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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1995
OR
/ / 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 0-2517
TOREADOR ROYALTY CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 75-0991164
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
530 Preston Commons West
8117 Preston Road
Dallas, Texas 75225
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 369-0080
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 twelve months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 1995
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Common Stock, $.15625 par value 5,343,371
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TOREADOR ROYALTY CORPORATION
ITEM 1. CONSOLIDATED BALANCE SHEET
March 31, December 31,
1995 1994
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,681,759 $ 3,893,666
Marketable securities, at market value 727,650 674,730
Accounts receivable 167,853 160,701
Federal income tax receivable 68,014 68,014
Prepaid expenses and deposits 105,212 14,340
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Total current assets 4,750,488 4,811,451
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Properties and equipment, less accumulated
depreciation, depletion and amortization 2,889,362 2,733,101
Other assets 51,352 105,352
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Total assets $ 7,691,202 $ 7,649,904
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 152,420 $ 164,763
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Total current liabilities 152,420 164,763
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Deferred tax liabilities 241,373 223,380
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Total liabilities 393,793 388,143
Stockholders' equity:
Preferred stock, $1.00 par value, 4,000,000 shares
authorized; none issued - - - - - -
Common Stock, $.15625 par value; 10,000,000
shares authorized; 5,349,071 shares issued 835,792 835,792
Capital in excess of par value 3,560,042 3,560,042
Retained earnings 2,526,885 2,526,164
Net unrealized gain on marketable securities 391,434 356,507
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7,314,153 7,278,505
Less 5,700 shares of common stock
in treasury, at cost (16,744) (16,744)
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Total stockholders' equity 7,297,409 7,261,761
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Total liabilities and stockholders' equity $ 7,691,202 $ 7,649,904
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The Company uses the successful efforts method of accounting for its oil and
gas producing activities.
See accompanying notes to the consolidated financial statements.
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TOREADOR ROYALTY CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the Three Months Ended
March 31,
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1995 1994
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REVENUES:
Oil and gas sales $ 343,677 $ 357,322
Lease bonuses and rentals 41,896 226,780
Interest and other income 51,711 56,866
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Total revenues 437,284 640,968
COSTS AND EXPENSES:
Lease operating expense 69,463 72,213
Dry holes and abandonments 69,401 - - -
Depreciation, depletion and amortization 56,975 77,406
Geological and geophysical 49,528 51,873
General and administrative 191,196 236,513
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Total costs and expenses 436,563 438,005
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INCOME BEFORE FEDERAL INCOME TAXES 721 202,963
PROVISION (BENEFIT) FOR INCOME TAX EXPENSE - - - - - -
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NET INCOME $ 721 $ 202,963
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INCOME PER SHARE $ 0.00 $ 0.04
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WEIGHTED AVERAGE SHARES OUTSTANDING 5,352,225 4,611,254
==================================
See accompanying notes to the consolidated financial statements.
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TOREADOR ROYALTY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the Three Months Ended
March 31,
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1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 721 $ 202,963
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 56,975 77,406
Dry holes and abandonments 69,401 - - -
Gain on sale of oil and gas properties
and equipment - - - (25,225)
(Increase) Decrease in accounts receivable (7,152) 10,902
Increase in federal income tax receivable - - - (9,961)
Pension funding in excess of expense - - - 3,387
Increase in prepaid expenses and deposits (36,872) (47,600)
Decrease in accounts payable and
accrued liabilities (12,343) (50,427)
Decrease in taxes payable - - - (70,039)
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Net cash provided by operating activities 70,730 91,406
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for oil and gas properties
and equipment (282,637) (44,215)
Purchase of furniture and fixtures - - - (3,470)
Proceeds from sales of oil and gas properties
and equipment - - - 25,225
Lease of undeveloped acreage - - - 95,372
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Net cash from (used for) investing activities (282,637) 72,912
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (211,907) 164,318
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,893,666 1,360,024
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,681,759 $ 1,524,342
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SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ - - - $ 80,000
See accompanying notes to the consolidated financial statements.
