SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20449
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission File number No. 0-14905
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada 13-3130236
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
444 MADISON AVENUE, SUITE 3203, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
(212) 688-3333
--------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
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 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 the registrant's Common Stock, $.08 par
value, as of August 11, 1997 is 42,991,892 shares.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1997 1996
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 19,196 $ 11,058
Cash - restricted -- 161,022
Marketable securities 3,617,954 --
Accounts and notes receivable, net 1,660,651 1,073,140
Inventory -- 459,961
Prepaid expenses 321,163 838,104
------------ ------------
Total current assets 5,618,964 2,543,285
------------ ------------
Property, plant and equipment:
Unevaluated property 871,754 5,648,630
Oil and gas properties -- 32,506,656
Refinery property and equipment 18,912,633 17,235,183
Other 212,970 499,971
------------ ------------
19,997,357 55,890,440
Less - accumulated depreciation, depletion,
amortization and impairments (3,966,595) (23,959,191)
------------ ------------
Total property, plant and equipment 16,030,762 31,931,249
------------ ------------
Other long-term assets, net 2,154,612 17,897
------------ ------------
Total assets $ 23,804,338 $ 34,492,431
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ -- $ 237,162
Current portion of long-term debt 2,390,793 5,968,393
Accounts payable 1,422,703 3,636,765
Accrued liabilities 2,077,782 2,524,194
------------ ------------
Total current liabilities 5,891,278 12,366,514
Long-term debt 2,961,109 798,199
------------ ------------
Total liabilities 8,852,387 13,164,713
------------ ------------
Stockholders' equity:
Preferred stock, par value $0.01, 7,000,000 shares
authorized, none issued -- --
Common stock, par value $.08, 100,000,000 shares
authorized, 39,559,188 shares issued and outstanding
at June 30, 1997 and 34,458,921 shares at December 31, 1996 3,164,735 2,756,714
Additional paid-in capital 79,978,622 78,677,265
Stock purchase warrants 1,297,754 1,297,754
Accumulated deficit (69,489,160) (61,404,015)
------------ ------------
Total stockholders' equity 14,951,951 21,327,718
------------ ------------
Commitments and contingent liabilities (Note 10) -- --
------------ ------------
Total liabilities and stockholders' equity $ 23,804,338 $ 34,492,431
============ ============
The accompanying notes are an integral part of these statements.
2
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30,
(Unaudited)
1997 1996
------------ ------------
Revenues:
Oil and gas production and
pipeline fees $ -- $ 337,054
Refinery lease fees -- 548,722
Other 53,092 80,557
------------ ------------
Total revenues 53,092 966,333
------------ ------------
Expenses:
Operating -- 104,567
General and administrative 926,474 688,523
Depreciation, depletion and
amortization 131,623 322,908
Interest 842,370 320,545
Unrealized loss on marketable securities 1,639,977 --
Provision for bad debts -- --
Loss on sale of subsidiaries -- --
------------ ------------
Total expenses 3,540,444 1,436,543
------------ ------------
Net loss $ (3,487,352) $ (470,210)
============ ============
Net loss per share of common stock $ (0.09) $ (0.02)
============ ============
Weighted-average number of shares
of common stock outstanding 39,034,729 26,767,464
============ ============
The accompanying notes are an integral part of these statements.
3
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
1997 1996
------------ ------------
Revenues:
Oil and gas production and
pipeline fees $ 260,579 $ 641,246
Refinery lease fees 442,714 1,117,318
Other 88,342 131,375
------------ ------------
Total revenues 791,635 1,889,939
------------ ------------
Expenses:
Operating 98,765 216,665
General and administrative 2,575,012 1,287,028
Depreciation, depletion and
amortization 382,366 647,453
Interest 1,415,411 521,180
Unrealized loss on marketable securities 3,393,727 --
Provision for bad debts 447,832 --
Loss on sale of subsidiaries 563,667 --
------------ ------------
Total expenses 8,876,780 2,672,326
------------ ------------
Net loss $ (8,085,145) $ (782,387)
============ ============
Net loss per share of common stock $ (0.22) $ (0.03)
============ ============
Weighted-average number of shares
of common stock outstanding 37,558,266 25,961,481
============ ============
The accompanying notes are an integral part of these statements.
