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. In 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 $1000 monthly and reimbursement of his actual and necessary expenses.
The Company is operating in one industry segment, the exploration, production and sale of oil and gas. See Financial Statements.
The Company is Y2K compliant as of February 28, 1999. The Company believes its major purchasers and suppliers are also Y2K compliant. The Company feels that its remediation plan has adequately addressed the Year 2000 problem, and therefore, this issue is not expected to have a material effect on the Company's internal operations. The Company has also attmepted to assess the impact of this issue on the various entities with which the Company does business. Although failure of these entities to adequately address the Year 2000 issue could indirectly impact the Company, it is not possible to quantify that impact, if any. However, the Company does not anticipate that the impact would have a material adverse effect on the Company's business.
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 an 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, 1999 all located in the state of Wyoming is as follows:
Gross Acres Net Acres
Undeveloped proved and unproved acres: Leasehold interest: Oil and gas 820 794.97
Developed proved acres: Leasehold interest: Primarily oil 5,696 2,030 Primarily gas 0 0
Oil and Gas Production. As of February 28, 1999, the Company owns the following productive wells: Oil Gas Gross Net Gross Net
Working Interest 50 23.5669 1 .50 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
1997 16,786 2,629 1998 16,081 4,295 1999 10,230 3,335
The average sales price (including transfers) per unit oil and gas produced for the years ended the last day of February is as follows:
1999 1998 1997
Oil -- Barrels $12.78 $18.50 $20.97 Gas -- MCF 1.37 $ 2.16 $ 2.64
The average production (lifting) cost per unit of production is as follows:
1999 1998 1997
Oil -- Barrels $15.02 $13.43 $14.58 Gas -- MCF $ 1.25 $ 1.25 $ 1.25
Net Exploratory Wells
Fiscal Year Drilled Producers Dry Holes Total Wells
1997 0 0 0 1998 0 0 0 1999 0 0 0
Net Development Wells
Fiscal Year Drilled Producers Dry Holes Total Wells
1997 0 0 0 1998 0 0 0 1999 0 0 0
Reserves. The following are reserve estimates as of last day of February:
Proved Oil and Gas Reserves Oil (bbls) Gas (mcf)
1997 88,197 84,255 1998 127,080 80,867 1999 117,443 77,549
Proved Developed Oil and Gas Reserves
1997 88,197 84,255 1998 127,080 80,867 1999 117,443 77,549
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.
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, 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 28, 1996 1 cent 1 cent
March 1, 1996 through February 28, 1997 1 cent 1 cent
March 1, 1997 through February 28, 1998 1 cent 1 cent
March 1, 1998 through February 28, 1999 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 1,593 holders of record of the Company's common stock as of May 31, 1999.
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 1999 1998 1997 1996 1995 Revenues: Operating revenues from oil and gas sales $131,682 306,807 $357,765 $266,227 $293,777
Other operating revenues 14,455 19,566 22,039 24,962 32,160
Earnings (loss) from continuing operations before extraordinary items (98,665) 18,197 ( 9,698) (51,635) (27,147)
Extraordinary items -- -- -- -- --
Net earnings (loss) from continuing operations (98,665) 18,197 ( 9,698) (51,635) (27,147) Earnings (loss) per share from continuing operations * * * * (.02)
Cash dividends per common share -- -- -- -- --
At year end:
Total assets 325,199 342,140 242,330 256,806 284,012 Long-term obligations 85,556 86,693 50,000 50,000 50,000 * 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 1999, net cash increased by $4,518. Of this increase, $50,000 was from a bank loan, $1,247 was principal payments on debt and cash used in operations $44,227. 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 1999. Short term notes payable increased by $49,992 which was discussed above and used in operations. The Company has financed property acquisitions in the past with debt and continue to repay such borrowing with the revenues from those properties.
Result of Operations
The Company's oil and gas revenues decreased from 306,807 in fiscal 1998 to $131,682, mainly due to a decrease in oil prices and decrease in produciton in fiscal 1999. Present production has the effect of decreasing Wyoming Oil & Minerals reserves. Crude oil sales decreased significantly due to the very low oil prices causing some wells to be shut in as they became uneconomical.
During fiscal 1999, the amount reserved for the depletion of reserves and the depreciation of equipment was $11,605. Loss on operations for the year was $98,665 due to the cost of working over some wells and the reasons stated above.
