UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(amendment no. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) |
|
March 16, 2006 |
|
|
December 31, 2005 |
HALLADOR PETROLEUM COMPANY
(Exact Name of Registrant as specified in Charter)
Colorado |
|
0-19260 |
|
84-1014610 |
(State or Other Jurisdiction |
|
(Commission File Number) |
|
(IRS Employer |
of Incorporation) |
|
|
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Identification No.) |
|
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|
|
|
1660 Lincoln Street, Suite 2700, Denver, Colorado |
|
80264-2701 |
||
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrants telephone number, including area code: 303-839-5504
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Explanatory Note
This Current Report on Form 8-K/A is filed as an amendment (Amendment No.1) to the Current Report on Form 8-K filed by Hallador Petroleum Company on January 3, 2006 to provide the financial statements and pro forma financial information required pursuant to Item 9.01 (a) and (b) of Form 8-K.
Item 9.01 - Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
|
FINANCIAL STATEMENTS FOR SAVOY ENERGY, L.P. |
|
|
|
|
|
Organization Profile |
3 |
|
|
|
|
Independent Auditors Report |
4 |
|
|
|
|
Financial Statements |
|
|
Balance Sheets |
5 |
|
Statements of Operations |
6 |
|
Statements of Partners Capital |
7 |
|
Statements of Cash Flows |
8 |
|
Notes to Financial Statements |
9-19 |
2
SAVOY ENERGY, L.P.
(A Limited Partnership)
Organization Profile
|
State of Formation |
|
|
|
Michigan |
|
|
|
|
|
|
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Business Location |
|
|
|
Traverse City, Michigan |
|
|
|
|
|
|
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Partners |
|
|
|
Savoy Exploration, Inc. |
- |
General Partner |
|
Yorktown Energy Partners II, L.P. |
Limited Partner |
|
|
UBS Warburg |
- |
Limited Partner |
|
Lexington Partners IV, L.P. |
|
Limited Partner |
|
Thomas C. Pangborn |
- |
Limited Partner |
|
William T. Sperry |
- |
Limited Partner |
|
Cheryl A. DeYoung |
- |
Limited Partner |
|
Allen C. Modroo |
- |
Limited Partner |
|
Jack P. Rokos |
- |
Limited Partner |
3
Independent Auditors Report
To the Partners
Savoy Energy, L.P.
(A Limited Partnership)
Traverse City, Michigan
We have audited the accompanying balance sheets of Savoy Energy, L.P. (A Limited Partnership) as of December 31, 2004 and 2003, and the related statements of operations, partners capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Savoy Energy, L.P. as of December 31, 2004 and 2003, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.
Weber, Curtin & Pahssen, LLC
April 22, 2005
4
SAVOY ENERGY, L.P.
(A Limited Partnership)
Balance Sheets
|
|
|
|
December 31, |
|
|||||
|
|
September 30, 2005 |
|
2004 |
|
2003 |
|
|||
|
|
(Unaudited) |
|
|
|
|
|
|||
Assets |
|
|
|
|
|
|
|
|||
Current Assets |
|
|
|
|
|
|
|
|||
Cash and cash equivalents (Note 1) |
|
$ |
3,931,635 |
|
$ |
5,008,787 |
|
$ |
6,425,867 |
|
Receivables: (Note 1) |
|
|
|
|
|
|
|
|||
Net revenue |
|
677,884 |
|
287,765 |
|
542,688 |
|
|||
Joint interest owners |
|
2,288,373 |
|
1,107,999 |
|
231,522 |
|
|||
Oil and gas equipment inventory (Note 1) |
|
1,140,335 |
|
1,016,664 |
|
811,775 |
|
|||
Prepaid expenses |
|
19,423 |
|
43,266 |
|
50,534 |
|
|||
Total Current Assets |
|
8,057,650 |
|
7,464,481 |
|
8,062,386 |
|
|||
|
|
|
|
|
|
|
|
|||
Oil and Gas Properties (Notes 1 and 6) |
|
|
|
|
|
|
|
|||
Proved properties |
|
9,686,827 |
|
8,014,763 |
|
7,422,261 |
|
|||
Unproved properties |
|
1,485,239 |
|
1,164,047 |
|
1,232,565 |
|
|||
|
|
11,172,066 |
|
9,178,810 |
|
8,654,826 |
|
|||
Less - accumulated depreciation, depletion, amortization |
|
4,504,038 |
|
3,731,489 |
|
2,610,767 |
|
|||
Net Oil and Gas Properties |
|
6,668,028 |
|
5,447,321 |
|
6,044,059 |
|
|||
|
|
|
|
|
|
|
|
|||
Other Assets |
|
|
|
|
|
|
|
|||
Office furniture and equipment, less accumulated depreciation of $113,104 at September 30, 2005, (Unaudited) $60,885 at December 31, 2004 and $63,404 at December 31, 2003 (Note 1) |
|
30,024 |
|
39,546 |
|
29,491 |
|
|||
Drilling equipment, less accumulated depreciation of $741,772 at September 30, 2005 (Unaudited) and $320,766 at December 31, 2004 (Notes 1 and 4) |
|
1,824,357 |
|
2,245,363 |
|
|
|
|||
Cash bonds (Note 5) |
|
50,000 |
|
50,000 |
|
50,000 |
|
|||
Total Other Assets |
|
1,904,381 |
|
2,334,909 |
|
79,491 |
|
|||
Total Assets |
|
$ |
16,630,059 |
|
$ |
15,246,711 |
|
$ |
14,185,936 |
|
|
|
|
|
|
|
|
|
|||
Liabilities and Partners Capital |
|
|
|
|
|
|
|
|||
Current liabilities |
|
