Item 1. Business
Wyoming Oil & Minerals, Inc. (the Company), a Wyoming Corporation, was incorporated on February 23, 1973 as Wyoming Coal Corporation. It was organized primarily to hold and develop state and fee coal leases and secondarily to acquire oil and gas properties and explore for, develop and produce oil and gas. As the Company evolved, its emphasis shifted from holding and developing the coal leases to acquiring oil and gas leases and production. Some of the Company's coal leases have been explored and found not to contain coal deposits in commercial quantities and been dropped. As of the date of this report, the Company's coal properties have all been sold or dropped. Since oil and gas sales are now the Company's primary revenue source, its name was changed to Wyoming Oil & Minerals, Inc. at a shareholders meeting held August 10, 1981 to more accurately reflect the Company's business.
Generally, the economic success of the Company depends on its ability to locate and purchase oil and gas properties or purchase or lease valuable oil and gas prospects or mineral deposits. The Company must further operate, sell or lease these deposits or prospects to others at a profit or develop the properties itself or in conjunction with others.
To accomplish these goals, the Company will encounter competition from major oil and mining companies and other independent operators attempting to acquire prospective oil and gas leases, coal leases, production and other mineral interest. These sources of competition may be both large and small energy oriented companies operation in the states in which the Company does business or may do business in the future. Some of these competitors are major oil and gas and coal companies with substantial reserves and earnings records. Others are small independents with varying degrees of stability. Some not only produce oil and gas, but refine and market petroleum products. Some produce and market coal. The Company may be in a position of competitive disadvantage with many of these companies in that they have greater sources of capital, technical and management personnel, research facilities and sources of information.
Compliance with statutory requirements respecting environmental quality may necessitate significant capital outlays which may materially effect the earning power of the Company or may cause material changes in the Company's proposed business. Inc the past fiscal year, the Company expended less than $1,000 to comply with environmental regulation. It does not contemplate spending significant funds incidental to its operation in the present fiscal year to comply with environmental regulations.
The Company markets its properties or interest in its properties to others who will develop them with the Company retaining an economic interest. The Company also drills exploratory oil and gas wells by itself and in joint venture with others. Additional funds may be needed to engage in these activities and the Company hopes to finance all or some of its interest in these by having others pay for the drilling and/or completion of wells in exchange for an interest in the particular well or prospect.
The business of the Company is seasonal only to the extent that weather conditions, particularly snow and cold in the winter, impede the ability of the Company or others who may be developing properties in which the Company has an interest to conduct exploratory activities, drilling production or mining operations.
The Company employs its President, Jack C. Bradley, Jr., who receives $2000 monthly and reimbursement of his actual and necessary expenses and one assistant.
The Company is operating in one industry segment, the exploration, production and sale of oil and gas. See Financial Statements.
Item 2.
Item 2. Properties
The Company rents office space in the Goodstein Building in Casper, Wyoming at $400 per month.
Oil and Gas Properties. For the following discussion, gross well or acre is a well or acre in which an interest is owned. The number of gross wells is the total number of wells in which and interest is owned.
A net well or acre is deemed to exist when the sum of fractional ownership interest in gross wells or acres equals one. The number of net wells or acres is the sum of the fractional ownership interests owned in gross wells or acres as expressed as whole numbers and fractions thereof.
A summary of the Company's oil and gas properties as of February 28, 1997 all located in the state of Wyoming is as follows:
Gross Acres* Net Acres*
Undeveloped proved and unproved acres: Leasehold interest: Oil and gas 360 352
Developed proved acres: Leasehold interest: Primarily oil 4,590 1,844 Primarily gas 0 0
* - decrease in acres due to expiration of override leases expired in which the Company had no basis.
Oil and Gas Production. As of February 28, 1997, the Company owns the following productive wells: Oil Gas Gross Net Gross Net
Working Interest 38 19.2509 0 0 Royalty 36 .1046 0 0
From its drilling efforts and from production purchased from others, the Company's net yearly production of crude oil and gas has been as follows:
Year Ended the last day of February Crude Oil in Barrels Gas in MCF
1995 15,970 5,081 1996 13,157 3,558 1997 16,786 2,629
The average sales price (including transfers) per unit oil and gas produced for the years ended the last day of February is as follows:
1997 1996 1995
Oil -- Barrels $20.97 $17.00 $16.07 Gas -- MCF $ 2.64 $ 1.43 $ 1.47
The average production (lifting) cost per unit of production is as follows:
1997 1996 1995
Oil -- Barrels $14.58 $16.96 $13.63 Gas -- MCF $ 1.25 $ 1.25 $ 1.25
Net Exploratory Wells
Fiscal Year Drilled Producers Dry Holes Total Wells
1995 0 0 0 1996 0 0 0 1997 0 0 0
Net Development Wells
Fiscal Year Drilled Producers Dry Holes Total Wells
1995 0 0 0 1996 0 0 0 1997 0 0 0
Reserves. The following are reserve estimates as of last day of February:
Proved Oil and Gas Reserves Oil (bbls) Gas (mcf)
1995 69,093 99,916 1996 163,378 86,884 1997 88,197 84,255
Proved Developed Oil and Gas Reserves
1995 69,093 99,916 1996 163,378 86,884 1997 88,197 84,255
The reserve estimates for all properties were computed both by management and by independent petroleum engineers for areas in which the Company has interest in certain wells. No reserve figures have been filed with or reported to any other regulatory authorities or agencies.
