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 December 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 February 4, 1999 was 25,032,495.
MAGELLAN PETROLEUM CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31, June 30,
1998 1998
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $10,156,321 $12,436,297
Accounts receivable 1,130,297 567,175
Marketable securities 2,050,630 1,265,495
Reimbursable development costs 270,845 191,266
Inventories 172,621 218,359
Other assets 241,748 296,933
----------- -----------
Total current assets 14,022,462 14,975,525
----------- -----------
Marketable securities 735,000 1,201,890
----------- -----------
Property and equipment:
Oil and gas properties (successful efforts method) 40,018,892 39,196,101
Land, buildings and equipment 1,683,701 1,510,666
Field equipment 1,252,116 1,262,464
----------- -----------
Total property and equipment 42,954,709 41,969,231
Less accumulated depletion, depreciation and amortization (19,855,532) (18,949,917)
----------- -----------
Net property and equipment 23,099,177 23,019,314
----------- -----------
Other assets 575,577 582,251
----------- -----------
Total assets $38,432,216 $39,778,980
=========== ===========
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,206,231 $ 1,918,880
Accrued liabilities 713,816 806,150
----------- -----------
Total current liabilities 1,920,047 2,725,030
----------- -----------
Long term liabilities:
Deferred income taxes 5,994,791 5,854,261
Reserve for future site restoration costs 712,723 657,288
----------- -----------
Total long term liabilities 6,707,514 6,511,549
----------- -----------
Minority interests 12,773,035 13,123,313
----------- -----------
Stockholders' equity:
Common stock, par value $.01 per share:
Authorized 50,000,000 shares
Outstanding 25,032,495 and 24,982,495 shares, respectively 250,325 249,825
Capital in excess of par value 43,572,363 43,532,238
----------- -----------
Total capital 43,822,688 43,782,063
Accumulated deficit (19,465,156) (19,350,036)
Accumulated other comprehensive loss (7,325,912) (7,012,939)
----------- -----------
Total stockholders' equity 17,031,620 17,419,088
----------- -----------
Total liabilities, minority interests and stockholders' equity $38,432,216 $39,778,980
=========== ===========
MAGELLAN PETROLEUM CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three months ended Six months ended
December 31, December 31,
1998 1997 1998 1997
---------- ---------- ---------- ----------
Revenues:
Oil sales $ 666,132 $1,229,381 $1,356,302 $2,372,928
Gas sales 2,565,181 2,864,909 4,765,022 5,748,035
Other production related revenues 167,840 235,647 298,198 564,264
Interest income 170,728 167,355 350,539 363,877
---------- ---------- ---------- ----------
3,569,881 4,497,292 6,770,061 9,049,104
---------- ---------- ---------- ----------
Costs and expenses:
Production costs 1,025,342 871,305 2,101,235 1,805,214
Exploration and dry hole costs 315,704 181,260 1,374,130 1,784,306
Salaries and employee benefits 375,679 465,839 723,332 870,937
Depletion, depreciation and amortization 535,426 595,274 1,055,097 1,115,943
Auditing, accounting and legal services 171,534 98,216 352,407 278,026
Shareholder communications 107,413 112,085 141,377 131,700
Other administrative expenses 250,260 294,880 431,880 575,724
Bad debts - 239,201 - 239,201
---------- ---------- ---------- ----------
2,781,358 2,858,060 6,179,458 6,801,051
---------- ---------- ---------- ----------
Income before income taxes and minority interests 788,523 1,639,232 590,603 2,248,053
Income tax provision 372,386 520,420 319,551 771,709
---------- ---------- ---------- ----------
Income before minority interests 416,137 1,118,812 271,052 1,476,344
Minority interests 357,955 652,504 386,172 940,173
---------- ---------- ---------- ----------
Net income (loss) $ 58,182 $ 466,308 $ (115,120) $ 536,171
========== ========== =========== ==========
Average number of shares outstanding
