Colorado | 84-0811034 | |||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
609 Castle Ridge Road, Suite 335 |
Austin, Texas 78746 |
(Address of Principal Executive Offices) (Zip Code) |
(512) 579-3560 |
(Issuer's Telephone Number, Including Area Code) |
(former name, address and fiscal year, if changed since last report) |
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☒ |
Item 1. | Financial Statements |
March 31, 2015 | December 31, 2014 | June 30, 2015 | December 31, 2014 | |||||||||||||
ASSETS | ASSETS | |||||||||||||||
CURRENT ASSETS: | ||||||||||||||||
Cash and cash equivalents | $ | 1,436,762 | $ | 978,145 | $ | 1,115,989 | $ | 978,145 | ||||||||
Certificates of deposit | - | 30,815 | - | 30,815 | ||||||||||||
Accounts receivable: | ||||||||||||||||
Oil and natural gas sales | 518,305 | 589,643 | 644,326 | 589,643 | ||||||||||||
Joint interest billings, less allowance for doubtful accounts of approximately $174,000 each period | 289,988 | 309,417 | 282,392 | 309,417 | ||||||||||||
Unrealized gain on commodity derivatives | 24,000 | - | ||||||||||||||
Prepaid income taxes | 352,522 | 350,486 | 354,113 | 350,486 | ||||||||||||
Deferred income tax asset—current | 89,000 | 98,000 | 91,000 | 98,000 | ||||||||||||
Prepaid expenses and other current assets | 78,777 | 74,032 | 86,832 | 74,032 | ||||||||||||
Total current assets | 2,765,354 | 2,430,538 | 2,598,652 | 2,430,538 | ||||||||||||
PROPERTY AND EQUIPMENT: | ||||||||||||||||
Oil and natural gas properties (successful efforts method) | 40,954,310 | 40,873,612 | 41,033,974 | 40,873,612 | ||||||||||||
Other equipment | 108,460 | 108,460 | 108,460 | 108,460 | ||||||||||||
Less accumulated depletion and depreciation | (21,021,781 | ) | (20,514,981 | ) | (21,465,581 | ) | (20,514,981 | ) | ||||||||
Net property and equipment | 20,040,989 | 20,467,091 | 19,676,853 | 20,467,091 | ||||||||||||
Total assets | $ | 22,806,343 | $ | 22,897,629 | $ | 22,275,505 | $ | 22,897,629 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||
Short-term debt | $ | 7,240,000 | $ | - | ||||||||||||
Accounts payable and accrued expenses | $ | 945,946 | $ | 546,731 | 670,585 | 546,731 | ||||||||||
Oil and gas revenues payable | 456,049 | 315,954 | 448,945 | 315,954 | ||||||||||||
Total current liabilities | 1,401,995 | 862,685 | 8,359,530 | 862,685 | ||||||||||||
LONG-TERM DEBT | 7,240,000 | 7,240,000 | - | 7,240,000 | ||||||||||||
DEFERRED INCOME TAXES | 1,824,000 | 2,064,000 | 1,718,000 | 2,064,000 | ||||||||||||
ASSET RETIREMENT OBLIGATION | 1,792,409 | 1,763,043 | 1,815,292 | 1,763,043 | ||||||||||||
Total liabilities | 12,258,404 | 11,929,728 | 11,892,822 | 11,929,728 | ||||||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||||||
Common stock, $.01 par value, 75,000,000 shares authorized; 9,062,385 and 9,052,385 shares issued, respectively, and 8,135,385 and 8,125,385 outstanding, respectively | 90,623 | 90,523 | 90,623 | 90,523 | ||||||||||||
Additional paid-in capital | 12,146,179 | 12,116,487 | 12,242,095 | 12,116,487 | ||||||||||||
Retained earnings | 278,029 | 727,783 | 16,857 | 727,783 | ||||||||||||
