UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
-----------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ____________________
Commission file number 1-5507
MAGELLAN PETROLEUM CORPORATION
................................................................................
(Exact name of registrant as specified in its charter)
DELAWARE 06-0842255
................................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
149 Durham Road, Madison, Connecticut 06443
................................................................................
(Address of principal executive offices) (Zip Code)
203-245-7664
................................................................................
(Registrant's telephone number, including area code)
................................................................................
(Former name, former address and former fiscal year,
if changed since last report)
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
l934 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.
|X| Yes |_| No
The number of shares outstanding of the issuer's single class of common
stock as of May 4, 1998 was 24,982,495.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MAGELLAN PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)
March 31, June 30,
1998 1997
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $14,408,792 $12,942,862
Accounts receivable 1,451,070 1,356,912
U.S. Government securities - 2,211,205
Reimbursable development costs 333,449 260,553
Inventories 189,415 250,069
----------- -----------
Total current assets 16,382,726 17,021,601
----------- -----------
Property and equipment:
Oil and gas properties (successful efforts method) 41,395,422 45,891,237
Land, buildings and equipment 1,705,054 1,837,114
Field equipment 1,507,652 1,598,387
----------- -----------
44,608,128 49,326,738
Less accumulated depletion, depreciation and amortization (19,716,212) (20,704,121)
----------- -----------
Net property and equipment 24,891,916 28,622,617
----------- -----------
Other assets 514,460 585,889
----------- -----------
$41,789,102 $46,230,107
=========== ===========
LIABILITIES, MINORITY INTERESTS
AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,160,518 $ 1,869,818
Accrued liabilities 766,662 933,256
----------- -----------
Total current liabilities 1,927,180 2,803,074
----------- -----------
Long term liabilities:
Deferred income taxes 7,189,876 7,087,224
Reserve for future site restoration costs 670,338 650,311
----------- -----------
7,860,214 7,737,535
----------- -----------
Minority interests 13,885,490 16,146,564
----------- -----------
Commitments (Note 2) - -
Stockholders' equity:
Common stock, par value $.01 per share:
Authorized 50,000,000 shares
Outstanding 24,982,495 and 24,851,245 shares, respectively 249,825 248,512
Capital in excess of par value 43,532,238 43,410,176
----------- -----------
43,782,063 43,658,688
Accumulated deficit (19,677,383) (20,386,549)
Foreign currency translation adjustments (5,988,462) (3,729,205)
----------- -----------
Total stockholders' equity 18,116,218 19,542,934
----------- -----------
$41,789,102 $46,230,107
=========== ===========
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MAGELLAN PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three months ended Nine months ended
March 31, March 31,
1998 1997 1998 1997
(Restated) (Restated)
Revenues:
Oil sales $ 851,429 $ 1,692,263 $ 3,224,357 $ 5,328,738
Gas sales 2,425,972 2,925,565 8,174,007 8,636,923
Other production related revenues 347,489 364,631 911,753 1,134,186
Interest income 195,481 193,464 559,358 644,043
Loss on sale of assets (636,203) - (636,203) -
----------- ----------- ----------- -----------
3,184,168 5,175,923 12,233,272 15,743,890
----------- ----------- ----------- -----------
Costs and expenses:
Production costs 951,573 1,251,602 2,756,787 3,647,038
Exploration and dry hole costs 265,415 2,655,000 2,049,721 2,655,000
Salaries and employee benefits 366,296 398,609 1,237,233 1,337,026
Depletion, depreciation and amortization 504,437 947,925 1,620,380 2,762,024
Auditing, accounting and legal services 113,178 87,819 391,204 339,242
Shareholder communications 22,228 25,434 153,928 159,619