Basic 25,032,495 24,973,120 25,025,352 24,920,888
========== ========== ========== ==========
Diluted 25,128,482 25,257,495 25,121,339 25,257,495
========== ========== ========== ==========
Net income per share
Basic and Diluted EPS $ - $.02 $ - $.02
==== ==== ==== ====
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
Accumulated
Capital in Other Comprehensive
Number Common excess of Accumulated Comprehensive income
of shares stock par value Deficit loss Total (loss)
---------- -------- ----------- ------------ ------------- ----------- --------------
June 30, 1998 24,982,495 $249,825 $43,532,238 $(19,350,036) $(7,012,939) $17,419,088 $(26,362,975)
Net income (loss) - - - (115,120) - (115,120) (115,120)
Currency translation
adjustments - - - - (312,973) (312,973) (312,973)
Exercise of stock
options 50,000 500 40,125 - - 40,625 -
---------- -------- ----------- ------------ ----------- ----------- ------------
Comprehensive
income (loss) (428,093)
-------------
December 31, 1998 25,032,495 $250,325 $43,572,363 $(19,465,156) $(7,325,912) $17,031,620 $(26,791,068)
========== ======== =========== ============= ============ =========== =============
MAGELLAN PETROLEUM CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Six months ended
December 31,
1998 1997
----------- -----------
Operating Activities:
Net (loss) income $ (115,120) $ 536,171
Adjustments to reconcile net income
to net cash provided by operating activities:
Depletion, depreciation and amortization 1,055,097 1,115,943
Deferred income taxes 140,530 (262,893)
Minority interests 386,172 940,173
Increase (decrease) in operating assets and liabilities:
Accounts receivable (345,558) (165,918)
Reimbursable development costs (17,089) (321,836)
Other assets 68,533 36,463
Inventories 98,111 145,677
Accounts payable and accrued liabilities (196,865) (441,718)
----------- -----------
Net cash provided by operating activities 1,073,811 1,582,062
----------- -----------
Investing Activities:
Purchase of marketable securities (net) (318,245) 1,334,868
Net additions to property and equipment (2,288,146) (2,015,219)
----------- -----------
Net cash used in investing activities (2,606,391) (680,351)
----------- -----------
Financing Activities:
Dividends to MPAL minority shareholders (686,567) (1,506,103)
Exercise of stock options 40,625 123,375
----------- -----------
Net cash provided in financing activities (645,942) (1,382,728)
----------- -----------
Effect of exchange rate changes on cash
and cash equivalents (101,454) (1,537,644)
----------- -----------
Net decrease in cash and cash equivalents (2,279,976) (2,018,661)
Cash and cash equivalents at beginning of year 12,436,297 12,942,862
----------- -----------
Cash and cash equivalents at
end of period $10,156,321 $10,924,201
=========== ===========
MAGELLAN PETROLEUM CORPORATION
PART I - FINANCIAL INFORMATION
December 31, 1998
Item 1. Financial Statements - Notes
The information for the six month period ended December 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.
The Company follows 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.
As of July 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities and foreign currency translation adjustments to be
included in other comprehensive income. Prior to the adoption of Statement 130,
these items were reported separately in stockholders' equity. Prior year
financial statements have been reclassified to conform to the requirements of
Statement 130.
The Company has assessed its Year 2000 readiness and believes that it
is presently compliant. The cost to implement this plan was approximately
$120,000 and is not considered material and would have been incurred in the
normal course of equipment replacement. The Year 2000 change should have no
material impact on the Company's internal operations or financial results.
However, the Company will be dependent on its suppliers, partners and customers
to make their systems Year 2000 compliant.