Production and operating expenses decreased approximately 21% as a percentage from fiscal 1998 to 1999, due to reasons stated above.
"Total" General and Administrative expenses decreased approximately $10,668 from fiscal 1998 compared to fiscal 1999 due to the President reducting his salary by one half for most of 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 increased over the prior year due to the additional bank financing discussed above.
Management anticipates the higher prices for oil for 2000. Therfore management anticipates sufficent revenue to pay expenses for fiscal year 2000.
Financial Position
During the Company's fiscal year 1998, net cash decreased by $3,976. Of this decrease, $112,399 was from the purchase of properties and $3,500 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 1998. Short term notes payable decreased by $3,500 which was paid in cash. The Company has financed property acquisitions with debt and continue to pay such borrowing with the revenues from those properties.
Result of Operations
The Company's oil and gas revenues decreased from $357,765 in fiscal 1997 to $306,807, mainly due to a decrease in oil prices in fiscal 1998. Present production has the effect of decreasing Wyoming Oil & Minerals reserves, however, due mainly to doing the waterflood of the Don Thorson #1, total oil and gas reserves increased significantly for the fiscal year ended February 28, 1998. An independent engineering firm generated a partial reserves analysis during fiscal year 1998. Crude oil stayed approximately the same.
During fiscal 1998, the amount reserved for the depletion of reserves and the depreciation of equipment was $15,934. Income on operations for the year was $18,197 due, in part, to the cost of abandoned nonproducing properties being only $4,842.
Production and operating expenses decreased approximately 19% as a percentage from fiscal 1997 to 1998, due to less workover costs.
"Total" General and Administrative expenses decreased approximately $5,498 from fiscal 1997 compared to fiscal 1998 due to a decrease in expenses for well logs, maps, etc. of $5,292. Since fiscal 1985, the Company resolved to avoid those activites that required additional outside professional services and to limit operations to the management of existing properties and the acquisition of additional properties within the Compan's ordinary course of business.
Interest expense remained approximately the same as in fiscal 1997.
Management anticipates the current low prices for oil will continue throughout 1999. Therefore management anticipates revenue and expenses will remain about the same for fiscal year 2000.
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.
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 57, 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 75, 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
Brosis Capital, LLC 1,260,000(1) 7.3% P.O. Box 2493 Casper, WY 82602
(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) 12.4% 330 S. Center, Suite 419 Casper, WY 82601
Jess A. Tolerton 650,000 3.8%
All directors and officers as a group 2,785,500 16.2%
(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.
See Footnote 9 to the financial statements.
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, 1999.
(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, 1999
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, 1999
/s/ Jess A. Tolerton Jess A. Tolerton Director and Secretary
DATED: June 11, 1999
WYOMING OIL AND MINERALS, INC.
CASPER, WYOMING
FINANCIAL STATEMENTS
AS OF FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
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, 1999 and 1998 and the related statements of operations, changes in stockholders' equity and cash flows for the years ended February 28, 1999, 1998 and 1997. 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, 1999 and 1998, and the results of its operations and changes in its stockholders' equity and its cash flow for the years ended February 28, 1999, 1998 and 1997, in conformity with generally accepted accounting principles.
MAURICE M. MORTON Certified Public Accountant
Casper, Wyoming May 7, 1999 WYOMING OIL AND MINERALS, INC.
