SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____
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FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the quarterly period ended March 31, 2004
OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-30472
PIONEER OIL AND GAS
Incorporated pursuant to the Laws of the State of Utah
Internal Revenue Service - Employer Identification No. 87-0365907
1206 W. South Jordan Parkway, Unit B
South Jordan, Utah 84095-5512
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X__ No ___
The total number of shares of the registrant's Common Stock, $.001 par value,
outstanding on March 31, 2004, was 7,914,219.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements for Second Fiscal Quarter 2004
Period Ending March 31, 2004
Financial Statements for Second Fiscal Quarter 2004
Period Ending March 31, 2004
PIONEER OIL AND GAS
Balance Sheet
As of March 31, 2004
(Unaudited)
Assets
Current assets:
Cash $ 282,059
Accounts receivable 156,796
Resale leases, at lower of cost or market 350,245
------------
Total current assets 789,100
Property and equipment - net (successful efforts method) 409,438
Other assets 2,000
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$ 1,200,538
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Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 38,139
Accrued expenses 27,380
------------
Total current liabilities 65,519
------------
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, par value $.001 per share, authorized
50,000,000 shares: 7,914,219 shares outstanding 7,914
Additional paid-in capital 2,474,025
Stock subscription receivable (218,187)
Accumulated deficit (1,128,733)
------------
Total stockholder's equity (deficit) 1,135,019
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$ 1,200,538
The accompanying notes are an integral part of these financial statements.
PIONEER OIL AND GAS
Statement of Operations
Six Months Ended March 31, 2004 and 2003
(unaudited)
2004 2003
---- ----
Revenue:
Oil and gas sales $ 409,530 $ 455,480
Royalty revenue 338,262 113,302
Operational reimbursements 3,000 3,500
Project and lease sales income 18,750 33,838
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769,542 606,120
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Costs and expenses:
Cost of operations 322,247 256,523
General and administrative expenses 180,911 158,102
Exploration costs 91,279 141,165
Lease rentals 33,960 38,564
Depreciation, depletion and amortization 54,866 43,731
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683,263 638,085
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Income (loss) from operations 86,279 (31,965)
Other income (expense):
Interest expense - (17,384)
Other (expense) income 21,506 8,217
------------ ------------
Income (loss) before provision
for income taxes 107,785 (41,132)
Provision for income taxes - -
------------ ------------
Net income (loss) $ 107,785 $ (41,132)
------------ ------------
Earnings per share - basic and diluted $ .01 $ (.01)
------------ ------------
Weighted average common shares - basic and diluted 7,950,000 7,962,000
------------ ------------
The accompanying notes are an integral part of these financial statements.
PIONEER OIL AND GAS
Statement of Operations
For Three Months Ended March 31, 2004 and 2003
(unaudited)
2004 2003
---- ----
Revenue:
Oil and gas sales $ 205,977 $ 254,114
Royalty revenue 159,993 97,516
Operational reimbursements 1,500 1,500
Project and lease sales income - -
------------ ------------
367,470 353,130
------------ ------------
Costs and expenses:
Cost of operations 140,341 145,107
General and administrative expenses 101,448 91,674
Exploration costs 46,036 92,809
Lease rentals 5,193 7,440
Depreciation, depletion and amortization 37,433 21,831
------------ ------------
330,451 358,861
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Income (loss) from operations 37,019 (5,731)
------------ ------------
Other income (expense):
Interest expense - (8,225)
Other (expense) income 8,058 8,163
------------ ------------
8,058 (62)
------------ ------------
Income (loss) before provision
for income taxes 45,077 (5,793)
Provision for income taxes - -
------------ ------------
Net income (loss) $ 45,077 $(5,793)
------------ ------------
Earnings per share - basic and diluted $ .01 $ -
------------- ------------
Weighted average common shares - basic and diluted 7,938,000 7,962,000
------------ ------------
The accompanying notes are an integral part of these financial statements.
PIONEER OIL AND GAS
Statement of Cash Flows
For The Six Months Ended March 31, 2004 and 2003
(unaudited)
2004 2003
---- ----
Cash flows from operating activities:
Net income $ 107,785 $ (41,132)
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation, depletion and amortization 54,866 90,295
Employee benefit plan expense 20,698 20,698
Interest income (6,958) (7,746)
(Increase) decrease in:
Accounts receivable (7,003) (18,955)
Resale leases (130,568) 40,513
Other assets 230 -
Increase (decrease) in:
Accounts payable (83,954) (30,884)
Accrued expenses 2,173 (7,310)
------------ ------------
Net cash (used in) provided by
operating activities (42,731) 45,479
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment (25,423) (30,891)
------------ ------------
Net cash used in investing activities (25,423) (30,891)
------------ ------------
Cash flow from financing activities:
Purchase and retirement of common stock (21,314) -
Net cash provided by (used in)
financing activities (21,314) -
------------ ------------
Net increase (decrease) in cash (89,468) 14,588
Cash, beginning of period $ 371,527 $ 90,458
------------ ------------
Cash, end of period $ 282,059 $ 105,046
------------ ------------
The accompanying notes are an integral part of these financial statements.
PIONEER OIL AND GAS
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS Third Fiscal Quarter
Ending March 31, 2004
(Unaudited)
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-B. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month and six-month periods ending
March 31, 2004 are not necessarily indicative of the results that may be
expected for the year ending September 30, 2004. For further information, refer
to the financial statements and footnotes thereto included in the Company's Form
10-KSB for the year ended September 30, 2003.
(1) The unaudited financial statements include the accounts of Pioneer Oil and
Gas and include all adjustments (consisting of normal recurring items) which
are, in the opinion of management, necessary to present fairly the financial
position as of March 31, 2004 and the results of operations and cash flows for
the three-month and six-month periods ended March 31, 2004 and 2003. The results
of operations for the three-month and six-month periods ended March 31, 2004 are
not necessarily indicative of the result to be expected for the entire year.
