U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2004.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 0-9435
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Colorado |
84-0811034 |
1703 Edelweiss Drive
Cedar
Park, Texas
78613
(Address of Principal Executive Offices) (Zip Code)
(512)
250-8692
(Issuer's Telephone Number, Including Area Code)
Securities registered
under Section 12(b) of the Exchange Act:
(None)
Securities registered under Section 12(g) of the Exchange Act:
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.
Yes X No
Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $3,016,902.
As of December 31, 2004, 7,680,175 shares of the Registrant's common stock par value $.01 per share, were outstanding. The aggregate market value of the voting stock held by non-affiliates of the Registrant at March 31, 2005, was $12,625,158.
Documents Incorporated by Reference: The Registrant hereby incorporates herein by reference the following documents.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements contained in this Form 10-KSB constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act and Section 27A of the Securities Exchange Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements
of historical facts, included in this Form 10-KSB that address activities,
events or developments that FieldPoint Petroleum Corp. and its subsidiaries
(collectively, the "Company") expects, projects, believes or
anticipates will or may occur in the future, including such matters as oil and
gas reserves, future drilling and operations, future production of oil and gas,
future net cash flows, future capital expenditures and other such matters, are
forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the
following: the volatility of oil
and gas prices, the Company's drilling and acquisition results, the Company's
ability to replace reserves, the availability of capital resources, the reliance
upon estimates of proved reserve, operating hazards and uninsured risks,
competition, government regulation, the ability of the Company to implement its
business strategy and other factors referenced in this Form 10-KSB.
General
FieldPoint Petroleum
Corporation, a Colorado corporation (the "Company"), was formed on
March 11, 1980, to acquire and enhance mature oil and natural gas field
production in the mid-continent and the Rocky Mountain regions. Since 1980, the
Company had engaged in oil and gas operations and, in 1986, divested all oil
and gas assets and operations. From December 1986, until its reverse
acquisition on December 31, 1997, The Company had not engaged in oil and gas
operations.
Reverse Acquisition - On
December 22, 1997, The Company entered into an Agreement with Bass Petroleum,
Inc., a Texas corporation ("BPI"), pursuant to which, on December 31,
1997, the Company acquired from the shareholders of BPI an aggregate of
8,655,625 shares of capital stock of BPI, in exchange for the issuance of
4,000,000 unregistered shares of the Company's common stock. The transaction was treated, for
accounting purposes, as an acquisition of FieldPoint Petroleum Corporation by
Bass Petroleum, Inc. On December 31,1997, the Company changed its name from
Energy Production Company to FieldPoint Petroleum Corporation.
Business Strategy
The Company's business
strategy is to continue to expand its reserve base and increase production and
cash flow through the acquisition of producing oil and gas properties. Such acquisitions will be based on an
analysis of the properties' current cash flow and the Company's ability to
profit from the acquisition. The
Company's ideal acquisition will include not only oil and gas production, but
also leasehold and other working interest in exploration areas.
The Company will also seek
to identify promising areas for the exploration of oil and gas through the use
of outside consultants and the expertise of the Company. This identification will include
collecting and analyzing geological and geophysical data for exploration
areas. Once promising properties
are identified, the Company will attempt to acquire the properties either for
drilling oil and natural gas wells, using independent contractors for drilling
operations, or for sale to third parties.
The Company recognizes that
the ability to implement its business strategies is largely dependent on the
ability to raise additional debt or equity capital to fund future acquisition,
exploration, drilling and development activities. The Company's capital resources are discussed more
thoroughly in Part II, Item 6, in Management's Discussion and Analysis.
Operations
As of December 31, 2004,
the Company had varying ownership interest in 339 gross productive wells (90.79
net) located in 4 states. The Company
operates 61 of the 339 wells; the other wells are operated by independent
operators under contracts that are standard in the industry. It is a primary
objective of the Company to operate most of the oil and gas properties in which
it has an economic interest. The
Company believes, with the responsibility and authority as operator, it is in a
better position to control cost, safety, and timeliness of work as well as
other critical factors affecting the economics of a well.