Balance Sheets
ASSETS
February 28, February 28, 1999 1998
Current assets: Cash $ 7,972 $ 3,454 Accounts receivable 12,858 23,391 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 33,865 37,485
Total current assets 60,545 70,180
Property and equipment, at cost under the successful efforts method of accounting (Note 4): Proved oil and gas properties (Notes 4 & 5) 435,342 435,342 Pipeline and drilling equipment 570 570 Office furniture and equipment 3,509 3,509 439,421 439,421
Less accumulated depletion and depreciation (201,929) (190,324) 237,492 249,097
Other assets: Accounts receivable - non current 27,101 22,802 Other assets 61 61 27,162 22,863 $ 325,199 $ 342,140 (continued)
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Balance Sheets (Continued)
Liabilities and Stockholders' Equity
February 28, February 28, 1999 1998
Current liabilities: Notes payable (Note 5): Related parties $ 4,500 $ 4,500 Bank 49,992 - Accounts payable 142,934 109,268 Accrued expenses 1,337 2,024 Current portion of long-term debt (Note 6) 2,668 2,778
Total current liabilities 201,431 118,570
Long-term debt - related parties (Note 6) 85,556 50,000
Stockholders' equity (Note 7): Common stock, $.01 par value: Authorized - 25,000,000 shares Issued - 17,250,000 shares in 1999 and in 1998 172,500 172,500 Additional paid-in capital 1,023,525 1,023,525 Accumulated deficit (1,157,813) (1,059,148)
38,212 136,877
$ 325,199 $ 342,140
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Statements of Operations
February 28, February 28, February 28, 1999 1998 1997
Operating revenues: Oil and gas sales (Note 10) $131,682 $306,807 $ 357,765 (Loss) on sale of oil and gas properties and equipment - - (700) Other operating income 14,455 19,566 22,039
Total operating revenues 146,137 326,373 379,104
Operating expenses: General and administrative 48,213 58,901 64,399 Depreciation and depletion 11,605 15,934 17,184 Oil and gas production costs 175,438 221,403 272,681 Abandoned properties - 4,842 28,619 Lease rentals - 620 1
Total operating expenses 235,256 301,700 382,884
Operating (loss) income (89,119) 24,673 (3,780)
Other income (expense): Interest income 4 44 44 Interest expense (9,550) (6,520) (5,962)
Other income (expense), net (9,546) (6,476) (5,918) (continued)
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Statements of Operations (Continued)
February 28, February 28, February 28, 1999 1998 1997
(Loss) earnings before income taxes:$ (98,665) $ 18,197 $ (9,698) Current taxes - - -
Net (loss) earnings $ (98,665) $ 18,197 $ (9,698) Weighted average number of shares outstanding $17,250,000 $17,000,000 $16,750,000
Net (loss) earnings per common share: Primary and fully diluted:
Net (loss) earnings $ * $ * $ *
*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 Shares Amount Capital Deficit Total
Balance at Feb 28, 1996 16,750,000 $167,500 $1,021,025 $(1,016,012) 120,878
Net loss - - - (9,698) (9,698)
Balance at Feb 28, 1997 16,750,000 167,500 1,021,025 (1,077,345) 111,180
Shares issued for properties 500,000 5,000 2,500 - 7,500
Net income - - - (18,197) (18,197)
Balance at Feb 28, 1998 17,750,000 172,500 1,023,525 1,059,148 136,877
Net loss - - - (98,665) (98,665)
Balance at Feb 28, 1999 17,250,000 $172,500 $1,023,525 $ (1,157,813)$ 38,212
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC. Statements of Cash Flows
February 28, February 28, February 28, 1999 1998 1997
Cash flows from operating activities: Cash received from customers $ 155,991 $ 369,130 $ 340,010 Cash paid to suppliers and employees (189,985) (244,806) (329,374) Interest income 4 44 44 Interest expense (10,237) (4,493) (7,767)
Net cash provided by (used in) operating activities (44,227) 119,875 2,913
Cash flows from investing activities: Purchase of oil and gas properties and equipment - (120,351) - Proceeds from sale of oil and gas properties and equipment - - 800
Net cash provided by (used in) investing activities - (120,351) 800
Cash flows from financing activities: Proceeds from note payable 49,992 - - Principal payments (1,247) (3,500) (4,000)
Net cash provided by (used in) financing activities 48,745 (3,500) (4,000)
Net increase (decrease) in cash and cash equivalents 4,518 (3,976) (287)
Cash and cash equivalents at beginning of year 3,454 7,430 7,717
Cash and cash equivalents at end of year$7,972 $3,454 $ 7,430 (continued)
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC. Statements of Cash Flows (Continued)
February 28, February 28, February 28, 1999 1998 1997
Reconciliation of net income to net cash provided by (used in) operating activities
Net earnings (loss) $ (98,665) $ 18,197 $ (9,698)
Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and depletion 11,605 15,934 17,184 (Increase) decrease in accounts receivable 6,234 36,917 (39,794) (Increase) decrease in inventory 3,620 5,840 6,680 Increase (decrease) in accounts payable 33,666 36,121 1,027 Increase (decrease) in accrued expenses (687) 2,024 (1,805) Abandoned properties - 4,842 28,619 Loss on sale of oil and gas properties and equipment - - 700
Net cash provided by (used in) operating activities $ (44,227) $ 119,875 $ 2,913
Supplemental schedule of non cash investing and financing activities
For the year ended February 28, 1998, the Company purchased properties with a cost of $46,971 in exchange for stock and a note payable.