|
|
|
|
|
|
|||
Accounts payable: |
|
|
|
|
|
|
|
|||
Trade |
|
$ |
2,132,234 |
|
1,725,868 |
|
$ |
363,828 |
|
|
Revenue distribution |
|
881,786 |
|
574,975 |
|
746,710 |
|
|||
General partner (Note 2) |
|
53,722 |
|
133,135 |
|
112,408 |
|
|||
Accrued distributions |
|
|
|
|
|
328,530 |
|
|||
Current maturities of long-term debt (Note 4) |
|
424,719 |
|
405,680 |
|
|
|
|||
Total Current Liabilities |
|
3,492,461 |
|
2,839,658 |
|
1,551,476 |
|
|||
|
|
|
|
|
|
|
|
|||
Asset Retirement Obligation (Note 6) |
|
334,214 |
|
290,042 |
|
206,833 |
|
|||
|
|
|
|
|
|
|
|
|||
Long-Term Debt, less current maturities (Note 4) |
|
1,344,079 |
|
1,675,463 |
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Total Liabilities |
|
5,170,754 |
|
4,805,163 |
|
1,758,309 |
|
|||
|
|
|
|
|
|
|
|
|||
Commitments and Contingencies (Note 5) |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Partners Capital (Note 5) |
|
|
|
|
|
|
|
|||
General partner |
|
5,084,021 |
|
4,610,194 |
|
5,534,833 |
|
|||
Limited partners |
|
7,709,026 |
|
7,132,878 |
|
8,152,733 |
|
|||
|
|
12,793,047 |
|
11,743,072 |
|
13,687,566 |
|
|||
Less capital contributions receivable from limited partners (Note 1) |
|
1,333,742 |
|
1,301,524 |
|
1,259,939 |
|
|||
Total Partners Capital |
|
11,459,305 |
|
10,441,548 |
|
12,427,627 |
|
|||
|
|
|
|
|
|
|
|
|||
Total Liabilities and Partners Capital |
|
$ |
16,630,059 |
|
$ |
15,246,711 |
|
$ |
14,185,936 |
|
See accompanying notes to financial statements.
5
SAVOY ENERGY, L.P.
(A Limited Partnership)
Statements of Operations
|
|
Nine Months Ended |
|
Year Ended |
|
||||||||
|
|
2005 |
|
2004 |
|
2004 |
|
2003 |
|
||||
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
NET REVENUES (Note 1) |
|
|
|
|
|
|
|
|
|
||||
Oil and gas |
|
$ |
2,561,646 |
|
$ |
2,723,498 |
|
$ |
3,381,414 |
|
$ |
4,213,853 |
|
Overhead and management fees |
|
95,526 |
|
35,367 |
|
70,971 |
|
70,010 |
|
||||
Other |
|
1,330,057 |
|
251,502 |
|
511,232 |
|
244,057 |
|
||||
Total Net Revenues |
|
3,987,229 |
|
3,010,367 |
|
3,963,617 |
|
4,527,920 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Expenses (Note 2) |
|
|
|
|
|
|
|
|
|
||||
Oil and gas operations |
|
|
|
|
|
|
|
|
|
||||
Lease operating costs |
|
609,394 |
|
568,332 |
|
695,378 |
|
1,484,749 |
|
||||
Depreciation, depletion and amortization |
|
1,199,850 |
|
1,047,251 |
|
2,198,387 |
|
1,198,390 |
|
||||
Severance taxes |
|
156,757 |
|
151,261 |
|
190,756 |
|
259,697 |
|
||||
Other |
|
18,644 |
|
22,109 |
|
59,171 |
|
63,156 |
|
||||
Total Oil and Gas Operations |
|
1,984,645 |
|
1,788,953 |
|
3,143,692 |
|
3,005,992 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Exploration: |
|
|
|
|
|
|
|
|
|
||||
Dry hole costs |
|
343,766 |
|
833,715 |
|
910,935 |
|
1,637,027 |
|
||||
Geological and geophysical |
|
16,654 |
|
503,601 |
|
537,631 |
|
203,860 |
|
||||
Impairments and expired lease costs |
|
50,142 |
|
58,800 |
|
419,336 |
|
511,003 |
|
||||
Carrying undeveloped properties |
|
95,876 |
|
80,296 |
|
120,800 |
|
172,211 |
|
||||
Other |
|
68,411 |
|
66,442 |
|
91,656 |
|
96,618 |
|
||||
Total Exploration |
|
574,849 |
|
1,542,854 |
|
2,080,358 |
|
2,620,719 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
General and Administrative |
|
|
|
|
|
|
|
|
|
||||
Administrative services |
|
250,084 |
|
313,252 |
|
462,631 |
|
665,652 |
|
||||
Professional fees |
|
49,866 |
|
78,842 |
|
110,400 |
|
152,618 |
|
||||
Office expense |
|
31,979 |
|
35,332 |
|
70,991 |
|
69,859 |
|
||||
Rent |
|
52,065 |
|
48,614 |
|
64,985 |
|
64,976 |
|
||||
Dues, subscriptions and licenses |
|
13,814 |
|
12,391 |
|
13,092 |
|
15,809 |
|
||||
Travel and entertainment |
|
4,616 |
|
8,541 |
|
12,355 |
|
20,339 |
|
||||
Depreciation and amortization |
|
3,861 |
|
4,190 |
|
5,587 |
|
759 |
|
||||
Other |
|
2,233 |
|
1,740 |
|
2,780 |
|
1,369 |
|
||||
Total General and Administrative |
|
408,518 |
|
502,902 |
|
742,821 |
|
991,381 |
|
||||
Total Expenses |
|
2,968,012 |
|
3,834,709 |
|
5,966,871 |
|
6,618,092 |
|
||||
Net Revenues Less Expenses |
|
1,019,217 |
|
(824,342 |
) |
(2,003,254 |
) |
(2,090,172 |
) |
||||
|
|
|
|
|
|
|
|
|
|
||||
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
||||
Gain on sale of proved properties |
|
7,523 |
|
10,000 |
|
10,000 |
|
19,287,045 |
|
||||
Interest, net |
|
(8,983 |
) |
11,514 |
|
7,175 |
|
1,391,547 |
|
||||
Total Other Income (Expense), Net |
|
(1,460 |
) |
21,514 |
|
17,175 |
|
20,678,592 |
|
||||
Net Income (Loss) |
|
$ |
1,017,757 |
|
$ |
(802,828 |
) |
$ |
(1,986,079 |
) |
$ |
18,588,420 |
|
See accompanying notes to financial statements.
