Company Name: MOUNTAINS WEST EXPLORATION INC Ticker Symbol: MWEX
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
{X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 {FEE REQUIRED}
the fiscal year ended December 31, 1997
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 {NO FEE REQUIRED
For the transition period from _______________ to ____________
Commission File Number: 0-9500
MOUNTAINS WEST EXPLORATION, INC.
(Name of small business issuer in its charter)
New Mexico 85-0280415
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) identification no.)
616 Central, S.E., Suite 213, Albuquerque, New Mexico 87102
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 505-243-4949
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
$0.001 Par Value Common Stock
(Title of Class)
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 there is no 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. {X}
State issuer's revenues for its most recent fiscal year. $243,081
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act).
$2,450,359 (based on an ask market value of $0.09 per share on March 20, 1998)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: $0.001 par value common stock, its
only class of equity securities, as of March 15, 1998 was: 38,019,270.
PART I
Item 1. Description of Business.
The Company
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Mountains West Exploration, Inc. (the "Company") was incorporated under the laws
of the State of New Mexico on September 17, 1979.
The Company, is an independent oil and gas company engaged in the acquisition,
exploration and development of oil and gas leases and concessions located in
Colorado and North Dakota. Recent and more important exploratory efforts have
been centered in Australia, Papua New Guinea, Central America and South America.
The Company is aggressively pursuing its major objective of increasing its oil
and gas reserves and production. During the past several years, the Company has
been establishing itself as a foreign exploration company. With most of the oil
and gas industry concentrating in foreign countries, the Company is now in an
excellent position to take advantage of the experience of its management and its
foreign concession and license interests.
For the past several years, as resources have permitted, the Company has been
increasing its activities and oil and gas production is rising, but it has yet
to obtain significant oil or gas income. Management's time and the limited
Company resources have been used to maintain the properties held, to acquire
additional properties and to participate to the extent possible in the
development of its properties. (See Item 2. Properties).
Domestic Exploration and Production
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The Company owns small interests in seven oil and gas wells in the
Denver-Julesburg basin in Eastern Colorado. These wells have been producing from
the "J" and Codel sandstones and are believed by Company Management to have
reached their economic limits. Small undeveloped reserves are behind the pipe in
most of these wells and will be developed in the near future, but are no longer
considered to have any value to the Company.
The Company has approximately 2,312 net acres of mineral rights in South Central
Colorado. Of those 2,312 acres, 1770 acres are located in the southwestern part
of the Raton Basin. Consolidated Industrial Services Oil and Gas, Inc., a
subsidiary of Infinity, Inc. , has now drilled and completed approximately 28
gas wells to the north and southwest of these interests. This is in addition to
4 wells drilled by Montana-Dakota to the south of the interests. Development of
the Company's 1,770 acres was not accomplished during 1997 because of a reported
10th Circuit opinion that placed in question certain coal bed methane leases. As
a result of that opinion, the lease of the properties that was reported last
year was voided. The Court's opinion was subsequently clarified and development
of this property will remain a priority during 1998. The Company does not
presently have the resources to development these properties, therefore, a
decision will be made whether the properties will be held until such time that
the Company has the necessary resources for the development or whether the
properties will be leased to others for development.
Access to all domestic properties in which the Company owns any interest is
readily available from state and county highways and roads on a year round
basis.
Foreign Exploration.
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Activities Related to Previously Reported Papua New Guinea Oil Interests
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Petroleum Development License No. 3
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The Company's interest in the unitized fields discussed below, after the
exercise by the government to acquire a 22-1/2% interest in the fields, is
approximately .8718%.
In 1984, the Company acquired Papua New Guinea Petroleum Prospecting Permit
number PPL 56, which after several farmouts of interest became owned by the PPL
56 Joint Venture Group, that was formed to conduct exploration activities on the
License. In 1991, a significant oil discovery was made on the License with the
#1 S.E. Gobe well which production tested for 4,250 barrels of oil per day from
the Jurassic Iagifu sandstone. Also in 1991, the #2 S.E. Gobe well was drilled
approximately one mile to the Southeast of the #1 well and tested 8,907 barrels
of oil per day, which was one of the biggest flows of oil ever recorded in Papua
New Guinea. In 1992, the #3 S.E. Gobe well was drilled and competed for 6,300
barrels of oil and 22.1 million cubic feet of gas per day. These three wells
established a gross vertical oil column in excess of 330 feet on the License.
The area upon which these wells are located is known as the Southeast Gobe Oil
Field.
The Southeast Gobe Oil Field, upon which there are located 5 oil wells belonging
to the Southeast Gobe Unit have now been unitized, and Chevron was elected as
the operator for all projects related to the unitized field and Gobe Main Field.