See accompanying notes to financial statements.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
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, 1999, 1998 and 1997
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.
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, 1999, 1998 and 1997
2. FOURTH QUARTER ADJUSTMENTS
During the fourth quarter of the year ended February 28, 1998, the Company recorded an additional $46,971 in the purchase price of two oil and gas leases.
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.
3. MARKETABLE EQUITY SECURITIES
Marketable equity securities are summarized below:
February 28, February 28, February 28, 1999 1998 1997
Available-for-sale securities, at cost $ 48,702 $ 48,702 $ 48,702 Less: Valuation allowance 42,852 42,852 42,852
Fair Value $ 5,850 $ 5,850 $ 5,850
There were no significant unrealized gains or losses.
4. OIL AND GAS PROPERTIES
During fiscal 1998, the Company purchased a 13.333% working interest in a producing lease in Hot Springs County, Wyoming and a 45% working interest in another producing lease in the same County. Both leases were purchased from a related party.
During fiscal 1998, the Company purchased a 50% working interest in two producing leases in Hot Springs County, Wyoming for $54,471. Both leases were purchased from a related party.
During fiscal 1998, the Company expended $99,264 for a major betterment workover on the Wade Hill Unit. The expenditures were to a related party. This amount is not being depleted as the results of the workover on production is not known at this time.
During fiscal 1997, the Company sold its interest in a producing lease in Campbell County, Wyoming for $800.
See Note 2, also. WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
5. NOTES PAYABLE
The Company had outstanding notes payable as follows:
Other 1999 1998
Note payable to Bank, due August 1, 1999, interst at 8.25% secured by producing oil and gas wells. $ 49,992 $ -
Note to individual (related party) due on demand, interest at 1% over the prime rate (9.00% at February 28, 1999) secured by a producing well. $ 4,500 $ 8,000 $ 54,492 $ 8,000
Other information regarding short-term notes payable is as follows:
1999 1998 1997
Average aggregate short-term borrowings $ 54,500 $ 6,250 $ 10,000 Maximum aggregate short-term borrowings at any month-end $ 54,492 $ 8,000 $ 12,000 Weighted average interest rate 8.60% 9.50% 9.25%
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:
1999 1998
Note payable to a partnership, due in monthly payments of $500 including imputed interest at 9%, maturity date February 12, 2007, original face amount of note was $60,000. $ 38,224 $ 39,471
Notes payable to two individuals (related parties), due December 1, 1999, interest at 2% over the prime rate (10.00% at February 28, 1999), unsecured 50,000 50,000 88,224 89,471
Less current portion (2,668) (2,778) $ 85,556 $ 86,693
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
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.
1999 1998 1997
Pretax income per books $(98,665) $ 18,197 $ (9,698) Timing differences: Depletion on intangible drilling costs 200 200 2,000
Taxable income (loss) $(98,665) $ 18,397 $ (7,698)
Deferred tax (assets) liabilities are comprised of the following, computed using a tax rate of 15%:
Tax effects of temporary differences for: 1999 1998 1997
Accounting for oil and gas properties $ 544 $ 575 $ 306 Accounting for securities held for sale (6,428) (6,428) (6,428) (5,884) (5,853) (6,122) Tax loss carryforwards (71,950) (56,199) (92,382) (77,834) (62,052) (98,504) Valuation allowance 77,834 62,052 98,504 Net deferred tax $ - $ - $ -
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
8. INCOME TAXES (Continued)
At February 28, 1999, the Company had net operating loss carryforwards available of $479,668 and unused investment credit carryforwards available of $3,724. Such carryforwards expire as follows:
Net Operating Investment Expiration Loss Credits
2000 50,863 3,724 2001 20,035 - 2002 127,905 - 2009 115,412 - 2010 8,006 - 2011 49,540 - 2012 9,442 - 2014 98,465 $479,668 $ 3,724*
* subject to limitations
The Company also has long-term capital loss carryover of $94,940.