Other administrative expenses 211,487 302,572 772,569 672,239
Bad debts - - 239,201 -
-
Interest 7,058 9,381 21,700 40,216
----------- ----------- ----------- -----------
2,441,672 5,678,342 9,242,723 11,612,404
----------- ----------- ----------- -----------
Income (loss) before income taxes and minority 742,496 (502,419) 2,990,549 4,131,486
interests
Income tax provision (credit) 245,655 (94,670) 1,017,364 1,900,292
----------- ----------- ----------- -----------
Income (loss) before minority interests 496,841 (407,749) 1,973,185 2,231,194
Minority interests 323,846 (10,330) 1,264,019 1,645,971
----------- ----------- ----------- -----------
Net income (loss) $ 172,995 $ (397,419) $ 709,166 $ 585,223
=========== =========== =========== ===========
Average number of shares outstanding
Basic 24,982,495 24,851,245 24,939,370 24,761,695
========== ========== ========== ==========
Diluted
Net income (loss) per share
Basic and Diluted EPS $.01 $(.02) $.03 $.02
==== ====== ==== ====
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
Capital in Foreign currency
Number Common excess of translation
of shares stock par value Deficit adjustments Total
June 30, 1997 24,851,245 $248,512 $43,410,176 $(20,386,549) $(3,729,205) $19,542,934
Net income - - - 709,166 - 709,166
Currency translation
adjustments - - - - (2,259,257) (2,259,257)
Exercise of stock options 131,250 1,313 122,062 123,375
---------- -------- ----------- ------------ ------------ -----------
- -
March 31, 1998 24,982,495 $249,825 $43,532,238 $(19,677,383) $(5,988,462) $18,116,218
========== ======== =========== ============= ============ ===========
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MAGELLAN PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Nine months ended
March 31,
1998 1997
(Restated)
Operating Activities:
Net income $ 709,166 $ 585,223
Adjustments to reconcile net income
to net cash provided by operating activities:
Exploratory and dry hole costs 844,156 2,655,000
Depletion, depreciation and amortization 1,815,388 2,762,024
Deferred income taxes 102,652 841,742
Minority interests 1,264,019 1,645,971
Increase (decrease) in operating assets and liabilities:
Accounts receivable 205,950 829,802
Reimbursable development costs 5,807 104,815
Other assets 118,884 (16,333)
Inventories 217,222 78,613
Income tax payable - (1,977,044)
Accounts payable and accrued liabilities (254,533) (156,971)
----------- -----------
Net cash provided by operating activities 5,028,711 7,352,842
----------- -----------
Investing Activities:
Sale (purchase) of U.S. Government securities 2,211,205 (946,946)
Net additions to property and equipment (2,589,979) (4,145,561)
----------- -----------
Net cash used in investing activities (378,774) (5,092,507)
----------- -----------
Financing Activities:
Dividends to MPAL minority shareholders (1,506,103) (1,778,622)
Exercise of MPC stock options 123,375 166,875
----------- -----------
Net cash used in financing activities (1,382,728) (1,611,747)
----------- -----------
Effect of exchange rate changes on cash
and cash equivalents (1,801,279) 275,803
----------- -----------
Net increase in cash and cash equivalents 1,465,930 924,391
Cash and cash equivalents at
beginning of year 12,942,862 11,278,957
----------- -----------
Cash and cash equivalents at
end of period $14,408,792 $12,203,348
=========== ===========
PART I - FINANCIAL INFORMATION
MAGELLAN PETROLEUM CORPORATION
March 31, 1998
Item 1. Financial Statements - Notes
The information for the three and nine month periods ended March 31,
1998 and 1997, is unaudited but includes all adjustments which the Company
considers necessary for a fair presentation of the results of operations for
those periods. All adjustments are of a normal recurring nature. The
consolidated financial statements include the Company's 50.7% owned subsidiary,
Magellan Petroleum Australia Limited ("MPAL").
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in
nature, are intended to be, and are hereby identified as "forward looking
statements" for purposes of the "Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995. The Company cautions readers that
forward looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in the
forward looking statements.
