SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--------
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended May 31, 1996 Commission File Number 0-6529
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
--------
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- --------------
DOUBLE EAGLE PETROLEUM AND MINING CO.
(Exact name of registrant as specified
in its charter)
WYOMING 83-0214692
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Overland Trail, P.O. Box 766
Casper, Wyoming 82602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 307-237-9330
NOT APPLICABLE
(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
------- -------
Capital stock, 2,712,371 shares having a par value of $.10 per share were
outstanding as of July 2, 1996.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
TABLE OF CONTENTS
Page Number
-----------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Report of Independent Certified Public Accountants I.
Condensed Balance Sheets May 31, 1996
(Unaudited) and August 31, 1995 II.
Statements of Operations for the three and
nine months ended May 31, 1996 and
1995 (Unaudited) III.
Condensed Statements of Cash Flows for
the nine months ended May 31, 1996 and
1995 (Unaudited) IV.
Notes to Condensed Financial Statements
(Unaudited) V.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations VI. - VII.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K VIII.
Signatures IX.
PART I
FINANCIAL INFORMATION
I.
------------------------------------------------
HOCKER, LOVELETT, HARGENS & YENNIE, P.C.
-----------------------------------
Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Double Eagle Petroleum and Mining Company
Casper, Wyoming
The accompanying condensed balance sheet of Double Eagle Petroleum and Mining
Company as of May 31, 1996 and the related statements of operations for the
three and nine month periods ended May 31, 1996 and 1995 and condensed
statements of cash flows for the nine month periods ended May 31, 1996 and 1995
were not audited by us and, accordingly we do not express an opinion on them.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of August 31, 1995, and the related statements
of operations and retained earnings and cash flows for the year then ended (not
presented herein); and in our report dated October 19, 1995, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying balance sheet as of August 31, 1995,
is fairly stated in all material respects in relation to the balance sheet from
which it has been derived.
/S/Hocker, Lovelett, Hargens & Yennie, P.C.
Casper, Wyoming
July 2, 1996
II.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
CONDENSED BALANCE SHEETS
MAY 31, 1996 AND AUGUST 31, 1995
May 31, August 31,
1996 1995
(Unaudited) (See Note
Below)
---------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,607 $ 268,385
Accounts receivable 126,128 41,337
Prepaid expenses 25,000 -
Total 155,735 309,722
OTHER ASSETS
Accounts receivable 82,277 82,277
Investment, at cost 9,000 9,000
Other 11,600 11,500
Total 102,877 102,777
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation and depletion -
and impairment allowance(Successful
Efforts method used for oil and gas
properties) 2,061,164 1,822,721
Total $ 2,319,776 $ 2,235,220
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 73,535 $ 110,432
Accrued production taxes 15,300 25,900
Notes payable 155,000 -
Total 243,835 136,332
DEFERRED TAX LIABILITY, net 152,299 155,733
Total 396,134 292,065
STOCKHOLDERS EQUITY
Common stock, $.10 par value; 5,000,000
shares authorized; 2,712,371 shares
issued and outstanding 271,237 271,237
Capital in excess of par value 886,254 886,254
Retained earnings 766,151 785,664
Total 1,923,642 1,943,155
Total $ 2,319,776 $ 2,235,220
<FN>
Note: The balance sheet at August 31, 1995 has been taken from the audited
financial statements at that date and condensed.
See accompanying notes to condensed financial statements.