4
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
1997 1996
----------- -----------
Cash flows from operating activities:
Net loss $(8,085,145) $ (782,387)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation, depletion and amortization 831,599 682,666
Unrealized loss on marketable securities 3,393,727 --
Provision for bad debts 447,832 --
Loss on sale of subsidiaries 563,667 --
Changes in assets and liabilities:
Accounts and notes receivable (219,640) (27,537)
Marketable securities -- --
Inventory 56,974 52,525
Prepaid and other 47,070 22,699
Accounts payable and accrued liabilities 98,681 (718,652)
----------- -----------
Net cash provided by (used in) operating activities (2,865,235) (770,686)
----------- -----------
Cash flows from investing activities:
Additions to oil and gas properties (451,181) (779,664)
Additions to refinery property and equipment (1,677,450) (20,431)
Other (212,547) (169,661)
----------- -----------
Net cash used in investing activities (2,341,178) (969,756)
----------- -----------
Cash flows from financing activities:
Cash - restricted, loan collateral 35,261 201,223
Net increase (decrease) in notes payable (237,162) (45,533)
Proceeds from long-term debt 3,405,000 1,810,000
Repayments of long-term debt (1,915,234) (1,035,178)
Proceeds from sale of marketable securities 1,757,069 --
Proceeds from issuance of common stock and
warrants, net 439,770 762,803
Proceeds from exercise of stock warrants
and options 560 --
Proceeds from sale of subsidiaries 1,729,287 --
----------- -----------
Net cash provided by financing activities 5,214,551 1,693,315
----------- -----------
Net increase (decrease) in cash and
cash equivalents 8,138 (47,127)
Cash and cash equivalents at beginning of year 11,058 162,218
----------- -----------
Cash and cash equivalents at end of year $ 19,196 $ 115,091
=========== ===========
The accompanying notes are an integral part of these statements.
5
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Common stock Additional Stock
------------ paid-in purchase Accumulated
Shares Amount capital warrants deficit Total
---------- ---------- ------------ ---------- ------------ ------------
Balance, December 31, 1996 34,458,921 $2,756,714 $ 78,677,265 $1,297,754 $(61,404,015) 21,327,718
Conversions of Debentures 2,590,488 207,239 667,761 -- -- 875,000
Issuance of stock for interest in oil &
gas properties 300,000 24,000 126,000 -- -- 150,000
Issuance of stock for services 250,000 20,000 (17,500) -- -- 2,500
Issuance of stock for compensation 100,000 8,000 32,000 -- -- 40,000
Issuance of stock in lieu of accounts payable 224,046 17,924 97,909 -- -- 115,833
Exercise of warrants 140 11 549 -- -- 560
Issuance of common stock 1,635,593 130,847 308,923 -- -- 439,770
Imputed interest on debentures
convertible at a discount to market -- -- 85,715 -- -- 85,715
Net loss for the period -- -- -- -- (8,085,145) (8,085,145)
---------- ---------- ------------ ---------- ------------ ------------
Balance, June 30, 1997 39,559,188 $3,164,735 $ 79,978,622 $1,297,754 $(69,489,160) $ 14,951,951
========== ========== ============ ========== ============ ============
The accompanying notes are an integral part of this statement.
6
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements of American
International Petroleum Corporation and Subsidiaries (the "Company") have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of June 30,
1997, the results of operations for the three month periods ended June 30, 1997
and 1996 and cash flows for the six months ended June 30, 1997 and 1996. These
results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's 1996 Annual Report on Form 10-K.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that the accompanying unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
1996 Annual Report on Form 10-K.
2. Marketable Securities
Marketable securities acquired by the Company at a basis of $2.00 per share had
a market value of $1.60 and $1.10 per share at March 31, 1997 and June 30, 1997,
respectively, resulting in an unrealized loss of $1,754,000 and $1,640,000, for
the two periods, respectively.
3. Other Long Term Assets
Notes totaling $4,400,000 acquired by the Company have been discounted and
recorded as $3,600,000, less current portion of $1,500,000.
4. Long-Term Debt
During the first six months of 1997, the Company received aggregate net proceeds
of $3,405,000 from the sale of Convertible Redeemable Subordinated Debentures,
issued in accordance with Regulation S as promulgated by the Securities and
Exchange Commission, of which approximately $235,000 in principal remains
outstanding as of August 12, 1997. In addition, on August 8, 1997, the Company
issued an
7
aggregate $6.4 million in 8% Convertible Subordinated Debentures
pursuant to Regulation S. (See Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
During the last three years, the Company has had difficulty generating
sufficient cash flow to fund its operations, capital expenditures and required
principal payments. As a result, the Company has from time to time operated with
limited liquidity or negative working capital. In order to continue operations
under such circumstances, the Company has historically relied on outside sources
of capital.
