PETROMINERALS CORPORATION
FORM 10-QSB
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
UNITED STATES 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 AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to.
Commission File No. 1-6336
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Petrominerals Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
95-2573652
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(I.R.S. Employer Identification No.)
915 South Westminster Avenue, Alhambra, California 91803
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(Address of Principal executive offices)
(818) 284-8842
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(Registrant's telephone number, including area code)
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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.
[ ] [X]
No Yes
The number of shares of Registrant's common stock outstanding at August 4,
1997 was 8,475,336.
PETROMINERALS CORPORATION
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets September 30, 1997
and December 31, 1996 4
Consolidated Statements of Operations for
the three months and nine months ended
September 30, 1997 and 1996 6
Consolidated Statements of Cash Flows for
the nine months ended September 30, 1997 and 1996 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION 11
SIGNATURES 12
See accompanying notes to consolidated financial statements.
PART I - FINANCIAL INFORMATION
See accompanying notes to consolidated financial statements.
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
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PETROMINERALS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value data)
ASSETS
September 30, December 31,
1997 1996
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(Unaudited) (Audited)
Current Assets
Cash and cash equivalents $ 275 $ 614
Accounts receivable, net 138 183
Inventories 56 61
Prepaid expenses 41 16
Other current assets - 20
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Total Current Assets 510 894
Restricted Cash 40 40
Property and Equipment, net (including oil and
gas properties accounted for on the successful
efforts method) 2,208 2,062
Notes Receivable and Other Assets 478 461
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Total Assets $ 3,236 $ 3,457
See accompanying notes to consolidated financial statements.
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1997 1996
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(Unaudited) (Audited)
Current Liabilities
Accounts payable $ 120 $ 464
Current portion of long-term debt 8 8
Accrued liabilities 107 87
Royalties payable 32 42
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Total Current Liabilities 267 601
Long-Term Debt, net of current portion 5 7
Prepetition liabilities 519 521
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LiabilitiesLiabilties 791 1,129
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Stockholders' Equity
Preferred stock:
$.10 par value, 5,000,000 shares authorized;
No shares issued and outstanding - -
Common stock:
$.10 par value, 20,000,000 authorized,
8,475,336 shares issued and outstanding at
September 30, 1997 and December 31, 1996 848 848
Capital in Excess of Par Value 563 563
Retained Earnings 1,034 917
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Total Stockholders' Equity 2,445 2,328
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Total Liabilities and Stockholders' Equity $ 3,236 $ 3,457
See accompanying notes to consolidated financial statements.
PETROMINERALS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(In thousands, except per share amounts)
(Unaudited)
For the three months For the nine months
ended September 30, ended September 30,
1997 1996 1997 1996
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REVENUES
Oilfield services $ 32 $ 6 $ 75 $ 14
Oil and gas 243 288 832 839
Gain on sale of assets - 18 - 50
Other income 124 4 197 7
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Total Revenues 399 316 1,104 910
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COSTS AND EXPENSES
Oilfield services 52 37 131 164
Oil and gas 128 127 404 467
Depreciation, depletion and amortization 25 32 81 91
General and administrative 115 102 345 286
Interest 1 1 2 3
Other expense 9 12 24 27
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Total Costs and Expenses 330 311 987 1,038
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Net Income (Loss) Before Reorganization Item 69 5 117 (128)
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Reorganization Item
Gain on debt forgiven - - - 599
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Net income $ 69 $ 5 $ 117 $ 471
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Net income per share .01 .00 .01 .06
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Weighted average common shares outstanding 8,475 8,475 8,475 8,464
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See accompanying notes to consolidated financial statements.
PETROMINERALS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(In thousands)
(Unaudited)
1997 1996
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Cash Flows from Operating Activities
Net income $ 117 $ 471
Adjustments to reconcile net loss to net cash provided from
Operating activities:
Depreciation, depletion and amortization 81 91
(Gain) loss on sale of assets - (50)
Changes in operating working capital:
Accounts receivable 45 (47)
Prepaid (25) (23)
Inventory 5 131
Other assets 20 -
Accounts payable (344) (81)
Royalties payable (10) 13
Accrued liabilities 20 (65)
Prepetition liabilities (2) (555)
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Net Cash Used by Operating Activities (93) (115)
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Cash Flows from Investing Activities
Capital expenditures (227) -
Proceeds from sale of assets - 36
Collection of note receivable (17) 19
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Net Cash Provided (Used) by Investing Activities (244) 55
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Cash Flows from Financing Activities
Principal payment of debt (2) (25)
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Net Decrease in Cash and Cash Equivalents (339) (85)
Cash and Cash Equivalents at beginning of period 654 409
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Cash and Cash Equivalents at end of period $ 315 $ 324
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PETROMINERALS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
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The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods. The results of operations for
the three month and nine month periods ended September 30, 1997 are not
necessarily indicative of the results to be expected for the full year.