III.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three For the Nine
--------------- --------------
Months Ended Months Ended
--------------- --------------
May 31, May 31, May 31, May 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
REVENUES
Sales of oil and gas $ 128,607 $ 96,063 $ 270,332 $ 204,425
Sales of oil and gas
properties - 21,527 130,000 634,969
Other 13,957 2,924 28,957 32,924
Total 142,564 120,514 429,289 872,318
COSTS AND EXPENSES
Production 17,659 4,087 52,040 29,777
Production taxes 6,238 7,675 23,981 13,858
Cost of oil and gas properties
sold - 4,025 14,439 228,992
Exploration 42,147 66,055 93,127 190,621
General and administrative 58,887 51,020 191,248 168,409
Depreciation and depletion 18,222 17,639 74,513 49,158
Total 143,153 150,501 449,348 680,815
INCOME (LOSS) FROM OPERATIONS (589) (29,987 ) (20,059) 191,503
OTHER INCOME (EXPENSE)
Interest expense (1,397) - (6,864) -
Interest income 350 6,861 3,976 13,597
(1,047) 6,861 (2,888) 13,597
INCOME (LOSS) BEFORE INCOME TAXES (1,636) (23,126 ) (22,947) 205,100
INCOME TAX EXPENSE (CREDIT)
Current - - - -
Deferred (238) 3,331 (3,434) 46,072
Total (238) 3,331 (3,434) 46,072
NET INCOME (LOSS) $ (1,398) $ (26,457 ) $ (19,513) $ 159,028
INCOME(LOSS)PER COMMON STOCK AND
COMMON STOCK EQUIVALENT SHARE $ (.00) $ (.01 ) $ (.01) $ .07
WEIGHTED AVERAGE/COMMON STOCK AND
COMMON STOCK EQUIVALENT SHARES
OUTSTANDING 2,712,371 2,363,635 2,712,371 2,363,653
DIVIDENDS PER SHARE OF COMMON
STOCK $ .00 $ .00 $ .00 $ .00
<FN>
See accompanying notes to condensed financial statements.
IV.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31, 1996 AND 1995
(UNAUDITED)
1996 1995
----------- ----------
OPERATING ACTIVITIES:
Net income (loss) $ (19,513) $ 159,028
Charges to income not requiring cash:
Depreciation and depletion 74,513 49,158
Abandoned properties 37,720 123,332
Gain on sale of assets (115,561) (405,977)
Deferred tax allowance (3,434) 46,072
Decrease (Increase) in operating assets:
Accounts receivable (84,791) (57,484)
Prepaid expenses (25,000) -
Other (100) 2,498
(Decrease)in operating liabilities:
Accounts payable (36,897) (5,236)
Accrued production taxes (10,600) (14,400)
Net cash (used in) operating activities (183,663) (103,009)
INVESTMENT ACTIVITIES:
Acquisitions of property and equipment (365,115) (333,154)
Proceeds from sale of property and equipment 130,000 634,969
Net cash provided by (used in) investing
activities (235,115) 301,815
FINANCING ACTIVITIES:
Proceeds from sale of common stock - 131,250
Proceeds from borrowings 297,500 -
Repayment of debt (142,500) -
Net cash provided by financing activities 155,000 131,250
(DECREASE)INCREASE IN CASH (263,778) 330,056
CASH AND CASH EQUIVALENTS
Beginning of period 268,385 108,460
End of period $ 4,607 $ 438,516
<FN>
See accompanying notes to condensed financial statements.
V.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Summary of Significant Accounting Policies
Refer to the Company's annual financial statements for the year ended
August 31, 1995, for a description of the accounting policies which have
been continued without change. Also, refer to the footnotes with those
annual statements for additional details of the Company's financial
condition, results of operations, and cash flows. The details in those
notes have not changed except as a result of normal transactions in the
interim.
2. Management Representation
In Management's opinion, all adjustments necessary for a fair presentation
are reflected in the interim financial statements. Such adjustments are of
a normal recurring nature.
3. Interim Results of Operations
The results of operations for the period ended May 31, 1996, are not
necessarily indicative of the operating results for the full year.
4. Related Party Transactions
During the quarter ending May 31, 1995 the Company purchased several
producing properties from an oil and gas company which is majority owned by
the President of Double Eagle. The transaction cost $202,550, paid through
the issuance of cash in the amount of $71,300 and issuance of 350,000
shares of the Company s common stock at $.375 per share for the $131,250
balance. The stock was issued in the name of the Company and represents
12.9% of Double Eagle s outstanding shares at the end of the quarter.
VI.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the nine months ended May 31, 1996, the Company's operations resulted in
negative working capital. The $261,500 decrease was due to the Company incurring
a major workover on one of its producing properties in the current quarter and
purchasing a producing property in the previous quarter. These transactions
were initially paid for with borrowed funds with a majority of the debt being
repaid in the current and previous quarter.
