Fountain Oil Announces Second Quarter Results and Progress Report.HOUSTON--(BUSINESS WIRE)--April 15, 1996--Fountain Oil Incorporated (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NMS See NetWare Management System. : GUSH) announced today the results of operations for the second quarter of fiscal 1996, which ended on February February: see month. 29, 1996. Revenue for the quarter ended February 29, 1996 amounted to $44,085, compared to $442,364 for the comparable period last year. Substantially all of the revenue for the most recent quarter is attributable to North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. oil and gas production, while a year ago all of the revenue was attributable to equipment sales and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" related to Fountain fountain, natural or artificially conveyed flow of water. In ancient Greece columnar shrines were built over springs and dedicated to deities or nymphs. In ancient Rome fountains fed by the great aqueduct system furnished water in the streets, in the villa gardens, Oil's proprietary, electrically enhanced oil recovery Enhanced Oil Recovery (EOR) is a generic term for techniques for increasing the amount of oil that can be extracted from an oil field. Using EOR, 30-60 %, or more, of the reservoir's original oil can be extracted [1] compared with 20-40% [2] technology used to stimulate production of heavy and paraffinic oil. While general and administrative expenses remained substantial in relation to revenue, they reflect the creation of an organization and infrastructure to execute the Company's strategy and manage the oil and gas projects it acquires. General and administrative expenses for the current quarter amounted to $1,289,126 compared to $1,203,848 a year earlier. The net loss for the quarter ended February 29, 1996 was $1,644,260 ($0.15 per share), compared with a loss of $1,497,747 ($0.23 per share) for the quarter ended February 28, 1995. During the second quarter of fiscal 1996, Fountain's investment in and advances to various oil and gas ventures in Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. increased by $613,505 to $3,504,392. During that quarter, the Company also completed an offering of its 8% Convertible Subordinated Debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before due December December: see month. 31, 1997. Fountain Oil issued $3,750,000 principal amount of the debentures at par and received net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $3,350,000 after commission and expenses. As of February 29, 1996, the Company had $1,724,296 in cash and cash equivalents. The Company plans to finance the net development costs of its oil and gas projects, as well as its current operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , through a combination of equity and debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and arrangements with strategic partners. Efforts are underway to arrange such financing. However, until such financing has been completed, the Company has initiated steps to minimize future cash outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. . Intergas, a Russian Russian associated in some way with Russia. Russian blue a breed of cats with short, dense, silver-tipped blue-colored coat and vivid green eyes. joint stock company ("Intergas") in which Fountain holds a 31% ownership interest, has development rights in the Maykop Maykop (mīkôp`), city (1989 pop. 149,000), capital of Adygey Republic, Krasnodar Territory, S European Russia, at the foot of the Greater Caucasus and on the Belaya River. It has machinery, lumber, and food-processing industries. gas condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. field located in the Republic of Adygea The Republic of Adygea (Russian: Респу́блика Адыге́я; Adyghe: , Russian Federation Russian Federation: see Russia. . As the field operator for Intergas, the Company last week concluded negotiations of a gas sales agreement which was signed between Intergas and Mostransgas Gas Transmission and Supply Enterprise, a Russian joint stock company ("Mostransgas"), under which Mostransgas would purchase all of Intergas' gas production from the Maykop Field for a ten year period. Under the agreement, Intergas would receive $1.03 per thousand cubic feet ($36 per thousand cubic meters Noun 1. cubic meter - a metric unit of volume or capacity equal to 1000 liters cubic metre, kiloliter, kilolitre metric capacity unit - a capacity unit defined in metric terms ) through the end of the second full calendar year after production commences, and the price for subsequent periods would be adjusted based upon then current Russian gas prices. Pricing is net for gas delivered at the field, with no additional transportation or transportation tax charges. The agreement with Mostransgas is subject to ratification The confirmation or adoption of an act that has already been performed. A principal can, for example, ratify something that has been done on his or her behalf by another individual who assumed the authority to act in the capacity of an agent. by the Intergas Board of Directors, which is expected to act on the matter in May 1996. Intergas expects also to produce condensate from the Maykop Field, and Fountain is exploring opportunities related to the sale of that condensate. The Company is presently assembling and testing in Texas two drilling rigs and related equipment that it expects to ship to Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). for use in the Maykop Field project. At February 29, 1996, Fountain had invested approximately $3,515,000 in the rigs and equipment and had advanced another $1,800,000 with regard to the rigs and equipment on behalf of