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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to ____
Commission file number 1-12108
GULFWEST ENERGY INC.
--------------------
(Exact name of Registrant as specified in its charter)
Texas
(State or other jurisdiction 87-0444770
of incorporation) (IRS Employer
Identification No.)
480 North Sam Houston Parkway East
Suite 300
Houston, Texas 77060
(Address of principal executive offices) (zip code)
(281) 820-1919
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(D) of the Securities 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 NO ____
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date, May 13, 2004, was 18,492,541 shares of
Class A Common Stock, $.001 par value.
GULFWEST ENERGY INC.
FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 2004
Page of
Form 10-Q
---------
Part I: Financial Statements
Item 1. Financial Statements
Consolidated Balance Sheets, March 31, 2004,
and December 31, 2003 3
Consolidated Statements of Operations-for the three
months ended March 31, 2004, and 2003 5
Consolidated Statements of Cash Flows-for the three
months ended March 31, 2004, and 2003 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
Item 4. Controls and Procedures 11
Part II: Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on 8-K 12
Signatures 13
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
- ------- ---------------------
GULFWEST ENERGY INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 AND DECEMBER 31, 2003
ASSETS
March 31, December 31,
2004 2003
(Unaudited) (Audited)
-------------------- --------------------
CURRENT ASSETS
Cash and cash equivalents $ 238,102 $ 483,618
Accounts receivable - trade, net of allowance
for doubtful accounts of $-0- in 2004 and 2003 1,369,190 1,099,802
Prepaid expenses 396,221 159,269
-------------------- --------------------
Total current assets 2,003,513 1,742,689
-------------------- --------------------
OIL AND GAS PROPERTIES,
using the successful efforts method of accounting 58,556,968 58,472,886
OTHER PROPERTY AND EQUIPMENT 2,132,220 2,132,220
Less accumulated depreciation, depletion and
Amortization (10,409,872) (10,017,931)
-------------------- --------------------
Net oil and gas properties and other property and
Equipment 50,279,316 50,587,175
-------------------- --------------------
OTHER ASSETS
Deposits 20,142 20,142
Debt issue cost, net 31,507 78,768
-------------------- --------------------
Total other assets 51,649 98,910
-------------------- --------------------
TOTAL ASSETS $ 52,334,478 $ 52,428,774
==================== ====================
The Notes to Consolidated Financial Statements are an integral part of these statements.
3
GULFWEST ENERGY INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 AND DECEMBER 31, 2003
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2004 2003
(Unaudited) (Audited)
-------------------- --------------------
CURRENT LIABILITES
Notes payable $ 8,782,165 $ 8,182,165
Notes payable - related parties 1,540,000 1,465,000
Current portion of long-term debt 29,340,799 29,396,092
Current portion of long-term debt - related parties 125,878 130,152
Accounts payable - trade 4,765,429 5,002,675
Accrued expenses 515,244 443,568
-------------------- --------------------
Total current liabilities 45,069,515 44,619,652
-------------------- --------------------
NONCURRENT LIABILITIES
Long-term debt, net of current portion 27,759 35,801
Asset retirement obligations 1,377,564 1,357,206
-------------------- --------------------
Total noncurrent liabilities 1,405,323 1,393,007
-------------------- --------------------
OTHER LIABILITES
Derivative instruments 303,620 591,467
-------------------- --------------------
Total Liabilities 46,778,458 46,604,126
-------------------- --------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 190 190
Common stock 18,493 18,493
Additional paid-in capital 29,283,692 29,283,692
Retained deficit (23,746,355) (23,477,727)
-------------------- --------------------
Total stockholders' equity 5,556,020 5,824,648
-------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 52,334,478 $ 52,428,774
==================== ====================
The Notes to Consolidated Financial Statements are an integral part of these statements.