During fiscal 1997, the Company adopted the successful efforts method
of accounting for its oil and gas operations; therefore, the results of
operations may vary materially from quarter to quarter. An active exploration
program may result in greater exploration and dry holes costs. Under this
method, the cost of drilling a dry hole is written off immediately. The Company
had previously followed the full cost method of accounting whereby all of its
exploratory and dry holes costs had been capitalized by country. These costs had
been amortized over a period of years through the depletion deduction.
If the worldwide decrease in the price of crude oil and the decrease in
the value of the Australian dollar continues, the Company's future earnings will
most likely be adversely impacted. At May 8, 1998, the Australian dollar was
equal to U.S. $.6346 as compared to U.S. $.6619 at March 31, 1998.
Liquidity and Capital Resources
Consolidated
At March 31, 1998, the Company on a consolidated basis had
approximately $14.4 million of cash and securities.
A summary of the major changes in cash and cash equivalents during the
nine month period ended March 31, 1998 is as follows:
Cash and cash equivalents at beginning of period $12,943,000
Sale of U.S. Government securities 2,211,000
Cash provided by operations 5,029,000
Exercise of stock options 123,000
Dividends paid to MPAL minority shareholders (1,506,000)
Net additions to property and equipment (2,590,000)
Effect of exchange on cash and cash equivalents (1,801,000)
-----------
Cash and cash equivalents at end of period $14,409,000
===========
PART I - FINANCIAL INFORMATION
MAGELLAN PETROLEUM CORPORATION
March 31, 1998
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
As to the Company (unconsolidated)
At March 31, 1998, Magellan Petroleum Corporation ("MPC"), on an
unconsolidated basis, had working capital of approximately $4 million. MPC's
normal annual operating budget is approximately $700,000 and its current cash
position and its future dividends from MPAL should be adequate to meet its
current cash requirements. During fiscal 1998, MPC has budgeted approximately
$400,000 for oil and gas exploration and has spent or committed approximately
$170,000 through March 31, 1998. MPC has in the past invested and may in the
future invest substantial portions of its available funds to maintain its
majority interest in MPAL.
During September 1997, MPC received a dividend of $1,546,000 from MPAL
which was added to MPC's working capital.
As to MPAL
At March 31, 1998, MPAL had working capital of approximately $10.5
million. MPAL has budgeted approximately $4.7 million for exploration in fiscal
1998 and spent approximately $2 million through March 31, 1998. MPAL expects to
fund its exploration and development costs through its cash flow from Australian
operations, and, if necessary, any additional requirements from its A.$10
million bank line of credit.
Results of Operations
Three month period ended March 31, 1998 vs. March 31, 1997.
The Company had consolidated net income of $172,995 for the three month
period ended March 31, 1998 compared to a net loss of $397,419 for the
comparable 1997 period. The components of consolidated net income (loss) for the
comparable periods were as follows:
Three month period ended
March 31,
1998 1997
MPC unconsolidated pretax loss $(159,491) $(386,796)
Share of MPAL pretax income (loss) 456,931 (59,960)
Share of MPAL income tax provision (124,445) 49,337
-------- ---------
Consolidated net income (loss) $172,995 $(397,419)
======== =========
Net income (loss) per share $.01 $(.02)
==== ======
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Revenues
Oil sales decreased by 50% in the current quarter to $851,000 from
$1,692,000 in 1997 because of a 26% decrease in oil prices, a 12% decrease in
the number of units sold and the 14% Australian foreign exchange rate decrease
as discussed below. Oil sales are expected to continue to decline unless
additional development wells are drilled to maintain production levels. MPAL is
dependent on the operator (65% control) to maintain field production and
initiate new drilling. Oil unit sales in barrels ("bbls") and the average price
per barrel sold during the periods indicated were as follows:
Three month period ended March 31,
1998 Sales 1997 Sales
---------------------- ----------------------
Average price Average price
bbls per bbl bbls per bbl
Australia-Mereenie 72,359 A.$21.57 82,490 A.$29.25
Gas sales decreased 17% to $2,426,000 in 1998 from $2,926,000 in 1997
because of the 14% Australian foreign exchange rate decrease as discussed below
and the 5% decrease in the volumes of gas sold as shown below. Total gas volumes
are expected to decline slightly in the short term because of the loss of the
Mt. Todd gold mine contract. The volumes in billion cubic feet ("bcf"), (before
deducting royalties) and the average price of gas per thousand cubic feet
("mcf") sold during the periods indicated were as follows:
Three month period ended March 31,
1998 Sales 1997 Sales
---------------------- ----------------------
Average price Average price
bcf per mcf bcf per mcf
(A.$) (A.$)
Australia:
Palm Valley
Alice Springs contract .301 2.98 .296 2.95
Darwin contract .541 2.02 .755 2.03
Mereenie:
Darwin contact .567 2.05 .392 1.81
Other .287 2.68 .350 2.79
----- -----
Total 1.696 1.793
===== =====
PART I - FINANCIAL INFORMATION
MAGELLAN PETROLEUM CORPORATION
March 31, 1998
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Cont'd)
Other production related revenues decreased 5% to $347,000 in 1998
compared to $364,000 in 1997 primarily because of the 14% Australian foreign
exchange rate decrease as discussed below.