The Company has annual rental obligations from $0.50 to $1.00 per acre on all of its leasehold oil and gas on which there is no production. If these payments are not made when due, the leases terminate. Additionally, the leases terminate at the end of this term unless production is obtained in which case the lease continues as long as production continues.
Oil and Gas Operations. The Company follows the successful efforts method of accounting for oil and gas exploration and development activities. Under this method of accounting lease acquisition costs, intangible drilling costs and other costs associated with exploration efforts which result in the discovery of proved reserves are capitalized. Costs of well equipment, development drilling, support facilities, major betterments and renewals and other development costs are capitalized. Capitalized costs are amortized using the units of production method. For leasehold costs, the basis is total estimated units proved developed reserves both of which are estimated by independent engineers and management of the Company. the amortized amounts are charged to depreciation and depletion expense. The recoverability of costs capitalized related to proved and unproved acreage is reviewed periodically. Any impairment discovered is charged to expenses.
Costs of drilling exploratory wells which do not result in the discovery of proved reserves are charged to expense. Production costs, geological and geophysical costs, and maintenance and repairs are charged to expense.
Item 3.
Item 3. Legal Proceedings.
None
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Bid Prices
High Low
March 1, 1988 through February 28, 1989 1 cent 1 cent
March 1, 1989 through February 28, 1990 1 cent 1 cent
March 1, 1990 through February 28, 1991 1 cent 1 cent
March 1, 1991 through February 28, 1992 1/2 cent 1/2 cent
March 1, 1992 through February 28, 1993 1 cent 1 cent
March 1, 1993 through February 28, 1994 1 cent 1 cent
March 1, 1994 through February 28, 1995 1 cent 1 cent
March 1, 1995 through February 29, 1996 1 cent 1 cent
March 1, 1995 through February 28, 1997 1 cent 1 cent
The source for the over-the-counter quotations is the National Association of Securities Dealers. Such quotations reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.
There were approximately 1,609 holders of record of the Company's common stock as of May 15, 1997.
No dividends have been declared or paid in the Company's history. Wyoming law generally provides that dividends may be declared and paid only out of the unreserved and unrestricted earned surplus of the corporation, except when the Articles of Incorporation of a corporation engaged in the business of exploiting natural resources so provide, dividends may be declared and paid out of depletion reserves.
Wyoming Oil & Minerals, Inc. has no unreserved and unrestricted earned surplus and its Articles of Incorporation do not provide that dividends may be paid from depletion reserves.
Item 6.
Item 6. Selected Financial Data
Year Ended February 28/29 1997 1996 1995 1994 1993 Revenues: Operating revenues from oil and gas sales $357,765 $266,227 $293,777 $207,295 $117,297
Other operating revenues 22,039 24,962 32,160 25,852 25,187
Earnings (loss) from continuing operations before extraordinary items ( 9,698) (51,635) (27,147) (396,484) 9,442
Extraordinary items -- -- -- -- --
Net earnings (loss) from continuing operations ( 9,698) (51,635) (27,147) (396,484) 9,442 Earnings (loss) per share from continuing operations * * (.02) * *
Cash dividends per common share -- -- -- -- --
At year end:
Total assets 242,330 256,806 284,012 414,237 729,758 Long-term obligations 50,000 50,000 50,000 58,703 -- * Less than $.01 per share
Item 7.
Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operation
Financial Position
During the Company's fiscal year 1997, net cash decreased by $287. Of this decrease, $2,913 is the result of operating activities, $800 was from the sale of properties and $4,000 was principal payments on debt. The Company's emphasis regarding property additions continues to be toward acquiring existing production rather than from drilling new wells. No new drilling was done by the Company in fiscal 1997 and significant costs related to maintaining existing production. Short term notes payable decreased by $4,000 which was paid in cash. The Company has financed property acquisitions with debt and continue to repay such borrowing with the revenues from those properties.
During the Company's fiscal year 1997, crude oil prices varied within a range of approximately $16.81 to $24.98 a barrel. Natural gas prices varied within a range of approximately $1.17 to $3.68. Revenue from such acquired properties must not only service debt, but continue to provide positive cash flow after retirement of that debt.
Result of Operations
The Company's oil and gas revenues increased from $266,227 in fiscal 1996 to $357,765 in fiscal 1997. Present production has the effect of decreasing Wyoming Oil & Minerals reserves, however, due mainly to not doing the waterflood of the Don Thorson #1 and the Wade Hill unit, total oil and gas reserves decreased significantly for the fiscal year ended February 29, 1997. An independent engineering firm generated a partial reserves analysis during fiscal year 1997. Crude oil sales increased by approximately 3474 equivalent barrels, which was mainly due to the Don Thorson #1 and the Wade Hill Unit increasing production.