Treasury stock, 927,000 shares, each period, at cost | (1,966,892 | ) | (1,966,892 | ) | (1,966,892 | ) | (1,966,892 | ) | ||||||||
Total stockholders’ equity | 10,547,939 | 10,967,901 | 10,382,683 | 10,967,901 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 22,806,343 | $ | 22,897,629 | $ | 22,275,505 | $ | 22,897,629 |
Three Months Ended March 31, | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
REVENUE: | ||||||||||||||||||||||||
Oil and natural gas sales | $ | 1,090,357 | $ | 2,904,215 | $ | 1,147,129 | $ | 2,367,540 | $ | 2,237,486 | $ | 5,271,755 | ||||||||||||
Well operational and pumping fees | 1,262 | 8,950 | 1,262 | 17,664 | 2,524 | 26,614 | ||||||||||||||||||
Disposal fees | 25,347 | - | 30,286 | 13,105 | 55,633 | 13,105 | ||||||||||||||||||
Total revenue | 1,116,966 | 2,913,165 | 1,178,677 | 2,398,309 | 2,295,643 | 5,311,474 | ||||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||
Production expense | 819,393 | 979,468 | 721,370 | 985,810 | 1,540,763 | 1,965,278 | ||||||||||||||||||
Depletion and depreciation | 506,800 | 825,500 | 443,800 | 623,500 | 950,600 | 1,449,000 | ||||||||||||||||||
Exploration expense | 15,497 | - | - | - | 15,497 | - | ||||||||||||||||||
Accretion of discount on asset retirement obligations | 26,000 | 26,000 | 27,000 | 25,000 | 53,000 | 51,000 | ||||||||||||||||||
General and administrative | 373,327 | 495,552 | 283,307 | 355,982 | 656,634 | 851,534 | ||||||||||||||||||
Total costs and expenses | 1,741,017 | 2,326,520 | 1,475,477 | 1,990,292 | 3,216,494 | 4,316,812 | ||||||||||||||||||
OPERATING INCOME (LOSS) | (624,051 | ) | 586,645 | (296,800 | ) | 408,017 | (920,851 | ) | 994,662 | |||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||||||
Interest income | 122 | 323 | 104 | 348 | 226 | 671 | ||||||||||||||||||
Interest expense | (63,445 | ) | (68,452 | ) | (64,434 | ) | (62,784 | ) | (127,879 | ) | (131,236 | ) | ||||||||||||
Unrealized loss on commodity derivatives | - | (46,209 | ) | |||||||||||||||||||||
Realized gain (loss) on commodity derivative | 25,234 | (882 | ) | 25,234 | (882 | ) | ||||||||||||||||||
Unrealized gain (loss) on commodity derivatives | 24,000 | 6,209 | 24,000 | (40,000 | ) | |||||||||||||||||||
Warrant modification expense | (66,124 | ) | - | (66,124 | ) | - | ||||||||||||||||||
Miscellaneous | 6,620 | 629 | 9,258 | 9,099 | 15,878 | 9,728 | ||||||||||||||||||
Total other expense | (56,703 | ) | (113,709 | ) | (71,962 | ) | (48,010 | ) | (128,665 | ) | (161,719 | ) | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (680,754 | ) | 472,936 | (368,762 | ) | 360,007 | (1,049,516 | ) | 832,943 | |||||||||||||||
INCOME TAX EXPENSE – CURRENT | - | (64,000 | ) | (410 | ) | (12,000 | ) | (410 | ) | (76,000 | ) | |||||||||||||
INCOME TAX BENEFIT (EXPENSE) – DEFERRED | 231,000 | (101,000 | ) | 108,000 | (121,000 | ) | 339,000 | (222,000 | ) | |||||||||||||||
TOTAL INCOME TAX PROVISION | 231,000 | (165,000 | ) | 107,590 | (133,000 | ) | 338,590 | (298,000 | ) | |||||||||||||||
NET INCOME (LOSS) | $ | (449,754 | ) | $ | 307,936 | $ | (261,172 | ) | $ | 227,007 | $ | (710,926 | ) | $ | 534,943 | |||||||||
EARNINGS PER SHARE: | ||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE: | ||||||||||||||||||||||||