PART I - FINANCIAL INFORMATION
MAGELLAN PETROLEUM CORPORATION
December 31, 1998
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Total comprehensive loss during the three and six month periods ended
December 31, 1998 and 1997 were as follows:
Three months ended Six months ended
December 31, December 31,
1998 1997 1998 1997
---------- ------------ ---------- ------------
Net income (loss) $ 58,182 $ 466,308 $(115,120) $ 536,171
Currency translation adjustments 391,338 (3,348,320) (312,973) (2,450,830)
-------- ------------ ---------- ------------
Total comprehensive income (loss) $449,520 $(2,882,012) $(428,093) $(1,914,659)
======== ============ ========== ============
Liquidity and Capital Resources
Consolidated
At December 31, 1998, the Company on a consolidated basis had
approximately $12,942,000 in cash and securities.
A summary of the major changes in cash and cash equivalents during the
period is as follows:
Cash and cash equivalents at beginning of period $12,436,000
Cash provided by operations 1,074,000
Net additions to property and equipment (2,288,000)
Purchase of marketable securities (318,000)
Dividend to MPAL minority shareholders (687,000)
Other (61,000)
-----------
Cash and cash equivalents at end of period $10,156,000
===========
As to MPC
At December 31, 1998, Magellan Petroleum Corporation ("MPC"), on an
unconsolidated basis, had working capital of approximately $4,020,000. MPC's
annual operating budget is approximately $700,000 and its current cash position
and annual MPAL dividend should be adequate to meet its current cash
requirements. During fiscal 1999, MPC has budgeted approximately $300,000 for
oil and gas exploration compared to the $111,000 expended during fiscal 1998.
MPC has in the past invested and may in the future invest substantial portions
of its cash to maintain its majority interest in its subsidiary company,
Magellan Petroleum Australia Limited ("MPAL").
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
During November 1998, MPAL paid a dividend of A.$.05 per share. MPC's
share of this dividend after withholding taxes was approximately $600,000, which
was added to its working capital.
As to MPAL
At December 31, 1998, MPAL had working capital of approximately
$8,818,000. MPAL has budgeted approximately $3.6 million for exploration in
fiscal 1999 as compared to the $3.3 million expended during fiscal 1998. The
current composition of MPAL's oil and gas reserves are such that the Company's
future revenues in the long term are expected to be derived from the sale of gas
in Australia.
Results of Operations
Three month period ended December 31, 1998 vs. December 31, 1997.
The Company had consolidated net income of $58,182 for the three month
period ended December 31, 1998 compared to net income of $466,308 for the
comparable 1997 period. The components of consolidated net income for the
comparable periods were as follows:
Three month period ended
December 31,
1998 1997
---------- ----------
MPC unconsolidated pretax loss $(203,592) $(203,604)
MPC income tax (105,732) -
Share of MPAL pretax income 502,587 933,547
Share of MPAL income tax (provision) credit (135,081) (263,635)
--------- ---------
Consolidated net income $ 58,182 $ 466,308
========= =========
Net loss per share (basic & diluted) $ - $.02
==== ====
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Revenues
Oil sales decreased by 46% in the current quarter to $666,000 from
$1,229,000 in 1997 because of a 35% decrease in oil prices, the 10% Australian
foreign exchange rate decrease discussed below and a 12% decrease in the number
of units sold. Oil sales are expected to continue to decline unless additional
development wells are drilled to maintain production levels. Current oil prices
make additional drilling uneconomic at this time. MPAL is dependent on the
operator (65% control) of the Mereenie field to maintain production. Oil unit
sales (before deducting royalties) in barrels ("bbls") and the average price per
barrel sold during the periods indicated were as follows:
Three month period ended December 31,
1998 Sales 1997 Sales
-------------------------- --------------------------
Average price Average price
bbls per bbl bbls per bbl
Australia-Mereenie 61,518 A.$18.94 69,879 A.$29.00
Gas sales decreased 10% to $2,565,000 in 1998 from $2,865,000 in 1997
primarily because of the 10% Australian foreign exchange rate decrease discussed
below. Total gas sales increased primarily because of the 1995 Mereenie gas
contract. The volumes in billion cubic feet ("bcf") (before deducting royalties)
and the average price of gas per thousand cubic feet ("mcf") sold during the
periods indicated were as follows:
Three month period ended December 31,
1998 Sales 1997 Sales
--------------------- ---------------------
Average price Average price
bcf per mcf bcf per mcf
Australia: (A.$) (A.$)
Palm Valley
Alice Springs contract .325 2.98 .312 2.93
Darwin contract .593 2.02 .587 2.02
Mereenie:
Darwin contract .642 2.08 .583 2.03
Other .340 2.72 .415 2.76
----- -----
Total 1.900 1.897
===== =====
Other production related revenues decreased 29% to $168,000 in 1998
compared to $236,000 in 1997. The primary reason for this decrease was that
MPAL's share of gas pipeline tariffs decreased to $136,000 in 1998 compared to
$203,000 in 1997 because of a continuing dispute regarding the producers' share
of the tariffs.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Interest increased 2% to $171,000 in 1998 from $167,000 in 1997. The
increase in interest income from the additional funds available for investment
was partially offset by the 10% Australian foreign exchange rate decrease as
discussed below.
