UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009
or
[ ] TRANSITION REPORT PURSUANT OT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 000-18774
SPINDLETOP OIL & GAS CO.
(Exact name of registrant as specified in its charter)
Texas 75-2063001
(State or other jurisdiction I.R.S. Employer Identification No.)
of incorporation or organization)
12850 Spurling Rd., Suite 200, Dallas, TX 75230
(Address of principal executive offices) (Zip Code)
(972) 644-2581
(Registrant's telephone number, including area code)
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
Company was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec 232.405
of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer", "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [ X ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act. Yes [ ] No [ X ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common, as of the latest practicable date.
Common Stock, $0.01 par value 7,620,803
(Class) (Outstanding at August 14, 2009)
SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
FORM 10-Q
For the quarter ended June 30, 2009
Index to Consolidated Financial Statements and Schedules
Page
Part I - Financial Information:
Item 1. - Financial Statements
Consolidated Balance Sheets
June 30, 2009 (Unaudited) and December 31, 2008 4-5
Consolidated Statements of Operations (Unaudited)
Six Months Ended June 30, 2009 and 2008 and
Three Months Ended June 30, 2009 and 2008 6
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 2009 and 2008 7
Notes to Consolidated Financial Statements 8
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 4. - Controls and Procedures 14
Part II - Other Information:
Item 1A - Risk Factors 9
Item 5. - Other Information 14
Item 6. - Exhibits 15
- 3 -
Part I - Financial Information
Item 1. - Financial Statements
SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
-------------------------
June 30 December 31
2009 2008
(Unaudited)
----------- -----------
ASSETS
Current Assets
Cash $10,758,000 $10,468,000
Accounts receivable, trade 901,000 1,510,000
Prepaid income tax 356,000 -
----------- -----------
Total Current Assets 12,015,000 11,978,000
----------- -----------
Property and Equipment, at cost
Oil and gas properties (full cost method) 14,005,000 13,633,000
Rental equipment 399,000 399,000
Gas gathering systems 145,000 145,000
Other property and equipment 170,000 170,000
----------- -----------
14,719,000 14,347,000
Accumulated depreciation and amortization (7,591,000) (7,007,000)
----------- -----------
Total Property and Equipment, net 7,128,000 7,340,000
----------- -----------
Real Estate Property, at cost
Land 688,000 688,000
Commercial office building 1,580,000 1,580,000
Accumulated depreciation (325,000) (300,000)
----------- -----------
Total Real Estate Property, net 1,943,000 1,968,000
----------- -----------
Other Assets 3,000 3,000
----------- -----------
Total Assets $21,089,000 $21,289,000
=========== ===========
The accompanying notes are an integral part of these statements.
- 4 -
SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
As of
-------------------------
June 30 December 31
2009 2008
(Unaudited)
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable, current portion $ 120,000 $ 120,000
Accounts payable and accrued liabilities 3,802,000 3,788,000
Income tax payable - 44,000
Tax savings benefit payable 97,000 97,000
----------- -----------
Total current liabilities 4,019,000 4,049,000
----------- -----------
Noncurrent Liabilities
Notes payable, long-term portion 1,020,000 1,080,000
Asset retirement obligation 719,000 667,000
----------- -----------
1,739,000 1,747,000
----------- -----------
Deferred income tax payable 2,397,000 2,457,000
----------- -----------
8,155,000 8,253,000
Total Liabilities ----------- -----------
Shareholders' Equity
Common stock, $.01 par value; 100,000,000
shares authorized; 7,677,471 shares issued
and 7,620,803 shares outstanding at
June 30, 2009; 7,677,471 shares issued
and 7,610,803 shares outstanding at
December 31, 2008. 77,000 77,000
Additional paid-in capital 889,000 874,000
Treasury Stock (27,000) (32,000)
Retained earnings 11,995,000 12,117,000
----------- -----------
Total Shareholders' Equity 12,934,000 13,036,000
----------- -----------
Total Liabilities and Shareholders' Equity $21,089,000 $21,289,000
=========== ===========
The accompanying notes are an integral part of these statements.
