Mining Oil Announces Third Quarter 2008 Results and Listing on the OTC Bulletin Board Exchange Under the Symbol: MIOI
Posted on: Thursday, 4 December 2008, 13:39 CST
HOUSTON, Dec. 4 /PRNewswire-FirstCall/ -- Mining Oil reported net income
available to common shareholders of $125,857, or $0.01 per share for the
quarter ending September 30, 2008. This compares to a net loss available to
common shareholders of ($53,585), or ($0.01) per share for the quarter ending
September 30, 2007. The Company has filed its Third Quarter 2008 results on
Form 10-Q with the Securities and Exchange Commission on November 18, 2008.
The results for the third quarter 2008 were primarily achieved through
Mining Oil's equity in the net income of MSB Energy, Inc., an affiliate of
Mining Oil, for the three months ended September 30, 2008. This equity income
represents the Company's 25% interest in MSB Energy, Inc., which was $117,546
for the three months ended September 30, 2008. On April 16, 2008, Mining Oil
formed MSB Energy to acquire the oil and natural gas assets of Reichmann
Petroleum Corporation through a U.S. Bankruptcy Court supervised sale. This
acquisition closed on June 5, 2008. The officers of Mining Oil, who are also
officers of MSB Energy, currently manage and operate over 130 oil and gas
properties in North and South Texas.
Mining Oil also announced that it had received clearance from the
Financial Industry Regulatory Authority (FINRA) to begin trading under the
symbol: MIOI. The Company's sponsoring market maker, vFinance Investments of
Boca Raton, Florida, will initially act as the primary market maker for a
period of 21 days from November 26, 2008. The Company's common stock is
listed on the OTC Bulletin Board.
For a complete listing of the Company's filings, please refer to:
http://www.sec.gov.
The following are excerpts from the Company's Form 10-Q filed with the
Securities and Exchange Commission on November 18, 2008. For the full Form
10-Q report, please refer to http://www.sec.gov.
Mining Oil, Inc.
(A Developmental Stage Company)
Statements of Operations
(Unaudited)
For the Period For the Period
from Inception from Inception
Three Months (July 12, 2007) Nine Months (July 12, 2007)
Ended Through Ended Through
September 30, September 30, September 30, September 30,
2008 2007 2008 2008
Oil revenues $-- $-- $42,679 $54,559
Cost and expenses
Production taxes -- -- 5,337 6,820
Depreciation,
depletion
and amortization 295 -- 19,991 20,711
General and
administrative
expenses, net (24,498) 53,585 424,116 548,768
Total cost
and
expenses (24,203) 53,585 449,444 576,299
Income (loss)
from operations 24,203 (53,585) (406,765) (521,740)
Other income
(expense)
Interest
income 16,096 2,077 21,282 25,959
Equity in
income of
MSB Energy,
Inc. 117,546 -- 117,546 117,546
Interest
expense (6,988) (2,077) (10,613) (15,290)
Amortization of
debt discount (25,000) -- (25,000) (25,000)
Total other
income,
net 101,654 -- 103,215 103,215
Net income
(loss) $125,857 $(53,585) $(303,550) $(418,525)
Net income
(loss) per
common share
Basic and
diluted $0.01 $(0.01) $(0.03) $(0.04)
Weighted average
common shares
outstanding:
Basic and
diluted 10,264,246 9,913,750 10,088,725 10,048,609
See accompanying notes to the financial statements.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following is management's discussion and analysis of certain
significant factors that have affected certain aspects of the Company's
financial position and results of operations during the periods included in
the accompanying unaudited financial statements. You should read this in
conjunction with the discussion under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the audited financial
statements as of and for the period from inception (July 12, 2007) through
December 31, 2007 included in our Form 10 and the unaudited financial
statements included elsewhere herein.
Overview
Mining Oil, Inc. is a developmental stage oil and gas exploration and
production company. The Company's core business is to explore, develop,
produce and acquire oil and natural gas properties primarily onshore in the
state of Texas and Louisiana and offshore in the Gulf of Mexico.
