PINX:TVOC Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 


(Mark One)
x  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended March 31, 2012

or

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

       Commission File No. 000-24778

TEXAS VANGUARD OIL COMPANY
(Exact name of registrant as specified in its charter)
 
Texas 74-2075344
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)

9811 Anderson Mill Rd., Suite 202
Austin, Texas 78750
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (512) 331-6781

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o.

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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. Yes x or No o.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

o Large accelerated filer                                                                           o Accelerated filer
o Non-accelerated filer                                                                              x Smaller reporting company

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Outstanding at March 31, 2012
1,416,587 shares
 
 
TEXAS VANGUARD OIL COMPANY
 
TABLE OF CONTENTS
 
   
 
Page Number
   
Part I. Financial Information
 
   
 3
   
 
   March 31, 2012 and December 31, 2011
3
   
 
   Three months ended March 31, 2012 and 2011
4
   
 
   Three months ended March 31, 2012 and 2011
5
   
6
   
 7
   
7
   
7
   
Part II. Other Information
 
   
8
   
9
 
 
In the opinion of the Registrant, all adjustments (consisting of normal recurring accruals) necessary to a fair statement of the results of the interim periods have been included.
 
 
Page 2 of 9


PART I.  FINANCIAL INFORMATION
 
Item 1. Financial Statements
TEXAS VANGUARD OIL COMPANY
Condensed Balance Sheets
 
Assets
 
   
March 31,
   
December 31,
 
   
2012
   
2011
 
   
(Unaudited)
   
(Audited)
 
Current assets:
           
   Cash and cash equivalents
  $ 9,259,365     $ 8,575,692  
   Trade accounts receivable, net of allowance for doubtful accounts
   of $216,649 and $209,666 in 2012 and 2011, respectively
    193,093       272,819  
   Prepaid expense
    25,331       176,839  
   Prepaid federal income tax
    -0-       27,776  
 
               
   Total current assets
    9,477,789       9,053,126  
                 
Property and equipment, at cost:
               
   Oil and gas properties - successful efforts method of accounting
    9,367,107       9,038,331  
   Office furniture and vehicles
    156,871       233,035  
 
               
      9,523,978       9,271,366  
   Less accumulated depreciation, depletion and amortization
    (4,861,920 )     (4,815,808 )
 
               
   Total property and equipment, net
    4,662,058       4,455,558  
 
               
Other assets
    1,000       1,000  
 
               
   TOTAL ASSETS
  $ 14,140,847     $ 13,509,684  
                 
Liabilities and Stockholders' Equity
 
Current liabilities:
               
   Trade accounts payable
  $ 479,767     $ 414,402  
   Taxes payable
    216,762       41,473  
   Asset retirement obligation, current portion
    29,837       78,797  
   Notes payable
    150,000       150,000  
 
               
   Total current liabilities
    876,366       684,672  
 
               
Deferred federal income tax liability
    322,149       322,149  
Asset retirement obligation, less current portion
    541,200       474,201  
 
               
   Total liabilities
    1,739,715       1,481,022  
 
               
Stockholders' equity:
               
   Common stock, par value $.05; authorized 12,500,000 shares;
   1,416,587 issued and outstanding in 2012 and 2011, respectively
    70,828       70,828  
   Additional paid-in capital
    1,888,528       1,888,528  
   Retained earnings
    10,441,776       10,069,306  
 
               
   Total stockholders' equity
    12,401,132       12,028,662  
 
               
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 14,140,847     $ 13,509,684  
 
See accompanying notes to condensed financial statements.
 