6
SAVOY ENERGY, L.P.
(A Limited Partnership)
Statements of Partners Capital
|
|
General |
|
Limited |
|
Capital |
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Balances, at January 1, 2003 |
|
$ |
7,254,105 |
|
$ |
11,433,086 |
|
$ |
(3,490,170 |
) |
$ |
15,197,021 |
|
|
|
|
|
|
|
|
|
|
|
||||
Add (Deduct) |
|
|
|
|
|
|
|
|
|
||||
Net income for the year |
|
8,654,025 |
|
9,934,395 |
|
|
|
18,588,420 |
|
||||
Partners capital contributions |
|
|
|
954,139 |
|
|
|
954,139 |
|
||||
Accrued interest on capital contributions receivable from limited partners |
|
|
|
87,839 |
|
(87,839 |
) |
|
|
||||
Partners cash distributions |
|
(10,373,297 |
) |
(11,938,656 |
) |
|
|
(22,311,953 |
) |
||||
Repayment of accrued interest on non-recourse notes by limited partners |
|
|
|
(1,363,931 |
) |
1,363,931 |
|
|
|
||||
Repayment of principal on non-recourse notes by limited partners |
|
|
|
(954,139 |
) |
954,139 |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Balances, at December 31, 2003 |
|
5,534,833 |
|
8,152,733 |
|
(1,259,939 |
) |
12,427,627 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Add (Deduct) |
|
|
|
|
|
|
|
|
|
||||
Net loss for the year |
|
(924,639 |
) |
(1,061,440 |
) |
|
|
(1,986,079 |
) |
||||
Accrued interest on capital contributions receivable from limited partners |
|
|
|
41,585 |
|
(41,585 |
) |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Balances, at December 31, 2004 |
|
4,610,194 |
|
7,132,878 |
|
(1,301,524 |
) |
10,441,548 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Unaudited |
|
|
|
|
|
|
|
|
|
||||
Add (Deduct) |
|
|
|
|
|
|
|
|
|
||||
Net income for the nine months ended September 30, 2005 |
|
473,827 |
|
543,930 |
|
|
|
1,017,757 |
|
||||
Accrued interest on capital contributions receivable from limited partners for the nine months ended September 30, 2005 |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
32,218 |
|
(32,218 |
) |
|
|
||||
Balances, at September 30, 2005 (Unaudited) |
|
$ |
5,084,021 |
|
$ |
7,709,026 |
|
$ |
(1,333,742 |
) |
$ |
11,459,305 |
|
See accompanying notes to financial statements.
7
SAVOY ENERGY, L.P.