Interest increased 1% in 1998 from $193,000 in 1997 to $195,000 in
1998. Although additional funds were available for investment, substantially
lower interest rates and the 14% Australian foreign exchange rate decrease as
discussed below offset the increase.
Loss on sale of assets. During March 1998, MPAL agreed to sell its
15.625% interest in ATP 378 P Queensland, Australia to its partner, Santos
Limited, for approximately $232,000. The $636,000 difference between the
carrying costs of $868,000 and the sales price is included in loss on the sale
of assets.
Costs and Expenses
Production costs decreased 24% in 1998 to $952,000 from $1,252,000 in
1997. The decrease relates to a decrease in costs at Mereenie and Palm Valley
and the 14% Australian foreign exchange rate decrease as discussed below.
Exploration and dry hole costs totaled $265,000 in 1998 which is the
cost of general exploration projects during the period compared to the
$2,655,000 amount during the 1997 period which included the abandonment costs of
the Baca County, Colorado project.
Depreciation, depletion and amortization decreased 47% in 1998 to
$504,000 from $948,000 in 1997. The decrease reflects the decrease in the number
of units sold, the increase in gas reserves used to calculate depletion and the
14% Australian foreign exchange rate decrease as discussed below.
Auditing, accounting and legal services increased 29% in 1998 to
$113,000 from $88,000 in 1997 because of increased Company operations and the
difference in quarterly periods when certain recurring services were performed.
Other administrative expenses decreased 30% from $303,000 in 1997 to
$211,000 in 1998 because there was an increase in the amount of overhead
chargeable to the Company's joint venture partners and a decrease in consulting
and insurance costs during the 1998 period.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Income Taxes
Income tax expense increased from a credit of $95,000 in 1997 to a tax
provision of $246,000 in 1998. The effective income tax rate for 1998 was 33%
compared to a credit of 18% in 1997 when the costs of the Baca County, Colorado
project were written off. The statutory income tax rate in Australia is 36%. The
components of tax income expense between MPC and MPAL were as follows:
1998 1997
-------- ---------
MPC $ - $ -
MPAL 324,000 (95,000)
-------- ---------
Consolidated $324,000 $(95,000)
======== =========
Exchange Effect
The value of the Australian dollar relative to the U.S. dollar
increased to $.6619 at March 31, 1998 compared to a value of $.6503 at December
31, 1997. This resulted in a $192,000 credit to the foreign currency translation
adjustments account for the three month period ended March 31, 1998. The average
exchange rate used to translate MPAL's operations in Australia was $.6669 for
the quarter ended March 31, 1998, which is a 14% decrease compared to the $.7784
rate for the quarter ended March 31, 1997.
Nine month period ended March 31, 1998 vs. March 31, 1997.