Market for Oil and Gas
The demand for oil and gas
is dependent upon a number of factors, including the availability of other
domestic production, crude oil imports, the proximity and size of oil and gas
pipelines in general, other transportation facilities, the marketing of competitive
fuels, and general fluctuations in the supply and demand for oil and gas. The Company intends to sell all of its
production to traditional industry purchasers, such as pipeline and crude oil
companies, who have facilities to transport the oil and gas from the wellsite.
Competition
The oil and gas industry is
highly competitive in all aspects.
The Company will be competing with major oil companies, numerous
independent oil and gas producers, individual proprietors, and investment
programs. Many of these
competitors possess financial and personnel resources substantially in excess
of those which are available to the Company and may, therefore, be able to pay
greater amounts for desirable leases and define, evaluate, bid for and purchase
a greater number of potential producing prospects that the Company's own
resources permit. The Company's
ability to generate resources will depend not only on its ability to develop
existing properties but also on its ability to identify and acquire proven and
unproven acreage and prospects for further exploration.
Environmental Matters
and Government Regulations
The Company's operations
are subject to numerous federal, state and local laws and regulations
controlling the discharge of materials into the environment or otherwise
relating to the protection of the environment. Such matters have not had a material effect on operations of
the Company to date, but the Company cannot predict whether such matters will
have any material effect on its capital expenditures, earnings or competitive
position in the future.
The production and sale of
crude oil and natural gas are currently subject to extensive regulations of
both federal and state authorities.
At the federal level, there are price regulations, windfall profits tax,
and income tax laws. At the state
level, there are severance taxes, proration of production, spacing of wells,
prevention and clean-up of pollution and permits to drill and produce oil and
gas. Although compliance with
their laws and regulations has not had a material adverse effect on the
Company's operations, the Company cannot predict whether its future operations
will be adversely effected thereby.
Operational Hazards and
Insurance
The Company's operations
are subject to the usual hazards incident to the drilling and production of oil
and gas, such as blowouts, cratering, explosions, uncontrollable flows of oil,
gas or well fluids, fires, pollution, releases of toxic gas and other
environmental hazards and risks.
These hazards can cause personal injury and loss of life, severe damage
to and destruction of property and equipment, pollution or environmental damage
and suspension of operations.
The Company maintains
insurance of various types to cover its operations. The Company's insurance does not cover every potential risk
associated with the drilling and production of oil and gas. In particular, coverage is not
obtainable for certain types of environmental hazards. The occurrence of a significant adverse
event, the risks of which are not fully covered by insurance, could have a
material adverse effect on the Company's financial condition and results of
operations. Moreover, no assurance
can be given that the Company will be able to maintain adequate insurance in
the future at rates it considers reasonable.
Administration
Office Facilities- The
office space for the Company's executive offices at 1703 Edelweiss Drive, Cedar
Park, Texas 78613, is currently provided by the majority shareholder at a cost
of $2,500 per month as of December 31, 2004.
Employees- As of March 31,
2005, the Company had 4 employees. The Company considers its relationship with
its employees satisfactory.
ITEM 2- PROPERTIES
Principal Oil and Gas
Interest
Lusk Field, Lea County
New Mexico is a producing oil and gas
field located outside of Hobbs, New Mexico. The company owns an 87.5%-100%
working interest in two oil and gas wells producing out of the Bonesprings and
Yates formations at depth ranging from approximately 3,400 feet to
approximately 10,000 feet. The company also owns an 87.5% working interest in
one water disposal well.
Chickasha Field, Grady
County Oklahoma is a waterflood
project producing from the Medrano Sand. The Rush Springs Medrano Unit is
located approximately sixty five miles southwest of Oklahoma City, Oklahoma.
The Company has a 20.64% working interest in the unit which consists of 21
producing oil and gas wells and 11 water injection wells.
Hutt Wilcox Field,
McMullen and Atascosa County Texas is
an oil and gas field located approximately 60 miles south of San Antonio, Texas
producing from the Wilcox sand. The Company has a working interest in 14 oil
wells.
West Allen Field,
Pontotoc County Oklahoma is a
producing oil and gas field located approximately 100 miles south of Oklahoma
City, Oklahoma. The Company has a working interest in 52 leases or a total of
224 wells, the leases have multiple wellbores and the Company has plans to
participate in the future recompletion of behind pipe zones.
