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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, 1997.
[ ] 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 May 31, 1997: Common Stock, $.04 par value - 4,989,309 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, 1997 and May 31, 1997 1
Condensed Statements of Operations
For the Three Months Ended May 31, 1996 and 1997 2
Statements of Cash Flows
For the Three Months Ended May 31, 1996 and 1997 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 8
Signatures 9
(i)
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Oakridge Energy, Inc.
CONDENSED BALANCE SHEETS
ASSETS
As of As of
February 28, May 31,
1997 1997
------------ ------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 195,631 $ 218,488
Trade accounts receivable 807,005 617,108
Other receivables 29,558 28,749
Investment securities 1,399,344 1,940,683
Current maturities of long-term notes receivable 4,760 4,855
Federal income tax receivable 230,602 230,602
Deferred tax asset 44,303 15,362
Prepaid expenses and other 27,571 17,534
------------ ------------
Total current assets 2,738,774 3,073,381
------------ ------------
Investment securities 1,347,663 1,048,249
Long-term notes receivable, net of current maturities 27,894 26,644
Oil and gas properties, at cost using the successful efforts method of
accounting, net of accumulated depletion and depreciation of
$2,864,407 on February 28, 1997 and $3,084,805 on May 31, 1997 3,180,284 3,462,031
Coal and gravel properties, net of accumulated depletion and depreciation
of $8,330,649 on February 28, 1997 and $8,333,644 on May 31, 1997 404,130 401,288
Real estate held for development 2,275,977 2,366,246
Other property and equipment, net of accumulated depreciation
of $733,429 on February 28, 1997 and $656,933 on May 31, 1997 172,611 165,850
Other assets 1,213,043 1,242,931
------------ ------------
$ 11,360,376 $ 11,786,620
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 239,906 $ 335,583
Accrued expenses 56,008 53,485
Other liabilities -- 351,618
------------ ------------
Total current liabilities 295,914 740,686
------------ ------------
Deferred federal income taxes 481,238 526,238
------------ ------------
Total liabilities 777,152 1,266,924
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Stockholders' equity:
Common stock, $.04 par value, 20,000,000 shares authorized,
10,157,803 shares issued 406,312 406,312
Additional paid-in capital 805,092 805,092
Retained earnings 17,188,379 17,342,315
Net unrealized gain on investment securities available for sale (86,002) (29,822)
------------ ------------
18,313,781 18,523,897
Less treasury stock, at cost; 5,074,444 shares on February 28, 1997
and 5,168,494 on May 31, 1997 (7,730,557) (8,004,201)
------------ ------------
Total stockholders' equity 10,583,224 10,519,696
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$ 11,360,376 $ 11,786,620
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The accompanying notes are an integral part of these financial statements.
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Oakridge Energy, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For 3 Months For 3 Months
Ended Ended
May 31, 1996 May 31, 1997
------------ ------------
Revenues:
Oil and gas $ 396,694 $ 898,975
Coal and gravel 14,832 10,342
Other 10,650 10,650
------------ ------------
Total revenues 422,176 919,967
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Operating expenses:
Oil and gas 289,192 566,782
Coal and gravel 18,133 24,376
Real estate development 48,442 16,514
General and administrative 98,494 128,696
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Total operating expenses 454,261 736,368
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Income (loss) from operations (32,085) 183,599
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Other income (expense):
Interest and dividend income 75,184 50,495
Interest expense (9,263) (3,607)
Other, net 0 9,683
------------ ------------
Total other income 65,921 56,571
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Income before income taxes 33,836 240,170
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Income tax expense 40,946 86,234
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Net income (loss) $ (7,110) $ 153,936
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Income (loss) per common share $ (0.00) $ 0.03
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Weighted average shares outstanding 5,126,833 5,031,577
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The accompanying notes are an integral part of these financial statements.