The Company had consolidated net income of $709,166 for the nine month
period ended March 31, 1998 compared to net income of $585,223 for the
comparable 1997 period. The components of consolidated net income for the
comparable periods were as follows:
Nine month period ended
March 31,
1998 1997
------------ ------------
MPC unconsolidated pretax loss $ (587,576) $ (828,527)
MPC income tax (1,000) (276,117)
Share of MPAL pretax income 1,812,614 2,511,266
Share of MPAL income tax provision (514,872) (821,399)
----------- -----------
Consolidated net income $ 709,166 $ 585,223
=========== ===========
Net income per share $.03 $.02
==== ====
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Revenues
Oil sales decreased by 39% in the current period to $3,224,000 from
$5,329,000 in 1997 because of a 10% decrease in oil prices, a 22% decrease in
the number of units sold and the 11% Australian foreign exchange rate decrease
as discussed below. Oil sales are expected to continue to decline unless
additional development wells are drilled to maintain production levels. MPAL is
dependent on the operator (65% control) to maintain field production. Oil unit
sales in barrels ("bbls") and the average price per barrel sold during the
periods indicated were as follows:
Nine month period ended March 31,
1998 Sales 1997 Sales
---------------------- ----------------------
Average price Average price
bbls per bbl bbls per bbl
Australia-Mereenie 213,089 A.$25.31 272,000 A.$28.18
Gas sales decreased 5% to $8,174,000 in 1998 from $8,637,000 in 1997.
Although there was a 5% increase in the volumes of gas sold, the increase was
offset by the 11% Australian foreign exchange rate decrease as discussed below.
Total gas volumes are expected to decline slightly in the short term because of
the loss of the Mt. Todd gold mine contract. The volumes in billion cubic feet
("bcf"), (before deducting royalties) and the average price of gas per thousand
cubic feet ("mcf") sold during the periods indicated were as follows:
Nine month period ended March 31,
1998 Sales 1997 Sales
---------------------- ----------------------
Average price Average price
bcf per mcf bcf per mcf
(A.$) (A.$)
Australia:
Palm Valley
Alice Springs contract .892 2.95 .813 2.95
Darwin contract 1.761 2.02 1.767 2.02
Mereenie:
Darwin contact 1.604 2.01 1.541 2.02
Other 1.130 2.76 .987 2.74
----- ----
Total 5.387 5.108
===== =====
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Cont'd)
Other production related revenues decreased 20% to $912,000 in 1998
compared to $1,134,000 in 1997 partially because of the 11% Australian foreign
exchange rate decrease as discussed below. MPAL's share of pipeline tariffs also
decreased during the 1998 period because gas sales to the Mt. Todd gold mine
were terminated by the bankruptcy of the operator of the mine.
Interest decreased 13% in 1998. The decrease from $644,000 in 1997 to
$559,000 in 1998 resulted from the combination of lower interest rates, and the
11% Australian foreign exchange rate decrease as discussed below.
Loss on sale of assets. During March 1998, MPAL agreed to sell its
15.625% interest in ATP 378 P Queensland, Australia to its partner, Santos
Limited, for approximately $232,000. The $636,000 difference between the
carrying costs of $868,000 and the sales price is included in loss on the sale
of assets.
Costs and Expenses
Production costs decreased 24% in 1998 to $2,757,000 from $3,647,000 in
1997. The decrease relates to a decrease in costs at Mereenie and Palm Valley
and the 11% Australian foreign exchange rate decreased as discussed below.
Exploration and dry hole costs totaled $2,050,000 in 1998 which is
primarily the $1,519,000 cost of drilling the Schilling-1 well offshore Western
Australia which was plugged and abandoned during the first quarter of the fiscal
year and the cost of general exploration projects ($531,000). The 1997 amount of
$2,655,000 included the abandonment costs of the Baca County, Colorado project.
Depreciation, depletion and amortization decreased 41% in 1998 to
$1,620,000 from $2,762,000 in 1997. The decrease reflects the decrease in the
number of units sold and the increase in gas reserves used to calculate
depletion and the 11% Australian foreign exchange rate decrease as discussed
below.