On February 25, 1997, the Company sold all of the issued and outstanding shares
of Common Stock of two of its wholly-owned subsidiaries, American International
Petroleum Corporation of Colombia ("AIPCC") and Pan American International
Petroleum Corporation ("PAIPC") (the "Purchased Shares") in an arms length
transaction (the "MIP Transaction") to Mercantile International Petroleum, Inc.
("MIP") in exchange for cash, shares of MIP Common Stock (the "MIP Shares"),
debt in the form of a $3 million exchangeable debenture (the "Exchangeable
Debenture), and deferred compensation, improving its working capital position
from a net working capital deficit of $9.8 million at December 31, 1996, to a
positive working capital of $2.9 million at March 31, 1997.
However, the market value of the MIP Shares has declined since the closing of
the MIP Transaction to a low of $1.10 on June 30, 1997. Since the Company must
record the MIP Shares at lower of cost or market, the resultant cumulative
unrealized loss of $3,394,000 recorded by the Company was the primary cause of
the decline in the Company's working capital position to a negative $272,000 as
of June 30, 1997. (Since June 30, 1997 MIP Common Stock has traded as high as
$1.49 per share.)
In order to repay the MGTF Note (discussed below) in full, redeem certain
outstanding convertible debentures prior to their conversion by the holders
thereof into the Company's Common Stock, and to continue the expansion of the
Company's refinery to enable the implementation of asphalt blending operations,
on August 6, 1997, the Company issued an aggregate $6.4 million of two-year 8%
Convertible Subordinated Debentures pursuant to Regulation S (the "Debentures")
for net proceeds of $6,016,000. As a result, the Company's working capital
improved to approximately $6 million as of August 11, 1997.
One half of the principal amount of the Debentures is convertible into shares of
the Company's Common Stock on or after October 6, 1997, the remainder 30 days
thereafter, all at a conversion price based on 85%
8
of the average closing bid price of the Company's Common Stock for the five
trading days prior to the date of conversion. The Company may redeem all or a
portion of the Debentures at any time prior to conversion by paying 110% of the
redemption amount to the holder on or before November 5, 1997, or 115%
thereafter. Like the majority of its recent convertible debenture issuances, the
Company intends, to the extent possible, to redeem the Debentures prior to their
conversion into Common Stock. During the past four months, the Company has
redeemed certain convertible debentures which would have otherwise been
converted into approximately 7 million shares of the Company's Common Stock.
During the six months ended June 30, 1997, the Company utilized $8,085,000 for
operations, which reflects approximately $5,237,000 in non-cash provisions,
including depreciation, depletion an amortization of $832,000, loss on
write-down of marketable securities acquired in the MIP Transaction of
$3,394,000, provision for bad debts of $448,000, and loss on sale of
subsidiaries of $564,000. Approximately $116,000 was used during the period to
increase current assets other than cash, and $99,000 was provided by an increase
in accounts payable and accrued liabilities. Cash for operations was provided,
in part, by the sale and distribution of marketable securities of $1,757,000 and
the issuance of Common Stock and net increase in long-term debt in an aggregate
amount of $1,930,000, and from the sale of subsidiaries of $1,729,000.
The Company has borrowed funds from MG Trade Finance Corp. ("MGTF"). As part of
the MIP Transaction, the Company agreed to change the maturity date for payment
of the unpaid balance due to MGTF (currently $2,108,000) to September 30, 1997
from March 31, 1998. In addition, the Company pledged 1,000,000 shares of the
MIP Shares to further secure the Loan Agreement with MGTF. The Company expects
to pay the balance due on the Loan Agreement by the revised due date with some
of the proceeds it received from the Debentures.
Because of non-payment of lease fees and other items of default under the terms
of its lease agreement with the Company, Gold Line was evicted from the Refinery
premises on March 20, 1997. The Company filed suit against Gold Line to recover
unpaid lease fees and other items totaling approximately $1.8 million and
received a judgment related thereto of approximately $1.5 million. All past
amounts due from Gold Line have been previously reserved, including a charge to
the reserve for bad debts during the first quarter of 1997 for $443,000
representing the unpaid processing fees for that period. On August 8, 1997, Gold
Line filed for protection under Chapter 11 of the U.S. Bankruptcy Code;
therefore no assurance can be given that the Company will be able to collect on
this judgment.