- 5 -
SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
--------------------- -------------------------
June 30 June 30 June 30 June 30
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenues
Oil and gas revenue $ 2,446,000 $ 6,389,000 $ 1,292,000 $ 3,272,000
Revenue from lease
operations 173,000 106,000 92,000 59,000
Gas gathering, compression
and Equipment rental 95,000 74 000 56,000 34,000
Real estate rental income 252,000 257,000 125,000 126,000
Interest income 111,000 97,000 66,000 23,000
Other 151,000 40,000 118,000 39,000
----------- ----------- ----------- -----------
Total revenue 3,228,000 6,963,000 1,749,000 3,553,000
----------- ----------- ----------- -----------
Expenses
Lease operations 1,057,000 1,646,000 509,000 997,000
Pipeline and rental operations 15,000 8,000 9,000 2,000
Real estate operations 95,000 143,000 49,000 77,000
Depreciation, depletion and
amortization 609,000 372,000 325,000 187,000
Asset retirement obligation
accretion 19,000 12,000 9,000 6,000
General and administrative 1,579,000 1,333,000 831,000 763,000
Interest expense 36,000 40,000 18,000 20,000
----------- ----------- ----------- -----------
Total Expenses 3,410,000 3,554,000 1,750,000 2,052,000
----------- ----------- ----------- -----------
Income Before Income Tax (182,000) 3,409,000 (1,000) 1,501,000
----------- ----------- ----------- -----------
Current tax provision - 861,000 - 540,000
Deferred tax provision (60,000) 354,000 (1,000) (56,000)
----------- ----------- ----------- -----------
(60,000) 1,215,000 (1,000) 484,000
----------- ----------- ----------- -----------
Net Income (Loss) $ (122,000)$ 2,194,000 $ - $ 1,017,000
=========== =========== =========== ===========
Earnings (Loss) per Share
of Common Stock
Basic and diluted $ (.02)$ 0.29 $ - $ 0.13
=========== =========== =========== ===========
Weighted Average Shares
Outstanding
Basic and diluted 7,615,333 7,610,803 7,615,333 7,610,803
=========== =========== =========== ===========
The accompanying notes are an integral part of these statements.
- 6 -
SPINDLETOP OIL & GAS CO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
-------------------------
June 30 June 30
2009 2008
----------- -----------
Cash Flows from Operating Activities
Net Income (Loss) $ (122,000) $ 2,194,000
Reconciliation of net income
to net cash provided by
Operating Activities
Depreciation, depletion and amortization 609,000 372,000
Changes in asset retirement obligation 19,000 84,000
Employee compensation paid with
treasury stock 20,000 -
Changes in accounts receivable 609,000 (21,000)
Changes in prepaid income taxes (356,000) -
Changes in accounts payable 12,000 842,000
Changes in current taxes payable (44,000) 363,000
Changes in deferred tax payable (60,000) 354,000
----------- -----------
Net cash provided by operating activities 687,000 4,188,000
----------- -----------
Cash flows from Investing Activities
Capitalized acquisition, exploration
and development costs (337,000) (174,000)
Purchase of property and equipment - (9,000)
Capitalized tenant improvements - (7,000)
----------- -----------
Net cash used for investing activities (337,000) (190,000)
----------- -----------
Cash Flows from Financing Activities
Decrease in notes payable (60,000) (60,000)
----------- -----------
Net cash used for Financing activities (60,000) (60,000)
----------- -----------
Increase in cash 290,000 3,938,000
Cash at beginning of period 10,468,000 6,325,000
----------- -----------
Cash at end of period $10,758,000 $10,263,000
=========== ===========
Interest paid in Cash $ 36,000 $ 40,000
=========== ===========
Income taxes paid $ 400,000 $ 500,000
=========== ===========
The accompanying notes are an integral part of these statements.
