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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 May 31, 2001.
[ ] 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)
The number of shares outstanding of each of the issuer's classes of common
equity, as of May 31, 2001: Common Stock, $.04 par value, 4,455,873 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 28, 2001 and May 31, 2001 1
Condensed Statements of Operations
For the Three Months Ended May 31, 2000 and 2001 2
Statements of Cash Flows
For the Three Months Ended May 31, 2000 and 2001 3
Notes to Condensed Financial Statements 4
2. Management's Discussion and Analysis or Plan of Operation 6
Part II - Other Information
6. Exhibits and Reports on Form 8-K 9
Signatures 9
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
As of As of
February 28, 2001 May 31, 2001
----------------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,337,950 $ 3,406,651
Trade accounts receivable 186,463 181,454
Investment securities 203,604 243,582
Deferred tax asset 194,103 179,323
Prepaid expenses and other 103,580 101,228
------------ ------------
Total current assets 4,025,700 4,112,238
------------ ------------
Oil and gas properties, at cost using the successful efforts method of
accounting, net of accumulated depletion and depreciation of
$5,508,910 on February 28, 2001 and $5,562,177 on May 31, 2001 1,358,417 1,291,529
Coal and gravel properties, net of accumulated depletion and depreciation
of $7,990,861 on February 28, 2001 and $7,993,590 on May 31, 2001 321,346 318,617
Real estate held for development 2,797,323 2,812,846
Other property and equipment, net of accumulated depreciation
of $351,822 on February 28, 2001 and $344,565 on May 31, 2001 122,094 125,825
Other noncurrent assets 947,111 952,111
------------ ------------
$ 9,571,991 $ 9,613,166
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 46,706 $ 110,614
Accrued expenses 84,409 67,367
------------ ------------
Total current liabilities 131,115 177,981
Reserve for reclamation costs 413,000 413,000
Deferred Federal income taxes 188,400 180,944
------------ ------------
Total liabilities 732,515 771,925
------------ ------------
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 17,288,964 17,285,875
Unrealized loss on investment securities
available for sale, net of income taxes (63,910) (38,712)
Less treasury stock, at cost, 5,694,180 shares on
February 28, 2001 and 5,701,930 on May 31, 2001 (9,596,982) (9,617,326)
------------ ------------
Total stockholders' equity 8,839,476 8,841,241
------------ ------------
$ 9,571,991 $ 9,613,166
============ ============
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
MAY 31, 2000 MAY 31, 2001
-------------- --------------
REVENUES:
OIL AND GAS $ 465,601 $ 372,136
GRAVEL 15,593 16,127
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TOTAL REVENUES 481,194 388,263
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OPERATING EXPENSES:
OIL AND GAS 248,647 276,883
COAL AND GRAVEL 19,174 13,566
REAL ESTATE DEVELOPMENT 10,386 9,482
GENERAL AND ADMINISTRATIVE 145,876 148,670
----------- -----------
TOTAL OPERATING EXPENSES 424,083 448,601
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INCOME (LOSS) FROM OPERATIONS 57,111 (60,338)
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OTHER INCOME:
INTEREST AND DIVIDEND INCOME 46,961 53,275
GAIN ON SALE OF OIL AND GAS PROPERTIES 11,906 120
OTHER, NET 128,045 2,000
----------- -----------
TOTAL OTHER INCOME 186,912 55,395
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INCOME (LOSS) BEFORE INCOME TAXES 244,023 (4,943)
----------- -----------
INCOME TAX EXPENSE (BENEFIT) 83,751 (1,854)
----------- -----------
NET INCOME (LOSS) $ 160,272 $ (3,089)
=========== ===========
BASIC AND DILUTED EARNING (LOSS) PER COMMON SHARE 0.04 (0.00)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 4,493,555 4,457,050
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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OAKRIDGE ENERGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
3 MONTHS ENDED 3 MONTHS ENDED
MAY 31, 2000 MAY 31, 2001
-------------- --------------
Cash flows from operating activities:
Net income (loss) $ 160,272 $ (3,089)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depletion and depreciation 95,995 63,306
Gain on sale of oil and gas properties (11,906) (120)
Gain on sale of other property and equipment (128,045) (2,000)
Deferred federal income taxes 78,479 (7,456)
Net changes in assets and liabilities:
Trade accounts receivable (12,544) 5,009
Prepaid expenses and other current assets (9,353) 23,160
Accounts payable 97,432 63,908
Accrued expenses (14,043) (17,042)
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Net cash provided by operating activities 256,287 125,676
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Cash flows from investing activities:
Additions to oil and gas properties (44,993) (9,504)
Additions to real estate held for development (8,503) (19,103)
Additions to other property and equipment 0 (7,462)
Investments in partnership (15,000) (5,000)
Proceeds from sale of oil and gas properties 11,906 2,438
Proceeds from sale of other property and equipment 129,066 2,000
Principal payments received on notes receivable 10,914 0
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Net cash provided by (used in) investing activities 83,390 (36,631)
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Cash flows from financing activities:
Purchases of treasury stock (77,569) (20,344)
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Net cash used in financing activities (77,569) (20,344)
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Net increase in cash and cash equivalents 262,108 68,701
Cash and cash equivalents at beginning of period 2,672,543 3,337,950
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Cash and cash equivalents at end of period $ 2,934,651 $ 3,406,651
============= =============
Supplemental disclosures of cash flow information:
Income taxes paid $ 23,732 $ 19,373
Recognition in Stockholders' Equity of the net unrealized holding gain on
available for sale securities of $40,647, net of tax effect of $23,842
during the quarter ended May 31, 2000 and $25,198, net of tax effect of
$14,780 during the quarter ended May 31, 2001.