The Company has sufficient capital, or access thereto, to complete the expansion
of the Refinery to enable the implementation of its asphalt operations and to
make any preliminary oil and gas related
9
expenditures in Kazakstan (See discussion below). The asphalt and other
operations at the Refinery are expected to provide the Company with the future
capital necessary to fund its oil and gas operations, or place the Company in a
position where it is able to access conventional financing for such projects.
During the next twelve months, the Company plans to spend up to $2 million for
the Refinery expansion, which it expects to fund in part by proceeds from the
Debentures, internally-generated cash flow from refinery operations, and/or with
the principal ($1.5 million is callable by the Company in February 1998) and
interest payments it receives from the Exchangeable Debenture. The Company is
also having discussions with other financing entities who have expressed
interest in financing further expansion and future operations at the Refinery.
The phase one construction of the Refinery expansion, necessary to implement
operations, should be completed this month. By the fourth quarter of this year,
the Company plans to commence asphalt processing.
The Company recently signed an agreement with a German-based company, MED
Shipping & Trading S.A. ("MED") for the purchase of a 70% working interest in a
4.7 million acre oil and gas concession (the "License") in the Usturt Basin of
Western Kazakstan. The License has been transferred by the Kazakstan government
to MED Shipping Usturt Petroleum Company Limited ("MSUP"), a joint venture
limited liability company, which has been formed to manage the License
operations. The Company owns 70% of MSUP through its newly-formed and
wholly-owned subsidiary American International Petroleum Kazakstan ("AIPK"),
which will handle all of the Company's operations in Kazakstan.
The License area is located in western Kazakstan approximately 125 kilometers
southeast of Chevron's multi-billion barrel Tengiz Oil Field and the Caspian
Sea. The area is bordered to the south by Elf Acquitain's license and to the
west by both Oryx/Exxon and Amoco licenses. Evaluation by the Company's
independent petroleum engineers indicates that preliminary estimates of
potential recoverable reserves on seven structures, located in the western half
of the License near major pipeline systems, could be up to 1.1 billion barrels
of oil equivalent. Additional structures have been identified in the License
area, but have not been evaluated. Regional seismic data on the eastern half of
the License area indicates additional structures, the largest of which, the
"Chikuduk", measures approximately 50 kilometers in length. This structure,
whose reserves are not yet estimated, could provide the largest potential
deposits in the License area. The Company plans to continue its evaluation of
the area and expects to expand its evaluation program as additional data is
released to the Company by the government.
The License area provides various commercial options for oil or gas production,
since there are several oil and gas pipelines which cross
10
the area. The existing infrastructure permits rapid development and marketing of
production and flexibility in securing acceptable markets for same. Production
can be sold north to Russia, Finland and the Atyrau Refinery, and/or south
through the Caspian Sea at Aktau for export abroad.
As previously reported, the Company paid $100,000 in cash and 300,000 shares of
its Common Stock, issued pursuant to Regulation S, to MED in return for the
option to acquire a 40% working interest in the License. Further negotiations
resulted in an increase in the working interest to 70%. As consideration for its
70% interest in MSUP, the Company issued 1,250,000 shares of its Common Stock,
pursuant to Regulation S, warrants to purchase 500,000 shares of its Common
Stock at an exercise price of $2.00 per share. An additional 1,500,000 shares of
its Common Stock will be issued if and when the Company's Common Stock trades
for five consecutive days at a price of $5.00 per share. MED will receive a
monthly consulting fee of $23,000 to be used to establish contacts for the
development and marketing of production, administrative and other activities
related to the enhancement of the License, and for AIPK operations in Kazakstan.
The Company will be responsible for operating the License operations and funding
all obligations therefor. Such obligations could amount to $13.5 million during
the next five years, approximately one-half of which must be expended during the
next three years for seismic and drilling. The Company is currently having
discussions with various oil companies who have expressed a preliminary interest
in the License area.
The Company is having discussions with various financing entities regarding
non-equity financing arrangements to provide funding for upcoming operations,
the repayment of the Debenture, and other capital it may require. However, there
is no assurance of success of any financing efforts the Company may pursue or
the timing or success of its Refinery projects and/or its other potential
projects. In the event that the Company is not able to fund its projects on its
own in a timely manner, management believes it will be able to obtain partners
for certain projects, however, such projects could be delayed or curtailed. As a
result of the sale of two of its subsidiaries and the eviction of Gold Line, the
Company has no current operating cash flows. Therefore, until the implementation
of new operations at its Refinery, or elsewhere, and absent any new financing it
may obtain, the Company will rely on its existing working capital and principal
and interest payments from the Exchangeable Debenture to sustain its business
operations.