- 7 -
SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND ORGANIZATION
The accompanying financial statements are presented in accordance with the
requirements of Form 10-Q and consequently do not include all of the
disclosures normally required by generally accepted accounting principles or
those normally made in the Company's annual Form 10-K filing. Accordingly,
the reader of this Form 10-Q may wish to refer to the Company's Form 10-K for
the year ended December 31, 2008 for further information.
The consolidated financial statements presented herein include the accounts of
Spindletop Oil & Gas Co., a Texas corporation ("the Company") and its wholly
owned subsidiaries, Prairie Pipeline Co., a Texas corporation and Spindletop
Drilling Company, a Texas Corporation. All significant inter-company
transactions and accounts have been eliminated.
In the opinion of management, the accompanying unaudited interim financial
statements contain all material adjustments, consisting only of normal
recurring adjustments necessary to present fairly the financial condition,
the results of operations and changes in cash flows of the Company and its
consolidated subsidiaries for the interim periods presented. Although the
Company believes that the disclosures are adequate to make the information
presented not misleading, certain information and footnote disclosures,
including a description of significant accounting policies normally included
in financial statements prepared in accordance with generally accepted
accounting principles generally accepted in the United States of America, have
been condensed or omitted pursuant to such rules and regulations.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates. A significant estimate made by
management includes the percentage used to calculate the depletion of the oil
and gas properties using the full cost method. The estimate is based on the
prior year percentage as adjusted by management based on their assessment of
current business activities. It is at least reasonably possible that the
depletion percentage estimate will change in the near term.
3. COMMON STOCK
Effective April 9, 2009, the Company issued 10,000 shares of restricted common
stock to a key employee pursuant to an employment package. The shares were
valued at $2.00 per share, the believed market value for free trading shares
at the time of issue. The amount was expensed as general and administrative
expense. The shares of common stock were issued out of Treasury Stock and
reduced the amount of the Company's common stock held in Treasury from 66,668
to 56,668 shares.
- 8 -
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
WARNING CONCERNING FORWARD LOOKING STATEMENTS
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
This Report on Form 10-Q may contain forward-looking statements within the
meaning of the federal securities laws, principally, but not only, under the
caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations. " We caution investors that any forward-looking
statements in this report, or which management may make orally or in writing
from time to time, are based on management's beliefs and on assumptions made
by, and information currently available to management. When used, the words
"anticipate," "believe," "expect," "intend," "may," "might," "plan,"
"estimate," "project," "should," "will," "result" and similar expressions which
do not relate solely to historical matters are intended to identify forward-
looking statements. These statements are subject to risks, uncertainties, and
assumptions and are not guarantees of future performance, which may be affected
by known and unknown risks, trends, uncertainties, and factors, that are beyond
our control. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, or projected. We caution you
that while forward-looking statements reflect our good faith beliefs when we
make them, they are not guarantees of future performance and are impacted by
actual events when they occur after we make such statements. We expressly
disclaim any responsibility to update our forward-looking statements, whether
as a result of new information, future events or otherwise. Accordingly,
investors should use caution in relying on past forward-looking statements,
which are based on results and trends at the time they are made, to anticipate
future results or trends.
Some of the risks and uncertainties that may cause our actual results,
performance or achievements to differ materially from those expressed or
implied by forward-looking statements include, among others, the factors listed
and described at Item 1A "Risk Factors" in the Company's Annual Report on Form
10-K, which investors should review. There have been no changes from the risk
factors previously described in the Company's Form 10-K for the fiscal year
ended December 31, 2008 (the "Form 10-K").
Other sections of this report may also include suggested factors that could
adversely affect our business and financial performance. Moreover, we operate
in a very competitive and rapidly changing environment. New risks may emerge
from time to time and it is not possible for management to predict all such
matters; nor can we assess the impact of all such matters on our business or
the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statements. Given these uncertainties, investors should not place undue
reliance on forward-looking statements as a prediction of actual results.