During fiscal 1997, the amount reserved for the depletion of reserves and the depreciation of equipment was $17,184. Loss on operations for the year was $9,698 due to the cost of abandoned properties of $28,619.
Production and operating expenses decreased approximately 18% as a percentage from fiscal 1996 to 1997, due to less workover costs.
"Total" General and Administrative expenses remained approximately the same in fiscal 1996 compared to fiscal 1997. Since fiscal 1985, the Company resolved to avoid those activities that required additional outside professional services and to limit operations to the management of existing properties and the acquisition of additional properties within the Company's ordinary course of business.
Interest expense remained approximately the same as in fiscal 1996.
Management anticipates higher crude oil and natural gas prices and therefore, an increase in oil and gas revenues in fiscal year 1998 to fiscal year 1997 will come from additional production and higher oil and gas prices.
Financial Position
During the Company's fiscal year 1996, net cash decreased by $53,270. Of this decrease, $33,170 is the result of operating activities, $15,100 was for the purchase of properties and $5,000 was principal payments on debt. The Company's emphasis regarding property additions continues to be toward acquiring existing production rather than from drilling new wells. No new drilling was done by the Company in fiscal 1996 and significant costs related to maintaining existing production. Short term notes payable decreased by $5,000 which was paid in cash. The Company has financed property acquisitions with debt and continue to repay such borrowing with the revenues from those properties.
During the Company's fiscal year 1996, crude oil prices varied within a range of approximately $13.07 to $19.10 a barrel. Natural gas prices varied within a range of approximately $1.03 to $1.50. Revenue from such acquired properties must not only service debt, but continue to provide positive cash flow after retirement of that debt. Result of Operations
The Company's oil and gas revenues decreased from $293,777 in fiscal 1995 to $266,227 in fiscal 1996. Present production has the effect of decreasing Wyoming Oil & Minerals reserves, however, due mainly to the waterflood of the Don Thorson #1 and the Wade Hill unit, total oil and gas reserves increased significantly for the fiscal year ended February 29, 1996. An independent engineering firm generated a partial reserves analysis during fiscal year 1996. Crude oil sales decreased by approximately 3067 equivalent barrels, which was mainly due to the Don Thorson #1 being out of operation for a number of months.
During fiscal 1996, the amount reserved for the depletion of reserves and the depreciation of equipment was $18,501. Loss on operations for the year was $45,190 due to increased workover costs on the recently acquired producing properties.
Production and operating expenses did not materially change as a percentage from fiscal 1995 to 1996, except for the increased workover cost described above.
"Total" General and Administrative expenses increased $11,546 from $53,284 in fiscal 1995 to $64,830 in fiscal 1996 mainly due to outside service expense of $9,161 for the year. Since fiscal 1985, the Company resolved to avoid those activities that required additional outside professional services and to limit operations to the management of existing properties and the acquisition of additional properties within the Company's ordinary course of business.
Interest expense remained approximately the same as in fiscal 1995.
Management anticipates higher crude oil and natural gas prices and therefore, and increase in oil and gas revenues in fiscal year 1997 to fiscal year 1996 will come from additional production and higher oil and gas prices.
Financial Position
During the Company's fiscal year 1995, net cash decreased by $26,989. Of this decrease, $50,612 is the result of operating activities, $75,616 is proceeds from the sale of properties, $2,436 was for the purchase of properties and $49,557 was principal payments on debt. The Company's emphasis regarding property additions continues to be toward acquiring existing production rather than from drilling new wells. No new drilling was done by the Company in fiscal 1995 and significant costs related to maintaining existing production. Short term notes payable decreased by $7,500 which was paid in cash. The Company has financed property acquisitions with debt and continue to repay such borrowing with the revenues from those properties.
During the Company's fiscal year 1995, crude oil prices varied within a range of approximately $10.55 to $18.10 a barrel. Natural gas prices varied within a range of approximately $1.08 to $1.82. Revenue from such acquired properties must not only service debt, but continue to provide positive cash flow after retirement of that debt.
Result of Operations
The Company's oil and gas revenues increased from $207,295 in fiscal 1994 to $293,777 in fiscal 1995. This increase resulted from the purchase of additional producing properties. Present production has the effect of increasing Wyoming Oil & Minerals reserves, however, due mainly to the loss of the Bradbury well and sale of another producing property, total oil and gas reserves decreased significantly for the fiscal year ended February 28, 1995. An independent engineering firm generated a partial reserves analysis during fiscal year 1995. Crude oil sales increased by approximately 1345 equivalent barrels, which was mainly due to the purchase of producing properties.
During fiscal 1995, the amount reserved for the depletion of reserves and the depreciation of equipment was $10,467. Loss on operations for the year was $20,361 due to a loss of $16,519 on the sale of a producing property and increased workover costs on the newly acquired producing properties.
Production and operating expenses did not materially change as a percentage from fiscal 1994 to 1995, except for the increased workover cost described above.