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Oakridge Energy, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
For 3 Months For 3 Months
Ended Ended
May 31, 1996 May 31, 1997
------------ ------------
Cash flows from operating activities:
Net income (loss) $ (7,110) $ 153,936
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depletion and depreciation 181,430 231,204
Accretion on investment securities, net (4,720) (4,648)
Gain on sales of other property and equipment 0 (19,000)
Deferred federal income taxes 184,718 45,000
Net changes in assets and liabilities:
Trade accounts receivable (177,449) 189,897
Other receivables (23,732) 809
Federal income tax receivable (173,213) 0
Prepaid expenses and other current assets 6,533 10,037
Accounts payable 53,599 95,677
Accrued expenses (10,470) (2,523)
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Net cash provided by operating activities 29,586 700,389
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Cash flows from investing activities:
Additions to oil and gas properties (775,823) (513,746)
Additions to coal and gravel properties (22,439) 0
Additions to real estate held for development 0 (91,472)
Additions to other property and equipment (5,588) 0
Increase in other assets 0 (29,888)
Proceeds from sale of oil and gas properties 0 11,601
Proceeds from sale of other property and equipment 0 19,000
Purchases of investments available for sale 0 (152,156)
Principal payments received on notes receivable 1,066 1,155
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Net cash used in investing activities (802,784) (755,506)
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Cash flows from financing activities:
Other liabilities 803,272 351,618
Purchases of treasury stock (22,971) (273,644)
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Net cash provided by financing activities 780,301 77,974
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Net increase in cash and cash equivalents 7,103 22,857
Cash and cash equivalents at beginning of period 44,300 195,631
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Cash and cash equivalents at end of period $ 51,403 $ 218,488
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Supplemental disclosures of cash flow information:
Interest paid $ 7,345 $ 3,198
Income taxes paid $ 29,382 $ 41,234
Recognition in Stockholders' Equity of the net unrealized holding gains on available for sale securities of
$167,677, net of tax effect of $57,010 during the quarter ended May 31, 1996 and $56,180, net of tax effect of
$28,941 during the quarter ended May 31, 1997.
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-month
periods ended May 31, 1996 and 1997 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, 1997.
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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, 1997 and the Notes to Condensed Financial Statements contained in
this report.
RESULTS OF OPERATIONS
The Company's financial performance continued to improve in the three
months ended May 31, 1997 as the Company had net income of $153,936 ($.03 per
share) compared to a net loss of $7,110 ($.00 per share) during the three
months ended May 31, 1996. Increased oil and gas revenues from the Company's
properties in East Texas were the principal reason for the improved
performance.
Oil and gas revenues during the three months ended May 31, 1997
increased approximately $502,300 (126.6%) as compared to the 1996 period.
Production gains from the Company's Madison County, Texas (principally oil) and
Limestone County, Texas (principally gas) properties were responsible for the
increased oil and gas revenues as revenues from all other areas of Company
production declined as compared to the prior year. The gains from the two East
Texas counties were due to 20 gross (3.47 net) new wells added by the Company
from June 1, 1996 through May 31, 1997. The Company had only minimal gas
revenues from New Mexico during the three months ended May 31, 1997 after this
area had made a significant contribution to oil and gas revenues in the 1996
period.
The increase in oil and gas revenues were accomplished despite
approximate 8.9% and 17.9% decreases in the Company's average oil and gas
prices received, respectively, during the three months ended May 31, 1997. The
Company's average oil and gas prices received were $19.47 per barrel and $1.77
per MCF in the 1997 period, down from $21.36 per barrel and $2.16 per MCF in
the 1996 period. The Company's average oil and gas prices had increased
substantially in the 1996 period from the 1995 period prices.
Gravel revenues decreased approximately $4,500 (30.3%) in the 1997
period due to the continued decline in gravel sales from the Company's Colorado
property. Other income (overhead fees received by the Company in the North
Texas area) was the same in the 1997 and 1996 periods.
The expenses of the Company's oil and gas operations increased
approximately $277,600 (96.0%) during the three months ended May 31, 1997. Such
expenses principally consisted of depletion and depreciation expense, lease
operating expense, production taxes and dry hole costs. The first three
categories of
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such expenses rose primarily due to the increased level of operations in the
East Texas area during the period. Dry hole costs increased approximately
$140,200 (446.6%) in the 1997 period as the Company participated in the
drilling of two gross (.45 net) dry holes in New Mexico and East Texas during
the period as compared to one gross (.23 net) dry hole in the 1996 period. The
Company did not have any expense from abandoned leaseholds in either period.
