased ad valorem taxes also affected both periods'
expense. Lower payroll expense partially offset the items for which increases
were incurred in both 2000 periods, and governmental reporting expense was also
reduced in the nine-month period.
Other income increased approximately $29,100 (108.0%) and $104,200
(79.6%) in the three and nine months ended November 30, 2000. Dividend and
interest income increased approximately $11,800 and $27,200 in these periods due
to larger cash balances carried by the Company and higher interest rates, and
the "other, net" income line item changed from an approximate $1,700 loss in the
1999 nine-month period to approximately $70,300 in income in the comparable 2000
period. The other, net income increase in the 2000 nine-month period resulted
from activity during the first six months of the period as gains from the sale
of one North Texas area well and equipment from a Madison County, Texas well
that was plugged and abandoned and from the sale of surplus coal equipment and a
right of way from a portion of the Company's Colorado land more than covered the
loss on the partial sale of an equity security which occurred during such time
frame.
The Company's weighted average shares outstanding decreased
approximately 2.5% and 2.7%, respectively, in the three and nine-month 2000
periods due to the purchase of 40,550 shares of the Company's common stock made
by the Company during the six months ended August 31, 2000 as the Company did
not purchase any additional shares during the three months ended November 30,
2000.
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FINANCIAL CONDITION AND LIQUIDITY
During the first nine months of fiscal 2001, the Company's operating
activities carried the Company's investing and financing activities, resulting
in an approximate $474,700 increase in cash and cash equivalents at November 30,
2000. Higher average oil and gas prices received enabled the Company's operating
activities to provide approximately $771,000 in funds during the period. The
Company's investing activities used approximately $190,100 in funds as proceeds
from the sale of oil and gas properties, other property and equipment and a
portion of an equity security held for investment were not sufficient to offset
additions to oil and gas properties totaling approximately $426,100. The
Company's financing activities (entirely purchases of the Company's common stock
during the first six months of the period) used approximately $106,200 in funds.
At November 30, 2000, the Company had no indebtedness and cash, cash equivalents
and investment securities available for sale aggregating approximately
$3,341,000.
The Company expects to fund its contemplated operations and any stock
purchases it makes during the remainder of fiscal 2001 from its cash and cash
equivalents and the cash flow from its oil and gas properties.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - None.
(b) Reports on Form 8-K - No reports on Form 8-K were filed by the
Company during the three months ended November 30, 2000.
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.
OAKRIDGE ENERGY, INC.
(Registrant)
DATE: January 15, 2001 By /s/ Sandra Pautsky
------------------------------------------
Sandra Pautsky, President
By /s/ Carol J. Cooper
------------------------------------------
Carol J. Cooper, Chief Accounting Officer
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INDEX TO EXHIBITS
The exhibits filed herewith are filed in accordance with the
requirements of Item 601 to Regulation S-B for filings on Form 10-QSB. For
convenient reference, each exhibit is listed according to the number assigned to
it in the Exhibit Table of such Item 601.
(2) - Plan of acquisition, reorganization,
arrangement, liquidation or succession - not
applicable.
(3) - (i) Articles of Incorporation - not applicable.
(ii) Bylaws - not applicable.
(4) - Instruments defining the rights of security
holders, including indentures - not applicable.
(10) - Material contracts - not applicable.
(11) - Statement re computation of per share earnings
- not applicable.
(15) - Letter on unaudited interim financial
information - not applicable.
(18) - Letter on change in accounting principles - not
applicable.
(19) - Reports furnished to security holders - not
applicable.
(22) - Published report regarding matters submitted to
vote - not applicable.
(23) - Consents of experts and counsel - not
applicable.
(24) - Power of Attorney - not applicable.
(99) - Additional exhibits - not applicable.