A road from the Chevron Group's pipeline road to the Southeast Gobe Filed
production facilities has been completed to the extent deemed by Chevron to be
necessary to permit access to the production and maintenance facilities. The
entire producing area, including the Gobe Main Field, is over 12 miles long. The
fields are located in mountainous country of the Papuan Fold Belt. Eight miles
to the south, Chevron has established and is operating a pipe line through which
it is presently transporting approximately 90,000 barrels of oil per day from
its fields in the Kutubu area located several miles northwest of the Southeast
Gobe and Gobe Main oil fields. Chevron began production from the Gobe Main Field
in March of 1988 and production from the wells in the Southeast Gobe Field is
predicted to begin in early April, 1998. At that time, for the first time, the
Company's interests will produce income. However, until the debt associated with
the cost of developing the Company's interest in the fields and production
facilities has been repaid, the Company will not experience any cash flow that
it might use for any other purpose.
Activities Related to New Papua New Guinea Gas Interests
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After the area covered by the PDL #3 was determined during 1996, the original
Petroleum exploration license (PPL 56) that PDL #3 had been part of expired, the
Joint Venture refilled for the remaining acreage to be included in two new
prospecting licenses. The southern part of PPL 56 was refilled as PPL 189. The
northern part of PPL 56 was refilled as PPL 190. After a realignment of
interests in the two new exploration licenses, the Company has a 5.051% interest
in PPL 189 and a 3.763% interest in PPL 190. The increase in the Company's share
of the new licenses greatly increased the Company's gas reserves in Papua New
Guinea.
PPL 189 contains the Barikewa gas field. A seismic program is currently
evaluating this structure for drilling in the near future. A huge NW-SE surface
structure, the Orie Anticline, was drilled several years ago but failed to
encounter any sand development. The structure remains prospective to the west
along the upper crest of the anticline (TABE prospect) and along the south
western flanks of the high where large stratigraphic traps could exist. New
studies indicate Tertiary reefs are present in the area which are known to
produce to the east and southeast.
PPL 190 has numerous anticlines located on it. The most important ones are as
follows:
1. WASUMA STRUCTURE. This structure is located between the Masaka structure on
the north and the Gobe structure on the south. A large part of the
anticline lies in PPL 190. A seismic line was shot across the structure in
1997. Several interpretations have been made of the information from the
seismic, which has confirmed that a structure exists. A wildcat drilling
attempt is now planned to commence during the summer of 1998, with the
Chevron group giving a cash contribution to the cost of the test drilling.
2. MASAKA STRUCTURE. This is a northwest southeast trending anticline parallel
to and located about six miles north of the Gobe Structure. This feature is
larger than the Gobe anticline. Chevron drilled the #1 Makasa well located
on the structure as a possible discovery well. High pressures in two upper
zones, as yet not known to produce, prevented this well from being
completed as a commercial well. The structure extends over into PPL 190
trending eastward for several miles. The Company has a 3.763% interest in
this feature.
3. TABE STRUCTURE . The Tabe prospect is located on the northwestern part of
the Orie Anticline. The Orie structure is very large (30 miles long) and
should have excellent reservoir conditions along the west and southwest
portions of the anticline. The prospect is near the Southeast Gobe oil
field and is very prospective for production.
4. ANESI STRUCTURE. The Anesi anticline was tested by the Beaver #1 well
drilled during 1996. The well was a dry hole but encountered sufficient
shows of oil and gas to indicate that the western one half of the structure
which lies in PPL 190 is still very prospective.
New discoveries such as the #1 Makasa and a new Chevron discovery, #1 Moran, are
finding new reserves in quantities far exceeding those found to date in the
existing fields.
Prior to 1984, two discoveries of gas were made(the expired PPL 56 License), the
Iehi gas field, which is now located on PPL 190 License and the Barikewa gas
field, now located on PPL 189 License. Both fields are awaiting development as
soon as a pipeline is available. Three separate groups of companies have
announced that they are conducting feasibility studies for liquefied natural gas
plants to be constructed in Papua New Guinea. The Company has been told that a
feasibility study of a methanol plant is also being done. Chevron has announced
its intention to lay a pipeline from Papua New Guinea to northern Australia with
an anticipated completion date for the pipeline of 2001. The Iehi and Barikewa
fields are primary targets for feedstock for any LNG and methanol plants that
might eventually be constructed. Preliminary proven reserve calculations
indicate that there are 163 to 450 billion cubic feet of gas for the Barikewa
field and 23.5 to 88 billion cubic feet of gas for the Iehi field. Using the
average of each field, the Company will own reserves of approximately 9 BCF in
the two fields. |
