Biloxi Marsh Lands Corporation (PINK SHEETS:BLMC) announces
results for the year ending December 31, 2012 and provides update.
The Company’s annual revenue breakdown is as follows: 2012 revenue
from oil and gas production for its fee lands was $572,559 compared
to revenue of $1,503,056 in 2011.
For the year 2012, total revenues included a $714,604 loss
emanating from the Company’s investment in B&L Exploration, LLC
(B&L). This compares to a loss of $3,423,042 from B&L in
the prior year. As an operating oil and gas entity, B&L’s
results included deductions for depreciation, depletion and
amortization (DD&A) costs relating to its ongoing drilling and
production activities. BLMC’s share of these DD&A expenses was
$800,488 and $1,801,797 for 2012 and 2011, respectively.
Meanwhile, dividend and interest income for 2012 was $199,024,
compared to $254,128 for 2011. In 2012 the Company realized a
cumulative gain from the sale of investment securities of $23,630
compared to a cumulative gain in the amount of $1,600,569 in 2011.
Meanwhile, expenses for the year totaled $983,083 compared to
$1,439,114 for the prior year. For the year, the Company incurred a
net loss of $460,635 or $.17 per share compared to a net loss of
$695,955 or $.25 per share in 2011.
As of December 31, 2012 the combined gross daily production rate
from 4 wells operated by the Company's mineral lessees was
approximately 3.8 million cubic feet (mmcf) of natural gas with net
daily production accruing to the Company of approximately .492
mmcf. The Company has been advised by Alta Mesa, one of the
Company’s mineral lessees, that the Ducros/SL 17958 well is going
to be plugged and abandoned after several unsuccessful attempts to
rework the well.
As of December 31, 2012, B&L’s net production breakdown was
approximately 1.0 mmcfg and 40 barrels of oil per day from 5 wells.
This compares to B&L’s net production of 2.4mmcfg and 100
barrels of oil per day as of December 31, 2011 from 6 wells. As
previously reported, Hurricane Isaac impacted production when the
storm came through the region in late August. All wells were
shut-in prior to the storm. The Goodrich Land and Energy No. 1
well, CL&F No. 1 well, and Harry Bourg No.1 well were placed
back on production shortly after the storm and sustained minimal
damage, if any. The SL 19061 #1 well and Delacroix #41 ST well
sustained damage during the storm, and after repairs, these wells
were returned to production during the third quarter. As of
December 31, 2012, B&L has working interests in 7 wells capable
of production and to which proved reserves are assigned. It should
be noted that 2 of the 7 wells in which B&L has a working
interest were temporarily shut-in, thus not producing on December
31, 2012.
The SL 19706 No. 1 well located in Coquille Bay in Plaquemines
Parish, Louisiana, and operated by Clayton Williams Energy, Inc.
(“CWE”) was returned to production on January 22, 2013 and is
currently flowing from the 19 sand interval on a 10/64th choke at
an approximate rate of 2.0 mmcf per day and 43 barrels of oil per
day.
McMoRan Exploration Co. (NYSE:MMR) reported on January 18, 2013
its Fourth-Quarter/Twelve-Month 2012 Results which included an
update of MMR’s “Ultra-Deep Exploration and Development Activities”
including “The Lomond North ultra-deep prospect, which is located
in the Highlander area, primarily in St. Martin Parish, Louisiana,
is currently drilling below 13,500 feet. This exploratory well has
a proposed total depth of 30,000 feet and is targeting Eocene,
Paleocene and Cretaceous objectives below the salt weld. McMoRan
controls rights to approximately 80,000 gross acres in Iberia, St.
Martin, Assumption and Iberville Parishes, Louisiana. McMoRan is
operator and currently holds a 72.0 percent working interest.
McMoRan’s investment in Lomond North totaled $40.1 million at
December 31, 2012.” The first string of 16” production casing was
set in late January of 2013 at 13,697 feet. As of the beginning of
March 2013, McMoRan continues the drilling of the Lomond North Well
and has reached a depth of approximately 16,704 feet measured
depth. As previously reported, B&L is contractually entitled to
a 1.5% of 8/8ths overriding royalty interest in the Lomond North
prospect exploratory well and in all mineral leases obtained by MMR
in this approximately 80,000 gross acre Highlander area located in
Iberia, St. Martin, Assumption and Iberville Parishes,
Louisiana.