Investors should also refer to our quarterly reports on Form 10-Q for future
periods and current reports on Form 8-K as we file them with the SEC, and to
other materials we may furnish to the public from time to time through
Forms 8-K or otherwise.
- 9 -
Results of Operations
Six months ended June 30, 2009 compared to six months ended June 30, 2008
-------------------------------------------------------------------------
Oil and gas revenues for the first half of 2009 were $2,446,000, a decrease of
$3,943,000 or 62% from revenues of $6,389,000 during the same period in 2008.
Natural gas revenues for the first six months of 2009 were $1,840,000 compared
to $5,194,000 for the same period in 2008, a decrease of $3,354,000, or 65%.
Natural gas volumes for the first half of 2009 were approximately 478,000 mcf
compared to approximately 679,000 mcf during the first half of 2008, a decrease
of approximately 201,000 mcf, or 30 %. The decrease between periods was due
to a decline in production. The Company drilled six horizontal Barnett Shale
wells that started producing during the fourth quarter of 2007 which were still
in their peak initial production during 2008. The production from these wells
has declined in the last several months, resulting in lower total production
during the first six months of 2009.
Average natural gas prices received were approximately $3.85 per mcf during the
first half of 2009 as compared to approximately $8.84 per mcf in the first half
of 2008, a decrease of approximately $4.99 per mcf or 56%. This decrease in the
average sales price was a result of the overall decline in natural gas prices
experienced across the industry which peaked in June and then steadily declined
throughout the third and fourth quarters of 2008. Average natural gas prices
have continued to decline since January of 2009, and are significantly lower
than in the previous year.
Oil sales for the first six months of 2009 were approximately $606,000 compared
to approximately $1,192,000 in the first six months of 2008, a decrease of
approximately $586,000 or 49%. Oil volumes for the first six months of 2009
were approximately 14,000 bbls compared to approximately 13,000 bbls during the
first six months of 2008, an increase of approximately 1,000 bbls, or 8%.
Average oil prices received were $43.57 per bbl in the first half of 2009
compared to $96.55 per bbl in the first half of 2008, a decrease of
approximately $52.98 or 55%. This decrease in the average sales price was a
result of the overall decline in crude oil prices experienced across the
industry which peaked in June and then steadily declined throughout the third
and fourth quarters of 2008. Average crude oil prices have rebounded since
January of 2009, but are significantly lower than in the previous year.
Interest income for the first half of 2009 was approximately $111,000 as
compared with approximately $97,000 for the same period in 2008, an increase of
about $14,000 or 14%. The amount of cash invested in certificates of deposit
and money market accounts compared to the previous year was larger; however
interest rates remained substantially the same. During the last quarter
of 2008 and the first half of 2009, the Company moved amounts normally invested
in certificates of deposit into business checking accounts at its primary
banking institution to take advantage of the unlimited FDIC insurance coverage.
The Company also moved money to take advantage of higher FDIC coverage of
$250,000 at other banks in order to protect the Company's liquid assets from
risk of loss for bank failures.
- 10 -
Other income for the first half of 2009 was approximately $151,000 as compared
with approximately $40,000 for the same period in 2008, an increase of
approximately $111,000. Approximately $92,000 of this amount was for
ad valorem tax services provided by the Company to several of its leases.
Lease operating expenses in the first half of 2009 were $1,057,000 as compared
to $1,646,000 for the same period in 2008, a decrease of approximately
$589,000, or 36%. Approximately $343,000 of this decrease is attributable to
workovers on various wells completed during the first six months of 2008.
Approximately $213,000 is due to lower severance tax rates on our Barnett Shale
wells in 2009 after the Company applied for and received a high cost severance
tax exemption for these wells. The Company is deferring workovers to the
extent possible until product prices rebound. Other reductions are due to net
decreases in operating costs on both operated and non-operated properties.