"Total" General and Administrative expenses increased $15,792 from $37,492 in fiscal 1994 to $53,284 in fiscal 1995 mainly due to an increase in salary to the President of $18,000. Since fiscal 1985, the Company resolved to avoid those activities that required additional outside professional services and to limit operations to the management of existing properties and the acquisition of additional properties within the Company's ordinary course of business.
Interest expense increased by $2,170 due to additional borrowing.
Management anticipates higher crude oil and natural gas prices and therefore, and increase in oil and gas revenues in fiscal year 1996 to fiscal year 1995 will come from additional production and higher oil and gas prices.
Item 8.
Item 8. Financial Statements and Supplementary Data.
For the financial statements and supplementary data required by Item 8, see Financial Statements, Unaudited Supplemental Financial Information and Schedules.
Item 9.
Item 9. Disagreements on Accounting and Financial Disclosure.
Not applicable
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
The following are the present directors and executive officers of the Company and the director-nominees for the coming year.
Jack C. Bradley Jr., age 55, has been president and a director of the Company since February 23, 1973. Bradley also is the president, a director, and the majority shareholder of Manx Oil Corporation, Casper, Wyoming since 1969; vice-president, director and shareholder on Manewal-Bradley Oil Company, Newcastle, Wyoming since 1962; and, secretary, director and shareholder of Econoservice, Inc., Casper, Wyoming since 1986 -- all of which are engaged in the oil and gas exploration or production business.
Since 1970, he has been owner of Zephyr Exploration which is a sole proprietorship engaged in the oil and gas exploration and production business and real estate investments.
Jess A. Tolerton, age 73, has been secretary, treasurer and director since February 12, 1974. Tolerton was a practicing attorney in Cheyenne, Wyoming from 1966 to 1968 and from January 1974 to December 31, 1990. He is now retired from practice.
There is no family relationship between any of the officers and directors of the Company. The term of the officers expire at the annual directors meeting.
Item 11.
Item 11. Executive Compensation
No director or officer of the Company received enumeration which exceeded $60,000 in the past fiscal year.
The Company has never granted any options to any of its officers or directors to purchase any of the Company's securities. The Company has adopted a key employee stock option plan designed to qualify under Section 422 of the Internal Revenue Code of 1954, as amended; however, no options have been granted pursuant to the plan. At the present time, no officer or director holds any options granted by the Company to purchase any on the Company's securities.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Amount and Nature of Beneficial Percent of Name and Address Ownership Class
The Hawks Company 1,260,000 (1) 7.5% P.O. Box 2493 Casper, WY 82601
(1) Owned of record
The following are shares owned by management:
Amount and Nature of Beneficial Percent of Director Ownership Class
Jack C. Bradley, Jr. 2,135,500 (1) 12.7% P.O. Box 3560 Casper, WY 82602
Jess A. Tolerton 650,000 3.9%
All directors and officers as a group 2,785,500 16.6%
(1) Of this total 2,085,500 shares are owned by record by Jack C. Bradley, Jr., and 50,000 are owned by Manx Oil Corporation of which Bradley is the president, a director, and owner of a majority of its outstanding common shares.
Item 13.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) See attached Financial Statements, Unaudited Supplemental Financial Information and Schedules.
(b) No reports of Form 8-K were filed in the fourth quarter of the fiscal year ended February 28, 1997.
(c) Exhibits required by Item 601 of Regulation SK: None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
WYOMING OIL & MINERALS, INC. A Wyoming Corporation
By: /s/ Jack C. Bradley, Jr. Jack C. Bradley, Jr., President and Principal Financial Officer
DATED: June 11, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Jack C. Bradley, Jr. Jack C. Bradley, Jr., Director and President
DATED: June 11, 1997
/s/ Jess A. Tolerton Jess A. Tolerton Director and Secretary
DATED: June 11, 1997
INDEPENDENT AUDITOR'S REPORT
Board of Directors Wyoming Oil and Minerals, Inc. Casper, Wyoming
I have audited the accompanying balance sheets of Wyoming Oil and Minerals, Inc., as of February 28, 1997 and February 29, 1996 and the related statements of operations, changes in stockholders' equity and cash flows for the years ended February 28, 1997, February 29, 1996 and February 28, 1995. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wyoming Oil and Minerals, Inc. as of February 28, 1997 and February 29, 1996, and the results of its operations and changes in its stockholders' equity and its cash flow for the years ended February 28, 1997, February 29, 1996 and February 28, 1995, in conformity with generally accepted accounting principles.
MAURICE M. MORTON Certified Public Accountant
Casper, Wyoming May 15, 1997
WYOMING OIL AND MINERALS, INC.