(A Limited Partnership)
Statements of Cash Flows)
|
|
Nine Months Ended |
|
Year Ended |
|
||||||||
|
|
2005 |
|
2004 |
|
2004 |
|
2003 |
|
||||
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
||||
Operating Activities: |
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
1,017,757 |
|
$ |
(802,828 |
) |
$ |
(1,986,079 |
) |
$ |
18,588,420 |
|
Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by operating activities |
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization |
|
1,203,711 |
|
1,051,441 |
|
2,203,974 |
|
1,199,149 |
|
||||
Accretion of discount on asset retirement obligation |
|
10,287 |
|
7,757 |
|
10,342 |
|
8,456 |
|
||||
Gain on sale of proved properties |
|
(7,523 |
) |
(10,000 |
) |
(10,000 |
) |
(19,287,045 |
) |
||||
Impairments and expired lease costs |
|
50,142 |
|
58,800 |
|
419,336 |
|
511,003 |
|
||||
Changes in operating assets and liabilities that provided (used) cash: |
|
|
|
|
|
|
|
|
|
||||
(Increase) decrease in: |
|
|
|
|
|
|
|
|
|
||||
Receivables |
|
(1,570,493 |
) |
(1,971 |
) |
(621,554 |
) |
1,140,094 |
|
||||
Oil and gas equipment inventory |
|
(123,671 |
) |
(109,232 |
) |
(204,889 |
) |
(139,388 |
) |
||||
Prepaid expenses |
|
23,843 |
|
21,527 |
|
7,268 |
|
(6,584 |
) |
||||
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
||||
Accounts payable |
|
633,764 |
|
410,005 |
|
1,211,032 |
|
(1,353,109 |
) |
||||
Accrued distributions |
|
|
|
(328,530 |
) |
(328,530 |
) |
328,530 |
|
||||
Net Cash Provided by Operating Activities |
|
1,237,817 |
|
296,969 |
|
700,900 |
|
989,526 |
|
||||
Investing Activities |
|
|
|
|
|
|
|
|
|
||||
Proceeds from sale of proved properties |
|
18,760 |
|
10,000 |
|
10,000 |
|
30,000,000 |
|
||||
Additions to oil and gas properties |
|
(2,021,384 |
) |
(447,310 |
) |
(1,620,409 |
) |
(3,209,149 |
) |
||||
Additions to office and drilling equipment |
|
|
|
(2,572,118 |
) |
(2,588,714 |
) |
(13,963 |
) |
||||
Net Cash Provided by (Used in) Investing Activities |
|
(2,002,624 |
) |
(3,009,428 |
) |
(4,199,123 |
) |
26,776,888 |
|
||||
Financing Activities |
|
|
|
|
|
|
|
|
|
||||
Proceeds from long-term debt |
|
|
|
2,300,000 |
|
2,300,000 |
|
|
|
||||
Repayments of long-term debt |
|
(312,345 |
) |
(112,824 |
) |
(218,857 |
) |
|
|
||||
Partners cash contributions |
|
|
|
|
|
|
|
954,139 |
|
||||
Partners cash distributions |
|
|
|
|
|
|
|
(22,311,953 |
) |
||||
Net Cash Provided by (Used in) Financing Activities |
|
(312,345 |
) |
2,187,176 |
|
2,081,143 |
|
(21,357,814 |
) |
||||
Net Increase (Decrease) in Cash and Cash Equivalents |
|
(1,077,152 |
) |
(525,283 |
) |
(1,417,080 |
) |
6,408,600 |
|
||||
Cash and Cash Equivalents, at the beginning of the year |
|
5,008,787 |
|
6,425,867 |
|
6,425,867 |
|
17,267 |
|
||||
Cash and Cash Equivalents, at the end of the year |
|
$ |
3,931,635 |
|
$ |
5,900,584 |
|
$ |
5,008,787 |
|
$ |
6,425,867 |
|
Supplemental Disclosures of Cash Flow Information |
|
|
|
|
|
|
|
|
|
||||
Cash paid for interest |
|
$ |
79,263 |
|
$ |
17,697 |
|
$ |
42,165 |
|
$ |
2,243 |
|
Supplemental Schedule of Non-cash Financing Activities |
|
|
|
|
|
|
|
|
|
||||
Accrued interest on capital contributions receivable from limited partners |
|
$ |
32,218 |
|
$ |
31,188 |
|
$ |
41,585 |
|
$ |
87,839 |
|
See accompanying notes to financial statements.
8
SAVOY ENERGY, L.P.
(A Limited Partnership)
Notes to Financial Statements
1. |
Nature of Business and Significant Accounting Policies |
Nature of Business |
|
|
|
9
|
|
exposed to any significant
credit risk associated with its cash. |
10
|
|
The following summarizes the Partnerships revenue by product sold: |
|||||||||||||
|
|
|
|||||||||||||
|
|
|
Nine Months Ended |
|
Year Ended |
|
|||||||||
|
|
|
2005 |
|
2004 |
|
2004 |
|
2003 |
|
|||||
|
|
|
(Unaudited) |
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Oil revenue |
|
$ |
1,061,213 |
|
$ |
694,146 |
|
$ |
1,045,208 |
|
$ |
1,505,890 |
|
|
|
Gas revenue |
|
1,445,482 |
|
1,962,754 |
|
2,280,599 |
|
2,516,661 |
|
|||||
|
Other liquids |
|
54,951 |
|
66,598 |
|
55,607 |
|
191,302 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total |
|
$ |
2,561,646 |
|
$ |
2,723,498 |
|
$ |
3,381,414 |
|
$ |
4,213,853 |
|
|
|
Long-Lived Assets |
2. |
Related Party Transactions |
In 2005 (unaudited), 2004 and 2003, the general partner incurred expenses on behalf of the Partnership for salaries and wages, payroll taxes, retirement plan contributions, health insurance, key man life insurance, other payroll related costs, and office rent. Those expenses amounted to $472,510 and $520,017 for the nine months ended September 30, 2005 and 2004 (unaudited), respectively, and $774,490 and $1,005,578 for the years ended December 31, 2004 and 2003, |