Costs and Expenses
Production costs increased 18% in 1998 to $1,025,000 from $871,000 in
1997. The increase relates to the costs at Mereenie where substantial remedial
work was performed on certain wells.
Exploration and dry hole costs totaled $316,000 in 1998 compared to
$181,000 in 1997. During the 1998 period, MPAL continued to evaluate various oil
and gas prospects more aggressively than in the 1997 period.
Auditing, accounting and legal expenses increased 75% from $98,000 in
1997 to $171,000 in 1998. The increase in the 1998 period relates to the legal
and tax advice sought in connection with an unsuccessful bid to acquire certain
oil and gas properties in Australia.
Other administrative expenses decreased 15% from $295,000 in 1997 to
$250,000 in 1998. Rent and travel expenses decreased and there was a 10%
Australian foreign exchange rate decrease as discussed below.
Income Taxes
Income tax expense decreased from $520,000 in 1997 to $372,000 in 1998
because of MPAL's reduced income. In addition, there was no Australian
withholding tax on MPC's 1997 dividend from MPAL. Generally, there is no
Australian withholding tax on dividends in any year that a corporation tax pays
income taxes. The components of tax income expense between MPC and MPAL were as
follows:
1998 1997
---- ----
MPC $106,000 $ -
MPAL 266,000 520,000
-------- --------
Consolidated tax (credit) $372,000 $520,000
======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Exchange Effect
The value of the Australian dollar relative to the U.S. dollar
increased to $.6123 at December 31, 1998 compared to a value of $.5933 at
September 30, 1998. This resulted in a $391,000 credit to the foreign currency
translation adjustments account for the three month period ended December 31,
1998. The average exchange rate used to translate MPAL's operations in Australia
was $.6240 for the quarter ended December 31, 1998, which is a 10% decrease
compared to the $.6922 rate for the quarter ended December 31, 1997.
Six month period ended December 31, 1998 vs. December 31, 1997.
