TIPPERARY CORP - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

		For the quarterly period ended March 31, 2003

OR

		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission File Number 1-7796

TIPPERARY CORPORATION

(Exact name of registrant as specified in its charter)

Texas		75-1236955
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

633 Seventeenth Street, Suite 1550 Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)

(303) 293-9379

(Issuer’s telephone number)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No ü

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at May 14, 2003
Common Stock, $.02 par value		39,221,489 shares

TIPPERARY CORPORATION AND SUBSIDIARIES

Index to Form 10-Q

		Page No.
PART I. FINANCIAL INFORMATION (UNAUDITED)

Item 1.	Financial Statements

	Consolidated Balance Sheets March 31, 2003 and December 31, 2002	1

	Consolidated Statements of Operations Three months ended March 31, 2003 and 2002	2

	Consolidated Statements of Cash Flows Three months ended March 31, 2003 and 2002	3

	Notes to Consolidated Financial Statements	4-9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10-15

Item 3.	(Not Applicable)

Item 4.	Controls and Procedures	16

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 2.	Changes in Securities	17

Item 3.	Defaults Upon Senior Securities	17

Item 4.	Submission of Matters to a Vote of Security Holders	17

Item 5.	Other Information	17

Item 6.	Exhibits and Reports on Form 8-K	17

SIGNATURES		18

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER		19-20

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

TIPPERARY CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

(unaudited)

	March 31 2003			December 31 2002
ASSETS
Current assets:
Cash and cash equivalents	$	358		$	1,725
Restricted cash		187			546
Receivables		1,793			1,863
Other current assets		103			290

Total current assets		2,441			4,424

Property, plant and equipment, at cost:
Oil and gas properties, full cost method		79,565			75,395
Other property and equipment		3,863			3,827

		83,428			79,222
Less accumulated depreciation, depletion and amortization		(5,310	)		(4,882	)

Property, plant and equipment, net		78,118			74,340

Deferred loan costs		5,410			5,751
Other noncurrent assets		238			238

	$	86,207		$	84,753

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		1,724			1,384
Accrued liabilities		1,125			1,970
Royalties payable		109			130

Total current liabilities		2,958			3,484

Long-term debt		32,479			27,899
Long-term asset retirement obligation		186			—
Minority interest		519			603
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock:
Cumulative; par value $1.00; 10,000,000 shares authorized; none issued		—			—
Non-cumulative, par value $1.00; 10,000,000 shares authorized; none issued		—			—
Common stock; par value $.02; 50,000,000 shares authorized; 39,231,087 shares issued and 39,221,489 shares outstanding		785			785
Capital in excess of par value		149,966			149,953
Accumulated deficit		(100,661	)		(97,946	)
Treasury stock, at cost; 9,598 shares		(25	)		(25	)

Total stockholders’ equity		50,065			52,767

	$	86,207		$	84,753

See accompanying notes to consolidated financial statements.

TIPPERARY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three months ended March 31
	2003			2002
Revenues	$	1,341		$	1,352
Costs and expenses:
Operating		957			592
Depreciation, depletion and amortization		308			423
Asset retirement obligation accretion		6			—
General and administrative		1,521			1,547

Total costs and expenses		2,792			2,562

Operating loss		(1,451	)		(1,210	)
Other income (expense):
Other income		—			70
Interest income		7			16
Interest expense		(1,305	)		(632	)
Foreign currency exchange gain (loss)		(4	)		23

Total other expense		(1,302	)		(523	)

Loss before income taxes		(2,753	)		(1,733	)
Income tax benefit		—			—

Loss before minority interest and cumulative effect of accounting change		(2,753	)		(1,733	)
Minority interest in loss of subsidiary		84			150

Loss before cumulative effect of accounting change		(2,669	)		(1,583	)
Cumulative effect of accounting change		(46	)		—

Net loss	$	(2,715	)	$	(1,583	)

Net loss per share
Basic and diluted	$	(.07	)	$	(.04	)

Weighted average shares outstanding
Basic and diluted		39,221			38,971

See accompanying notes to consolidated financial statements.

TIPPERARY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three months ended March 31
	2003			2002
Cash flows from operating activities:
Net loss	$	(2,715	)	$	(1,583	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization		308			423
Amortization of deferred loan costs		353			396
Compensatory warrants granted		3			3
Minority interest in loss of subsidiary		(84	)		(150	)
Asset retirement obligation accretion		6			—
Cumulative effect of accounting change		46			—
Changes in current assets and current liabilities:
Decrease (increase) in receivables		(83	)		468
Decrease in prepaid drilling costs and other current assets

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