Giddings Field, Fayette
County Texas is in the prolific
Austin Chalk field located in various counties surrounding the city of
Giddings, Texas. In February 1998, the company acquired a 97% working interest
in the Shade lease. The lease currently has 3 producing oil and gas wells with
a daily production rate of approximately 120 Mcfe net to the Company. Oil and
Gas are produced from the Austin chalk formation; the Company will evaluate
whether additional reserves can be developed by use of horizontal well
technology.
Big Muddy Field,
Converse County Wyoming is a
producing oilfield located approximately thirty miles south of Casper,
Wyoming. FieldPoint Petroleum owns
a 100% working interest in the Elkhorn and J.C. Kinney lease which consists of
3 oil wells producing out of the Wallcreek and Dakota formations at depths
ranging from approximately 3,200 feet to approximately 4,000 feet.
Serbin Field, Lee and
Bastrop Counties Texas is an oil and
gas field located approximately 50 miles east of Austin and 100 miles west of
Houston. The Company has a working
interest in 72 producing oil and gas wells with a production rate for 2004 of
approximately 45 barrels of oil equivalent ("BOE") net to the
Company. Oil and gas are produced
from the Taylor Sand at depths ranging from approximately 5,300 feet to
approximately 5,600 feet; it is a 46-gravity oil sand.
Production
The table below sets forth
oil and gas production from the Company's net interest in producing properties
for each of its last two fiscal years.
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Oil and Gas Production |
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Quantities |
2004 |
2003 |
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Oil (Bbls) |
63,669 |
65,514 |
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|
Gas (Mcf) |
101,583 |
113,373 |
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Average Sales Price |
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||
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|
Oil ($/Bbl) |
$38.35 |
$29.69 |
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|
Gas ($/Mcf) |
$4.31 |
$3.13 |
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Average Production Cost
($/BOE) |
$15.02 |
$13.07 |
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The Company's oil and gas
production is sold on the spot market and the Company does not have any
production that is subject to firm commitment contracts. During the year ended December 31,
2004, purchases by each of four customers, Dorado Oil Company, Pontotoc
Production, Inc., Westport Resources, and ConocoPhillips represented more than
10% of total Company revenues.
During the year ended December 31, 2003, purchases by each of four
customers, Westport Resources, Pontotoc Production, Inc., Dorado Oil Company
and Plains Petroleum represented more than 10% of the total Company
revenues. None of these customers,
or any other customers of the Company, has a firm sales agreement with the
Company. The Company believes that
it would be able to locate alternate customers in the event of the loss of one
or all of these customers.
Productive Wells
The table below sets forth
certain information regarding the Company's ownership, as of December 31, 2004,
of productive wells in the areas indicated.
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Productive Wells |
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Oil |
Gas |
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State |
Gross1 |
Net2 |
Gross1 |
Net2 |
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New Mexico |
2 |
1.6 |
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- |
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Oklahoma |
208 |
47.03 |
37 |
4.59 |
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Texas |
82 |
31.15 |
7 |
3.8 |
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Wyoming |
3 |
2.63 |
- |
- |
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Total |
295 |
82.41 |
44 |
8.39 |
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____________________________
1 A gross well or acre is a well or acre in which a working interest is owned. The number of gross wells is the total number of wells in which a working interest is owned. The number of gross acres is the total number of acres in which a working interest is owned.
2 A net well or acre is deemed to exist when the sum of fractional ownership working interests in gross wells or acres equals one. The number of net wells or acres is the sum of the fractional working interests owned in gross wells or acres expressed as whole numbers and fractions thereof.
Drilling Activity
The Company drilled no
wells in 2004 and drilled 4 wells in 2003 of which include two were determined
to be productive. The Company incurred $86,948 of exploration expense relating
to the unsuccessful wells.
Reserves
Please refer to unaudited
Note 13 in the accompanying audited financial statements for a summary of the
Company's reserves at December 31, 2004 and 2003.
Acreage
The following tables set forth the gross and net acres of developed and
undeveloped oil and gas leases in which the Company had working interest and
royalty interest as of December 31, 2004.