11
Results of Operations
For the Six Months Ended June 30, 1997 as compared
to the Six Months Ended June 30, 1996
The following table highlights the Company's results of operations for the six
months ended June 30, 1997 and 1996.
For The Six Months
Ended June 30,
1997 1996
---- ----
Exploration and Production Activity:
Colombia Properties: (1)
Revenues - Oil Sales (000's) $ 261 $ 641
Lease Operating Expenses (000's) $ 99 $ 212
Production Volume - Bbls 18,625 73,098
Average Price per Bbl $ 14.01 $ 8.77
Production Cost per Bbl $ 5.31 $ 2.90
DD&A per Bbl $ 3.77 $ 3.77
Peru Properties: (2) (2)
Refinery Operations: (3)
Refinery Lease Fees (000') $ 443 $ 1,047
Average Daily Throughput 9,838 11,574
Average Throughput Fee $ 0.50 $ 0.50
- --------------------------------------------------------------------------------
(1) Reflects activity through February 25, 1997
(2) Information for 1997 and 1996 is not available due to a dispute with the
Company's partner.
(3) Reflects refinery activities through March 20, 1997.
Oil and Gas Operations:
The results of operations for Colombia and Peru for 1997 reflect results for the
period through February 25, 1997, the date of the sale of the Colombia and Peru
subsidiaries, compared to six full months of operations reflected in 1996.
Refinery Operations:
The results of operations for the Refinery for 1997 reflect results for the
period through March 20, 1997, the date the Company evicted
12
it's tenant, compared to six full months of operations reflected in 1996.
Other Revenue:
Other revenues decreased approximately $42,000, or 33%, during the current
period compared to the same period in 1996. The decrease is primarily due to a
decrease in other revenues previously attributable to the Colombia operations
prior to the sale as previously discussed.
General and Administrative:
General and Administrative ("G&A") expenses increased approximately $1,287,984
compared to the same period during 1996 primarily due to approximately $230,000
in non-recurring expenses related to the legal proceedings against Gold Line, a
loss of approximately $234,000 on the sale and disposition of a portion of the
MIP Shares, and a non-recurring $695,000 adjustment to partially compensate key
employees whose salaries have remained unchanged for the past five years and
additionally as an incentive to ensure that the Company maintains a competitive
position in the industry regarding the continuity of the employment of its
employees.
Depreciation, Depletion, and Amortization decreased approximately $265,000
during the current period compared to the same period last year due primarily to
the decrease in oil production from Colombia during the current period as
compared to the same period last year.
Interest expense increased approximately $894,000, during the first six months
of 1997 compared to the same period last year of 1996 of which approximately
$287,000 is due primarily to imputed interest calculated on the Company's issued
convertible debt instruments. The calculation is a result of a new position
adopted by the Securities and Exchange Commission, ("SEC"), for convertible debt
instruments which are convertible into a company's stock at a discount to the
market price. Additionally, approximately $109,000 of interest expense was
incurred during the current period to redeem certain outstanding convertible
debentures. Approximately $224,000 of amortized bond costs was charged during
the current period as interest expense which is attributable to Company's
outstanding and retired debentures during the current period.
Unrealized Loss on Marketable Securities
Marketable securities of MIP, 4,384,375 shares, held by the Company were valued
at $2.00 per share when acquired. At March 31, 1997 the current market price was
$1.60 per share, resulting in a net unrealized loss of $1,754,000. At June 30,
1997 the market price was $1.10 per share, resulting in a net unrealized loss of
$1,640,000 on shares held at June 30, 1997. Total unrealized loss for the period
ended June 30, 1997 was $3,393,727.
13
Loss on Sale of Assets
The Company recorded an aggregate $564,000 to reflect the current discounted
fair value of the Exchangeable Debenture and the $1.4 million performance
earn-out received in the MIP Transaction.
Results of Operations
For the Three Months Ended June 30, 1997 as compared
to the Three Months Ended June 30, 1996
The following table highlights the Company's results of operations for the three
months ended June 30, 1997 and 1996.