Balance Sheets
ASSETS
February 29, February 28, 1997 1996
Current assets: Cash $ 7,430 $ 7,717 Accounts receivable 83,110 43,316 Marketable equity securities - (Note 3) 5,850 5,850 Inventory of oilfield equipment and oil in tanks - at lower of cost (specific identification) or market 43,325 50,005
Total current assets 139,715 106,888
Property and equipment, at cost under the successful efforts method of accounting (Note 4): Proved oil and gas properties (Notes 4 & 5) 268,023 298,142 Unproved oil and gas properties 4,842 4,842 Pipeline and drilling equipment 570 570 Office furniture and equipment 3,509 3,509 276,944 307,063
Less accumulated depletion and depreciation (174,390) (157,206) 102,554 149,857
Other assets 61 61
$ 242,330 $ 256,806 (continued)
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Balance Sheets (Continued)
Liabilities and Stockholders' Equity
February 28, February 29, 1997 1996
Current liabilities: Notes payable (Note 5): Related parties $ 8,000 $ 12,000 Accounts payable 73,150 72,123 Accrued expenses - 1,805
Total current liabilities 81,150 85,928
Long-term debt - related parties (Note 6) 50,000 50,000
Stockholders' equity (Note 7): Common stock, $.01 par value: Authorized - 25,000,000 shares Issued - 16,750,000 shares in 1997 and 1996 167,500 167,500 Additional paid-in capital 1,021,025 1,021,025 Accumulated deficit (1,077,345) (1,067,647)
111,180 120,878
$ 242,330 $ 256,806
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Statements of Operations
February 28, February 29, February 28, 1997 1996 1995
Operating revenues: Oil and gas sales (Notes 5 & 10)$ 357,765 $ 266,227 $ 293,777 Gain (loss) on sale of oil and gas properties and equipment (700) - (16,519) Other operating income 22,039 24,962 32,160
Total operating revenues 379,104 291,189 309,418
Operating expenses: General and administrative 64,399 64,830 53,284 Depreciation and depletion 17,184 18,501 10,467 Oil and gas production costs 272,681 251,419 250,316 Abandoned properties 28,619 - 15,006 Lease rentals 1 1,629 706
Total operating expenses 382,884 336,379 329,779
Operating income (loss) (3,780) (45,190) (20,361)
Other income (expense): Interest income 44 523 239 Interest expense (5,962) (6,968) (7,025)
Other income (expense), net (5,918) (6,445) (6,786) (continued)
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Statements of Operations (Continued)
February 28, February 29, February 28, 1997 1996 1995
Earnings (loss) before income taxes: $ (9,698) $ (51,635) $ (27,147) Current taxes - - -
Net earnings (loss) $ (9,698) $ (51,635) $ (27,147) Weighted average number of shares outstanding 16,750,000 16,750,000 16,750,000
Net earnings (loss ) per common share: Primary and fully diluted:
Net earnings (loss) $ * $ * $ *
*Less than $.01 per share
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Statements of Stockholders' Equity
Common Stock Additional .01 Par Value Paid-in Accumulated Treasury Stock Shares Amount Capital Deficit Shares Amount Total
Bal at 02/28/94 16,750,000 $167,500 $1,021,025 $(988,865) - $ - $199,660
Net loss - - - (27,147) - - (27,147)
Bal at 02/28/95 16,750,000 167,500 1,021,025(1,016,012) - - 172,513
Net loss - - - (51,635) - - (51,635)
Bal at 02/29/96 16,750,000 167,500 1,021,025(1,067,647) - - 120,878
Net loss - - - (9,698) - - (9,698)
Bal at 02/28/97 16,750,000 $167,500 $1,021,025$(1,077,345) - $ - $111,180
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC. Statements of Cash Flows
February 28, February 29, February 28, 1997 1996 1995
Cash flows from operating activities: Cash received from customers $ 340,010 $ 294,067 $ 314,001 Cash paid to suppliers and employees(329,374) (322,597) (357,714) Interest income 44 523 239 Interest expense (7,767) (5,163) (7,138)
Net cash provided by (used in) operating activities 2,913 (33,170) (50,612)
Cash flows from investing activities: Purchase of oil and gas properties and equipment - (15,100) (2,436) Proceeds from sale of oil and gas properties and equipment 800 - 75,616
Net cash provided by (used in) investing activities 800 (15,100) 73,180
Cash flows from financing activities: Principal payments (4,000) (5,000) (49,557)
Net cash provided by (used in) financing activities (4,000) (5,000) (49,557)
Net increase (decrease) in cash and cash equivalents (287) (53,270) (26,989)
Cash and cash equivalents at beginning of year 7,717 60,987 87,976
Cash and cash equivalents at end of year $ 7,430 $ 7,717 $ 60,987 (continued)
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC. Statements of Cash Flows (Continued)
February 28, February 29, February 28, 1997 1996 1995
Reconciliation of net income to net cash provided by (used in) operating activities
Net earnings (loss) $ (9,698) $ (51,635) $ (27,147)
Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and depletion 17,184 18,501 10,467 (Increase) decrease in accounts receivable (39,794) 2,87 (13,678) (Increase) decrease in inventory 6,680 (32,343) 1,742 Increase (decrease) in accounts payable 1,027 27,624 (53,408) Increase (decrease) in accrued expenses (1,805) 1,805 (113) Abandoned properties 28,619 - 15,006 Gain (loss) on sale of oil and gas properties and equipment 700 - 16,519
Net cash provided by (used in) operating activities $ 2,913 $ (33,170) $ (50,612)
Supplemental schedule of non cash investing and financing activities
None
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997 and February 29, 1996 and February 28, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General
Wyoming Oil and Minerals, Inc. engages principally in the exploration, development and production of oil and gas which is mainly in Wyoming.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts receivable
The Company uses the direct write off method for bad debts which expenses uncollectible accounts in the year they become uncollectible. Any difference between this method and the allowance method is not material.