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TOREADOR ROYALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements should be read in the context
of the consolidated financial statements and notes thereto filed with the
Securities and Exchange Commission in Toreador Royalty Corporation's (the
"Company") 1994 Annual Report on Form 10-K. In the opinion of the Company, the
information furnished herein reflects all adjustments consisting of only normal
recurring adjustments, necessary for a fair presentation of the results of the
interim periods reported herein.
CAPITALIZATION POLICY FOR OIL AND GAS ACTIVITIES
The Company follows the successful efforts method of accounting for
oil and gas exploration and development expenditures. Under this method, costs
of successful exploratory wells and all development wells are capitalized.
Costs to drill exploratory wells which do not find proved reserves are
expensed. Acquisition costs of mineral interests in oil and gas properties
remain capitalized until they are impaired or a determination has been made to
discontinue exploration of the lease, at which time all related costs are
charged to expense. Impairment of unproved properties is assessed and recorded
on a property-by-property basis. Upon sale or abandonment of units of property
or the disposition of miscellaneous equipment, the cost is removed from the
asset account, the related reserves relieved of the accumulated depreciation or
depletion and the gain or loss is credited to or charged against operations.
Maintenance and repairs are charged to expense; betterments of property are
capitalized and depreciated.
EARNINGS PER SHARE
Earnings per common share are based on the weighted average number of
shares, including common share equivalents (except where inclusion of such
common share equivalents would have an antidilutive effect), outstanding.
FEDERAL INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109(SFAS 109), "Accounting for Income
Taxes", which was adopted effective January 1, 1993.
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TOREADOR ROYALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
NOTE 2 - MARKETABLE SECURITIES
Marketable securities are comprised of 105,840 shares in the San Juan
Basin Royalty Trust at March 31, 1995 and December 31, 1994. The Company's
cost in this royalty trust is $126,258. At March 31, 1995, the market value of
these securities which are designated as available for sale aggregated
$727,650, resulting in a gross unrealized gain in the amount of $601,392 and an
unrealized gain, net of tax effect, of $391,434. At December 31, 1994, the
market value of these securities was $674,730, resulting in a gross unrealized
gain in the amount of $548,472, and an unrealized gain, net of tax effect, of
$356,507.
NOTE 3 - NON-PRODUCING MINERAL AND ROYALTY INTERESTS
Principal properties include mineral fee interests acquired by the
Company during 1951 and 1958. These interests totaled approximately 530,000
net mineral acres underlying approximately 870,000 surface acres in the Texas
Panhandle and West Texas. It is recognized that the ultimate realization of
the investment in these properties is dependent upon future exploration and
development operations which are dependent upon satisfactory leasing and
drilling arrangements with others. Additionally, the Company owns working or
royalty interests in Texas, New Mexico, Oklahoma, Arkansas, Louisiana and
Colorado.
NOTE 4 - INTEREST AND OTHER INCOME
Items in interest and other income consist of:
Three Months Ended
March 31,
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1995 1994
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Interest - Certificates of Deposit and
U. S. Treasury Bills $ 42,123 $ 9,607
Distribution from Grantor Trust:
San Juan Basin Royalty Trust 9,588 16,034
Sale of oil and gas properties and 25,225
equipment - - -
Management fees - - - 6,000
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$ 51,711 $ 56,866
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TOREADOR ROYALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
NOTE 5 - CAPITAL
On May 23, 1994, the Company privately placed 809,071 shares of common
stock for an aggregate consideration of $2,831,749. In its private placement
agreement with the purchasers, the Company granted them registration rights,
pursuant to which a registration statement on Form S-3 covering all the shares
was filed on June 22, 1994. The registration statement was declared effective
July 11, 1994 and the Company is obligated to maintain such effectiveness until
May 23, 1996. In connection with the private placement, the Company's
placement agent received a five-year warrant to purchase 106,867 shares of
common stock at a price of $4.375 per share. The placement agent has rights to
participate in registered offerings of common stock by the Company.