 
Page 3 of 9

 
TEXAS VANGUARD OIL COMPANY
Condensed Statements of Earnings
(Unaudited)
 
   
Three months ended
March 31,
 
   
2012
   
2011
 
Revenue:
           
   Operating revenue
  $ 1,929,451     $ 1,724,834  
   Other income
    16,042       15,528  
 
               
   Total revenue
    1,945,493       1,740,362  
 
               
Costs and expenses:
               
   Production cost
    1,090,462       1,045,393  
   Depreciation, depletion and amortization
    109,962       109,055  
   General and administrative
    159,915       153,168  
   Impairment in value of oil and gas property
    1,888       -0-  
   Interest
    748       939  
   Doubtful accounts expense
    6,983       9,058  
 
               
   Total costs and expenses
    1,369,958       1,317,613  
 
               
   Earnings before taxes
    575,535       422,749  
Federal and state taxes:
               
   Provision for federal income tax
    191,878       140,332  
   Provision for state margin tax
    11,187       10,007  
 
               
   Net earnings
  $ 372,470     $ 272,410  
                 
Weighted average number of shares outstanding
    1,416,587       1,416,587  
                 
Basic earnings per share
  $ .26     $ .19  
Diluted earnings per share
  $ .26     $ .19  
 
See accompanying notes to condensed financial statements.
 
 
Page 4 of 9


TEXAS VANGUARD OIL COMPANY
Condensed Statements of Cash Flows
(Unaudited)
 
   
Three months ended
March 31,
 
   
2012
   
2011
 
Net cash provided by operating activities
  $ 944,695     $ 433,180  
                 
Cash flows used in investing activities:
               
   Additions to oil and gas properties
    (333,022 )     (31,818 )
   Purchase of equipment
    -0-       -0-  
   Proceeds from sale of equipment
    72,000       -0-  
 
               
Net cash used in investing activities
    (261,022 )     (31,818 )
                 
Net cash used in financing activities
    ---       ---  
 
               
Net change in cash and cash equivalents
    683,673       401,362  
                 
Cash and cash equivalents at beginning of period
    8,575,692       7,621,018  
 
               
Cash and cash equivalents at end of period
  $ 9,259,365     $ 8,022,380  

See accompanying notes to condensed financial statements.
 
 
Page 5 of 9

 
TEXAS VANGUARD OIL COMPANY
Notes to Condensed Financial Statements
(Unaudited)
March 31, 2012
 
Note 1:   Oil and Gas Properties

Texas Vanguard Oil Company (the “Company”) follows the "successful efforts" method of accounting for oil and gas exploration and production operations. Accordingly, costs incurred in the acquisition and exploratory drilling of oil and gas properties are initially capitalized and either subsequently expensed if the properties are determined not to have proved reserves, or reclassified as a proven property if proved reserves are discovered.  Costs of drilling development wells are capitalized. Geological, geophysical, carrying and production costs are charged to expense as incurred.
 
The Company performs a periodic review for impairment of proved properties. The Company determines if impairment has occurred through either adverse changes or as a result of its periodic review for impairment. Upon abandonment of properties, the reserves are deemed fully depleted and any unamortized costs are recorded in the statement of income under impairment expense. Upon the sale of oil and gas reserves in place, costs less accumulated amortization of such property are removed from the accounts and resulting gain or loss on sale is reflected in operations. 
 
Impairment of unproved properties is assessed periodically and any impairment in value is currently charged to expense. Loss is recognized to the extent that such impairment is indicated. When an entire interest in an unproved property is sold, gain or loss is recognized, taking into consideration any recorded impairment.
 
Depreciation, depletion and amortization of proved oil and gas property costs, including related equipment and facilities, are provided using the units-of-production method.

Note 2:   Income Taxes

The Company uses the "asset and liability method" of income tax accounting which bases the amount of current and future taxes payable on the events recognized in the financial statements and on tax laws existing at the balance sheet date.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes enactment date.

Note 3:   Statement of Cash Flows

Cash and cash equivalents as used in the Condensed Statements of Cash Flows include cash in banks and certificates of deposits owned.

Note 4:   Recently Issued Accounting Standards

The Financial Accounting Standards Board (FASB) did not issue any Updates during the first quarter of 2012.
 
 
Page 6 of 9

 
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.

The following information is provided in compliance with SEC guidelines to explain financial information shown in the Condensed Financial Statements.