Management believes that the Company's liquidity is sufficient to meet future
cash needs for operations. It is not anticipated that future material sales of
oil and gas properties will be made solely to raise working capital.
RESULTS OF OPERATIONS
- ---------------------
Current Year-to-Date Compared to Corresponding Year-to-Date
- -----------------------------------------------------------
The Company has experienced a net loss for the current year of $(19,153)
compared to a net income for the prior period of $159,028. The change is due
mainly to the sale of several of the Company's nonproducing properties in the
first quarter of the prior year, yielding a profit of $363,600, compared to the
sale of nonproducing properties in the current year yielding a profit of
$115,600.
Revenue from oil and gas sales increased by approximately $65,900 in the current
period compared to the same period one year ago. This increase can be attributed
to a workover performed on one of its producing properties and the purchase of a
producing properties in the first quarter of the current year.
Production costs and taxes increased by approximately $32,400 to coincide with
the increase in oil and gas sales revenue.
Exploration costs decreased considerably when compared to the same period one
year ago. The $97,500 decrease is mainly attributable to not as many of the
Company's nonproducing leases being abandoned and fewer rental payments being
made due to the abandonments in the prior year.
Overall costs and expenses decreased by approximately $231,500 when compared to
the prior year, due mainly to a decrease in the cost of properties sold.
Interest income decreased by approximately $9,600 due to a decrease in funds
being available for investments as they were used to purchase producing
properties in the current year.
Current Quarter Compared to Previous Quarter
- --------------------------------------------
Revenues from oil and gas sales increased by approximately $52,200 compared to
the previous quarter. Oil and gas revenues for the quarter ended May 31, 1996
were $128,600 and were $76,400 for the quarter ended February 29, 1996. This
increase was due mainly to the aforementioned workover on one of the Company's
producing properties.
Production costs, including taxes, decreased by approximately $12,600 during the
current quarter when compared to the previous quarter. The decrease can be
attributed to ad valorem taxes being paid in the previous quarter.
Exploration costs increased when compared to the previous quarter by $25,900.
This increase is attributed to higher valued nonproducing leases expiring in the
current quarter than in the previous quarter.
General and administrative costs decreased by approximately $15,700 compared to
the quarter ending February 29, 1996. This decrease was due to the cost
attributable to the Company's annual meeting in the previous quarter.
VII.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Current Quarter Compared to Previous Quarter (Continued)
- --------------------------------------------------------
Interest income remained fairly stable when compared to the previous quarter.
Depreciation and depletion expense decreased by approximately $10,800 compared
to the previous quarter. This decrease can be attributed to a revised estimate
of reserves from a producing property following a workover in the current
quarter. This resulted in a decrease in the depletion ratio used to calculate
depletion on the property.
Operations in the current quarter resulted in a $1,398 net loss compared to net
income of $34,360 for the previous quarter. The aforementioned sale of
nonproducing properties caused the majority of the change.
Current Quarter Compared to Corresponding Quarter
- -------------------------------------------------
Oil and gas revenues increased by $32,500 compared to the same quarter in 1995
due to better prices and production from newly acquired producing properties.
Sales of and cost of sales of oil and gas properties decreased drastically when
compared to the corresponding quarter due to the sale on a nonproducing property
in the corresponding quarter and no sales in the current quarter.
Production costs, including production taxes, increased by $12,100 compared to
the same quarter one year ago. This increase coincides with the increase in
revenue and the increase in operating expenses for repairs to one of the
Company's producing properties in the current quarter.
Exploration costs decreased by $23,900 when compared to the corresponding
quarter in 1995. This decrease is mainly attributed to the abandonment of
nonproducing leases during the corresponding quarter.
General and administrative and depreciation and depletion remained fairly stable
between the two quarters.
The change in net (loss) of $25,100 can be attributed to the aforementioned sale
of nonproducing property in the corresponding quarter.
VIII.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
Form 8-K was not required to be filed during the period covered by this report.
IX.
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.
DOUBLE EAGLE PETROLEUM AND MINING COMPANY
(Registrant)
/s/ Richard B. Laudon
Richard B. Laudon
Treasurer and Chief Financial Officer
Date: July 9, 1996