4
GULFWEST ENERGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(UNAUDITED)
2004 2003
------------------- --------------------
OPERATING REVENUES
Oil and gas sales $ 2,500,640 $ 3,204,863
Operating overhead and other income 38,089 45,740
------------------- --------------------
Total Operating Revenues 2,538,729 3,250,603
------------------- --------------------
OPERATING EXPENSES
Lease operating expenses 1,314,284 1,369,935
Depreciation, depletion and amortization 439,202 603,944
Accretion expense 20,358
General administrative 401,192 414,041
------------------- --------------------
Total Operating Expenses
2,175,036 2,387,920
------------------- --------------------
INCOME FROM OPERATIONS 363,693 862,683
------------------- --------------------
OTHER INCOME AND EXPENSE
Interest expense (920,168) (760,880)
Unrealized gain (loss) on derivative instruments 287,847 18,856
------------------- --------------------
Total Other Income and (Expense) (632,321) (742,024)
------------------- -- --------------------
INCOME (LOSS) BEFORE INCOME TAXES (268,628) 120,659
INCOME TAXES
------------------- --------------------
NET INCOME (LOSS) (268,628) 120,659
DIVIDENDS ON PREFERRED STOCK (Paid 2004 - 0; Paid 2003 - 0) (34,375)
------------------- --------------------
NET INCOME (LOSS) AVAILABE TO COMMON SHAREHOLDERS $ (303,003) $ 120,659
=================== ====================
NET INCOME (LOSS) PER SHARE, BASIC AND DILUTED $ (.02) $ 0.01
=================== ====================
The Notes to Consolidated Financial Statements are an integral part of these statements.
5
GULFWEST ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(UNAUDITED)
2004 2003
------------------- --------------------
------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (268,628) $ 120,659
Adjustments to reconcile net income (loss) to net cash
Provided by operating activities:
Depreciation, depletion and amortization
439,202 603,944
Accretion expense 20,358
Common stock and warrants issued and charged to operations 25,500
Note payable issued and charged to interest 61,046
Unrealized gain on derivative instruments
(287,847) (18,856)
(Increase) decrease in accounts receivable - trade, net (269,388) (688,860)
(Increase) decrease in prepaid expenses (236,952) 54,744
Increase in accounts payable and accrued expenses 373,384 101,882
------------------- --------------------
Net cash provided by (used in) operating activities (168,825) 199,013
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (84,082) (270,383)
------------------- --------------------
Net cash used in investing activities (84,082) (270,383)
------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt (122,867) (262,146)
Proceeds from debt issuance 130,258 300,000
------------------- --------------------
Net cash provided by financing activities 7,391 37,854
------------------- --------------------
DECREASE IN CASH AND CASH EQUIVALENTS (245,516) (33,516)
CASH AND CASH EQUIVALENTS,
Beginning of period 483,618 687,694
------------------- --------------------
CASH AND CASH EQUIVALENTS,
End of period $ 238,102 $ 654,178
=================== ====================
CASH PAID FOR INTEREST $ 778,889 $ 548,641
=================== ====================
The Notes to Consolidated Financial Statements are an integral part of these statements.
6
GULFWEST ENERGY INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004 AND 2003
(UNAUDITED)
1. During interim periods, we follow the accounting policies set forth in
our Annual Report on Form 10-K filed with the Securities and Exchange
Commission. Users of financial information produced for interim periods are
encouraged to refer to the footnotes contained in the Annual Report when
reviewing interim financial results. 2. The accompanying financial
statements include the Company and its wholly-owned subsidiaries: RigWest
Well Service, Inc. formed September 5, 1996; GulfWest Texas Company formed
September 23, 1996; DutchWest Oil Company formed July 28, 1997; Southeast
Texas Oil and Gas Company, L.L.C. acquired September 1, 1998; SETEX Oil and
Gas Company formed August 11, 1998; GulfWest Oil & Gas Company formed
February 8, 1999; LTW Pipeline Co. formed April 19, 1999; GulfWest
Development Company formed November 9, 2000; and, GulfWest Oil & Gas
Company (Louisiana) LLC formed July 31, 2001. All material intercompany
transactions and balances are eliminated upon consolidation. 3. In
management's opinion, the accompanying interim financial statements contain
all material adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial condition, the results of
operations, and the cash flows of GulfWest Energy Inc. for the interim
periods. 4. Non-cash Investing and Financing Activities During the three
month period ended March 31, 2004, we issued a note payable for $600,000 in
exchange for an account payable for $538,954 and $61,046 in interest
expense was recorded. During the three month period ended March 31, 2003,
we acquired $48,224 of other property and equipment through notes payable
to financial institutions. We also acquired $182,742 of oil producing
properties in exchange of accounts receivable from a related party. 5. As a
result of a financing agreement with an energy lender, we were required to
enter into an oil and gas hedging agreement with the lender. It has been
determined this agreement meets the definition of SFAS 133 "Accounting for
Derivative Instruments and Hedging Activities" and is accounted for as a
derivative instrument.