BASIC | $ | (0.06 | ) | $ | 0.04 | $ | (0.03 | ) | $ | 0.03 | $ | (0.09 | ) | $ | 0.07 | |||||||||
DILUTED | $ | (0.06 | ) | $ | 0.03 | $ | (0.03 | ) | $ | 0.02 | $ | (0.09 | ) | $ | 0.06 | |||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||||||||||||||
BASIC | 8,135,274 | 8,066,336 | 8,135,385 | 8,070,386 | 8,135,330 | 8,068,373 | ||||||||||||||||||
DILUTED | 8,135,274 | 8,953,701 | 8,135,385 | 10,042,271 | 8,135,330 | 9,551,477 |
For the Three Months Ended March 31, | For the Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income (loss) | $ | (449,754 | ) | $ | 307,936 | $ | (710,926 | ) | $ | 534,943 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Unrealized loss on commodity derivatives | - | 46,209 | ||||||||||||||
Unrealized (gain) loss on commodity derivatives | (24,000 | ) | 40,000 | |||||||||||||
Depletion and depreciation | 506,800 | 825,500 | 950,600 | 1,449,000 | ||||||||||||
Exploration expense | 15,497 | - | 15,497 | - | ||||||||||||
Accretion of discount on asset retirement obligations | 26,000 | 26,000 | 53,000 | 51,000 | ||||||||||||
Deferred income tax expense (benefit) | (231,000 | ) | 101,000 | (339,000 | ) | 222,000 | ||||||||||
Stock compensation expense | 29,792 | - | 59,584 | - | ||||||||||||
Warrant modification expense | 66,124 | - | ||||||||||||||
Changes in current assets and liabilities: | ||||||||||||||||
Accounts receivable | 90,767 | (453,016 | ) | (27,658 | ) | (174,416 | ) | |||||||||
Income taxes receivable | (2,036 | ) | 50,641 | (3,627 | ) | 91,283 | ||||||||||
Prepaid expenses and other assets | (4,745 | ) | (592,047 | ) | (12,800 | ) | (79,214 | ) | ||||||||
Accounts payable and accrued expenses | 380,119 | 76,305 | 56,522 | 592,937 | ||||||||||||
Oil and gas revenues payable | 140,095 | (46,395 | ) | 132,991 | 114,529 | |||||||||||
Other | 30,815 | - | 30,815 | - | ||||||||||||
Net cash provided by operating activities | 532,350 | 342,133 | 247,122 | 2,842,062 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Additions to oil and natural gas properties and other equipment | (73,733 | ) | (1,609,716 | ) | (109,278 | ) | (2,938,140 | ) | ||||||||
Net cash used in investing activities | (73,733 | ) | (1,609,716 | ) | (109,278 | ) | (2,938,140 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
Proceeds from long term debt | - | 500,000 | - | 500,000 | ||||||||||||
Common stock issued from the exercise of warrants | - | 22,259 | ||||||||||||||
Net cash provided by financing activities | - | 500,000 | - | 522,259 | ||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 458,617 | (767,583 | ) | 137,844 | 426,181 | |||||||||||
CASH AND CASH EQUIVALENTS, beginning of the period | 978,145 | 2,648,487 | 978,145 | 2,648,487 | ||||||||||||
CASH AND CASH EQUIVALENTS, end of the period | $ | 1,436,762 | $ | 1,880,904 | $ | 1,115,989 | $ | 3,074,668 | ||||||||
SUPPLEMENTAL INFORMATION: | ||||||||||||||||
Cash paid during the period for interest | $ | 62,444 | $ | 64,237 | $ | 127,862 | $ | 190,847 | ||||||||
Cash paid during the period for income taxes | $ | 2,036 | $ | 17,752 | $ | 4,841 | $ | 33,622 | ||||||||