one of its joint venture partners in Intergas. The Company estimates that it will have to pay another $1,500,000 to $2,100,000 on items such as outstanding accounts payables Payables Related: Accounts payable related to the rigs and equipment, shipping costs, supplies and customs taxes in order to deliver the rigs and equipment in Russia. The Company does not anticipate shipping the rigs and equipment until various matters related to the project, including financing for the project, are satisfactorily resolved. A production license for the Gorisht-Kocul Field was executed last week by the Albanian Minister of Mines and Energy and has now been forwarded to Albpetrol, the Albanian national oil company, for signature. Albpetrol is to be the Company's joint venture partner in the development of the Gorischt-Kocul Field. The joint venture agreement and license will then be submitted to the Council of Ministers of Albania Albania (ălbā`nyə), Albanian Shqipëria or Shqipnija, officially Republic of Albania, republic (2005 est. pop. 3,563,000), 11,101 sq mi (28,752 sq km), SE Europe. for approval. The Company has negotiated the principal elements of an agreement to acquire 80% of the outstanding stock of UK-RAN Oil Corporation ("UK-RAN") and is exploring the possibility of purchasing all or part of the remaining 20%. UK-RAN owns 45% of the equity of a Ukrainian joint venture formed to work over and develop the Lelyaki Field in Central Ukraine. The Company has held extensive discussions with Ukrainian officials regarding the project and the pending application for production license. Fountain expects acquisition of a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in UK-RAN and the issuance of the production license for the Lelyaki Field to be completed during the current fiscal year. A second project in the Ukraine, Boryslaw, is progressing towards license, and negotiations with Ukrnafta, the Ukrainian national oil company, regarding the joint venture to develop the Boryslaw Field are continuing. The technology division of the Company has initiated a full revision of its EEOR downhole equipment system to increase the level of reliability as required by the oil and gas industry for installation and operation. The Company intends to establish and document reliability and performance through controlled installations of the equipment and well production behavior before aggressively marketing the revised system. Fountain Oil is actively acquiring and developing a portfolio of oil and gas properties. The Company has also developed and is marketing a patented, electrically enhanced oil recovery technology used to increase the production of paraffinic and heavy oil. -0-
PART I - FINANCIAL INFORMATION
FOUNTAIN OIL INCORPORATED AND SUBSIDIARIES
Item 1. Financial Statements
Consolidated Condensed Balance Sheet
Unaudited
February 29, 1996
ASSETS
Cash and cash equivalents $ 1,724,296
Accounts receivable - affiliated entities 1,806,282
Accounts receivable, other 159,884
Inventory 17,596
Prepaid expenses 358,156
Total current assets 4,066,214
Capitalized financing costs 372,842 Property and equipment, net 4,150,813 Oil and gas properties, net, full cost method (including $235,221 unevaluated) 535,445 Investment in and advances to oil and gas ventures 3,504,392
Total Assets $ 12,629,706
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,299,442
Accrued liabilities 310,226
Note payable 69,331
Total current liabilities 1,678,999
Account payable - related party 242,927 8% Convertible subordinated debentures 3,750,000 Commitments and contingencies (Notes 2 and 11) Stockholders' Equity: Preferred stock, par value $0.10 per share, 5,000,000 shares authorized: no shares issued or outstanding --- Common stock, par value $0.10 per share, 50,000,000 shares authorized: 10,846,063 shares issued and outstanding 1,084,606 Capital in excess of par value 29,265,975 Accumulated deficit since October 31, 1988 when a deficit of $39,952,292 was eliminated (23,392,801) Total stockholders' equity 6,957,780 Total Liabilities and stockholders' equity $12,629,706
PART I - FINANCIAL INFORMATION
FOUNTAIN OIL INCORPORATED AND SUBSIDIARIES
Item 1. Financial Statements
Consolidated Condensed Statements of Operations
Unaudited Unaudited
Three Months Ended Six Months Ended
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
1996 1995 1996 1995
Operating Revenues: Power Unit rentals $ -- $ -- $1,913 $ 14,710 Equipment sales -- 338,679 -- 414,079 Consulting income 2,943 103,685 2,943 103,685 Oil & gas production 41,142 -- 75,402 --
44,085 442,364 80,258 532,474
Operating expenses: Cost of sales -- 300,788 -- 327,952 Lease operating expense 41,107 -- 55,521 -- General and administrative 1,289,126 1,203,848 2,309,187 1,522,145 Depreciation, depletion and amortization 79,695 389,282 155,683 630,606 Impairment of oil and gas properties 233,000 -- 233,000 -- Research and development -- 12,432 -- 63,279 Geological and geophysical -- 26,040 -- 42,517
1,642,928 1,932,390 2,753,391 2,586,499
Operating Loss 1,598,843 1,490,026 2,673,133 2,054,025 Other income (expense): Interest, net (57,730) (5,698) (9,987) (5,389) Gain on settlement of liabilities, net -- -- -- 1,171 Other 12,313 (2,023) 15,010 4,127 Total other income (expense) (45,417) (7,721) 5,023 (91) Net Loss $1,644,260 $1,497,747 $2,668,110 $2,054,116 Weighted average number of common shares outstanding 10,837,755 6,473,238 10,835,909 6,222,396 Net Loss Per Common Share $(.15) $(.23) $(.25) $ (.33) -0- CONTACT: Fountain Oil Incorporated (United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) Gary J. Plisga, +1(713) 492-6992 or Fountain Oil Incorporated (Europe) Nils N. Trulsvik, +1(47) 66 90 3144 |
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