As previously reported, during the June 20, 2012 Central Gulf of
Mexico Lease Sale, B&L was the high bidder and successfully
obtained the mineral rights to Eugene Island Block 74. Based on
B&L’s recently commissioned independent reservoir engineer’s
study, this lease block is projected to contain significant natural
gas and oil Proved Undeveloped (PUD) reserves with significant
additional upside potential in undrilled fault blocks. B&L
holds a 60% working interest in Eugene Island Block 74, and it will
be necessary to drill wells to access the PUD reserves and
additional upside potential. B&L is seeking partners to develop
this highly prospective offshore lease block.
Additionally, B&L and its partners have obtained mineral
rights to a 1,320 acre lease position in Allen Parish, Louisiana.
The objective is to test the Middle and Lower Wilcox sands. B&L
is actively seeking industry participants to develop this lease
position.
Meanwhile, 2D seismic acquisition operations were completed
during the fourth quarter of 2012 on B&L’s Phoenix Prospect in
Union Parish, Louisiana. B&L and its operating partner,
Greystone Oil & Gas, LLP, are interpreting and mapping the
seismic in hopes of developing potential drilling prospects.
B&L and Greystone control approximately 7,000 gross acres in
Union Parish. The objective in this prospect is the upper Smackover
intervals as well as Lower Smackover Brown Dense formation.
As previously reported, in addition to the foregoing
projects/prospects, B&L is actively assembling additional
prospective acreage on which to explore, exploit and develop the
acreage’s mineral interest. The goal is to place a portion of the
working interests with third party industry partners in an effort
to mitigate risk. Due to this strategic shift, B&L only
participated in drilling 2 wells during 2012 compared to 4 wells
drilled during 2011.
A reflection of the success of B&L’s strategy is its recent
acquisition of approximately 50 square miles or 30,000 acres of
mineral and surface rights in Calhoun and Victoria County, Texas.
This project is identified as B&L’s Lago Verde 3D Seismic
Project. On September 18, 2012, field operations for the collection
of proprietary 3D seismic data over this 50 square mile area
commenced. This focus area is situated in the prolific oil rich leg
of the Frio trend with adjacent fields having produced in excess of
200 million barrels of oil (MMBO) and 1.8 trillion cubic feet (TCF)
of natural gas. The potential targets are Miocene and Oligocene
which are relatively shallow ranging from 3,000 feet to 11,000 feet
and are drilled with land rigs.
B&L successfully placed a significant working interest in
its Lago Verde project with the Bass Group with main offices in
Fort Worth, Texas. B&L is operating the 3D seismic survey and
BOPCO, the operating company for the Bass Group, will operate any
wells that may be drilled within this Lago Verde project area.
B&L hopes to have completed seismic data collection operations
by the end of March 2013, and 3D data processing is anticipated to
take five to six weeks from completion of the 3D data collection
operations. B&L maintains a 33.5% working interest in the Lago
Verde project.
The end of the year proved reserve study commissioned by the
Company and completed by T. J. Smith & Company, Inc., an
independent reservoir engineer, estimates that as of December 31,
2012 BLMC’s “Developed Producing” (PDP) reserves were .297 billion
cubic feet (BCF) of natural gas and estimates that the “Developed
Non-Producing” (PDNP) reserves were .521 BCF, totaling .818 BCF of
estimated proved natural gas reserves. Additionally, this reserve
study estimates that approximately 14% of the proved reserves will
deplete by the end of 2013.
In addition to the foregoing estimated proved reserves, another
reserve study completed by the same independent reservoir engineer
estimates that B&L’s proved reserves as of December 31, 2012
were approximately 8.5 billion cubic feet of natural gas (BCFG) and
approximately 187 thousand barrels of oil (MBBL) which compares to
2.4 billion cubic feet (BCF) of natural gas and 81 thousand barrels
of oil (MBBL) at the end of 2011. It should be noted that a
significant component of B&L’s proved reserves as of December
31, 2012 are Proved Undeveloped (PUD). As is necessary with all PUD
reserves, a well or wells must be drilled and completed to fully
develop these PUD reserves.