Real Estate expenses during the first six months of 2009 were approximately
$95,000 compared to approximately $143,000 for the same period in 2008, a
decrease of $48,000 or 34%. This decrease was a direct result of the Company
negotiating a new fixed rate contract for the building's electricity beginning
in November of 2008. Electricity cost for the first half of 2009 was $49,000
compared to $92,000 for the same period in 2008, a decrease of $43,000 or 47%.
Depreciation, depletion, and amortization for the first half of 2009 was
$609,000 as compared to $372,000 for the same period in 2008, an increase of
$237,000, or 64%. The company re-evaluated its proved oil and gas reserve
quantities as of December 31, 2008, and increased its depletion rate for 2008
to 8.520% of the total capitalized cost of oil and gas properties (the "full
cost pot"), as compared to a rate of 5.883% used at December 31, 2007 and the
first three quarters in 2008. In order to estimate the depletion for 2009
during the year, the Company has estimated an increase in the rate for 2009 of
approx 0.95% from 8.52% used in the prior year to 9.47%. This increase along
with an increase in the full cost pot from approximately $10,566,000 at the end
of the second quarter of 2008, to approximately $12,089,000 at the end of the
second quarter of 2009, has caused the increase between the two years.
General and administrative costs for the first half of 2009 were $1,579,000
compared to $1,333,000 for the same period in 2008, an increase of
approximately $246,000 or 18%. This increase is due mainly to payroll costs
and associated employee benefit costs. Personnel costs and benefits accounted
for approximately $1,379,000 of the total general and administrative cost in
the first six months of 2009 compared to approximately $993,000 for the same
period in 2008, an increase of approximately $386,000 or 39%. This increase
was offset by a reduction in the management fee payable of $120,000. A portion
of the increase in salary and benefits was due to personnel added to the
Company's payroll as the result of the termination of the Management Services
Contract between the Company and Giant Energy Corp on September 30, 2008.
Effective October 1, 2008, Chris Mazzini and Michelle Mazzini, President and
Vice President of the Company respectively, became employees of Spindletop Oil
and Gas Co.
Interest expense was approximately $36,000 for the first half of 2009 compared
to approximately $40,000 for the same period in 2008, a decrease of
approximately $4,000. This is due to the continued reduction of the principal
amount of the loan on the building as interest on the note is calculated and
paid based on the unpaid balance of the loan.
- 11 -
Three months ended June 30, 2009 compared to three months ended June 30, 2008
-----------------------------------------------------------------------------
Oil and gas revenues for the three months ended June 30, 2009 were $1,292,000,
a decrease of $1,980,000, or 61% from revenues of $3,272,000 for the same
period in 2008.
Natural gas revenues for the second quarter of 2009 were $858,000 compared to
$2,549,000 for the same period in 2008, a decrease of $1,691,000, or 66%.
Natural gas volumes for the second quarter of 2009 were approximately 288,000
mcf compared to approximately 312,000 mcf during the same period of 2008, a
decrease of approximately 24,000 mcf, or 8%. This decrease was due primarily
to the decline of production from six horizontal Barnett Shale wells that
started producing during the fourth quarter of 2007 which were still in their
peak initial production during 2008, but for which production has leveled out
during 2009.
Average natural gas prices received were approximately $3.92 per mcf in the
second quarter of 2009 as compared to approximately $10.20 per mcf during the
same period in 2008, a decrease of approximately $6.28, or 62%.
Oil sales for the second quarter of 2009 were approximately $434,000 compared
to approximately $723,000 for the same period of 2008, a decrease of
approximately $289,000 or 40%. Oil volumes for the second quarter of 2009
were approximately 7,500 bbls compared to a similar production of approximately
6,500 bbls during the same period of 2008.
Average oil prices received were approximately $49.60 per bbl in the second
quarter of 2009 compared to $110.26 per bbl during the same period of 2008,
a decrease of approximately $60.66 per bbl, or 55%.
