1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the Quarterly Period ended JUNE 30, 1996
--------------------------------------------------
or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the transition period from _______________________ to ______________________
Commission File Number: 0-18726
---------------------------------------------------------
SEABOARD OIL CO.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 75-2275736
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3100 N. "A" STREET, BUILDING B, SUITE 200, MIDLAND, TEXAS 79705
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(915) 684-7005
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report).
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
proceeding 12 months (or for such period that the registrant was required to
file such reports), and (2) has been subject to such requirements for the past
90 days.
[X] Yes [ ] No
There were 1,471,369 shares of Common Stock, $.01 par value of the registrant
outstanding as of June 30, 1996.
2
SEABOARD OIL CO.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet
June 30, 1996 3
Consolidated Statements of Operations
Three Months Ended June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows
Three Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit - 27 Financial Data Schedule
b. Reports on Form 8-K - The Registrant filed
a Form 8-K dated June 21, 1996 reporting
a proposed merger agreement.
Signatures 8
2
3
SEABOARD OIL CO.
Consolidated Balance Sheet
(Unaudited)
June 30, 1996
Assets
------
Current assets:
Cash and cash equivalents $ 4,416,000
Accounts receivable:
Trade 68,000
Oil and gas sales 580,000
Other 6,000
Other current assets 60,000
-------------
Total current assets 5,130,000
-------------
Property and equipment at cost:
Oil and gas properties, based on
successful efforts accounting method 17,289,000
Other property and equipment 851,000
-------------
18,140,000
Less accumulated depreciation and
depletion (7,698,000)
-------------
Net property and equipment 10,442,000
-------------
$ 15,572,000
=============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Trade accounts payable $ 376,000
Accrued liabilities:
Oil and gas sales 128,000
Other 159,000
-------------
Total current liabilities 663,000
-------------
Stockholders' equity:
Preferred Stock, $.10 par value.
Authorized 500,000 shares; no
shares issued or outstanding -
Common Stock, $.01 par value.
Authorized 3,000,000 shares,
1,571,015 issued 16,000
Capital in excess of par value 9,538,000
Retained earnings 5,903,000
-------------
15,457,000
Less: Treasury stock, at cost (548,000)
-------------
Total stockholders' equity 14,909,000
-------------
Commitments
$ 15,572,000
=============
See accompanying notes to consolidated financial statements.
3
4
SEABOARD OIL CO.
Consolidated Statements of Operations
(Unaudited)
Three months ended
June 30
-------------------------------
1996 1995
------------ -------------
Operating revenues-oil and
gas sales $ 1,723,000 $ 1,518,000
------------ -------------
Operating costs and expenses:
Lease operating expenses 460,000 416,000
Dryhole and abandonment 216,000 21,000
Depreciation and depletion 464,000 388,000
General and administrative 181,000 173,000
------------ -------------
Total operating costs
and expenses 1,321,000 998,000
------------ -------------
Operating income 402,000 520,000
------------ -------------
Other income:
Interest income 56,000 42,000
Gain on sale of assets 21,000 50,000
Other income 1,000 -
------------ -------------
Total other income 78,000 92,000
------------ -------------
Net income $ 480,000 $ 612,000
============ =============
Earnings per share $ 0.33 $ 0.41
============ =============
Weighted average shares
outstanding 1,469,918 1,487,450
============ =============
See accompanying notes to consolidated financial statements.
4
5
SEABOARD OIL CO.
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended
June 30
------------------------------
1996 1995
----------- ------------
Cash flows from operating activities:
Net income $ 480,000 $ 612,000
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and depletion 464,000 388,000
Dryhole and abandonment 213,000 11,000
Gain on sale of assets (21,000) (50,000)
Change in assets and liabilities:
(Increase) decrease in accounts receivable 52,000 (139,000)
(Increase) decrease in other current assets (6,000) 106,000
Increase in accounts payable 200,000 69,000
Increase (decrease) in accrued
liabilities (47,000) 5,000
----------- ------------
Net cash provided by operations 1,335,000 1,002,000
----------- ------------
Cash flows from investing activities:
Additions to oil and gas properties (795,000) (2,087,000)
Additions to other property and equipment - (340,000)
Proceeds from sales of assets 28,000 64,000
----------- ------------
Net cash used in investing activities (767,000) (2,363,000)
----------- ------------
Cash flows from financing activities:
Exercise of stock option 21,000 -
----------- ------------
Net cash provided by
financing activities 21,000 -
----------- ------------
Net increase (decrease) in cash and
cash equivalents 589,000 (1,361,000)
Cash and cash equivalents at beginning
of period 3,827,000 3,769,000
----------- ------------
Cash and cash equivalents at end of period $ 4,416,000 $ 2,408,000
=========== ============
See accompanying notes to consolidated financial statements.