The proved reserve studies referenced above include explanatory
notes that are an integral part of each study. A copy of the 2013
President’s Report to Shareholders that includes these notes will
be available on the Company’s website after March 29, 2013. The
Company recommends that all interested parties refer to its website
to view these notes and other relevant information:
www.biloximarshlandscorp.com.
B&L was organized as a limited liability Company (LLC) under
the laws of Louisiana in July of 2006. B&L’s Class A members
are BLMC and Lake Eugenie Land & Development, Inc. (LKEU),
which have membership percentages of 75% and 25% respectively. The
Operating Agreement was amended on November 16, 2009 to create a
Class B membership to allow for certain future projects at the
discretion of the board of managers to be participated by either
Class A or Class B members or a combination of the respective
Classes. B&L’s Class B members are BLMC and LKEU, which have
membership percentages of 90% and 10%, respectfully. In December
2012, the members approved the consolidation of all the membership
classes into a single class of membership, consistent with the
Class A membership. All appropriate actions were taken according to
the terms of the operating agreement with respect to the
consolidation. Effective January 1, 2013, BLMC and LKEU will have
membership percentages of 75% and 25%, respectively.
During its meeting held on December 11, 2012, the Board of
Directors declared a dividend of $.25 per outstanding share of
common stock payable on Thursday, December 27, 2012 to shareholders
of record at the close of business on Friday, December 21, 2012.
This represents a total cash dividend payment of $679,007 or $.25
per share in 2012. Since 2002, the Company has paid approximately
$52,400,000 in total dividends. With the Company’s fee land based
production depleting and no new wells being drilling on its fee
lands, it will be difficult to maintain the level of dividends paid
since 2002. With this said, using 3D seismic data in its
possession, the Company is constantly working on developing the
minerals located below its fee lands. Meanwhile, the Company is
focusing on developing reserves outside of its fee acreage and
diversifying into oil production through its investment in B&L.
In its current stage of growth and continued reinvestment in its
successful drilling program, B&L should not be viewed as a
dividend producing entity.
William B. Rudolf, President and CEO, commented: “We are pleased
with the results of B&L’s partial strategic shift from
participating in the drilling of prospects generated by third
parties to acquiring mineral acreage positions and focusing on
placing a portion of those interests with industry partners to
assist in drilling and development. While this partial shift in
strategy has temporarily slowed B&L’s drilling program, thus a
reason for the short term decline in daily production, overtime
this strategy should prove to mitigate risk to B&L, improve its
economics and lead to an accelerated drilling program during the
second half of 2013 and into 2014. Evidence of the success of this
shift in strategy is the placement of a significant interest in our
Lago Verde 3D Seismic acquisition program with the Bass Group.
Additionally, B&L’s proved reserves have increased
significantly year over year which adds value to the Company’s
investment in B&L. Meanwhile, we continue to actively work on
developing both shallow and deep prospects on the Company’s
property, particularly our deep Tuscaloosa Project. However, the
current price of natural gas is making the marketing of these
prospects difficult.”
The Company maintains a website, www.biloximarshlandscorp.com,
and strongly recommends that all investors and interested parties
visit the website to view historical press releases, historical
financial statements including President’s Report to Shareholders
and general information about the Company.
Biloxi Marsh Lands Corporation owns approximately 90,000 acres
of marsh lands located in St. Bernard Parish, Louisiana. As the
landowner, it derives revenues from oil and gas exploration and
production activities that take place on or near the Company’s
land. The Company also derives revenues and expenses from its
ownership interest in B&L Exploration, LLC and minimal revenues
from surface rentals.
This news release contains forward-looking statements regarding
oil and gas discoveries, oil and gas exploration, development and
production activities and reserves. Accuracy of the forward-looking
statements depends on assumptions about events that change over
time and is thus susceptible to periodic change based on actual
experience and new developments. The Company cautions readers that
it assumes no obligation to update or publicly release any
revisions to the forward-looking statements in this report.
Important factors that might cause future results to differ from
these forward-looking statements include: variations in the market
prices of oil and natural gas; drilling results; unanticipated
fluctuations in flow rates of producing wells; oil and natural gas
reserves expectations; the ability to satisfy future cash
obligations and environmental costs; and general exploration and
development risks and hazards. Readers are cautioned not to place
undue reliance on forward-looking statements made by or on behalf
of the Company. Each such statement speaks only as of the day it
was made. The factors described above cannot be controlled by the
Company. When used in this report, the words “believes,”
“estimates,” “plans,” “expects,” “should,” “outlook,” and
“anticipates” and similar expressions as they relate to the Company
or its management are intended to identify forward-looking
statements.