11
|
|
respectively. Of these amounts, $250,084 and $313,252 for the nine months ended September 30, 2005 and 2004 (unaudited) and $462,631 and $665,652 for the years ended December 31, 2004 and 2003, respectively, are classified as general and administrative expenses. In addition, $117,626 and $109,556 for the nine months ended September 30, 2005 and 2004 (unaudited) and $156,467 and $160,977 for the years ended December 31, 2004 and 2003, respectively, are classified as exploration costs. The remaining $104,800 and $97,209 for the nine months ended September 30, 2005 and 2004 (unaudited) and $155,392 and $178,949 for the years ended December 31, 2004 and 2003, respectively, are for production costs of which a portion was charged to joint owners. The accounts payable to the general partner reported on the balance sheets relate to the reimbursement of these expenses. |
||||||||
|
|
|
||||||||
3. |
Line-of-Credit |
The Partnership has a $3,000,000 unsecured line-of-credit agreement with a bank which expires on August 1, 2005 and which bears interest at .5% below the prime rate. As of September 30, 2005 (unaudited), December 31, 2004 and 2003, the Partnership has no outstanding borrowings under this line-of-credit. |
||||||||
|
|
|
||||||||
4. |
Long-Term Debt |
Long-term
debt consists of a note payable to a bank, payable at $43,500 monthly,
including interest at .5% below the prime rate, which results in a rate of
5.1% at December 31, 2004. The note is collateralized by drilling
equipment. The final payment is due
July 1, 2009. |
||||||||
|
|
|
||||||||
|
Year Ending |
|
September 30, |
|
December 31, |
|
|
|||
|
|
|
(Unaudited) |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
2005 |
|
$ |
424,719 |
|
$ |
405,680 |
|
|
|
|
2006 |
|
451,503 |
|
431,263 |
|
|
|||
|
2007 |
|
479,976 |
|
458,459 |
|
|
|||
|
2008 |
|
412,600 |
|
487,370 |
|
|
|||
|
2009 |
|
|
|
298,371 |
|
|
|||
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
1,768,798 |
|
$ |
2,081,143 |
|
|
12
5. |
Commitments and Contingencies |
Lease Commitments |
Year Ending |
|
September 30, |
|
December 31, |
|
||
|
|
(Unaudited) |
|
|
|
||
|
|
|
|
|
|
||
2005 |
|
$ |
|
|
$ |
65,440 |
|
2006 |
|
27,400 |
|
10,960 |
|
||
|
|
|
|
|
|
||
Total |
|
$ |
27,400 |
|
$ |
76,400 |
|
|
|
Total
rent expense included in the statements of operations amount to $49,000 and
$47,570 for the nine months ended September 30, 2005 and 2004 (unaudited),
respectively, and $63,530 and $61,680 for the years ended December 31, 2004
and 2003, respectively. |
13
|
|
contamination at any of its sites which would require significant costs for clean up. |
|
|
|
6. |
Asset Retirement Obligation |
On
January 1, 2003, the Partnership adopted Statement of Financial Accounting
Standard No. 143, Accounting for Asset Retirement Obligations (SFAS 143).
SFAS 143 requires entities to recognize a liability for the present value of
all legal obligations associated with the retirement of tangible long-lived
assets and to capitalize an equal amount as part of the cost of the related
oil and gas properties. |
|
|
Nine Months |
|
Year Ended |
|
|||||
|
|
2005 |
|
2004 |
|
2003 |
|
|||
|
|
(Unaudited) |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Asset retirement obligation, at the beginning of the period |
|
$ |
290,042 |
|
$ |
206,833 |
|
$ |
169,116 |
|
Additions related to new properties |
|
33,885 |
|
72,867 |
|
29,261 |
|
|||
Accretion expense |
|
10,287 |
|
10,342 |
|
8,456 |
|
|||
|
|
|
|
|
|
|
|
|||
Asset retirement obligation, at the end of the period |
|
$ |
334,214 |
|
$ |
290,042 |
|
$ |
206,833 |
|
7. |
Supplemental Information on Oil and Gas Producing Activities (Unaudited) |
The following information is presented in
accordance with Statement of Financial Accounting Standards No. 69,
Disclosure About Oil and Gas Producing Activities: |
|
|
Year Ended December 31, |
|
||||
|
|
2004 |
|
2003 |
|
||
|
|
|
|
|
|
||
Property acquisition costs |
|
$ |
616,293 |
|
$ |
373,552 |
|
Exploration costs |
|
541,750 |
|
1,318,802 |
|
||
Development costs |
|
462,366 |
|
1,516,795 |
|
||
14
|
|
Estimated Proved Oil and Gas Reserves |
|
|
Oil (bbl) |
|
Gas (mcf) |
|
|
|
|
|
|
|
Balance, at December 31, 2002 |
|
1,144,093 |
|
12,236,930 |
|
Production |
|
(211,718 |
) |
(1,903,241 |
) |
Sales of minerals in-place |
|
(1,014,155 |
) |
(10,625,985 |
) |
Revisions of previous estimates |
|
196,537 |
|
1,535,664 |
|
|
|
|
|
|
|
Balance, at December 31, 2003 |
|
114,757 |
|
1,243,368 |
|
Production |
|
(26,809 |
) |
(448,165 |
) |
Revisions of previous estimates |
|
(5,299 |
) |
31,223 |
|
|
|
|
|
|
|
Balance, at December 31, 2004 |