2) Earnings (loss) per common share is based on the weighted average number of
shares outstanding during the period.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
During the six months ended March 31, 2004, the company recorded interest income
(on the stock subscription receivable) of $6,958, reduced the stock subscription
receivable by $13,740 and recorded an employee benefit plan contribution of
$20,698.
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Period Ending March 31, 2004)
Unaudited financial data
The discussion and analysis contained herein should be read in conjunction with
the preceding financial statements and the information contained in the
Company's 10KSB. Except for the historical information contained herein, the
matters discussed in this 10 QSB contain forward looking statements within the
meaning of Section 27a of the Securities Act of 1933, as amended, and Section
21e of the Securities Exchange Act of 1934, as amended, that are based on
management's beliefs and assumptions, current expectations, estimates, and
projections. Statements that are not historical facts, including without
limitation statements which are preceded by, followed by or include the words
"believes," "anticipates," "plans," "expects," "may," "should," or similar
expressions are forward-looking statements. Many of the factors that will
determine the company's future results are beyond the ability of the Company to
control or predict. These statements are subject to risks and uncertainties and,
therefore, actual results may differ materially. All subsequent written and oral
forward-looking statements attributable to the Company, or persons acting on its
behalf, are expressed qualified in their entirety by these cautionary
statements. The Company disclaims any obligation to update any forward-looking
statements whether as a result of new information, future events or otherwise.
Important factors that may include, but are not limited to: the risk of a
significant natural disaster, the inability of the Company to insure against
certain risks, fluctuations in commodity prices, the inherent limitations in the
ability to estimate oil and gas reserves, changing government regulations, as
well as general market conditions, competition and pricing, and other risks
detailed from time to time in the Company's SEC reports, copies of which are
available upon request from the Company.
Results of Operations -
Total Revenue for the second fiscal quarter increased four percent from $353,130
in fiscal 2003 to $367,470 in fiscal 2004. For the six-month period revenues
increased 27 percent from $606,120 to $769,542. The increase in revenue for the
six-month period was due to an increase in oil and gas sales and royalty revenue
of 31 percent. Project and lease sales income dropped from $33,838 for fiscal
2003 to $18,750 for 2004. The Company is currently marketing overpressured gas
prospects in the Uinta Basin of Utah and hopes to realize additional revenue
from the sale of these projects during fiscal 2004.
Total oil and gas sales (including royalty revenue) increased from $351,630 to
$365,970 in the second quarter and from $568,782 to $747,792 for the six-month
period. These increases were due primarily to increased oil and gas prices.
Average oil prices for the quarter increased from $27.76 bbl to $30.47 bbl while
gas prices increased from $3.58 MCF to $5.06 MCF. For the six-month period,
average oil prices increased from $25.63 bbl to $28.48 bbl while gas prices
increased from $2.97 to $4.58.
Costs of operations decreased slightly from $145,107 to $140,341 for the quarter
and increased from $256,523 to $322,247 for the six-month period primarily due
to higher payments to working interest partners due to higher product prices.
General and administrative expenses increased from $91,674 to $101,448 for the
quarter and increased from $158,102 to $180,911 for the six-month period.
The Company's net income for the second quarter (fiscal 2004) was $45,077
compared to a net loss of $5,793 for the second fiscal quarter 2003. For the
six-month period (fiscal 2004) the Company posted net income of $107,785
compared to a net loss of $41,132 for fiscal 2003.
Liquidity and Capital Resources
During the first six-months of fiscal 2004 cash used in operating activities was
$42,731 and cash used in investing activities required $25,423. Financing
activities used $21,314 in cash.
Cash used in operating activities was primarily for the purchases of resale
leases ($130,568). Cash used in investing activities decreased from $30,981
(fiscal 2003) to $25,423 (fiscal 2004).
ITEM 3. CONTROLS AND PROCEDURE
Within the 90 days prior to this report, we carried out an evaluation, under the
supervision and with the participation of management, including our principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the principal executive and principal financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in our periodic SEC filings. There have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation.
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
The Company may become or is subject to investigations, claims, or lawsuits
ensuing out of the conduct of its business, including those related to
environmental safety and health, commercial transactions etc. The Company is
currently not aware of any such items, which it believes could have a material
adverse affect on its financial position.
Item 2 - Changes in Securities
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
None.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
Exhibit No. Description
31 Certification of the Chief Executive
Officer and Chief Financial Officer
pursuant to Rule 13a-14 of the
Securities and Exchange Act of 1934,
as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002.
32 Certification of the Chief Executive
Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
REPORTS ON FORM 8-K
(b) The registrant filed an 8K on February 13, 2004 regarding its offer to
purchase the shares of its shareholders owning less than 1000 shares in the
Company. No other 8K filings were made during the quarter ending March 31, 2004.
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 thereunto duly authorized.
Pioneer Oil and Gas
Dated: May 9, 2004 /s/ Don J. Colton
-----------------------------
President and Chief Executive Officer
Exhibit 31
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Don J. Colton, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pioneer Oil and Gas.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. I have disclosed, based on the most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls.
6. I have indicated in this annual report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of the most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
DATE: May 9, 2004
/s/ Don J. Colton
-----------------------
Don J. Colton, President
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Quarterly Report of Pioneer Oil and Gas
(the "Company") on Form 10-QSB for the period ended March 31, 2004 (the
"Report"), I, Don J. Colton, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(i) The Report fully complies with the requirements of section 13(a) of the
Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Don J. Colton
-------------------------
Don J. Colton
Chief Executive Officer
May 9, 2004