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 $113,157, to Manewal-Bradley Oil Company, Inc. were $3,410 and to Econoservice, Inc. were $576 for the year ended February 28, 1999. Amounts received from Manx Oil Corporation were $1,839 for lease operating expenses. Oil and gas revenue received from Manx Oil Corporation were $88,924 and oil and gas revenue paid were $650. The Company owed Manx Oil Corporation $117,0084 at February 28, 1999 and $76,504 at February 28, 1998. Manx Oil Corporation owed the Company $6,678 at February 28, 1999 and $11,241 at February 28, 1998. See Note 4 also.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
10. MAJOR PURCHASERS AND CONCENTRATION OF RISK
Substantially all of the Company's accounts receivable at February 28, 1999 and 1998 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 collateralized. One single joint interest receivable comprises 57% of total noncurrent accounts receivable at February 28, 1999.
The following customers each contributed 10% or more of the revenues derived from oil and gas sales for the years ending February 28, as follows:
1999 1998 1997
Eighty-Eight Oil $ 113,154 $ 218,696 $ 162,606 Texaco $ - $ 47,141 $ 43,464 JN Petroleum $ - $ 65,293 $ 92,509 Amoco $ 13,351 $ - $ -
11. SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited)
Capitalized Costs
Capitalized costs relating to the Company's oil and gas producing activities as of February 28, 1999, 1998 and 1997 are as follows:
1999 1998 1997 Proved properties $ 435,342 $ 435,342 $ 268,023 Unproved properties - - 4,842
$ 435,342 $ 435,342 $ 272,865
Support equipment $ 570 $ 570 $ 570
Accumulated depreciation and depletion $ 197,850 $ 179,937 $ 170,881
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, 1999, 1998 and 1997 (all in the United States): 1999 1998 1997 Property acquisition costs: Proved properties $ - $ 68,055 $ - Unproved properties $ - $ - $ - Exploration costs $ - $ 620 $ 1 Development costs $ - $ 99,264 $ -
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
11. SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited) (continued)
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, 1999, 1998 and 1997 (all in the United States):
1999 1998 1997
Revenues $ 131,682 $ 306,807 $ 357,765 Production costs 175,438 221,403 272,681 Exploration costs - 620 1 Depreciation and depletion 11,605 15,934 17,184
$ (55,361) $ 68,850 $ 67,899 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.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
11. SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited) (continued)
Oil and Gas Reserve Quantities
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, 1999, 1998 and 1997: 1999 1998 1997 Oil Gas Oil Gas Oil Gas (bbls.) (mcf) (bbls.) (mcf) (bbls.) (mcf) Proved reserves: Beginning of year 127,080 80,687 88,197 84,255 163,378 86,884 Improved Recovery - Water Flood - - - - (63,384) - Revisions of previous estimates 593 17 40,963 907 4,989 - Purchase of minerals in place - - 14,000 - - - Production (10,230) (3,335) (16,080) (4,295) (16,786) (2,629) Sales of minerals in place - - - - - -
End of year 117,443 77,549 127,080 80,867 88,197 84,255
Proved developed reserves: Beginning of year 127,080 80,867 88,197 84,255 163,378 86,884 End of year 117,443 77,549 127,080 80,867 88,197 84,255
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.
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.
WYOMING OIL AND MINERALS, INC.
Notes to Financial Statements February 28, 1999, 1998 and 1997
11. Supplementary Oil and Gas Information (Unaudited) (Continued)
Oil and Gas Reserve Quantities (Continued)
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, 1999, 1998 and 1997.
1999 1998 1997 Future cash inflows $1,411,362 $2,213,824 $1,901,220 Future production and development costs (808,058) (1,047,014) (955,275) Future income tax expenses - (164,009) (64,735) Future net cash flows 603,304 1,002,801 881,210
10% annual discount for estimated timing of cash flows (52,966) (385,486) (344,608) Standard measure of discounted future net cash flows $ 550,338 $ 617,315 $ 536,602
The following are the principal sources of changes in the standardized measure of discounted future net cash flows: February 28, February 28, February 28, 1999 1998 1997 Sales and transfers of oil and gas produced, net of production costs $ 43,756 $ (85,404) $ (85,084) Net changes in prices and production costs (531,394) (832,487) 414,851 Improved Recovery - Water Flood - - (515,701) Revisions of previous quantities estimates (3,404) 662,797 25,294 Net change in purchases and sales of minerals in place - 346,920 - Accretion of discount 61,732 53,660 80,965 Net changes in income taxes 164,009 (99,274) 131,861 Other - mainly change in production costs 198,324 34,501 (325,238) Net increase (decrease) (66,977) 80,713 (273,052)
Estimated standardized measures: Beginning of year 617,315 536,602 809,654
End of year $ 550,338 $ 617,31 $ 536,602