We entered into the agreement, commencing in May 2000, to hedge a portion
of our oil and gas sales for the period of May 2000 through April 2004. The
agreement calls for initial volumes of 7,900 barrels of oil and 52,400 Mcf
of gas per month, declining monthly thereafter. We entered into a second
agreement with the energy lender, commencing September 2001, to hedge an
additional portion of our oil and gas sales for the periods of September
2001 through July 2004 and September 2001 through December 2003,
respectively. The agreement calls for initial volumes of 15,000 barrels of
oil and 50,000 Mmbtu of gas per month, declining monthly thereafter. As a
result of these agreements, we realized a reduction in revenues of $376,270
for the three-month period ended March 31, 2004 and a reduction in revenues
of $550,378 for the three-month period ended March 31, 2003, which is
included in oil and gas sales.
7
The estimated change in fair value of the derivatives is reported in Other
Income and Expense as unrealized (gain) loss on derivative instruments. The
estimated fair value of the derivatives is reported in Other Assets (or
Other Liabilities) as derivative instruments.
6. Stock Based Compensation In October 1995, SFAS No. 123, "Stock Based
Compensation," (SFAS 123) was issued. This statement requires that we
choose between two different methods of accounting for stock options and
warrants. The statement defines a fair-value-based method of accounting for
stock options and warrants but allows an entity to continue to measure
compensation cost for stock options and warrants using the accounting
prescribed by APB Opinion No. 25 (APB 25), "Accounting for Stock Issued to
Employees." Use of the APB 25 accounting method results in no compensation
cost being recognized if options are granted at an exercise price at the
current market value of the stock or higher. We will continue to use the
intrinsic value method under APB 25 but are required by SFAS 123 to make
pro forma disclosures of net income (loss) and earnings (loss) per share as
if the fair value method had been applied in our 2004 and 2003 financial
statements.
There were no options or warrants issued as stock-based employee
compensation in the three month period ended March 31, 2004 and 2003.
7. As shown in the financial statements, we had a working capital deficiency
of $43,066,002 at March 31, 2004 and $42,876,963 at December 31, 2003. This
and other conditions raise substantial doubt about our ability to continue
as a going concern.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------- ------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Overview.
We are engaged primarily in the acquisition, development, exploitation,
exploration and production of crude oil and natural gas. Our focus is on
increasing production from our existing crude oil and natural gas properties
through the further exploitation, development and exploration of those
properties, and on acquiring additional interests in crude oil and natural gas
properties. Our gross revenues are derived from the following sources:
1. Oil and gas sales that are proceeds from the sale of crude oil and
natural gas production to midstream purchasers;
2. Operating overhead and other income that consists of earnings from
operating crude oil and natural gas properties for other working
interest owners, and marketing and transporting natural gas. This also
includes earnings from other miscellaneous activities.
3. Well servicing revenues that are earnings from the operation of well
servicing equipment under contract to other operators. During the
period ended March 31, 2004, we worked only for our own account. The
following is a discussion of our consolidated financial condition,
results of operations, financial condition and capital resources. You
should read this discussion in conjunction with our Consolidated
Financial Statements and the Notes thereto contained elsewhere herein.
See "Financial Statements."
Results of Operations.
The factors which most significantly affect our results of operations are
(1) the sales price of crude oil and natural gas, (2) the level of total sales
volumes of crude oil and natural gas, (3) the cost and efficiency of operating
our own properties, (4) depletion and depreciation of oil and gas property costs
and related equipment (5) the level of and interest rates on borrowings, (6) the
level and success of new acquisitions and development of existing properties,
and (7) the adoption of changes in accounting rules.
We consider depletion and depreciation of oil and gas properties and
related support equipment to be critical accounting estimates, based upon
estimates of oil and gas reserves.
The estimates of oil and gas reserves utilized in the calculation of
depletion and depreciation are estimated in accordance with guidelines
established by the Securities and Exchange Commission and the Financial
Accounting Standards Board, which require that reserve estimates be prepared
under existing economic and operating conditions with no provision for price and
cost escalations over prices and costs existing at year end, except by
contractual arrangements.