Change in accrued capital expenditures | $ | 22,462 | $ | - | $ | 67,332 | $ | 1,499,545 |
1. | Nature of Business, Organization and Basis of Preparation and Presentation |
2. | Liquidity |
3. | Recently Issued Accounting Pronouncements |
4. | Oil and Natural Gas Properties |
5. | Earnings Per Share |
For the Three Months Ended March 31, | For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Net income (loss) | $ | (449,754 | ) | $ | 307,936 | $ | (261,172 | ) | $ | 227,007 | $ | (710,926 | ) | $ | 534,943 | |||||||||
Weighted average common stock outstanding | 8,135,274 | 8,066,336 | 8,135,385 | 8,070,386 | 8,135,330 | 8,068,373 | ||||||||||||||||||
Weighted average dilutive effect of stock warrants | - | 887,365 | - | 1,971,885 | - | 1,483,104 | ||||||||||||||||||
Dilutive weighted average shares | 8,135,274 | 8,953,701 | 8,135,385 | 10,042,271 | 8,135,330 | 9,551,477 | ||||||||||||||||||
Earnings (loss) per share: | ||||||||||||||||||||||||
Basic | $ | (0.06 | ) | $ | 0.04 | $ | (0.03 | ) | $ | 0.03 | $ | (0.09 | ) | $ | 0.07 | |||||||||
Diluted | $ | (0.06 | ) | $ | 0.03 | $ | (0.03 | ) | $ | 0.02 | $ | (0.09 | ) | $ | 0.06 |
Income Taxes |
Related Party Transactions |
Stockholders’ Equity |
10. |
Period | Volume (Barrels) | $/Barrel | ||||||||||||||
Daily | Total | Floor | Ceiling | |||||||||||||
NYMEX –WTI Collars June 1 – December 2015 | 200 | 36,800 | $ | 55.00 | $ | 70.00 |
Fair Value | ||||||||||
Balance Sheet | June 30, | December 31, | ||||||||
Location | 2015 | 2014 | ||||||||
Derivatives not designated as hedging instruments | ||||||||||
Commodity derivatives | Current Assets | $ | 24,000 | $ | - |
Fair Value | |||||||||||||||||
Income Statement | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Location | 2015 | 2014 | 2015 | 2014 | |||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||
Unrealized gain (loss) on commodity derivatives | Other Income (Expense) | $ | 24,000 | $ | 6,209 | $ | 24,000 | $ | (40,000 | ) | |||||||
Realized gain (loss) on commodity derivatives | $ | 25,234 | $ | (882 | ) | $ | 25,234 | $ | (882 | ) |
· | Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. At June 30, 2015, we had no Level 1 measurements. |
· | Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Our derivatives, which consist of commodity collars, are valued using commodity market data which is derived by combining raw inputs and quantitative models and processes to generate forward curves. Where observable inputs are available, directly or indirectly, for substantially the full term of the asset or liability, the instrument is categorized in Level 2. At June 30, 2015, all of our commodity derivatives were valued using Level 2 measurements. |
· | Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At June 30, 2015, we had no Level 3 measurements. |
Quarter Ended March 31, | ||||||||
2015 | 2014 | |||||||
Revenue: | ||||||||
Oil sales | $ | 993,998 | $ | 2,605,280 | ||||
Natural gas sales | 96,359 | 298,935 | ||||||
Total oil and natural gas sales | $ | 1,090,357 | $ | 2,904,215 | ||||
Sales volumes: | ||||||||
Oil (Bbls) | 21,694 | 28,009 | ||||||
Natural gas (Mcf) | 34,333 | 44,483 | ||||||