RESULTS OF OPERATIONS

Operating revenues increased by $204,617 (12%) for the three-month period ended March 31, 2012 from the comparable prior-year period primarily as a result of higher oil prices in 2012 as compared to 2011.  Production costs increased $45,069 (4%) for the three-month period ended March 31, 2012 from the prior-year period.  Increased production costs for the three-month period ended March 31, 2012 as compared to the prior-year period are largely associated with an increase in workover  activity as well as an increased participation in non-operated properties and the costs associated therewith.

General and administrative expenses for the three-month period ended March 31, 2011 increased $6,747 (4%) as compared to the prior year period. Interest expense decreased $191 for the three-month period ended March 31, 2012 from the comparable prior-year period.  Depreciation, depletion and amortization increased by $907 (1%) for the three-month period ended March 31, 2012 from the comparable prior-year period.  Depreciation, depletion and amortization varies from period to period because of changes in reserve estimates, changes in quantities of oil and gas produced, changes in price of oil and gas sold,  as well as the acquisition, discovery, or sale of producing properties.  For the three-month period  ended March 31, 2012 the Company provided a provision of $1,888 for the impairment of value of oil and gas properties due to less than expected production performance of specific wells and for wells that were plugged and abandoned.

LIQUIDITY AND CAPITAL RESOURCES

During the period ended March 31, 2012, the Company's liquidity remained strong enough to meet its short-term cash needs.   The sources of liquidity and capital resources are generated from cash on hand, cash provided by operations and from credit available from financial institutions.  Working capital at March 31, 2012 decreased to 10.81 to 1 from 13.22 to 1 at December 31, 2011. Management believes that oil and gas property investing activities in 2012 can be financed through cash on hand, cash from operating activities, and bank borrowings. The Company anticipates continued invest­ments in proven oil and gas properties in 2012 when they can be purchased at prices that will provide a short payback period. If bank credit is not available, the Company may not be able to continue its policy of continued investment in strategic oil and gas properties. Cash flow provided by operations was $944,695 for the three months ended March 31, 2012.  The Company used $333,022 to invest in oil and gas properties in the first three months of 2012 as compared to $31,818 in the first three months of 2011.

The worldwide crude oil prices continue to fluctuate in 2012. The Company cannot predict how prices will vary during the remainder of 2012 and what effect they will ultimately have on the Company, but management believes that the Company will be able to generate sufficient cash from operations to service its bank debt and provide for maintaining current production of its oil and gas properties.

Inflation is not anticipated to have a significant impact on the Company’s operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company does not engage in hedging activities and does not use commodity futures nor forward contracts in its cash management functions.

Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil and natural gas.  These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control.  We cannot predict future oil and natural gas prices with any degree of certainty.  Sustained declines in oil and natural gas prices may adversely affect our financial condition and results of operations, and may also reduce the amount of net oil and natural gas reserves that we can produce economically.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as of March 31, 2012 (the "Evaluation Date"). Based upon this evaluation, our principal financial and accounting officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission ("SEC") reports is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms relating to the Company, including, our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared.

In addition, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date.
 
 
Page 7 of 9


PART II.  OTHER INFORMATION

Item 6. Exhibits

Exhibits:  
 
31.1
32.1
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
Taxonomy Extension Calculation Linkbase
101.DEF
Taxonomy Extension Definition Linkbase
101.LAB
Taxonomy Extension Label Linkbase
101.PRE
Taxonomy Extension Presentation Linkbase

 
Page 8 of 9

 
 
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.
 
 
TEXAS VANGUARD OIL COMPANY
(Registrant)
 
       
Date: May 7, 2012
By:
/s/ William G. Watson, President  
    William G. Watson, President  
    (Chief Executive Officer and Chief Financial Officer)  
       

 
Page 9 of 9

PINX:TVOC Texas Vanguard Oil Co Quarterly Report 10-Q Filling

Texas Vanguard Oil Co PINX:TVOC Stock - Get Quarterly Report SEC Filing of Texas Vanguard Oil Co PINX:TVOC stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

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PINX:TVOC Texas Vanguard Oil Co Quarterly Report 10-Q Filing - 3/31/2012
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