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 three month periods
ended May 31, 2000 and 2001 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 28, 2001.
(3) On March 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 requires the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are
not hedges must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives will either be offset against the change
in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the
hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in
earnings. Adoption of SFAS No. 133 did not have a significant impact on
the operating results or financial position of the Company.
(4) The Company's operating segments are set forth in the annual financial
statements and accompanying notes for the fiscal year ended February
28, 2001.
Information regarding operations and assets by segment is as follows:
For the three For the three
months ended months ended
May 31, 2000 May 31, 2001
------------- -------------
Business segment revenue:
Oil and gas $ 465,601 $ 372,136
Gravel 15,593 16,127
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$ 481,194 $ 388,263
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Business segment profit (loss):
Oil and gas $ 216,954 $ 95,253
Coal and gravel (3,581) 2,561
Real estate development (10,386) (9,482)
General corporate (145,876) (148,670)
------------ ------------
Income (loss) from operations 57,111 (60,338)
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For the three For the three
months ended months ended
May 31, 2000 May 31, 2001
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Business segment profit (loss) (continued):
Interest income and other, net 175,006 55,275
Gain on sales of oil and gas properties 11,906 120
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Income (loss) before income taxes $ 244,023 $ (4,943)
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As of As of
February 28, 2001 May 31, 2001
----------------- ---------------
Total assets:
Oil and gas $ 5,411,122 $ 5,438,124
Coal and gravel 321,346 318,617
Real estate development 2,797,323 2,812,846
General corporate 1,042,200 1,043,579
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$ 9,571,991 $ 9,613,166
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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 28, 2001 and the Notes to Condensed Financial Statements contained in
this report.
RESULTS OF OPERATIONS
The Company had a net loss of $3,089 ($.00 per share) in the three
months ended May 31, 2001 compared to net income of $160,272 ($.04 per share)
during the three months ended May 31, 2000. Lower oil and gas revenues, higher
oil and gas operating expense and reduced other income were responsible for the
loss.
Oil and gas revenues declined approximately $93,500 (20.1%) in the
three months ended May 31, 2001 primarily due to the continued decline in oil
production sale volumes from the Company's principal property in Madison County,
Texas. Oil volumes from this property fell from 10,494 barrels in the 2000
period to 7,533 barrels in the 2001 period, an approximate 28.2% drop. The
Company's average oil price received during the 2001 period also declined $1.07
per barrel to $26.76 per barrel (an approximate 3.9% decrease) as nationwide oil
prices retreated from their highs of 2000 and early 2001. The Company's gas
revenues increased slightly due to a significantly higher average gas price
received, but the Company's oil and gas production is currently so heavily
weighted to oil that the increase in gas revenues did not materially offset the
oil revenues decline. The proposed secondary recovery project for the Madison
County, Texas property still awaits the necessary level of royalty owners
approval.
Revenues from the Company's gravel operations in La Plata County,
Colorado increased approximately $500 in the three months ended May 31, 2001.
Rentals received by the Company from its surface lease to Four Corners
Materials, Inc. ("Four Corners") were increased at the start of the fiscal year
based on the Company's pending extension of its gravel mining contract with Four
Corners, and the rental increase more than offset a decline in the Company's
royalty income resulting from a lower level of gravel sales made by Four Corners
during the quarter from the Company's property.