Marketable equity securities
Marketable equity securities are classified as available-for-sale securities and are carried at fair value at the balance sheet date.
When securities are sold, the cost is based on the first-in, first-out method.
Oil and gas properties
The Company follows the successful efforts method of accounting for oil and gas exploration and development activities. Under this method of accounting, lease acquisition costs, intangible drilling costs and other costs associated with exploration efforts, which result in the discovery of proved reserves, are capitalized. Costs of well equipment, development drilling, support facilities, major betterment and renewals and other development costs are also capitalized. Capitalized acquisition costs of proved properties are amortized using the unit-of-production method on the basis of total estimated units of proved oil and gas reserves. Other capitalized costs are amortized using the unit-of-production method on the basis of total estimated units of proved developed reserves. The amortized amounts are charged to depreciation and depletion expense. The recoverability of costs capitalized both for proved and unproved properties is reviewed periodically. Any impairment discovered is charged to expense.
Costs of drilling exploratory wells which do not result in the discovery of proved reserves are charged to expense. Production costs, geological and geophysical costs, and maintenance and repairs are charged to expense when incurred.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997 and February 29, 1996 and February 28, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Other property and equipment
The Company's pipeline and drilling equipment and office furniture and equipment are depreciated utilizing the straight-line method to apportion costs over an estimated useful life of five years.
Income taxes
Investment tax credits are recorded in the year in which they are utilized to reduce income taxes.
Earnings (loss) per common share
Earnings or loss per common share is based on the weighted average number of shares of the Company's $.01 par value common stock outstanding during the year. Outstanding warrants have been excluded because the exercise price is substantially higher than the trading price of the Company's stock.
Statement of cash flows
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Reclassifications
Certain reclassifications have been made to financial statements of prior years to be comparative with the current year presentation.
Off-Balance-Sheet Risk
Sale of oil and gas are made to domestic petroleum purchasing and refining companies with payment normally received within thirty to sixty days of sale. Billings to joint interest holders are normally received within thirty to sixty days of billing.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997, February 29, 1996 and February 28, 1995
2. FOURTH QUARTER ADJUSTMENTS
During the fourth quarter of the year ended February 28, 1997 the Company wrote off a proved undeveloped lease. Cost was decreased $28,619 and a loss was recorded of $28,619.
During the fourth quarter of the year ended February 29, 1996, the Company recorded an increase of $32,893 in the amount of oil inventory stored in tanks. Oil and gas income also increased $32,893.
During the fourth quarter of the year ended February 28, 1995, the Company wrote off a proved undeveloped lease. Cost was decreased $86,441, accounts payable was decreased $71,435 and a loss was recorded of $15,006.
3. MARKETABLE EQUITY SECURITIES
Marketable equity securities are summarized below:
February 28, February 29, February 28, 1997 1996 1995
Available-for-sale securities, at cost $ 73,411 $ 73,411 $ 73,411 Less: Valuation allowance 67,561 67,561 67,561
Fair Value $ 5,850 $ 5,850 $ 5,850
There were no significant unrealized gains or losses.
4. OIL AND GAS PROPERTIES
During fiscal 1997, the Company sold its interest in a producing lease in Campbell County, Wyoming for $800.
Effective May 1, 1995, the Company purchased 20% of seven producing leases in Converse and Campbell Counties, Wyoming from a related party for $15,100.
During fiscal year 1995, the Company sold its interest in producing wells in Campbell County, Wyoming to an independent party for $4,181 and recognized a loss of $16,519.
See Note 2, also.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997, February 29, 1996 and February 28, 1995
5. NOTES PAYABLE
The Company had outstanding notes payable as follows:
Other 1997 1996
Note to individual (related party), due on demand, interest at 1% over the prime rate, (9.25% at February 29, 1996) unsecured. $ - $ 500
Note to individual (related party) due on demand, interest at 1% over the prime rate (9.25% at February 28, 1997) secured by a producing well. 8,000 11,500
$ 8,000 $12,000
Other information regarding short-term notes payable is as follows:
1997 1996 1995
Average aggregate short-term borrowings $ 10,000 $ 14,500 $ 20,750 Maximum aggregate short-term borrowings at any month-end $ 12,000 $ 17,000 $ 24,500 Weighted average interest rate 9.25% 9.0% 8.0%
The weighted average interest rate was computed by dividing interest expense by the weighted average of such borrowings outstanding.