The Company had a consolidated net loss of $115,120 for the six month
period ended December 31, 1998 compared to net income of $536,171 for the
comparable 1997 period. The components of consolidated net income for the
comparable periods were as follows:
Six month period ended
December 31,
1998 1997
----------- -----------
MPC unconsolidated pretax loss $ (405,863) $ (428,085)
MPC income tax (105,732) (1,000)
Share of MPAL pretax income 504,791 1,355,683
Share of MPAL income tax provision (108,316) (390,427)
----------- -----------
Consolidated net income (loss) $ (115,120) $ 536,171
=========== ==========
Net income (loss) per share (basic & diluted) $( - ) $.02
====== ====
Revenues
Oil sales decreased by 43% in the current period to $1,356,000 from
$2,373,000 in 1997 because of a 27% decrease in oil prices, an 11% decrease in
the number of units sold and the 14% Australian foreign exchange decrease as
discussed below. Oil sales are expected to continue to decline unless additional
development wells are drilled to maintain production levels. Current oil prices
make additional drilling uneconomic at this time. MPAL is dependent on the
operator (65% control) of the Mereenie field to maintain production. Oil unit
sales in barrels ("bbls") and the average price per barrel sold during the
periods indicated were as follows:
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Six month period ended December 31,
1998 Sales 1997 Sales
------------------------- -------------------------
Average price Average price
bbls per bbl bbls per bbl
Australia-Mereenie 125,807 A.$19.91 140,730 A.$27.23
Gas sales decreased 17% to $4,765,000 in 1998 from $5,748,000 in 1997
primarily because of the 14% Australian foreign exchange decrease as discussed
below and a small decrease in the volume of gas sold. Total gas volumes are
expected to continue at least at current levels in the short term. The volumes
in billion cubic feet ("bcf"), (before deducting royalties) and the average
price of gas per thousand cubic feet ("mcf") sold during the periods indicated
were as follows:
Six month period ended December 31,
1998 Sales 1997 Sales
---------------------- ----------------------
Average price Average price
bcf per mcf bcf per mcf
Australia: (A.$) (A.$)
Palm Valley
Alice Springs contract .611 2.97 .592 2.94
Darwin contract 1.315 2.02 1.220 2.02
Mereenie:
Darwin contact 1.168 2.04 1.037 1.99
Other .585 2.70 .842 2.79
---- ----
Total 3.679 3.691
===== =====
Other production related revenues decreased 47% to $298,000 in 1998
compared to $564,000 in 1997. The primary reason for this decrease was that
MPAL's share of gas pipeline tariffs decreased to $235,000 in 1998 compared to
$502,000 in 1997 because of a continuing dispute regarding the producers' share
of the tariffs.
Interest decreased 4% in 1998. The decrease from $364,000 in 1997 to
$351,000 in 1998 resulted from the combination of lower interest rates, and the
14% Australian foreign exchange decrease as discussed below which was partially
offset by additional capital available for investment.
Costs and Expenses
Production costs increased 16% in 1998 to $2,101,000 from $1,805,000 in
1997. The increase relates to the costs at Mereenie where substantial remedial
work was performed on certain wells.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Exploration and dry hole costs totaled $1,374,000 in 1998 compared to
$1,784,000 in 1997. The costs in 1998 relate primarily to the cost of drilling
the Schilling-1 well offshore Western Australia which was plugged and abandoned
during the first quarter of the fiscal year.
Depreciation, depletion and amortization decreased 5% in 1998 to
$1,055,000 from $1,116,000 in 1997. The decrease reflects the decrease in the
number of units sold and the increase in gas reserves used to calculate
depletion.
Auditing, accounting and legal services increased 27% in 1998 to
$352,000 from $278,000 in 1997. The increase in the 1998 period relates to the
legal and tax advice sought in connection with an unsuccessful bid to acquire
certain oil and gas properties in Australia.
Other administrative expenses decreased 23% from $561,000 in 1997 to
$432,000 in 1998. MPAL's rent, business taxes and travel expenses decreased
during the 1998 period. Rent expense decreased in the 1998 period because MPAL
renegotiated its Brisbane office lease. The 1997 period included a stamp duty on
the consolidation of certain properties. During the 1998 period, there was a
substantial decrease in MPAL's foreign operations which reduced the related
travel expenses.