The following Statements of Assets, Liabilities and
Stockholders’ Equity—Income Tax Basis and Statements of Revenues
and Expenses—Income Tax Basis have been derived from the Company’s
end of the year financial statements, but do not include the
information and footnotes that are an integral part of a complete
financial statement. A complete copy of the audited Financial
Statements and Schedule—Income Tax Basis, Years Ended December 31,
2012 and 2011 along with the 2013 President’s Report to
Shareholders and the Company’s Proxy Statement will be available
after March 29, 2013 on the Company’s website
www.biloximarshlandscorp.com or through requesting a copy in
writing from the Company - Attention: Investor Relations, Biloxi
Marsh Lands Corporation, One Galleria Blvd., Suite #902, Metairie,
LA 70001.
BILOXI MARSH LANDS
CORPORATION Statements of Assets, Liabilities, and
Stockholders' Equity-Income Tax Basis December 31, 2012 and 2011
Assets
2012 2011 Current assets: Cash and cash
equivalents $ 1,802,767 3,220,432 Accounts receivable 112,763
146,516 Accrued interest receivable 19,275 22,250 Prepaid expenses
36,113 39,987 Deferred tax asset 426,345 813,807 Federal income
taxes receivable — 16,136 State income taxes receivable 177,850
14,160 Marketable debt securities - at cost 295,525 301,525 Other
assets 3,830 3,830 Total current assets 2,874,468
4,578,643 Investment in partnership 2,571,253 1,335,857
Marketable debt and equity securities - at cost 9,173,122
10,028,136 Land 234,939 234,939 Levees and office furniture and
equipment 307,323 298,429 Accumulated depreciation (303,454 )
(298,429 ) Total assets $ 14,857,651 16,177,575
Liabilities and Stockholders' Equity Current liabilities:
Income taxes payable $ 14,386 — Accrued expenses 20,526 19,345
Other current liabilities 4,608 4,410 Total current
liabilities 39,520 23,755 Stockholders' equity:
Common stock, $0.001 par value. Authorized
20,000,000 shares; issued 2,851,196 shares; outstanding 2,716,028
and 2,735,328 shares in 2012 and 2011, respectively
47,520 47,520 Retained earnings 15,212,071 16,351,713
Treasury stock, 135,168 and 115,868 shares
in 2012 and 2011, respectively, at cost
(441,460 ) (245,413 ) Total stockholders' equity 14,818,131
16,153,820 Total liabilities and stockholders' equity $
14,857,651 16,177,575
BILOXI MARSH LANDS CORPORATION Statements of
Revenues and Expenses - Income Tax Basis Years ended December 31,
2012 and 2011
3 Months
Ended 12 Months Ended December 31 December
31 2012 2011 2012 2011
Revenues:
Oil and gas royalties $ 162,588 289,282 553,326 1,519,192
Severance taxes (8,680 ) (12,647 ) (30,767 ) (66,136 ) Oil and gas
royalties, net 153,908 276,635 522,559 1,453,056 Surface
rentals 50,000 50,000 50,000 50,000
Total oil and gas revenues 203,908 326,635
572,559 1,503,056
Other (loss) income:
Income (loss) from investment in partnership 202,345 (960,235 )
(714,604 ) (3,423,042 ) Dividends and interest income 67,400 62,641
199,024 254,128 Gain (loss) on sale of securities (191,686 )
988,524 23,630 1,600,569 Surface rentals 19,597 22,145 31,772
22,145 Other 6,060 13,886 85,916 43,642
Total other (loss) income 103,716 126,961
(374,262 ) (1,502,558 ) Total revenues and income 307,624
453,596 198,297 498
Expenses: Total expenses 347,665 669,954
983,083 1,439,114 Net loss before
income taxes (40,041 ) (216,358 ) (784,786 ) (1,438,616 )
Income taxes Provision for income taxes (31,615 ) (266,592 )
(324,151 ) (742,661 ) Net (loss) income $ (8,426 ) 50,234
(460,635 ) (695,955 ) Net (loss) income per share $ -
0.02 (0.17 ) (0.25 )
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