6. LONG-TERM DEBT
The Company had long-term debt as follows:
1997 1996
Notes payable to two individuals (related parties), due December 1, 1999, interest at 2% over the prime rate (10.25% at February 28, 1997), unsecured $ 50,000 $ 50,000
Long-term debt maturities are as follows:
Year Ended February 28, Amount
1999 $ 50,000
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997, February 29, 1996 and February 28, 1995
7. STOCKHOLDERS' EQUITY
The Company has adopted a key-employee stock option plan. The plan provides for a maximum of 1,000,000 shares of the Company's common stock available to be optioned. The fair market value of the shares, as determined by the Board of Directors at the time the option is granted, will be the exercise price. The options will expire on the earlier of five years after being granted or two months after termination of employment. Since the adoption of the plan, no options have been granted.
No dividends have ever been declared or paid.
8. INCOME TAXES
Net income and losses differ from taxable income (loss) because certain revenues and expenses are reported in the financial statements in periods which differ for those in which they are subject to taxation. The principal timing differences are intangible drilling costs, which are deducted as incurred for tax purposes, but capitalized and depleted for proven properties for financial statement purposes; and unrealized losses on marketable securities, which are recognized for financial statement purposes currently, but not until realized for tax purposes. Deferred income taxes are not recognized on the timing differences as it is not likely that all net operating loss carryforwards will be used.
February 28, 1997 1996 1995
Pretax income per books $ (9,698) $ (51,635) $ (27,147) Timing differences: Depletion on intangible drilling costs 2,000 2,000 3,000 Basis difference on sale of oil and gas properties - - 18,402
Taxable income (loss) $ (7,698) $ (49,635) $ (5,745)
As discussed above, the Company adopted SFAS No. 109 as of February 28, 1994. Deferred tax (assets) liabilities are comprised of the following at February 28, computed using a tax rate of 15%:
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 29, 1997, February 28, 1996 and February 28, 1995
8. INCOME TAXES (Continued)
Tax effects of temporary differences for: 1997 1996 1995
Accounting for oil and gas properties $ 306 $ 606 $ 905 Accounting for securities held for sale (6,428) (6,428) (6,428) (6,122) (5,822) (5,523) Tax loss carryforwards (92,382) (107,216) (107,606) (98,504) (113,038) (113,129) Valuation allowance 98,504 113,038 113,129 Net deferred tax $ - $ - $ -
At February 29, 1997, the Company had net operating loss carryforwards available of $615,880 and unused investment credit carryforwards available of $9,190. Such carryforwards expire as follows:
Net Operating Investment Expiration Loss Credits
1998 217,687 4,968 1999 8,275 498 2000 61,322 3,724 2001 20,035 - 2002 127,905 - 2003 115,412 - 2004 8,006 - 2005 49,540 - 2006 7,698 - $ 615,880 $ 9,190*
* subject to limitations
The Company also has long-term capital loss carryover of $94,940.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997, February 29, 1996 and February 28, 1995
9. RELATED PARTY TRANSACTIONS
The Company is related to the following companies by common ownership and/or management:
Manx Oil Corporation Manewal-Bradley Oil Company, Inc. Zephyr Exploration Econoservice, Inc.
Lease operating expenses paid to Manx Oil Company were $206,621, to Manewal- Bradley Oil Company, Inc. were $4,067 and to Econoservice, Inc. were $13,911 for the year ended February 28, 1997. Amounts received from Manx Oil Corporation were $3,504 for lease operating expenses. Oil and gas revenue received from Manx Oil Corporation were $245,254 and oil and gas revenue paid were $1,629. The Company owed Manx Oil Corporation $57,466 at February 28, 1997, $49,088 at February 29, 1996 and $14,818 at February 28, 1995. Manx Oil Corporation owed the Company $47,815 at February 28, 1997 and $16,045 at February 29, 1996.
10. MAJOR PURCHASERS
Substantially all of the Company's accounts receivable at February 28, 1997 and February 29, 1996 result from oil and gas sales to other companies in the oil and gas industry or joint industry billings to other interest holders. This concentration of customers may impact the Company's overall credit risk, either positively or negatively, in that these entities may be similarly affected by industry - wide changes in economic or other conditions. Such receivables are generally not collaterized.
The following customers each contributed 10% or more of the revenues derived from oil and gas sales as follows:
February 28, February 29, February 28, 1997 1996 1995
Eighty-Eight Oil $ 162,606 $ 132,678 $ 165,570 Texaco $ 43,464 $ 33,707 $ 27,131 JN Petroleum $ 92,509 $ 59,620 $ 54,744
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 29, 1997, February 28, 1996 and February 28, 1995
12. SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited)
Capitalized Costs
Capitalized costs relating to the Company's oil and gas producing activities as of February 28, 1997, February 29, 1996 and February 28, 1995 are as follows: 1997 1996 1995 Proved properties $268,023 $298,142 $283,042 Unproved properties 4,842 4,842 4,842
$272,865 $302,984 $287,884
Support equipment $ 570 $ 570 $ 570
Accumulated depreciation and depletion $170,881 $153,697 $135,196
Costs incurred in oil and gas property acquisition, exploration and development activities
Costs incurred in oil and gas property acquisition, exploration and development activities, including capital expenditures, are summarized as follows for the years ended February 28, 1997, February 29, 1996 and February 28, 1995 (all in the United States): 1997 1996 1995
Property acquisition costs: Proved properties $ - $ 15,100 $ 2,436 Unproved properties $ - $ - $ - Exploration costs $ 1 $ 1,629 $ 706 Development costs $ - $ - $ -
Results of operations for oil and gas producing activities
The results of operations for oil and gas producing activities, excluding capital expenditures and corporate overhead and interest costs, are as follows for the years ended February 28, 1997, February 29, 1996 and February 28, 1995 (all in the United States):
1997 1996 1995 Revenues $357,765 $266,227 $293,777 Production costs 272,681 251,419 250,316 Exploration costs 1 1,629 706 Depreciation and depletion 17,184 18,501 10,467
$ 67,899 $ (5,322) $ 32,288
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997, February 29, 1996 and February 28, 1995
12. SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited) (Continued)
Oil and Gas Reserve Quantities
The estimates of proved reserves and related valuations were determined both by management and by independent petroleum engineers. Estimates of proved reserves are inherently imprecise and are continually subject to revision based on production history, results of additional exploration and development and other factors.