Property and Equipment
The following is a description of the properties in which the Company is
participating as of September 30, 2008:
North Edna Field-Jefferson Davis Parish, Louisiana
In December 2007, our Company acquired a 2.3333% overriding royalty
interest in an 80-acre onshore proved developed producing property in the
North Edna Field in Jefferson Davis Parish, Louisiana for $50,000. The
property has estimated 8/8ths proven reserves of 50,427 barrels of oil
(approximately 1,200 barrels of oil net to our interest). Since the effective
date of the acquisition (December 1, 2007) through the end of September 30,
2008, the production on this property has generated $54,559 in revenues for
the Company, before production taxes.
Results of Operations
The following is a discussion of the results of our operations for the
three and nine month periods ended September 30, 2008.
Revenues. All of our revenues are from the sale of our oil production. Our
revenues may vary significantly from year to year depending on changes in
commodity prices, which fluctuate widely, and production volumes.
Three Months Nine Months
Ended Ended
September 30, September 30,
2008 2007 2008
Revenues:
Oil sales $-- $-- $42,679
Production:
Oil and condensate (barrels) -- -- 417
Average Sales Price:
Oil, condensate and NGLs
(per barrel) $-- $-- $112.75
Production taxes $-- $-- $5,337
Depreciation, depletion and
amortization $295 $-- $19,991
General and administrative
expenses, net $(24,498) $53,585 $424,116
Interest expense $6,988 $2,077 $10,613
Amortization of debt
discount $25,000 $-- $25,000
Interest income $16,096 $2,077 $21,282
Equity in income of
MSB Energy, Inc. $117,546 $-- $117,546
Crude Oil Sales. We reported crude oil sales of none and $42,679,
respectively, for the three and nine months ended September 30, 2008 from our
2.3333% overriding royalty interest in one well which we acquired effective
December 1, 2007 located on the North Edna Field in Jefferson Davis Parish,
Louisiana. Our net crude oil production for the three and nine months ended
September 30, 2008 was none and 417 barrels, respectively, net to our
interest, with an average sales price of none and $112.75 per barrel,
respectively. There was no production during the three months ended September
30, 2008 because the Company's only well was shut-in for workover during the
entire period due to sand control issues. The Company expects the operator of
the well to install the appropriate equipment and re-commence production.
Since we own an overriding royalty interest, we are not responsible for any
capital costs and operating expenses.
Production Taxes. Production taxes for the three and nine months ended
September 30, 2008 was none and $5,337, respectively, and related entirely to
production taxes on oil volumes sold. At this time, our interest in the one
well we own is an overriding royalty interest which does not require us to pay
direct operating expenses. Direct operating expenses of the well are the
responsibility of the working interest owners. When the Company acquires
working interests in properties, it will be charged with operating expenses
and costs in connection with the drilling and the operation of the leases.
Production taxes and lease operating expenses are expected to increase as we
acquire interests in additional producing properties or drill wells on
leasehold acreage we may own.
Depreciation, Depletion and amortization. Depreciation, depletion and
amortization for the three and nine months ended September 30, 2008 was $295
and $19,991, respectively. Depletion expense for the three and nine months
ended September 30, 2008 was approximately none and $46.45 per barrel.
General and Administrative Expenses. General and administrative expenses
for the three and nine months ended September 30, 2008 totaled $(24,498) and
$424,116, respectively, and is comprised primarily of professional fees of
$313,638 and $683,332, which has been offset by a reimbursement of expenses
from MSB Energy, Inc. of $442,587, respectively. General and administrative
expenses for the period ended September 30, 2007 since inception (July 12,
2007) totaled $53,585. These costs were incurred as a result of our recent
start-up and to promote our business strategy. These general overhead costs
are expected to increase significantly as we continue to pursue other
acquisition opportunities and as we increase our technical and administrative
staff necessary to support our business strategy.
Interest Expense. Interest expense for the three and nine months ended
September 30, 2008 was $6,988 and $10,613, respectively. Interest expense for
the period ended September 30, 2007 since inception (July 12, 2007) totaled
$2,077. Under our agreement with a shareholder which expired on April 30,
2008, any interest income earned on our cash deposits held by a commercial
bank is required to be remitted to the shareholder. In addition, interest
expense related to the bank line of credit agreement entered into in May 2008
was $6,988 and $9,198, respectively, for the three and nine months ended
September 30, 2008.