Income Taxes
Income tax expense decreased from $772,000 in 1997 to $320,000 in
1998. The effective income tax rate for 1998 was 54% compared to 34% in 1997.
The statutory income tax rate in Australia is 36%. In addition, there was no
Australian withholding tax on MPC's 1997 dividend from MPAL. Generally, there is
no Australian withholding tax on dividends in any year that a corporation tax
pays income taxes. The components of tax income expense between MPC and MPAL
were as follows:
1998 1997
---- ----
MPC $106,000 $ 1,000
MPAL 214,000 771,000
-------- --------
Consolidated $320,000 $772,000
======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Exchange Effect
The value of the Australian dollar relative to the U.S. dollar
decreased to $.6123 at December 31, 1998 compared to a value of $.6194 at June
30, 1998. This resulted in a $313,000 charge to the foreign currency translation
adjustments account for the six month period ended December 31, 1998. The 1%
decrease in the value of the Australian dollar decreased the reported asset and
liability amounts in the balance at December 31, 1998 from the June 30, 1997
amounts. The average exchange rate used to translate MPAL's operations in
Australia was $.6114 for the six month period ended December 31, 1998, which is
a 14% decrease compared to the $.7138 rate for the period ended December 31,
1997.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company does not have any significant exposure to market risk as
the only market risk sensitive instruments are its investments in marketable
securities. At December 31, 1998, the carrying value of such investments was
approximately $12,820,000, which approximates the fair value of the securities.
Since the Company expects to hold the investments to maturity, the maturity
value should be realized. During the first half of fiscal 1999, the value of the
Australian dollar relative to the U.S. dollar decreased 1% and reduced the
reported asset amounts at December 31, 1998 from the June 30, 1998 amounts.
MAGELLAN PETROLEUM CORPORATION
PART II - OTHER INFORMATION
December 31, 1998
Item 4. Submission of Matters to a Vote of Security Holders.
(a) On December 2, 1998, the Company held its Annual General
Meeting of Stockholders for the year ended June 30, 1998.
(b) The following directors were reelected as directors of the
Company. The vote was as follows:
Shares Stockholders
For Withheld For Withheld
Dennis D. Benbow 21,379,690 940,270 2,840 201
Benjamin W. Heath 21,359,849 960,111 2,825 216
(c) The firm of Ernst & Young LLP, was appointed as the
Company's independent auditors for the year ending June 30, 1999. The vote was
as follows:
Shares Stockholders
For 21,700,093 2,878
Against 381,221 76
Abstain 238,546 87
(d) The 1998 Stock Option Plan was approved. The vote was as
follows:
Shares Stockholders
For 19,030,343 2,309
Against 2,546,025 575
Abstain 743,592 157
Item 5. Other Information.
During January 1999, MPAL was granted exploration blocks W98-2 and
W98-3 in the Eastern Browse Basin offshore Western Australia. The following
exploration program was submitted to obtain the blocks with the exploration
expenditures in years 1-3 required by accepting the permits:
Year W98-2 W98-3
1 A.$100,000 A.$180,000
2 200,000 500,000
3 200,000 200,000
Total Years 1-3 500,000 880,000
---------- ----------
4 3,500,000 3,500,000
5 250,000 250,000
6 3,500,000 3,500,000
--------- ---------
Total Years 4-6 7,250,000 7,250,000
----------- -----------
Total All Years A$7,750,000 A$8,130,000
=========== ===========
PART II - OTHER INFORMATION
MAGELLAN PETROLEUM CORPORATION
December 31, 1998
During January 1999, MPAL surrendered its 17% interest in Block D of
ATP 244P in Queensland, Australia. MPAL did not consider the project to have the
requisite technical merit for further exploration expenditures.
Mallon Oil Company (2% interest) and Mountain States Corporation (4
1/2%) have notified the Belize Southern Offshore Block PSA participants that
they will withdraw from the venture effective March 25, 1999.
During the quarter ended December 31, 1998, MPAL relinquished its 5%
interest in WA-199-P which is located in the Bonaparte Basin in the Timor Sea
offshore Western Australia.
The participants (MPC 18% interest) in the Tapia Canyon, California
heavy oil recovery project have agreed to postpone any further development work
until oil prices recover. Approximately $125,000 of the $600,000 pilot steam
flood project will have been spent by March 31, 1999.
Plans to install the proposed LPG plant in the Mereenie oil and gas
field in Australia have been suspended pending a reevaluation of the economics
of the project.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) 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: February 4, 1999 By /s/ James R. Joyce
James R. Joyce, President and
Chief Financial and Accounting Officer