We emphasize that reserve estimates are inherently imprecise. Accordingly,
the estimates are expected to change as more current information becomes
available. Our policy is to amortize capitalized oil and gas costs on the unit
of production method, based upon these reserve estimates. It is reasonably
possible the estimates of future cash inflows, future gross revenues, the amount
of oil and gas reserves, the remaining estimated lives of the oil and gas
properties, or any combination of the above may be increased or reduced in the
near term. If reduced, the carrying amount of capitalized oil and gas properties
may be reduced materially in the near term.
9
Comparative results of operations for the periods indicated are discussed below.
Three-Month Period Ended March 31, 2004 compared to Three Month Period Ended
March 31, 2003.
Revenues
Oil and Gas Sales. Revenues from the sale of crude oil and natural gas for
the first quarter decreased 22% from $3,204,900 in 2003 to $2,500,600 in 2004.
This was due to a decrease in oil and natural gas sales volumes. The lower sales
volumes were due to (1) the natural decline in production from our Gulf Coast
fields; (2) the temporary shut-in of some natural gas wells in the Grand Lake
and Madisonville Fields, as a result of gas compressor and sales pipeline
maintenance and operational changes; and (3) the non-availability of capital
funds needed to restore production in certain wells with down-hole mechanical
problems.
Operating Overhead and Other Income. Revenues from these activities
decreased 17% from $45,700 in 2003 to 38,100 in 2004, due primarily to a
decrease in sales volumes in fields where we transport for other working
interest owners..
Costs and Expenses
Lease Operating Expenses. Lease operating expenses decreased 4% from
$1,369,900 in 2003 to $1,314,300 in 2004.
Depreciation, Depletion and Amortization (DD and A). DD and A decreased 27%
from $603,900 in 2003 to $439,200 in 2004 due to lower sales volumes.
General and Administrative (G and A) Expenses. Our G and A expenses
decreased 3% from $414,000 in 2003 to 401,200 in 2004.
Interest Expense. Interest expense increased 21% from $760,900 in 2003 to
920,200 in 2004, primarily due to penalty interest charged in January 2004, by
our largest debt holder..
Financial Condition and Capital Resources
- -----------------------------------------
At March 31, 2004, our current liabilities exceeded our current assets by
$43,066,002. We had a loss available to common shareholders of $303,003 for the
quarter compared to an income of $120,659 for the period in 2003.
During the first quarter of 2004, our sales volumes were 45,184 barrels of
crude oil and 253,756 Mcf of natural gas compared to 61,209 barrels of crude oil
and 317,547 Mcf of natural gas in the first quarter of 2003. Revenue for crude
oil sales for the quarter was $1,263,863 in 2004 compared to $1,501,723 in 2003
and for natural gas sales was $1,236,777 in 2004 compared to $1,703,140 in 2003.
In a subsequent event on April 27, 2004, we completed an $18,000,000
financing package with a new energy lender. We used $15,700,000 to retire
existing debt of $27,584,145, resulting in forgiveness of debt of $11,884,145.
This taxable gain will be completely offset by available net operating loss
carryforwards. The term of the note is eighteen months and it bears interest at
the prime rate plus 11%. This rate increases by .75% per month beginning in
month ten. We paid the new lender $1,180,000 in cash fees and also issued the
new lender warrants to purchase 2,035,621 shares of our common stock at an
exercise price of $.01 per share, expiring in five years. The warrants are
subject to demand registration and anti-dilution provisions.
10
Simultaneously, our wholly-owned subsidiary, GulfWest Oil & Gas
Company, completed the initial phase of a private offering of its Series A
Preferred Stock for $3,900,000. The Series A Preferred Stock is exchangeable
four our Common Stock based on a liquidation value of $500 per share of Series A
Preferred Stock divided by $.35 per share of our Common Stock. As part of a fee
and commission, we issued $500,000 of the Series A Preferred Stock to a
financial advisor. One of our directors acquired $1,500,000 of the Series A
Preferred Stock.
Pursuant to an agreement with a financial advisor who provided access to
the lender and raised $1,900,000 of the Series A preferred stock, we paid a cash
commission of $400,000, in addition to the $500,000 issued in Series A Preferred
Stock. The advisors contends that additional fees are due, however we disagree
and, at this time, do not know what the outcome of the disagreement will be.