|
82,649 |
|
826,426 |
|
15
|
Standardized Measure of Discounted Future
Net Cash Flows |
|
|
December 31, |
|
||||
|
|
2004 |
|
2003 |
|
||
|
|
|
|
|
|
||
Future cash flows |
|
$ |
8,908,290 |
|
$ |
9,799,186 |
|
|
|
|
|
|
|
|
|
Future production costs |
|
(3,294,349 |
) |
(3,474,631 |
) |
||
|
|
|
|
|
|
||
Future net cash flows |
|
5,613,941 |
|
6,324,555 |
|
||
10% annual discount for estimated timing of cash flows |
|
(1,190,646 |
) |
(1,216,269 |
) |
||
|
|
|
|
|
|
||
Standardized measure of discounted future net cash flows |
|
$ |
4,423,295 |
|
$ |
5,108,286 |
|
16
|
|
Changes in the Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Reserves An analysis of the changes in the standardized measure of discounted future net cash flows during each of the last two years is as follows: |
|
|
Year Ending |
|
||||
|
|
2004 |
|
2003 |
|
||
|
|
|
|
|
|
||
Standardized measure of discounted future net cash flows relating to proved reserves, beginning of the year |
|
$ |
5,108,286 |
|
$ |
38,648,374 |
|
Sales and transfers of oil and gas produced |
|
(2,495,280 |
) |
(2,469,407 |
) |
||
Net increase (decrease) in prices and production costs |
|
1,443,396 |
|
(1,616,385 |
) |
||
Sales of reserves in-place |
|
|
|
(33,232,800 |
) |
||
Revisions in previous quantity estimates |
|
(1,959 |
) |
2,392,685 |
|
||
Accretion of discount |
|
510,829 |
|
3,864,837 |
|
||
Changes in rates of production and other |
|
(141,977 |
) |
(2,479,018 |
) |
||
|
|
|
|
|
|
||
Standardized measure of discounted future net cash flows relating to proved reserves, end of the year |
|
$ |
4,423,295 |
|
$ |
5,108,286 |
|
|
|
The computation of the standardized measure of discounted future net cash flows relating to proved reserves at December 31, 2004 and 2003 was based on year-end prices of $40.79 and $29.70 for oil and $6.70 and $5.14 for gas, respectively. |
17
(b) Unaudited Pro Forma Financial Information
The unaudited pro forma financial statements as of and for the nine months ended September 30, 2005, and for the year ended December 31, 2004, are below and give effect to the acquisition of Savoy Energy Limited Partnership ("Savoy") by Hallador Petroleum Company ("Hallador").
On December 30, 2005, Hallador Petroleum Company (Hallador) entered into an agreement to purchase a 32% interest in Savoy Energy Limited Partnership (Savoy) from Yorktown Energy Partners II, L.P. (Yorktown, an institutional investor) for $4,165,000.
On December 20, 2005, through a private placement, Hallador sold 1,893,169 shares of its common stock to Yorktown for $2.20 per share. The cash proceeds of $4,165,000 were used to acquire the 32% interest in Savoy from Yorktown.
The unaudited pro forma consolidated balance sheet was prepared as though the transaction had occurred on September 30, 2005, and includes the following:
The acquisition of the 32% interest in Savoy from Yorktown; and
The sale of Hallador common stock to Yorktown.
The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2005, and for the year ended December 31, 2004, includes the following transactions as if they had occurred as of the beginning of the respective periods:
The acquisition of the 32% interest in Savoy from Yorktown; and
The sale of Hallador common stock to Yorktown.
Adjustments for these transactions are reflected in the notes to the unaudited pro forma financial statements. You should read the unaudited pro forma financial statements and accompanying notes along with the historical financial statements included in Halladors previous filings with the Securities and Exchange Commission, and the audited and unaudited Savoy financial statements included above.
The information presented under the heading "Savoy Pro Forma Adjustments" reflects a 32% share of Savoys results of operations for the nine months ended September 30, 2005 and the year ended December 31, 2004. There are no Savoy results of operations reflected in Halladors historical results of operations.
The pro forma statements of operations were derived by adjusting the historical financial statements of Hallador. The adjustments were based on currently available information. The actual adjustments, therefore, may differ from the pro forma adjustments. We believe, however, that the adjustments provide a reasonable basis for presenting the significant effects of the transactions described above. The unaudited pro forma financial statements do not purport to present Halladors results of operations had the acquisition or the other transaction actually been completed as of the dates indicated. Moreover, the statements do not project our financial position or results of operations for any future date or period.