Total (BOE) | 27,417 | 35,423 | ||||||
Average sales prices: | ||||||||
Oil ($/Bbl) | $ | 45.82 | $ | 93.02 | ||||
Natural gas ($/Mcf) | 2.81 | 6.72 | ||||||
Total ($/BOE) | $ | 39.77 | $ | 81.99 | ||||
Costs and expenses ($/BOE) | ||||||||
Lease operating expense (lifting costs) | $ | 29.89 | $ | 27.65 | ||||
Depletion and depreciation | 18.48 | 23.30 | ||||||
Exploration expense | 0.56 | - | ||||||
Accretion of discount on asset retirement obligations | 0.95 | 0.74 | ||||||
General and administrative | 13.62 | 13.99 | ||||||
Total | $ | 63.50 | $ | 65.68 |
Quarter Ended June 30, | ||||||||
2015 | 2014 | |||||||
Revenue: | ||||||||
Oil sales | $ | 1,064,687 | $ | 2,184,142 | ||||
Natural gas sales | 82,442 | 183,398 | ||||||
Total oil and natural gas sales | $ | 1,147,129 | $ | 2,367,540 | ||||
Sales volumes: | ||||||||
Oil (Bbls) | 20,074 | 23,551 | ||||||
Natural gas (Mcf) | 28,549 | 43,151 | ||||||
Total (BOE) | 24,832 | 30,743 | ||||||
Average sales prices: | ||||||||
Oil ($/Bbl) | $ | 53.04 | $ | 92.74 | ||||
Natural gas ($/Mcf) | 2.89 | 4.25 | ||||||
Total ($/BOE) | $ | 46.20 | $ | 77.01 | ||||
Costs and expenses ($/BOE) | ||||||||
Lease operating expense (lifting costs) | $ | 29.05 | $ | 32.07 | ||||
Depletion and depreciation | 17.87 | 20.28 | ||||||
Exploration expense | - | - | ||||||
Accretion of discount on asset retirement obligations | 1.09 | 0.81 | ||||||
General and administrative | 11.41 | 11.58 | ||||||
Total | $ | 59.42 | $ | 64.74 |
Six Months Ended June 30, | ||||||||
2015 | 2014 | |||||||
Revenues: | ||||||||
Oil sales | $ | 2,058,684 | $ | 4,789,422 | ||||
Natural gas sales | 178,802 | 482,333 | ||||||
Total | $ | 2,237,486 | $ | 5,271,755 | ||||
Sales volumes: | ||||||||
Oil (Bbls) | 41,768 | 51,560 | ||||||
Natural gas (Mcf) | 62,882 | 87,634 | ||||||
Total (BOE) | 52,248 | 66,166 | ||||||
Average sales prices | ||||||||
Oil ($/Bbl) | $ | 49.29 | $ | 92.89 | ||||
Natural gas ($/Mcf) | 2.84 | 5.50 | ||||||
Total ($/BOE) | $ | 42.82 | $ | 79.68 | ||||
Costs and expenses ($/BOE) | ||||||||
Lease operating expense | $ | 29.49 | $ | 29.70 | ||||
Depletion and depreciation | 18.19 | 21.90 | ||||||
Exploration expense | 0.30 | - | ||||||
Accretion of discount on asset retirement obligations | 1.01 | 0.77 | ||||||
General and administrative | 12.57 | 12.87 | ||||||
Total | $ | 61.56 | $ | 65.24 |
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. | CONTROLS AND PROCEDURES |
a) | Disclosure Controls and Procedures |
b) | Changes in Internal Control over Financial Reporting |
c) | Limitations of Any Internal Control Design |
Exhibits | ||
Certifications of Chief Executive Officer | ||
Certifications of Chief Financial Officer | ||
Certification of Chief Executive Officer Pursuant to U.S.C. Section 1350 | ||
Certification of Chief Financial Officer Pursuant to U.S.C. Section 1350 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.LAB | XBRL Label Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document |
Date: | By: | /s/ Roger D. Bryant | ||||
Roger D. Bryant, Principal Executive Officer |
Date: | By: | /s/ Phillip H. Roberson | ||||
Phillip H. Roberson, Principal Financial Officer |