Of the $21,400,000 total cash raised, we used $15,700,000 to pay existing
debt and $1,580,000 to pay fees and commissions, leaving $4,120,000 available
for capital expenditures and working capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------- ----------------------------------------------------------
The following market rate disclosures should be read in conjunction with
the quantitative disclosures about market risk contained in our 2003 annual
report on Form 10-K, as well as with the consolidated financial statements and
notes thereto included in this quarterly report on Form 10-Q.
All of our financial instruments are for purposes other than trading. We
only enter derivative financial instruments in conjunction with our oil and gas
hedging activities.
Hypothetical changes in interest rates and prices chosen for the following
stimulated sensitivity effects are considered to be reasonably possible
near-term changes generally based on consideration of past fluctuations for each
risk category. It is not possible to accurately predict future changes in
interest rates and product prices. Accordingly, these hypothetical changes may
not be an indicator of probable future fluctuations.
Interest Rate Risk
We are exposed to interest rate risk on debt with variable interest rates.
At March 31, 2004, we carried variable rate debt of $38,577,592. Assuming a one
percentage point change at March 31, 2004 on our variable rate debt, the annual
pretax income would change by $385,776.
Commodity Price Risk
We hedge a portion of price risks associated with our oil and natural gas
sales which are classified as derivative instruments. As of March 31, 2004,
these derivative instruments' liabilities had a fair value of $303,620. A
hypothetical change in oil and gas prices could have an effect on oil and gas
futures prices, which are used to estimate the fair value of our derivative
instrument. However, it is not practicable to estimate the resultant change, if
any, in the fair value of our derivative instrument.
ITEM 4. PROCEDURES AND CONTROLS
- ------- -----------------------
As of September 30, 2003, an evaluation was performed under the supervision
and with the participation of our management, including the CEO and Vice
President of Finance, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on that evaluation, our management,
including the CEO and Vice President of Finance, concluded that our disclosure
11
controls and procedures were effective as of March 31, 2004. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to March 31, 2004.
PART II. OTHER INFORMATION
- ------- -----------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------- ----------------------------------------------------
No matter was submitted to a vote of our security holders during the first
quarter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------- ---------------------------------
(a) Exhibits -
Number Description
------ -----------
*3.1 Articles of Incorporation of the Registrant and Amendments
thereto.
*3.2 Bylaws of the Registrant.
- ---------------
* Previously filed with the Company's Registration Statement (on
Form S-1, Reg. No. 33-53526), filed with the Commission on
October 21, 1992.
(b) Form 8-K - None.
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
GULFWEST ENERGY INC.
(Registrant)
Date: May 13, 2004 By: /s/ Thomas R. Kaetzer
---------------------------------
Thomas R. Kaetzer
President
Date: May 13, 2004 By: /s/ Jim C. Bigham
---------------------------------
Jim C. Bigham
Executive Vice President and Secretary
Date: May 13, 2004 By: /s/ Richard L. Creel
---------------------------------------
Richard L. Creel
Vice President of Finance
12
CERTIFICATIONS
I, Thomas R. Kaetzer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of GulfWest Energy
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
i
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 13, 2004
/s/ Thomas R. Kaetzer
-----------------------------------
Thomas R. Kaetzer
President and Chief Executive Officer
ii
CERTIFICATIONS
I, Richard L. Creel, certify that:
1. I have reviewed this quarterly report on Form 10-Q of GulfWest Energy
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
i
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 13, 2004
/s/ Richard L. Creel
-----------------------------------
Richard L. Creel
Vice President of Finance
ii
May 13, 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Certification Required Under Section 906 of Sarbanes-Oxley Act of 2002
In connection with the accompanying report on Form 10-Q for the period ended
March 31, 2004 and filed with the Securities and Exchange Commission on the date
hereof (the "Report"), We, Thomas R. Kaetzer, President and CEO of GulfWest
Energy Inc. (the "Company"), and Richard L. Creel, Vice President of Finance of
the Company hereby certify that:
1. The report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
GulfWest Energy Inc.
/s/ Thomas R. Kaetzer
- ------------------------------------
By: Thomas R. Kaetzer
President and Chief Executive Officer
/s/ Richard L. Creel
- ------------------------------------
By: Richard L. Creel
Vice President of Finance