The expenses of the Company's coal and gravel operations increased
approximately $6,200 (34.4%) in the 1997 period principally due to higher
payroll expense and ad valorem taxes. Real estate development expenses declined
approximately $31,900 (65.9%) in the three months ended May 31, 1997 as
compared to the 1996 period. In the 1996 period, the Company had not yet
received the land use permit from La Plata County, Colorado which allowed the
Company to commence preliminary site work on the golf course it is building on
approximately 170 acres of the 2,025 acres of land the Company owns in such
county and, as a result, expensed all of the amounts it incurred for employees
working on the project, contract services, consulting engineering services and
location maintenance (a total of approximately $39,200). The Company's receipt
of the land use permit in August 1996 allowed any amounts expended by the
Company for these items in the 1997 period to be capitalized. The funds spent
by the Company in the 1997 period for employees working on the project and
consulting engineering services were capitalized, but it was not necessary for
the Company to expend any funds for contract services and location maintenance
during the period.
General and administrative expense rose approximately $30,200 (30.7%)
during the three months ended May 31, 1997 primarily due to the increased
expense incurred in 1997 for the independent petroleum engineering report the
Company obtains annually at yearend with respect to its proven oil and gas
reserves. In 1997, the Company changed the firm responsible for preparing the
report and such firm was required to evaluate a number of new wells that
commenced production during the year, both of which added to the expense of the
report.
Interest and dividend income declined approximately $24,700 (32.8%)
in the 1997 period. Prior to February 28, 1997, the Company paid in full its
margin account borrowings, which had been used to fund the Company's operations
for most of the year, with proceeds from sales and maturities of investment
securities. This resulted in a significant reduction in the funds the Company
had invested in the 1997 period. Interest expense declined approximately $5,700
(61.1%) in the 1997 period. Although the Company again used margin account
borrowings to fund a portion of its operations in the 1997 period, the level of
such borrowings was not as great as in the 1996 period. The "other, net"
category of other income and expense was an income item totaling approximately
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$9,700 in the 1997 period and resulted primarily from a gain on the sale of
other property and equipment. The Company had no items of income or expense in
this category in the 1996 period.
Income tax expense increased approximately $45,300 during the 1997
period due to the higher level of pre-tax income. The amount of the Company's
income tax expense in the 1996 period exceeded its pre-tax income for such
period due to the combination of franchise taxes paid the State of Texas and
federal income taxes.
The Company's average weighted shares outstanding declined
approximately 1.9% in the 1997 period. The Company purchased 94,050 shares
during the 1997 period, including a total of 61,250 shares from an affiliate
and an employee.
FINANCIAL CONDITION AND LIQUIDITY
During the first quarter of fiscal 1998, the Company's additions to
its oil and gas properties and its real estate development activities required
approximately $605,200 in cash funds and its other investing activities used an
additional approximate $150,300 in funds. The Company's operating activities
provided approximately $700,400 in funds during the quarter and the Company's
financing activities (the excess of funds obtained from margin account
borrowings over the funds used to purchase Company stock) provided an
additional $78,000 in funds, resulting in an increase in the Company's cash and
cash equivalents by approximately $22,900.
Notwithstanding the increase in the Company's oil and gas revenues
which occurred in fiscal 1997 and the first quarter of fiscal 1998 and which
the Company expects to continue, the Company anticipates that its activities in
the oil and gas business and in real estate development during the remainder of
fiscal 1998 will be net users of cash. To the extent the needed funds are not
provided by the Company's operating activities, the Company expects to fund
such activities from a combination of further margin account borrowings and the
sale and maturities of its investment securities. At May 31, 1997, the Company
held investment securities totaling approximately $2,989,000.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - Financial Data Schedule for the three months ended May 31,
1997 filed as Exhibit 27.
(b) Reports on Form 8-K - No reports on Form 8-K were filed by the
Company during the three months ended May 31, 1997.
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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 15, 1997 By /s/ Sandra Pautsky
------------------------------------
Sandra Pautsky, Executive Vice
President and 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.
(27) - Financial Data Schedule - filed herewith.
(99) - Additional exhibits - not applicable.