18
HALLADOR PETROLEUM COMPANY
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 2005
(in thousands, except per share information)
|
|
Hallador |
|
Savoy Pro |
|
Pro Forma |
|
||||
|
|
|
|
|
|
|
|
||||
ASSETS |
|
|
|
|
|
|
|
||||
Current assets |
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
11,539 |
|
$ |
4,165 |
(b) |
$ |
11,539 |
|
|
Accounts receivable- |
|
|
|
(4,165 |
)(a) |
|
|
||||
Oil and gas sales |
|
921 |
|
|
|
921 |
|
||||
Well operations |
|
839 |
|
|
|
839 |
|
||||
Total current assets |
|
13,299 |
|
0 |
|
13,299 |
|
||||
|
|
|
|
|
|
|
|
||||
Oil and gas properties, at cost (successful efforts): |
|
|
|
|
|
|
|
||||
Unproved properties |
|
3,555 |
|
|
|
3,555 |
|
||||
Proved properties |
|
2,301 |
|
|
|
2,301 |
|
||||
Less - accumulated depreciation, depletion, amortization and impairment |
|
(1,764 |
) |
|
|
(1,764 |
) |
||||
|
|
4,092 |
|
0 |
|
4,092 |
|
||||
|
|
|
|
|
|
|
|
||||
Other assets: |
|
|
|
|
|
|
|
||||
Investments |
|
|
|
|
|
|
|
||||
Savoy Energy, L.P. |
|
|
|
4,165 |
(a) |
4,165 |
|
||||
Catalytic Solutions |
|
150 |
|
|
|
150 |
|
||||
CELLC |
|
271 |
|
|
|
271 |
|
||||
Other assets |
|
76 |
|
|
|
76 |
|
||||
Total other assets |
|
497 |
|
4,165 |
|
4,662 |
|
||||
Total assets |
|
17,888 |
|
4,165 |
|
22,053 |
|
||||
|
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
||||
Current liabilities |
|
|
|
|
|
|
|
||||
Accounts payable and accrued liabilities |
|
$ |
995 |
|
$ |
|
|
$ |
995 |
|
|
Oil and gas sales payable |
|
1,205 |
|
|
|
1,205 |
|
||||
Income taxes payable |
|
494 |
|
|
|
494 |
|
||||
Total current liabilities |
|
2,694 |
|
0 |
|
2,694 |
|
||||
|
|
|
|
|
|
|
|
||||
Stockholders equity |
|
|
|
|
|
|
|
||||
Preferred stock, $.10 par value; 10,000,000 shares authorized, none issued |
|
|
|
|
|
|
|
||||
Common stock, $.01 par value; 100,000,000 shares authorized, 7,093,150 shares issued |
|
71 |
|
19 |
(b) |
90 |
|
||||
Additional paid-in capital |
|
18,061 |
|
4,146 |
(b) |
22,207 |
|
||||
Accumulated deficit |
|
(2,938 |
) |
|
|
(2,938 |
) |
||||
Total shareholders equity |
|
15,194 |
|
4,165 |
|
19,359 |
|
||||
Total liabilities and shareholders equity |
|
$ |
17,888 |
|
$ |
4,165 |
|
$ |
22,053 |
|
|
See accompanying notes to financial statements.
19
HALLADOR PETROLEUM COMPANY
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2005
(in thousands, except per share information)
|
|
Hallador |
|
Savoy Pro |
|
Pro Forma |
|
||||
|
|
|
|
|
|
|
|
||||
REVENUE |
|
|
|
|
|
|
|
||||
Gas |
|
$ |
521 |
|
$ |
|
|
$ |
521 |
|
|
Natural gas liquids |
|
146 |
|
|
|
146 |
|
||||
Oil |
|
73 |
|
|
|
73 |
|
||||
Interest |
|
414 |
|
|
|
414 |
|
||||
Total revenue |
|
1,154 |
|
0 |
|
1,154 |
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
||||
Lease operating |
|
157 |
|
|
|
157 |
|
||||
Delay rentals |
|
38 |
|
|
|
38 |
|
||||
Impairment of unproved properties |
|
183 |
|
|
|
183 |
|
||||
Equity in loss of Savoy Energy, L.P. |
|
|
|
(326 |
)(c) |
(279 |
) |
||||
|
|
|
|
47 |
(d) |
|
|
||||
Equity in loss of CELLC |
|
55 |
|
|
|
55 |
|
||||
Depreciation, depletion and amortization |
|
30 |
|
|
|
30 |
|
||||
General and administrative |
|
411 |
|
|
|
411 |
|
||||
|
|
874 |
|
(279 |
) |
595 |
|
||||
Income from continuing operations before minority interest and income taxes |
|
280 |
|
279 |
|
559 |
|
||||
|
|
|
|
|
|
|
|
||||
Minority interest |
|
(84 |
) |
|
|
(84 |
) |
||||
|
|
|
|
|
|
|
|
||||
Income from continuing operations before income taxes |
|
196 |
|
279 |
|
475 |
|
||||
|
|
|
|
|
|
|
|
||||
Income taxes - current |
|
(90 |
) |
(128 |
)(f) |
(218 |
) |
||||
|
|
|
|
|
|
|
|
||||
Income from continuing operations |
|
$ |
106 |
|
$ |
151 |
|
$ |
257 |
|
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations per share-basic |
|
$ |
.02 |
|
$ |
.01 |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding-basic |
|
7,093 |
|
1,893 |
(e) |
8,986 |
|
||||
See accompanying notes to financial statements.
