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|
|Cash and cash equivalents||$||1,802,767||3,220,432|
|Accrued interest receivable||19,275||22,250|
|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|
|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|
|Levees and office furniture and equipment||307,323||298,429|
|Liabilities and Stockholders' Equity|
|Income taxes payable||$||14,386||—|
|Other current liabilities||4,608||4,410|
|Total current liabilities||39,520||23,755|
Common stock, $0.001 par value. Authorized 20,000,000 shares; issued 2,851,196 shares; outstanding 2,716,028 and 2,735,328 shares in 2012 and 2011, respectively
Treasury stock, 135,168 and 115,868 shares in 2012 and 2011, respectively, at cost
|Total stockholders' equity||14,818,131||16,153,820|
|Total liabilities and stockholders' equity||$||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|
|Oil and gas royalties||$||162,588||289,282||553,326||1,519,192|
|Oil and gas royalties, net||153,908||276,635||522,559||1,453,056|
|Total oil and gas revenues||203,908||326,635||572,559||1,503,056|
|Other (loss) income:|
|Income (loss) from investment in partnership||202,345||(960,235||)||(714,604||)||(3,423,042||)|
|Dividends and interest income||67,400||62,641||199,024||254,128|
|Gain (loss) on sale of securities||(191,686||)||988,524||23,630||1,600,569|
|Total other (loss) income||103,716||126,961||(374,262||)||(1,502,558||)|
|Total revenues and income||307,624||453,596||198,297||498|
|Net loss before income taxes||(40,041||)||(216,358||)||(784,786||)||(1,438,616||)|
|Provision for income taxes||(31,615||)||(266,592||)||(324,151||)||(742,661||)|
|Net (loss) income||$||(8,426||)||50,234||(460,635||)||(695,955||)|
|Net (loss) income per share||$||-||0.02||(0.17||)||(0.25||)|