The category of "Undeveloped Acreage" in the table includes
leasehold interest that already may have been classified as containing proved
undeveloped reserves.
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Developed1 |
Undeveloped2 |
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State |
Gross3 |
Net4 |
Gross3 |
Net4 |
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New Mexico |
640 |
480 |
640 |
90 |
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Oklahoma |
8586 |
1108 |
200 |
19 |
|
Texas |
2120 |
547 |
1360 |
1000 |
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Wyoming |
200 |
200 |
2000 |
2000 |
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Total
|
11546 |
2335 |
4200 |
3109 |
ITEM
3- LEGAL PROCEEDINGS
None.
ITEM
4 -SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5-MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock
is traded in the over-the-counter market and listed on the Bulletin Board under
the symbol "FPPC." The following quotations, where quotes were
available, reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not necessarily represent actual transactions.
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FISCAL 2004 |
CLOSING BID |
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HIGH |
LOW |
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First Quarter |
.85 |
.35 |
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Second Quarter |
1.60 |
.65 |
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Third Quarter |
1.20 |
.54 |
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Fourth Quarter |
1.50 |
.60 |
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FISCAL 2003 |
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HIGH |
LOW |
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First Quarter |
.66 |
.29 |
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Second Quarter |
.84 |
.26 |
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Third Quarter |
.75 |
.31 |
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Fourth Quarter |
.75 |
.37 |
At March 31, 2004, the
approximate number of shareholders of record was 1,250. The Company has not paid any dividends
on its Common Stock and does not expect to do so in the foreseeable future.
Recent Sales of Unregistered
Securities
In
April 2004, the Company sold 100,000 units in a private sale to a single
investor. Each unit sold for $0.65
and consisted of one common share, and five warrants (A-E). Each warrant is exercisable at any time
over the next 3 years, are redeemable at the Company's option based on certain
sustained trading prices, and have exercise prices as follow:
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A |
$0.65 |
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B |
$0.75 |
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C |
$1.00 |
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D |
$1.25 |
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E |
$2.00 |
The units were sold without
registration under the Securities Act of 1933, (the"Securities Act")
in reliance upon an exemption set forth in Section 4(2) and Regulation D
thereunder. Proceeds of the sale
were used for working capital.
EQUITY COMPENSATION PLAN INFORMATION
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|
Number of |
Weighted average exercise price of outstanding
options, warrants and rights |
Number of securities remaining available for future
issuances under equity compensation plans (excluding securities reflected in
column (a)) |
|
|
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Equity compensation plans
approved by |
|
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Equity compensation plans
not approved |
690,000 |
$.59 |
690,000 |
|
Total |
690,000 |
$.59 |
690,000 |
(1) Includes
nonqualified options granted to outside directors.
ITEM
6 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
The following discussion
should be read in conjunction with the Company's Financial Statements, and
respective notes thereto, included elsewhere herein. The information below should not be construed to imply that
the results discussed herein will necessarily continue into the future or that
any conclusion reached herein will necessarily be indicative of actual
operating results in the future.
Such discussion represents only the best present assessment of the
management of FieldPoint Petroleum Corporation.
Overview
FieldPoint Petroleum
Corporation derives its revenues from its operating activities including sales
of oil and gas and operating oil and gas properties. The Company's capital for investment in producing oil and
gas properties has been provided by cash flow from operating activities and
from bank financing. The Company
categorizes its operating expenses into the categories of production expenses
and other expenses.
Comparison of Year Ended December 31, 2004 to Year
Ended December 31, 2003
Results of Operation
Revenues increased 24% or
$587,527 to $3,016,902 for the year ended December 31, 2004, from the
comparable 2003 period. Oil
production volumes decreased by 3% at the same time the average price per
barrel increased 29% during 2004 to $38.35 from the comparable 2003 period
average price of $29.69 per barrel.
Also in 2004, the gas production volume decreased by 11% while the
average price per Mcf was $4.31, an increase of 37% from the 2003 comparable
period. The decreases in
production volumes were primarily due to declines in the Kerr McGee operated
Rush Springs Unit in Grady County, Oklahoma offset by the Lea County New Mexico
Lusk Field acquisition.