5
6
SEABOARD OIL CO.
Notes to Consolidated Financial Statements
June 30, 1996
(Unaudited)
(1) Opinion of Management
Although the information furnished is unaudited, in the opinion of
management of Seaboard Oil Co. (the "Company"), the accompanying
financial statements reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the financial
condition and results of operations for the periods presented. The
results of operations for the three months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the fiscal year.
(2) Proposed Merger
The Company announced on June 21, 1996 that it had received an offer from
Seaboard Acquisition Partners, Inc. ("SAP") to acquire the 415,686 shares
of common stock of the Company not currently owned by SAP, constituting
approximately 29% of the outstanding shares. The purchase price per
share is $9.75 and the transaction is proposed to be accomplished through
a merger of a wholly owned subsidiary of SAP with and into the Company.
SAP currently owns 1,055,683 shares of the Company's common stock,
constituting approximately 71% of the outstanding shares.
SAP's offer is subject to: (1) the receipt of a satisfactory commitment to
fund the purchase price; (2) the absence of any material adverse change
in the Company's financial condition, results of operations or prospects
prior to the closing of the transaction; (3) the aggregate amount of the
consideration paid for shares and for cancellation of options and rights
for shares not exceeding $4.9 million; (4) the parties entering into a
Merger Agreement containing terms acceptable to the parties; and (5) such
other terms and conditions which the Company believes is necessary, from
a legal point of view, to solicit proxies from its shareholders with
respect to the transaction.
The Company filed a preliminary proxy statement with the Securities and
Exchange Commission on July 12, 1996, in connection with its Annual
Meeting of Stockholders which included the SAP merger proposal.
(3) Reclassifications
Certain reclassifications have been made to the 1995 financial statements
to conform to the 1996 presentation.
6
7
SEABOARD OIL CO.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
The Company's working capital at June 30, 1996 was $4,467,000 and its current
ratio was 7.73:1, compared to working capital of $4,076,000 and a current ratio
of 8.98:1 at March 31, 1996. Capital expenditures for the three months ended
June 30, 1996 were approximately $795,000, which was the Company's primary
investing activity. The Company drilled three wells during the quarter, two of
which were Clearfork tests in Hockley County, Texas and the other a Clearfork
development well in Gaines County, Texas. One of the Clearfork tests in
Hockley County, Texas has been determined to be a dry hole. Approximately
$213,000 was charged to dry hole and abandonment expense in the Company's first
quarter related to this well.
The Company's capital expenditure budget for the remainder of fiscal 1997 is
for (1) the continued development of the Company's existing oil and gas
properties in the North Robertson Unit and Quito West Unit which includes the
drilling of four development wells, (2) the drilling of a development well on a
lease adjoining the North Robertson Unit and (3) the drilling of development
wells in both Ector and Hockley Counties of Texas.
To fund such capital expenditures, the Company expects that its cash provided
by operations and cash balances plus borrowing under its line of credit will be
adequate not only to fund 1997 capital expenditures but provide the Company the
financial flexibility needed to respond to investment opportunities for the
acquisition of oil and gas properties.
Results of Operations
Revenue from oil and gas production for the three months ended June 30, 1996
was $1,723,000 compared to $1,518,000 for the same period last year. The
majority of this increase can be attributed to higher oil prices. The Company
received an average of $20.70 per barrel during the current quarter compared to
$17.92 per barrel for the same quarter last year. Gas prices also increased
from an average of $1.78 last year to $2.26 for the current period.
Other income reported by the Company for the quarter ended June 30, 1996 was
$78,000, a decrease of $14,000 from the same period last year. A gain of
$50,000 from the sale of a certain royalty interest recorded last year offset
by higher interest income in the current quarter accounts for the decrease.
Lease operating expenses were $460,000 during the quarter ended June 30, 1996
compared to $416,000 for the same period last year. This increase in lease
operating expenses is due primarily to a production tax refund received during
the first quarter of last year. General and administrative expenses held
steady at 11% of revenues for the three months ended June 30, 1996 and 1995.
7
8
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.
SEABOARD OIL CO.
- -------------------------
(REGISTRANT)
Date: August 12, 1996 /s/ GARY B. GILLIAM
---------------------------------
Gary B. Gilliam, President
and Chief Financial Officer
8
9
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule