New Concept Energy, Inc. (AMEX:GBR), (the “Company” or “NCE”) a
Dallas-based oil and gas company, today reported a net loss for the
twelve months ended December 31, 2011 of $11.8 million or $(6.06)
per share, compared to net loss of $11,000 or $(0.01) per share for
the twelve months ended December 31, 2010. Net loss for the three
months ended December 31, 2011 was $11.9 million as compared to a
net income of $125,000 for the three months ended December 31,
2010.
The most significant components of the loss recorded in 2011
were bad debt expense of $10 million and impairment expense of $1.4
million for the Company’s oil and gas properties.
Between 2006 and the early part of 2009 the Company loaned a
related real estate management company its surplus cash for
interest rates ranging from 2% over the prime rate to 8% interest.
At December 31, 2009 these loans totaled $11 million. Since 2009
the Company has been paid $857,000 in interest and a principal pay
down of $1 million; however, in the fourth quarter of 2011 the
Company determined that the financial condition of the obligator
had deteriorated and there could be no assurance that the amount
owed would or could be collected. The company has recorded a
reserve of $10 million and written the receivable to zero.
Due to the decline of the prices for natural gas during 2011 the
Company has taken a non-cash charge to operations of $1.4 million
as an impairment of the Company’s oil and gas reserves.
In December 2006, Carlton Energy Group, LLC (“Carlton”)
instituted litigation against an individual, Eurenergy Resources
Corporation (“Eurenergy”) and several other entities including New
Concept Energy, Inc., alleging tortuous conduct, breach of contract
and other matters and as to the Company that it was the “alter ego”
of Eurenergy. The Carlton claims were based upon an alleged
tortuous interference with a contract related to the right to
explore a coal bed methane concession in Bulgaria which had never
(and has not to this day) produced a drop of hydrocarbons. At no
time during the pendency of this project or since did the Company
or any of its officers or directors have any interest whatsoever in
the success or failure of the so-called “Bulgaria Project.”
However, in the litigation, Carlton alleged that the Company was
the “alter ego” of certain of the other Defendants including
Eurenergy. Following a jury trial in 2009, the Trial Court granted
a judgment for the Company that it was not the “alter ego” of any
of the other parties and thereby would not incur any damages.
Cross appeals were filed and on February 14, 2012 the Court of
Appeals issued an opinion which, among other things, reinstated the
jury award of damages jointly and severely against the defendants
including Eurenergy in the amount of $66.5 million and affirmed the
award of exemplary against Eurenergy of $8.5 million. The Court of
Appeals also overturned the Trial Court’s ruling favorable to the
Company rendering a judgment for that amount plus exemplary damages
against the Company as the “alter ego” of Eurenergy.
The Company plans to file a Petition for Review of the Court of
Appeals Decision with the Supreme Court of the State of Texas. The
Company vigorously denies that it is the “alter ego” of any other
entity. There are questions regarding the underlying liability of
Eurenergy and if Eurenergy is successful in its petition for review
or, even if unsuccessful if the Company is successful on its
positions described above, the Trial Court’s judgment could be
reinstated and the Company would have no liability on this
claim.
NEW CONCEPT ENERGY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (amounts in thousands)
December 31,
2011 2010 Assets Current assets
Cash and cash equivalents $ 109 $ 59 Accounts receivable from oil
and gas sales 167 223 Other current assets 20 101
Total current assets 296 383
Note
and interest receivable – related party - 10,361
Oil
and natural gas properties (full cost accounting method) Proved
developed and undeveloped oil and gas properties, net of depletion
11,141 11,789
Property and equipment, net of
depreciation Land, buildings and equipment - oil and gas
operations
1,486
1,308 Other
150
156
Total property and equipment 1,636 1,464
Other assets 377 70
Total assets
$ 13,450 $ 24,067
NEW CONCEPT ENERGY, INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - CONTINUED
(amounts in thousands, except share amounts)
December 31,
2011 2010 Liabilities and stockholders' equity
Current liabilities Accounts payable - trade $ 422 $
83
Accrued expenses
417 156
Total current
liabilities 839 239
Long-term debt Notes payable
2,249 1,308 Payable - related parties 691 953 Asset retirement
obligation 2,702 2,573 Other long-term liabilities 491
723
Total liabilities 6,972 5,796
Stockholders' equity Preferred stock, Series B 1 1
Common stock, $.01 par value; authorized, 100,000,000 shares;
issued and outstanding, 1,946,935 shares at December 31, 2010 and
2009 20 20 Additional paid-in capital 58,838 58,838 Accumulated
deficit (52,381 ) (40,588 ) 6,478
18,271
Total liabilities &
equity $ 13,450 $ 24,067
NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATION (amounts in
thousands, except per share data) Year Ended December
31, 2011 2010 2009 Revenue Oil and
gas operations, net of royalties $ 1,020 $
1,288
$
1,246
Real estate operations 2,881
2,925
2,852
3,901 4,213 4,098
Operating expenses Oil and gas operations
1,430 1,292 1,498 Real estate operations 1,290 1,225 1,217 Lease
expense
866
886 958 Corporate general and administrative
619
731 1,342 Accretion of asset retirement obligation 129 123 117
Impairment of natural gas and oil
properties
1,428 - 1,695
5,762 4,257 6,827 Operating
earnings (loss) (1,861 ) (44 ) (2,729 )
Other income
(expense) Interest income 360 497 574 Interest expense (131 )
(124 ) (123 ) Bad debt expense - note receivable (10,006 ) - -
Other income (expense), net (155 ) (340 ) 68
(9,932 ) 33 519 Earnings from continuing operations
(11,793 ) (11 ) (2,210 ) Net income (loss) applicable to
common shares $ (11,793 ) $ (11 ) $ (2,210 ) Net income
(loss) per common share-basic and diluted $ (6.06 ) $ (0.01 ) $
(1.14 ) Weighted average common and equivalent shares
outstanding - basic 1,947 1,947 1,947
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