Proved reserves are reserves judged to be economically producible in future years from known reservoirs under existing economic and operating conditions; i.e., prices and costs as of the date the estimate is made and assuming continuation of current regulatory practice using conventional production methods and equipment. Proved developed reserves are those expected to be recovered through existing wells with existing equipment and operating methods.
Presented below is a summary of the changes in estimated proved reserves of the Company, all of which are located in the United States, for the years ended February 28, 1997 and February 29, 1996 and February 28, 1995: 1997 1996 1995 Oil Gas Oil Gas Oil Gas (bbls.) (mcf) (bbls.) (mcf) (bbls.) (mcf) Proved reserves: Beginning of year 163,378 86,884 69,093 99,916 128,216 489,108 Improved Recovery - Water Flood (63,384) - 94,278 - - - Revisions of previous estimates 4,989 - 826 (9,474) (36,867) 89 Purchase of minerals in place - - 12,338 - - - Production (16,786) (2,629) (13,157) (3,558) (15,970) (5,081) Sales of minerals in place - - - - (6,286)(384,200)
End of year 88,197 84,255 163,378 86,884 69,093 99,916
Proved developed reserves: Beginning of year 163,378 86,884 69,093 99,916 124,116 224,108 End of year 88,197 84,255 163,378 86,884 69,093 99,916
Standardized measure of discounted future net cash flows and changes therein relating to proved oil and gas reserves
Statement of Financial Accounting Standards No. 69 prescribes guidelines for computing a standardized measure of future net cash flows and changes therein relating to estimated proved reserves. The Company has followed those guidelines which are briefly discussed below.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997, February 29, 1996 and February 28, 1995
12. Supplementary Oil and Gas Information (Unaudited) (Continued)
Oil and Gas Reserve Quantities (Continued)
Future cash inflows and future production and development costs are determined by applying year-end prices and costs to the estimated quantities of oil and gas to be produced. Estimated future income taxes are computed using year-end statutory income tax rates, including consideration for previously legislated future statutory depletion rates and investment tax credits. The resulting future net cash flows are reduced to present value amounts by applying a 10% annual discount factor.
The assumptions used to compute the standardized measure are those prescribed by the Financial Accounting Standards Board and, as such, do not necessarily reflect the Company's expectations of actual revenues to be derived from those reserves or their present worth. The limitations inherent in the reserve quantity estimation process, as discussed previously, are equally applicable to the standardized measure computations since these estimates are the basis for the valuation process.
Presented below are the standardized measure of discounted future net cash flows and changes therein relating to proved reserves as of and for the years ended February 28, 1997 and February 29, 1996 and February 28, 1995.
1997 1996 1995 Future cash inflows $ 1,901,220 $ 2,922,401 $ 1,240,670 Future production and development costs (955,275) (1,398,293) (642,010) Future income tax expenses (64,735) (196,596) - Future net cash flows 881,210 1,327,512 598,660
10% annual discount for estimated timing of cash flows (344,608) (517,858) (179,506) Standard measure of discounted future net cash flows $ 536,602 $ 809,654 $ 419,154
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1997, February 29, 1996 and February 28, 1995
12. Supplementary Oil and Gas Information (Unaudited) (Continued)
Oil and Gas Reserve Quantities (Continued)
The following are the principal sources of changes in the standardized measure of discounted future net cash flows:
February 28, February 29, February 28, 1997 1996 1995
Sales and transfers of oil and gas produced, net of production costs $ (85,084) $ (14,808) $ (43,461) Net changes in prices and production costs 414,851 (13,554) 469,084 Improved Recovery - Water Flood (515,701) 515,701 - Revisions of previous quantities estimates 25,294 (4,119) (175,213) Net change in purchases and sales of minerals in place - - (600,886) Accretion of discount 80,965 41,915 62,278 Net changes in income taxes 131,861 (196,596) 51,327 Other - mainly change in production costs (325,238) 61,961 33,249
Net increase (decrease) (273,052) 390,500 (203,622)
Estimated standardized measures: Beginning of year 809,654 419,154 622,776
End of year $ 536,602 $809,654 $ 419,154