Interest income for the second quarter of 2009 was approximately $66,000 as
compared with approximately $23,000 for the same period in 2008. The amount
of cash invested in certificates of deposit compared to the previous year was
slightly larger during the second quarter of 2009 compared to the previous
year, however interest rates remained substantially the same. During the last
quarter of 2008 and the first half of 2009, the Company moved amounts normally
invested in certificates of deposit into business checking accounts at its
primary banking institution to take advantage of the unlimited FDIC insurance
coverage. The Company also moved money to take advantage of higher FDIC
coverage of $250,000 at other banks in order to protect the Company's liquid
assets from risk of loss for bank failures.
Other income for the second quarter of 2009 was approximately $118,000 as
compared with approximately $39,000 for the same period in 2008, an increase
of approximately $79,000 due primarily to ad valorem tax services provided
by the Company to several of its leases.
Lease operating expenses in the second quarter of 2009 were $509,000 as
compared to $997,000 for the same period in 2008, a decrease of approximately
$488,000, or 49%. Approximately $275,000 of this decrease is attributable to
Workovers completed in 2008 on various wells. Approximately $162,000 is due
to lower severance tax rates on our Barnett Shale wells in 2009 after the
Company applied for and received a high cost severance tax exemption for these
- 12 -
wells. The Company is deferring workovers to the extent possible until product
prices rebound. Other reductions are due to net decreases in operating costs
on both operated and non-operated properties.
Real Estate expenses during the second quarter of 2009 were approximately
$49,000 compared to approximately $77,000 for the same period in 2008, a
decrease of $28,000 or 36%. This decrease was a direct result of the Company
negotiating a new fixed rate contract for the building's electricity beginning
in November of 2008. Electricity cost for the second quarter of 2009 was
$24,000 compared to $45,000 for the same period in 2008, a decrease of $21,000
or 47%.
Depreciation, depletion, and amortization for the second quarter of 2009 was
$325,000 as compared to $187,000 for the same period in 2008, an increase of
$138,000, or 74%. The company re-evaluated its proved oil and gas reserve
quantities as of December 31, 2008, and increased its depletion rate for 2008
to 8.520% of the total capitalized cost of oil and gas properties (the "full
cost pot"), as compared to a rate of 5.883% used at December 31, 2007 and the
first three quarters in 2008. In order to estimate the depletion for 2009
during the year, the Company has estimated an increase in the rate for 2009 of
approx 0.95% from 8.52% to 9.47%. This increase along with an increase in the
full cost pot from approximately $10,566,000 at the end of the second quarter
of 2008, to approximately $12,089,000 at the end of the second quarter of 2009,
has caused the increase for the second quarter of both years.
General and administrative costs for the second quarter of 2009 were $831,000
compared to $763,000 for the same period in 2008, an increase of $68,000 or 9%.
Personnel costs and benefits accounted for approximately $684,000 of the total
general and administrative cost in the second quarter of 2009 compared to
approximately $548,000 for the same period in 2008, an increase of
approximately $136,000 or 25%. This increase was offset by a reduction in the
management fee payable of $60,000. A portion of the increase in salary and
benefits was due to personnel added to the Company's payroll as the result of
the termination of the Management Services Contract between the Company and
Giant Energy Corp on September 30, 2008. Effective October 1, 2008, Chris
Mazzini and Michelle Mazzini, President and Vice President of the Company
respectively, became employees of Spindletop Oil and Gas Co.
Financial Condition and Liquidity
The Company's operating capital needs, as well as its capital spending program
are generally funded from cash flow generated by operations. Because future
cash flow is subject to a number of variables, such as the level of production
and the sales price of oil and natural gas, the Company can provide no
assurance that its operations will provide cash sufficient to maintain current
levels of capital spending. Accordingly, the Company may be required to seek
additional financing from third parties in order to fund its exploration and
development programs.