The accompanying consolidated financial statements do not include footnotes
and certain financial presentations normally required under generally accepted
accounting principles; and, therefore, should be read in conjunction with the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1996.
NOTE 2 - PER SHARE COMPUTATIONS
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Per share computations are based upon the weighted average number of common
shares outstanding during each year. Common stock equivalents are not included
in the computations since their effect would be anti-dilutive.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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FINANCIAL CONDITION
The Company had a negative cash flow of approximately $315,000 for the six
months ended September 30, 1997. This decrease in cash was primarily the net
effect of paying off accrued liabilities associated with the Petrominerals
96-1 turnkey drilling contract in the first quarter of 1997 and cash received
under a purchase option for the Hasley Canyon real estate. As a result,
accounts payable decreased by approximately $344,000 during this same period
of time. The Company does not currently have any plans to drill additional
wells.
The Company does, however, continue to review possible merger or sale options
that would benefit shareholders. The Company's heavy crude oil reserves are
desirable, and may be of interest to another entity. The Company and its
consultants are currently exploring these options.
Nine months ended September 30, 1997 as compared with the six months ended
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September 30, 1996.
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The Company had income from continuing operations of approximately $117,000
for the nine months ended September 30, 1997, as compared to a loss of
approximately $128,000 for the nine months ended September 30, 1996. The
profits in 1997 are reflective of the Company's efforts to maximize
shareholder value. Under this plan, the Company has completed a new well,
entered into an agreement with a developer to sell some of the Company's real
estate, and has generally continued to keep costs low while improving
revenues.
BUSINESS REVIEW
Oil and Gas Segment
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The Company continues to realize the benefit of remedial work that was
performed in the previous year. However, this increase is less than the 29%
increase noted at March 31, 1997, due to less favorable oil prices. Expenses
relating to the production of oil and gas have decreased by 16% during the
same period as the Company continuously improves efficiency. The increase in
other income of approximately $190,000 was due to increased operator fees and
equipment leasing fees associated with the new well and fees received under
the lease and option to purchase agreement with the developer of the Hasley
Canyon real estate. Management feels that the profits during the first three
quarters of 1997 will be representative of the final quarter of this year.
The Company entered into a lease and option to purchase agreement with a
developer effective December 30, 1996. Under this agreement, the Company has
received approximately $100,000 from an unrelated developer. These payments
have been recorded as other income, as they do not reduce the purchase price
of the property should the developer exercise his option. The Company feels
that the developer's low-density plans will ensure that the Company has a
compatible neighbor in the future.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS (Continued)
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BUSINESS REVIEW (Continued)
Oilfield Services Segment
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The Company continues to operate its wholly owned subsidiary, Hydro-Test
International, Inc. (HTI), with existing equipment at the remaining facility
near Waller, Texas. There are no current or future plans to expand these
operations. Oilfield service revenues from HTI's operations increased by
$61,000 during the first nine months of 1997, as compared to the same period
in 1996, due to more favorable oil prices. Oilfield service expenses decreased
by $33,000 during the same period due to the decline in administrative
expenses associated with the bankruptcy proceedings. This resulted in a net
loss of $56,000 for the nine months ended September 30, 1997, as opposed to a
net loss of $150,000 for the same period in 1996. It is difficult to
determine if these losses will continue, however, HTI is in the process of
expanding their client base in hopes of increasing future revenues.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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The Company is not a party to nor is its property the subject of any material
legal proceedings other than ordinary routine litigation incidental to its
business, or which is covered by insurance, except as previously disclosed in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
1996.
ITEM 2. CHANGES IN SECURITIES
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None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
ITEM 5. OTHER INFORMATION
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None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits - Financial Data Schedule
(b) Reports on Form 8-K - None.
SIGNATURES
Pursuant to the requirement 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.
PETROMINERALS CORPORATION
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(Registrant)
\s\Paul L. Howard
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Paul L. Howard
President, CEO & Chief Financial Officer