20
HALLADOR PETROLEUM COMPANY
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2004
(in thousands, except per share information)
|
|
Hallador |
|
Savoy Pro |
|
Pro Forma |
|
||||
|
|
|
|
|
|
|
|
||||
REVENUE |
|
|
|
|
|
|
|
||||
Gas |
|
$ |
656 |
|
$ |
|
|
$ |
656 |
|
|
Natural gas liquids |
|
166 |
|
|
|
166 |
|
||||
Oil |
|
83 |
|
|
|
83 |
|
||||
Interest |
|
167 |
|
|
|
167 |
|
||||
Total revenue |
|
1,072 |
|
0 |
|
1,072 |
|
||||
|
|
|
|
|
|
|
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
||||
Lease operating |
|
149 |
|
|
|
149 |
|
||||
Delay rentals |
|
102 |
|
|
|
102 |
|
||||
Impairment of unproved properties |
|
144 |
|
|
|
144 |
|
||||
Equity in loss of Savoy Energy, L.P. |
|
|
|
636 |
(c) |
712 |
|
||||
|
|
|
|
76 |
(d) |
|
|
||||
Depreciation, depletion and amortization |
|
42 |
|
|
|
42 |
|
||||
General and administrative |
|
852 |
|
|
|
852 |
|
||||
|
|
1,289 |
|
712 |
|
2,001 |
|
||||
Loss from continuing operations before minority interest |
|
(217 |
) |
(712 |
) |
(929 |
) |
||||
|
|
|
|
|
|
|
|
||||
Minority interest |
|
65 |
|
|
|
65 |
|
||||
|
|
|
|
|
|
|
|
||||
Loss from continuing operations |
|
$ |
(152 |
) |
$ |
(712 |
) |
$ |
(864 |
) |
|
|
|
|
|
|
|
|
|
||||
Loss from continuing operations per share-basic |
|
$ |
(.02 |
) |
$ |
(.08 |
) |
$ |
(.10 |
) |
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding-basic |
|
7,093 |
|
1,893 |
(e) |
8,986 |
|
||||
See accompanying notes to financial statements.
21
HALLADOR PETROLEUM COMPANY
Notes to Unaudited Pro Forma Financial Statements
(a) |
Cash paid in connection with the acquisition of 32% equity interest in Savoy Energy, L.P. |
|
$ |
4,165 |
|
|
|
|
|
|
|
(b) |
Sale of common stock to Yorktown Energy Partners VI, L.P. in a private placement |
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
1,893,169 |
|
|
|
|
|
|
|
|
|
Price per share |
|
2.20 |
|
|
|
Proceeds from private placement |
|
$ |
4,165 |
|
|
|
|
|
|
|
(c) |
Equity in loss of Savoy Energy, L.P.: |
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2005 as reported in item 9.01 (a) |
|
$ |
1,018 |
|
|
Hallador Petroleum Companys percentage of equity interest |
|
32 |
% |
|
|
Hallador Petroleum Companys equity in loss of Savoy Energy, L.P. |
|
$ |
326 |
|
|
For the year ended December 31, 2004 as reported in item 9.01 (a) |
|
$ |
(1,986 |
) |
|
Hallador Petroleum Companys percentage of equity interest |
|
32 |
% |
|
|
Hallador Petroleum Companys equity in loss of Savoy Energy, L.P. |
|
$ |
(636 |
) |
|
|
|
|
|
|
(d) |
Hallador Petroleum Companys purchase price exceeded its pro rata share of the equity of Savoy Energy, L.P. The excess cost was attributed to Savoy Energy, L.P.s oil and gas properties. The adjustment reflects the depreciation, depletion and amortization of the excess based on Savoy Energy, L.P.s weighted average units of production rate during the respective periods below. |
|
|
|
|
|
|
|
|
|
|
|
Hallador Petroleum Company purchase price |
|
$ |
4,165 |
|
|
Equity of Savoy Energy, L.P. as of January 1, 2004 |
|
12,428 |
|
|
|
Hallador Petroleum Companys percentage of equity interest |
|
32 |
% |
|
|
Pro rata share of the equity of Savoy Energy, L.P. |
|
3,977 |
|
|
|
Excess cost |
|
188 |
|
|
|
Weighted average units of production rate |
|
25 |
% |
|
|
Amortization of excess cost |
|
47 |
|
|
|
|
|
|
|
|
|
Hallador Petroleum Company purchase price |
|
$ |
4,165 |
|
|
Equity of Savoy Energy, L.P. as of January 1, 2004 |
|
12,428 |
|
|
|
Hallador Petroleum Companys percentage of equity interest |
|
32 |
% |
|
|
Pro rata share of the equity of Savoy Energy, L.P. |
|
3,977 |
|
|
|
Excess cost |
|
188 |
|
|
|
Weighted average units of production rate |
|
41 |
% |
|
|
Amortization of excess cost |
|
76 |
|
|
|
|
|
|
|
|
(e) |
The weighted average shares outstanding reflect the impact of the shares issued to Yorktown Energy Parnters VI, L.P., proceeds of which were used to acquired the 32% equity interest in Savoy Energy, L.P. |
|
|
|
|
|
|
|
|
|
|
(f) |
Provision for income taxes based on annual effective tax rate of 35% applied to income from continuing operations. |
|
|
|
|
(g) |
Reflects the financial position and results of operations for Hallador Petroleum Company as reported in its periodic reports on Form 10-QSB and Form 10-KSB for the periods ended September 30, 2005 and December 31, 2004, respectively. |
|
|
|
22
(c) Shell Company Transactions: None
(d) Exhibits -
10.1 PURCHASE AND SALE AGREEMENT dated effective as of December 31, 2005 between Hallador Petroleum Company, as Purchaser and Yorktown Energy Partners II, L.P., as Seller relating to the purchase and sale of limited partnership interests in Savoy Energy Limited Partnership - Incorporated by reference to the Form 8-K filed on January 3, 2006. (1)
(1) Incorporated by reference to Form 8-K filed January 3, 2006.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
HALLADOR PETROLEUM COMPANY |
||
|
|
||
|
|
|
|
Date: March 16, 2006 |
By: |
/S/ VICTOR P. STABIO |
|
|
|
Victor P. Stabio |
|
|
|
Chief Executive Officer |
|
|
|
and President |
24