- 13 -
Item 4. - Controls and Procedures
(a) As of the end of the period covered by this report, Spindletop Oil & Gas
Co. carried out an evaluation, under the supervision and with the participation
of the Company's management, including the Company's Principal Executive
Officer and Principal Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15 and 15d-15. Based upon the evaluation, the Company's
Principal Executive Officer and Principal Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of the end of
the period covered by the report.
(b) There have been no changes in the Company's internal controls over
financial reporting during the quarter ended June 30, 2009 that have materially
affected, or are reasonably likely to materially affect the Company's internal
controls over financial reporting.
Part II - Other Information
Item 5 - Other Information
During the fourth quarter of 2008, the Poston #1 well, located on our Godley
North Block in Johnson County, Texas was drilled to a depth of 6,754 ft. and
cased. This well has been perforated and is awaiting a pipeline connection.
The Company owns a 91% working interest in this well.
- 14 -
Item 6. - Exhibits
The following exhibits are filed herewith or incorporated by reference as
indicated.
Exhibit
Designation Exhibit Description
3.1 (a) Amended Articles of Incorporation of Spindletop Oil & Gas Co.
(Incorporated by reference to Exhibit 3.1 to the General Form
for Registration of Securities on Form 10, filed with the
Commission on August 14, 1990)
3.2 Bylaws of Spindletop Oil & Gas Co. (Incorporated by
Reference to Exhibit 3.2 to the General Form for Registration
Of Securities on Form 10, filed with the Commission on
August 14, 1990)
31.1 * Certification pursuant to Rules 13a-14 and 15d under the
Securities Exchange Act of 1934.
31.2 * Certification pursuant to Rules 13a-14 and 15d under the
Securities Exchange Act of 1934.
32.1 * Certification pursuant to 18 U.S.C. Section 1350.
____________________________
* filed herewith
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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.
SPINDLETOP OIL & GAS CO.
(Registrant)
Date: August 14, 2009 By: /s/ Chris G. Mazzini
Chris G. Mazzini
President, Chief Executive Officer
Date: August 14, 2009 By: /s/ Michelle H. Mazzini
Michelle H. Mazzini
Vice President, Secretary
Date: August 14, 2009 By: /s/ Robert E. Corbin
Robert E. Corbin
Controller, Principal Financial Officer
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Exhibit 31.1
CERTIFICATION
I, Chris G. Mazzini, certify that:
1. I have reviewed this report on Form 10-Q of Spindletop Oil & Gas Co.;
2. Based on my knowledge, this 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 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 report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13-15(e) and 15d-15e) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the
registrant and have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles; and
(c) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the controls and procedures as of the end of
the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
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5. The registrant's other certifying officers and I have disclosed, based
On our most recent evaluation of internal control over financial reporting,
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 and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; 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.
Dated: August 14, 2009
/s/ Chris G. Mazzini
CHRIS G. MAZZINI
President, Chief Executive Officer
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Exhibit 31.2
CERTIFICATION
I, Robert E. Corbin, certify that:
1. I have reviewed this report on Form 10-Q of Spindletop Oil & Gas Co.;
2. Based on my knowledge, this 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 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 report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13-15(e) and 15d-15e) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the
registrant and have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles; and
(c) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the controls and procedures as of the end of
the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
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5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; 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.
Dated: August 14, 2009.
/s/ Robert E. Corbin
ROBERT E. CORBIN
Controller, Principal Financial Officer
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Exhibit 32.1
Officers' Section 1350 Certifications
The undersigned officers of Spindletop Oil & Gas Co., a Texas corporation (the
"Company"), hereby certify that (i) the Company's Report on Form 10-Q for the
quarter ended June 30, 2009 fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934, and (ii) the information
contained in the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2009 fairly presents, in all material respects, the financial
condition and results of operations of the Company, at and for the periods
indicated.
Dated: August 14, 2009
/s/ Chris G. Mazzini
CHRIS G. MAZZINI
President, Chief Executive Officer
/s/ Robert E. Corbin
ROBERT E. CORBIN
Controller, Principal Financial Officer
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