SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____
--------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the quarterly period ended December 31, 2003
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 December 31, 2003, was 7,961,418.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements for First Fiscal Quarter 2004 Period Ending
December 31, 2003.
PIONEER OIL AND GAS
Balance Sheet
December 31, 2003
(unaudited)
Assets
Current assets:
Cash $ 481,512
Accounts receivable 74,797
Resale leases, at lower of cost or market 241,284
---------
Total current assets 797,593
Property and equipment - net (successful efforts method) 428,822
Other assets 2,303
---------
$ 1,228,718
=========
----------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 106,201
Accrued expenses 25,075
Line of Credit -
Total current liabilities 131,276
---------
Commitments and contingencies -
Stockholders' equity:
Common stock, par value $.001 per share, authorized
50,000,000 shares: 7,961,418 shares issued and
outstanding 7,961
Additional paid-in capital 2,495,218
Stock subscription receivable (231,927)
Accumulated deficit (1,236,518)
Year to date income (loss) 62,708
---------
Total stockholder's equity 1,097,442
---------
$ 1,228,718
=========
PIONEER OIL AND GAS
Statement of Operations
First Fiscal Quarter Ending December 31,
(unaudited)
2003 2002
--------- ---------
Revenue:
Oil and gas sales $ 201,041 $ 196,321
Royalty Revenue 180,781 20,831
Operational reimbursements 1,202 500
Project and lease sales income 18,750 33,838
--------- ---------
401,774 251,490
--------- ---------
Costs and expenses:
Cost of operations 181,906 111,416
General and administrative expenses 79,830 66,402
Exploration costs 44,876 48,382
Lease rentals 28,767 31,124
Depreciation, depletion and amortization 17,433 21,900
--------- ---------
352,812 279,224
--------- ---------
Income (loss) from operations 48,962 (27,734)
--------- ---------
Other income (expense):
Interest expense 0 (9,159)
Other (expense) income 13,746 1,554
--------- ---------
Net other income (expense) 13,746 (7,605)
--------- ---------
Income (loss) before provision
for income taxes 62,708 (35,339)
Provision for income taxes 0 0
--------- ---------
Net Income (loss) $ 62,708 $ (35,339)
========= =========
Earnings per share - basic and diluted $ .01 $ (.01)
--------- ---------
Weighted average common shares - basic and diluted 7,961,000 7,961,000
PIONEER OIL AND GAS
Statement of Cash Flows
First Fiscal Quarter Ending December 31,
(unaudited)
2003 2002
--------- ---------
Cash flows from operating activities:
Net income $ 62,708 $ (35,339)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 17,433 28,192
(increase) decrease in:
Accounts receivable 74,996 19,009
Resale leases (21,607) 57,412
Other assets (73) -
Increase (decrease) in:
Accounts payable (15,892) (12,275)
Accrued expenses (132) (7,540)
--------- ---------
Net cash provided by (used in)
operating activities 117,433 49,459
--------- ---------
Cash flows from investing activities:
Proceeds from sale of property - -
Acquisition of property and equipment (7,374) (844)
--------- ---------
Net cash used in investing activities (7,374) (844)
--------- ---------
Cash flow from financing activities:
Increase in Credit Line - -
Acquisition and retirement of Treasury Stock (74) -
--------- ---------
Net cash provided by (used in) financing activities (74) -
--------- ---------
Net increase (decrease) in cash 109,985 48,615
Cash, beginning of quarter 371,527 90,458
--------- ---------
Cash, end of quarter $ 481,512 $ 139,073
========= =========
PIONEER OIL AND GAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
First Fiscal Quarter Ending December 31, 2003
(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 period ended December 31, 2003
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 December 31, 2003 and the results of operations and cash flows
for the three month period ended December 31, 2003 and 2002. The results of
operations for the three months ended December 31, 2003 are not necessarily
indicative of the result to be expected for the entire year.
(2) Earnings per common share is based on the weighted average number of shares
outstanding during the period.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Period Ending December 31, 2003)
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 10SB. 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 first fiscal quarter increased 60 percent from $251,490 in
fiscal 2003 to $401,774 in fiscal 2004. The increase in revenue was due
primarily to an increase in royalty income of $180,781 for fiscal 2004 versus
$20,831 in fiscal 2003. Part of the increase was due to a clerical error on the
part of the payor on the Hunter Mesa Unit who paid the Company for November and
December 2003 production instead of just November 2003. Project and lease sales
income declined from $33,838 in fiscal 2003 to $18,750 in fiscal 2004.
Total oil and gas sales (including royalty revenue) increased from $217,152
(2003) to $381,822 (2004) in the first quarter. This increase was due to
increased royalty revenue and higher product prices. Average oil prices for the
quarter increased over the first quarter of fiscal 2003 from $23.85 bbl to
$26.25 bbl while gas prices increased from $2.01 MCF to $4.25 MCF. For the
quarter oil production dropped thirty percent due to natural declines (and lower
production rates on The Climax 7-2 well) while gas production increased 38
percent. The Climax 7-2 is currently being produced at a lower rate to preserve
equipment integrity and reduce work-over expenses.
Project and lease sales income for the quarter decreased from $33,858 to
$18,750. Project sales are a function of many factors and in general are not
related to the time of year.
Costs of operations increased from $111,416 (2003) to $181,906 (2004) for the
quarter primarily due to work over expenses on the Sheldon, Pilot and Climax
properties.
General and administrative expenses increased from $66,402 to $79,830.
The Company's net income for the first quarter increased from a loss of $35,339
for fiscal 2003 to net income of $62,708 for fiscal 2004 an increase of $98,047.
Earnings per share for the first quarter of fiscal 2004 were $.01. This compares
to a loss of $.01 for the same period last year.
Liquidity and Capital Resources
During the first quarter of fiscal 2004 net cash provided by operating
activities was $117,433 while investing activities used $7,374 in cash.
Financing activities used $74 in the repurchase of a small amount of the
Company's stock. One of the larger uses of cash was $21,607 for the purchase of
resale leases to increase the Company's inventory of acreage for future
development and sale. Cash at the end of the quarter increased from $371,527 to
$481,512.
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 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
The Company during the quarter ending December 31, 2003, repurchased 200 common
shares from a shareholder desiring to sell directly to the Company.
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
The following Exhibits are filed herewith:
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
The Company did not file any reports on Form 8-K during the
fiscal quarter ending December 31, 2003.
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: February 10, 2004 /s/ Don J. Colton
--------------------------
President and CEO
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
quarterly 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 quarterly 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: February 10, 2004.
/s/ Don J. Colton
-------------------------------------
Don J. Colton, President, CEO and CFO
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 December 31, 2003 (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
CEO and CFO
February 10, 2004