Interest Income. Interest income for the three and nine months ended
September 30, 2008 earned from our cash deposits at a commercial bank was none
and $1,415, respectively. Interest income for the period ended September 30,
2007 since inception (July 12, 2007) totaled $2,077. In addition, interest
income from notes receivable was $16,096 and $19,867, respectively, for the
three and nine months ended September 30, 2008.
Equity in Income of MSB Energy, Inc. Equity in income of MSB Energy, Inc.
for the three and nine months ended September 30, 2008, which represents the
Company's 25% interest in MSB Energy, Inc., was $117,546.
Capital Resources and Liquidity
Overview of Cash Flow Activities. Cash flows used in operating activities
were $263,286 and $36,457 for the nine months ended September 30, 2008 and
2007, respectively. The increase was primarily due to the 2007 period only
being two and one half months.
Cash flows used in investing activities were $594,549 and none for the
nine months ended September 30, 2008 and 2007, respectively, and related
primarily to loans of $590,000 to a third party seller.
Net cash provided by financing activities for the nine months ended
September 30, 2008 was $693,000 and related primarily to net proceeds of
$200,000 from the issuance of a convertible note and $493,000 in borrowings
under the bank line of credit. Net cash provided by financing activities for
the nine months ended September 30, 2007 was related to the proceeds of
$300,100 from the issuance of common stock in August 2007.
Liquidity/Cash Flow Outlook. We expect to continue to raise capital
through the issuance of equity securities, debt securities, and by securing
loans from financial institutions. We believe that the properties that we
expect to acquire should be able to generate sufficient operating cash flows
to support the Company's general operating and administrative expenses. There
can be no assurance that these properties will be able to do so. As such, we
will continue to raise capital through the issuance of equity securities and
bank debt financing to fund our acquisitions and exploration, development and
production efforts.
We may not be able to obtain financing needed in the future on terms that
would be acceptable to us. If we cannot obtain adequate financing, we may be
required to limit or defer our planned oil and natural gas acquisition
program. The recent worldwide financial and credit crisis has adversely
affected the ability of many companies, including us, to access the debt and
equity markets. This decreased ability to obtain financing could materially
adversely affect our ability to continue our previously expected business
plan.
In May 2008, the Company received a $500,000 line of credit from a bank.
Advances on the line of credit bears interest at the prime rate published in
the Wall Street Journal daily, but not less than 6% per annum. The note for
the line of credit matures in May 2009. The Company has drawn $493,000 against
the line of credit as of September 30, 2008.
In July 2008, the Company borrowed $200,000 from a third party lender. It
issued a note with a principal of $230,000 to the third party lender. The note
will accrue interest at the rate of 15% per annum from October 16, 2008 until
maturity on January 15, 2009. The principal and interest is convertible into
the Company's common stock.
The Company has retained Global Hunter Securities LLC, an investment
banking firm, to act as the Company's financial advisor and placement agent
for the issuance of up to $45 million of senior debt of the Company. The
Company will use the proceeds primarily for drilling of recompletions and
other low risk drilling opportunities on properties that has acquired or will
acquire.
In May 2008, the Company loaned $350,000 to a third party seller with whom
it has an agreement to purchase its assets. The Company receives a note of the
entities which will be acquired, and it received a second lien on
substantially all of the oil and natural gas properties and the pipelines and
platforms of the borrowers. In July 2008, the Company loaned an additional
$200,000 to the third party seller, and the entities which would be acquired
issued a new note with a principal amount of $550,000. The interest will
accrue at 12% per annum and the maturity of the note has been extended to
December 15, 2008. In August 2008, the Company loaned an additional $40,000 to
the third party seller, and the note issued is also secured by a second lien
on all of the assets of the borrower.
Properties
In January 2008, the Company entered into a memorandum of understanding
with the third party seller to purchase a 65% interest in oil and natural gas
properties in two shallow water offshore Texas fields and the associated
platforms, facilities, and equipment. In addition, the Company will acquire a
65% interest in an approximately 100 mile gathering pipeline system which
services the two fields. In September 2008, the Company entered into a letter
of intent which modified prior agreements and provided for the acquisition of
100% of the equity interests of the principal owner of the entities which own
these assets for an undisclosed sum of cash and restricted common stock of the
Company. These entities will become wholly-owned subsidiaries of the Company.