The expenses of the Company's oil and gas operations increased
approximately $28,200 (11.4%) in the 2001 period due
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to higher lease operating expense, principally with respect to the Madison
County, Texas property and in the North Texas area, and to an increase in dry
hole expense. The Madison County, Texas lease operating expense increased
approximately $24,900 and the North Texas area expense rose approximately
$19,200, both due to greater workover expense incurred to place wells back on
production. The Company also incurred approximately $19,700 in dry hole costs
during the 2001 period with respect to a well drilled in Wilbarger County,
Texas, but the Company did not incur any dry hole costs in the 2000 period.
Depletion and depreciation expense and production taxes declined approximately
$28,300 (34.7%) and $3,900 (17.6%), respectively, in the three months ended May
31, 2001 primarily due to the decrease in oil production from the Madison
County, Texas property. Ad valorem taxes were approximately $3,600 lower as
accruals for this expense for fiscal 2002 are based on lower valuations received
at the start of the year.
The expenses of the Company's coal and gravel operations decreased
approximately $5,600 (29.3%) in the three-month period ended May 31, 2001 due to
across-the-board declines in all categories of expenses with the largest decline
(approximately $3,800) occurring with respect to payroll. Real estate
development expenses were approximately $900 (8.7%) lower in the 2001 period as
the Company waited on further action by the City of Durango, Colorado on the
Company's annexation application with respect to the approximately 1,100 acres
involved in its proposed "Oakridge at Durango" development. Legal expense
related to the development did increase significantly during the period although
most other categories of expense declined.
General and administrative expense rose approximately $2,800 (1.9%)
during the three months ended May 31, 2001 primarily due to increased legal and
tax accounting expense. The amount of the increase was partially offset by
declines in payroll, auditing, engineering and general depreciation expense.
Other income declined approximately $131,500 (70.4%) in the 2001 period
due to the drop in the levels of revenues from gain on the sale of oil and gas
properties and the "other, net" categories as compared to those achieved in the
2000 period. Interest and dividend income increased approximately $6,300 in the
2001 period but the Company had only $2,120 of revenues from the remaining two
categories of other income. In the 2000 period, however, the Company had
approximately $11,900 in gain from the sale of oil and gas properties and
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approximately $128,000 in revenues from gains on the sale of surplus coal
equipment (bulldozers) and the sale of a right of way from a portion of the
Company's Colorado land.
The Company's weighted average shares outstanding decreased by
approximately 36,500 shares (.8%) in the 2001 period due to purchases of the
Company's common stock made by the Company during the year ended May 31, 2001.
The Company purchased 7,750 shares of its common stock during the three-month
2001 period from unaffiliated parties.
FINANCIAL CONDITION AND LIQUIDITY
During the first quarter of fiscal 2002, the Company's operating
activities funded the Company's investing and financing activities, resulting in
an approximate $68,700 increase in cash and cash equivalents at May 31, 2001.
The Company's operating activities contributed approximately $125,700 despite
the decline in the Company's oil and gas revenues compared to the first quarter
of fiscal 2001, but the Company's investment activities used approximately
$36,600 in funds, primarily for additions to real estate held for development
and to oil and gas properties. The Company's financing activities (entirely
purchases of the Company's common stock) used approximately $20,400 in funds. At
May 31, 2001, the Company had no indebtedness and cash, cash equivalents and
investment securities available for sale totaling $3,650,200.
The Company expects to fund its contemplated operations and any stock
purchases it makes during the second quarter and the remainder of fiscal 2002
from its cash and cash equivalents, sales of all or a portion of its investment
securities available for sale and the cash flow from its oil and gas properties.
Any significant decline in oil and gas prices from current levels might cause
the Company to restrict its activity levels from those presently contemplated by
management for the remainder of the fiscal year.
As discussed in the Company's Annual Report on Form 10-KSB for the
fiscal year ended February 28, 2001, in the longer term the Company will
probably need to secure substantial equity and/or debt financing to be able to
proceed in a reasonable manner with its proposed Colorado real estate
development. The Company will also explore selling portions of the property to
other companies who would develop specific portions of the property. There can
be no assurances that any of these financing options will be available to the
Company when needed.
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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 May 31, 2001.
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: July 16, 2001 By /s/ Sandra Pautsky
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Sandra Pautsky, President
By /s/ Carol J. Cooper
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Carol J. Cooper, Chief Accounting Officer
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