The net proceeds to the Company from the private placement (after
deducting the placement agent's fee of $141,112 and expenses of approximately
$75,000) were approximately $2,616,000.
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TOREADOR ROYALTY CORPORATION
March 31, 1995
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company has no debt and maintains its excess cash funds in
interest-bearing deposits and commercial paper. The Company is not aware of
any demands, commitments or events which will result in its liquidity
increasing or decreasing in a material way. From time to time, the Company may
receive lease bonuses that cannot be anticipated and, when funds are available,
the Company may elect to participate in exploratory ventures. The Company also
may acquire producing oil and gas assets which could require the use of debt.
Management believes that sufficient funds are available internally to meet
anticipated capital requirements for fiscal 1995.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1995 vs
Three Months Ended March 31, 1994
Revenues for the first quarter 1995, were $437,284, versus $640,968 for
the same period in 1994. Oil and gas sales were $343,677 on volumes of 14,061
BBLs and 76,077 MCF in 1995 versus $357,322 on volumes of 13,957 BBLs and
90,987 MCF in 1994. The $13,645 decrease in oil and gas sales resulted from a
decline in gas production by 14,910 MCF while oil production increased slightly
by 104 BBLs. The gas volume and revenue declines were partially offset by a
30% average increase in oil prices. Lease bonus and rental income decreased by
$184,884 to $41,896 in 1995 from $226,780 in 1994. Interest and other income
was $51,711 in 1995 versus $56,866 in 1994. Interest income increased by
$32,516 to $42,123 in 1995 from $9,607 in 1994 due to increased investment
balances resulting from the successful private placement of stock in the second
quarter of 1994. Royalty trust distributions declined by $6,446 to $9,588 in
1995 from $16,034 in 1994. The Company recorded sales of certain oil and gas
properties of $25,225 in 1994 while no property dispositions have been made in
1995. The acreage joint venture for which the Company received $6,000 in
management fees ended in the fourth quarter of 1994.
Costs and expenses were $436,563 in 1995 versus $438,005 in 1994. Dry
holes and abandonments were $69,401 in 1995 compared to none for the same
period in 1994. How-
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TOREADOR ROYALTY CORPORATION
March 31, 1995
RESULTS OF OPERATIONS (Continued)
Three Months Ended March 31, 1995 vs
Three Months Ended March 31, 1994
ever, decreases in all other expense categories counterbalanced this
exploration expense increase. The remaining cost and expense categories
decreased $70,843, comprised of $2,750 from lease operating expense; $20,431
from depreciation, depletion and amortization; $2,345 from geological and
geophysical; and $45,317 from general and administrative expenses.
Depreciation, depletion and amortization decreased as a result of no provision
for lease impairment being required in 1995 due to the expiration in 1994 of
undeveloped acreage in the Arkoma Basin. The major contributing factor for the
general and administrative expense decline was a reduction in the utilization
of outside professional consultants.
The Company recognized net income of $721, or a fractional cent per share,
for the first quarter of 1995 versus net income of $202,963, or $.04 per share,
for the same period of 1994.
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TOREADOR ROYALTY CORPORATION
March 31, 1995
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The information required by this Item 6(a) is set forth in the
Index to Exhibits accompanying this quarterly report and is
incorporated herein by reference.
(b) Reports on Form 8-K
None.
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.
TOREADOR ROYALTY CORPORATION,
Registrant
/s/ PETER R. VIG
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Peter R. Vig, Chairman;
the Principal Executive, Financial
and Accounting Officer
May 12, 1995
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TOREADOR ROYALTY CORPORATION
March 31, 1995
INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY NUMBERED
NUMBER EXHIBIT PAGE
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27.1 Financial Data Schedule
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