The transactions are expected to close in the fourth quarter of 2008 after
completion of the financial statement audits of the entities being acquired.
Upon closing of the purchase, the Company will enter into an employment
agreement with the principal owner of the entities being acquired, which will
provide for an annual salary along with customary benefits and other incentive
programs.
At the end of March 2008, the Company made the high bid for the purchase
of certain oil and natural gas interests offered by Reichmann Petroleum
Corporation through a U.S. Bankruptcy Court supervised sale under Section 363
of the Bankruptcy Code. In April 2008, the Company assigned its winning bid
rights to MSB Energy, Inc. which assumed responsibility for funding and
closing the purchase, which occurred on June 5, 2008. In return for the
assignment, the Company received a 25% equity share in MSB Energy, Inc., and a
contractual right to a partition and ownership of an undivided 33.3% interest
in all MSB properties upon the occurrence of certain contingencies, which have
subsequently occurred. In September 2008, the Company and other equity holders
of MSB initiated the partition of the assets and liabilities of MSB with the
Company to receive 33.3% of the assets and to assume 33.3% of the liabilities.
This partition is expected to close by December 2008.
In September 2008, the Company entered into a participation agreement to
acquire certain working interests held by Jurasin Oil & Gas, Inc. ("Jurasin")
of Houston, Texas, and its affiliate, Rampant Lion Energy, LLC, in two
prospects. These two prospects include one located in south Louisiana and
another located in the offshore shallow waters of Mustang Island in Texas.
This agreement provides that the parties enter into a long-term Area of Mutual
Interest (AMI) for the next 10 years. As such, Jurasin will offer the Company
the right of first refusal to acquire any interest that Jurasin has in future
prospects which Jurasin develops or acquires.
The agreement provides for the Company to fund the capital expenditures
for drilling and development of these prospects. It also provides for the
recovery of all costs incurred by the Company before any distributions or
payouts. Furthermore, this agreement will provide Jurasin with the right to
receive a certain interest after the payout on these projects.
The Company has estimated that the budget will be approximately
$23 million to pay for capital expenditures such as drilling, land acquisition
costs, seismic studies, geological services, and certain overhead costs for
the two prospects. Reserve consultants, Netherland, Sewell & Associated (NSA),
have been retained to evaluate both the proved and probable reserves
identified by Jurasin.
FORWARD-LOOKING STATEMENTS
There are statements contained in this Quarterly Report that are not
historical facts. These "forward-looking statements" can be identified by use
of terminology such as "believe," "hope," "may," "anticipate," "should,"
"intend," "plan," "will," "expect," "estimate," "project," "positioned,"
"strategy" and similar expressions. You should be aware that these
forward-looking statements are subject to risks and uncertainties that are
beyond our control. For a discussion of these risks, you should read the
Company's Registration Statement on Form 10 carefully, especially the risks
discussed under "Risk Factors." Although management believes that the
assumptions underlying the forward-looking statements included in the
Registration Statement and Quarterly Report on Form 10-Q are reasonable, they
do not guarantee our future performance and actual results could differ from
those on Form 10 contemplated by these forward-looking statements. The
assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of
data and other information and their use in developing and selecting
assumptions from and among reasonable alternatives require the exercise of
judgment. To the extent that the assumed events do not occur, the outcome may
vary substantially from anticipated or projected results, and, accordingly, no
opinion is expressed on the achievability of those forward-looking statements.
In light of these risks and uncertainties, there can be no assurance that the
results and events contemplated by the forward-looking statements contained in
the Registration Statement on Form 10 and the Quarterly Report on Form 10-Q
will in fact transpire. You are cautioned not to place undue reliance on the
continuing accuracy on these forward-looking statements, which relate only to
the referenced dates. We do not undertake any obligation to update or revise
any forward-looking statements.
SOURCE Mining Oil, Inc.
Source: PR Newswire
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