For The Three Months
Ended June 30,
1997 1996
---- ----
Exploration and Production Activity:
Colombia Properties:
Revenues - Oil Sales (000's) (1) $ 337
Lease Operating Expenses (000's) (1) $ 101
Production Volume - Bbls (1) 36,332
Average Price per Bbl (1) $ 9.28
Production Cost per Bbl (1) $ 2.78
DD&A per Bbl (1) $ 3.77
Peru Properties: (1) (2)
Refinery Operations:
Refinery Lease Fees (000') (3) $ 479
Average Daily Throughput (3) 10,641
Average Throughput Fee (3) $ 0.50
- --------------------------------------------------------------------------------
(1) Colombia and Peru properties were sold as of February 25, 1997
(2) Information for 1996 is not available due to a dispute with the Company's
partner.
(3) The refinery's tenant was evicted as of March 20, 1997.
14
Oil and Gas Operations:
The date of the sale of the Colombia and Peru subsidiaries was February 25,
1997, therefore there were no operations for the three months ended June 30,
1997.
Refinery Operations:
The Company evicted it's lessee on March 20, 1997, therefore there were no
operations for the three months ended June 30, 1997.
Other Revenue:
Other revenues decreased approximately $27,000, or 34%, during the current
quarter compared to the same quarter of 1996. The decrease is primarily due to a
decrease in other revenue as a result of the sale of the Colombia operations.
General and Administrative:
General and Administrative ("G&A") expenses increased approximately $238,000
compared to the same period during 1996 primarily due to the following reasons:
non-recurring legal fees of approximately $31,000 incurred during the current
period which were attributable to the Company's legal proceedings against Gold
Line, as previously discussed above; during the current period the Company
recognized a loss of approximately $234,000 on the sale and disposition of
certain marketable securities it held; and property taxes and insurance cost
increased approximately $85,000 during the current quarter compared to the same
period in in 1996 due to the Company having to absorb additional costs as a
result of the eviction of the refinery lessee, as previously discussed.
Depreciation, Depletion, and Amortization decreased approximately $191,000
during the current period compared to the same period last year due to the lack
of any oil production from Colombia during the current quarter as a result of
the sale of this subsidiary as previously discussed.
Interest expense increased approximately $492,000 during the second quarter of
1997 compared to the same period last year, of which approximately $16,000 is
due primarily to imputed interest calculated on the Company's issued convertible
debt instruments. Additionally, approximately $37,500 in interest expense was
incurred during the current period to redeem certain convertible debentures.
Approximately $138,000 of amortized bond costs was charged as interest expense
during the current period compared to $38,000 charged in the same period last
year, which is attributable to Company's outstanding and retired debentures
during the current period.
15
Unrealized Loss on Marketable Securities
Marketable securities held by the Company at June 30, 1997, and carried at a
lower of cost or market value of $1.60 since March 31, 1997, had a market price
at June 30, 1997 of $1.10 per share, resulting in a net unrealized loss of
$1,640,000 during the current quarter.
Loss on Sale of Assets
The Company recorded an aggregate of $564,000 to reflect the current discounted
fair value of the Exchangeable Debenture and the $1.4 million performance
earn-out received in the MIP Transaction.
PART II. OTHER INFORMATION
Item 5. Other Information
See Part I, Item 2, above.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 Form of 8% Convertible Subordinated Debentures due August 1,
1999.
4.2 Form of Subscription Agreement used in connection
with the offering of the Registrants' debentures, the
form of which is attached hereto as Exhibit 4.1.
4.3 Form of Warrant to purchase shares of the
Registrants' Common Stock issued in connection with
the offering of the Registrants' debentures, the form
of which is attached hereto as Exhibit 4.1.
4.4 Form of Registration Agreement used in connection
with the offering of the Registrants' debentures, the
form of which is attached hereto as Exhibit 4.1.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
16
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 13, 1997
AMERICAN INTERNATIONAL
PETROLEUM CORPORATION
By /s/ Denis J. Fitzpatrick
---------------------------
Denis J. Fitzpatrick
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4.1 Form of 8% Convertible Subordinated Debentures due August 1,
1999.
4.2 Form of Subscription Agreement used in
connection with the offering of the
Registrants' debentures, the form of which
is attached hereto as Exhibit 4.1.
4.3 Form of Warrant to purchase shares of the
Registrants' Common Stock issued in
connection with the offering of the
Registrants' debentures, the form of which
is attached hereto as Exhibit 4.1.
4.4 Form of Registration Agreement used in
connection with the offering of the
Registrants' debentures, the form of which
is attached hereto as Exhibit 4.1.
27.1 Financial Data Schedule.
17