Auditing, accounting and legal services increased 15% in 1998 to
$391,000 from $339,000 in 1997. The 1997 period included a credit of $67,000 for
certain legal costs recovered by MPAL in settlement of a 1994 dispute. Without
the nonrecurring credit, audit, accounting and legal services would have
decreased $40,000 during the 1998 period.
Other administrative expenses increased 15% from $672,000 in 1997 to
$773,000 in 1998 because there was a decrease in the amount of overhead
chargeable to the Company's joint venture partners during the 1998 period.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Income Taxes
Income tax expense decreased from $1,900,000 in 1997 to $1,017,000 in
1998. The effective income tax rate for 1998 was 34% compared to 46% in 1997.
The statutory income tax rate in Australia is 36%. The difference in the
effective income tax rates during the periods is because there was no Australian
withholding tax on MPC's 1998 dividend from MPAL. The components of tax income
expense between MPC and MPAL were as follows:
1998 1997
---------- ----------
MPC $ 1,000 $ 276,000
MPAL 1,016,000 1,624,000
---------- ----------
Consolidated $1,017,000 $1,900,000
========== ==========
Exchange Effect
The value of the Australian dollar relative to the U.S. dollar
decreased to $.6619 at March 31, 1998 compared to a value of $.7538 at June 30,
1997. This resulted in a $2,259,000 charge to the foreign currency translation
adjustments account for the nine month period ended March 31, 1998. The 12%
decrease in the value of the Australian dollar decreased the reported asset and
liability amounts in the balance at March 31, 1998 from the June 30, 1997
amounts. The average exchange rate used to translate MPAL's operations in
Australia was $.6982 for the period ended March 31, 1998, which is a 11%
decrease compared to the $.7874 rate for the period ended March 31, 1997.
PART II - OTHER INFORMATION
MAGELLAN PETROLEUM CORPORATION
March 31, 1998
Item 5. Other Information.
On March 16, 1998, MPC (2 1/2%), MPAL (20%) and the other joint
venture participants entered into a new Production Sharing Agreement ("PSA")
with the Government of Belize. The new PSA (Southern Offshore Block PSA)
combines the blocks previously included in the Gladden PSA and the Block 13 PSA,
and totals approximately 893,000 acres. The work obligations of the new PSA are
as follows:
Year Amount
Year 1 $ 100,000
Year 2 300,000
Year 3 3,000,000
Year 4 150,000
Participants Interest (%)
Belize Natural Resources, Ltd. 18
Dover Belize, Inc. 50
Magellan Petroleum (Belize) Limited 20
Mountain States Petroleum Corporation 4 1/2
Barringer Patents, Inc. 3
Magellan Petroleum Corporation 2 1/2
Mallon Production Company 2
During April 1998, MPAL acquired a 5% interest in Exploration Permit
WA-199-P in the Bonaparte Basin in the Timor Sea offshore Western Australia.
MPAL will earn its interest in the permit by funding 10% of the cost of drilling
the Kittiwake-1 well which is estimated to cost MPAL A.$1.1 million (U.S.
$700,000). The Kittiwake well has been drilled to its projected total depth
without encountering any commercial hydrocarbons. The cost of the well will be
written off in the quarter ended June 30, 1998.
During April 1998, MPC agreed in principle to acquire a 20% interest
in a heavy oil recovery project in Tapia Canyon, California. The field is
estimated to have approximately 12 million barrels of oil in place with only 13%
of the oil recovered to date. The initial purchase price for a 90% (75% APO)
interest in the project is $200,000 (Company share 20% - $40,000). There is also
a commitment to spend $600,000 to perform remedial work on the field and to
complete a pilot stream flood program during the first year of the project
(Company share $120,000).
Item 6. Exhibits and Reports on Form 8-K
None.
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:
MAGELLAN PETROLEUM CORPORATION
Registrant
Date: May 12, 1998 By /s/ James R. Joyce
--------------------------------------
James R. Joyce, President and
Chief Financial and Accounting Officer